ThatMansScope

More evidence that Republican climate theory is nonsense

2012-03-14T07:45:00.001-07:00

Republicans these days, in their constant quest to be beneath contempt, are required to be ignorant of science or completely dismiss it. Consequently, they either (a) deny climate change, (b) deny that it's caused by greenhouse gasses, or (c) deny the human role in the accumulation of greenhouse gasses.

The Australian Broadcasting System has a wonderful science site that is free and that has very informative articles and videos illustrating many different aspects of research and discovery. You can reach the site by clicking HERE.

Today there is an article explaining exactly why the overwhelming majority of scientists believe that humans are mostly the cause for the buildup of the major greenhouse gas CO2 (carbon dioxide). Basically, it's the subtle variation in the presence of the different forms of carbon in modern plants, fossil fuels (made from ancient plants), and in the atmosphere now and in the past. The argument is clever, subtle, and convincing to those who are willing to read it without closing off their minds to a bit of quantitative thinking. The same article also explains why scientist also discount the role of volcanoes in the accumulation of CO2. Here is the article.

(Coincidentally, Rick Santorum, when asked about CO2 recently, said: ""Tell that to a plant, how dangerous carbon dioxide is." Well, as the above science article points out, scientists have actually asked plants, in a way, and the plants' response is that burning fossil fuels has increased the concentration of CO2 in the atmosphere significantly.)

I guess this post is a little too late to be read by my evangelical followers in Alabama and Mississippi who gave important victories to Rick Santorum yesterday. No doubt digesting a bit of actual science would have made them more critical about Republican positions on climate science, thus lowering their turnout in the primaries and shifting the margin to Mitt Romney. I'm pleased that through this late posting I could do my part in helping the PTR advance the most absurd of its candidates, thus doing my small part in helping to re-elect Obama.

(Should Santorum actually become President, I will discontinue this blog since there would be no real point in doing anything except letting craziness play out its course.)

More evidence that Republican economic theory is nonsense

2012-03-13T18:30:00.000-07:00

I guess I've said it dozens of times: there is absolutely no evidence that raising the tax rate on the wealthy will cause them to stop investing and creating jobs and all the nice things that they are supposed to do.

Certainly if the top rate were, say 100%, there would be no incentive to earn more than the cut-off for this marginal rate. On the other hand, if the top rate were really low -- say 15% -- the revenue gained would be inconsequential. So, somewhere in between 15% and 100% there is an optimal rate at which the maximum revenue for the IRS would be gained -- a rate still low enough so that there would be no disincentive for the wealthy to earn in that bracket.

What is this optimal rate? To listen to Republicans one would think that it might be at most 25% (grudgingly -- they'd rather not tax the wealthy at all). It turns out that it is at least 70% and probably higher. Remember, of course, that this rate would only apply to income greater than a certain amount -- certainly in the 6 figures. No one -- not even the most liberal Democrats -- are proposing such a high rate. But it is sustainable, would still leave the very rich with plenty of incentive, and go a long way to reducing our deficits. The wealthy used to pay that much -- back in the days of Eisenhower -- and paid as much as 50% even as recently as Reagan. But most of them don't like to pay taxes, so their enablers, the Republicans, have invented all sorts of fantasies to justify cuts in their rates. And the Democrats, including Obama, are afraid to call them on it.

If you don't believe me, check out what Bruce Bartlett has to say in today's Times. Bartlett held senior policy positions in both the Reagan and Bush I administrations, and was on the staffs of such non-liberals as Jack Kemp and Ron Paul.

Like nearly everything that Republicans have to say these days, there is almost nothing factual in their economic arguments. They make it up as they go along.

Birth control and democracy

2012-03-04T16:30:00.001-08:00

The 7 - 2 Supreme Court decision Griswold vs. Connecticut (1965) established the right of married people to purchase and use birth control devices. Six years later, Eisenstadt vs. Baird extended this to unmarried couples as well. (I was living in Massachusetts when that happened and remember Bill Baird's courage and dedication in risking his freedom to make this test case.)

Given the virtually total acceptance of birth control by Americans -- even, or especially among Catholics -- it is highly unlikely that this right can be denied. I would venture to say it is less likely than the re-imposition of Prohibition -- in spite of ravings from lunatics like Rick Santorum and the hierarchy of the Catholic Church.

So, despite a lot of hyperbole, the issue these days is mostly: Who pays for it?

As it stands now, it is the issuers of health insurance, under the Affordable Health Care Act (popularly called "ObamaCare"), that are required to foot the bill. It is important to note, in this context, that it is not the "American Taxpayer" who pays for anyone's contraception: that's simply not the way it works, Rush Limbaugh to the contrary (except possibly in the case of Medicaid, which is barely in the controversy here anyway).

Arguments pro and con involve the following

1. The Viagra argument
2. The Mental Health argument
3. The Running Shoes argument

4. The Prescription Drug argument.

1. Currently, both Viagra and The Pill are covered by ObamaCare, and neither is restricted by marital status or even one's sex. It is possible to make distinctions, however. Some (mostly men) might claim that sex -- for procreation or otherwise -- is possible without The Pill, but in many cases is not without Viagra (or its equivalents). If you take the narrow and exceedingly unpopular view that sex is only for procreation, then this argument might have some force, however, medically, one can obtain semen without erection or ejaculation, so the argument from this perspective is not accurate. The many women who are on The Pill would claim that without it sex would be much more encumbered and far less enjoyable (hence less likely to happen). Furthermore, sex without The Pill would almost surely result in more dependence on condoms and other physical contraceptives, hence result in more unintended and unwanted pregnancies. This in turn would result in higher healthcare costs and/or more abortions. Thus, it is hard to make a realistic distinction between coverage of Viagra and coverage of The Pill, and from an economic perspective, paying for The Pill will, statistically, save money in insurance premiums.

2. The effectiveness of The Pill has enabled several generations of women to feel "in control" of their bodies with respect to sex and reproduction. Supposedly this has lead to an increase in overall mental health, though that is difficult to quantify; nevertheless, this has led to the argument that paying for The Pill is appropriate because its use is a women's health issue -- sort of like regular gynecological checkups. Of course there are other contraceptives available. Some are simply variations on the The Pill such as various "patches" or timed-release doses; others are doctor-based such as diaphragms and IUDs. Then there are condoms which, though not always under a woman's control and subject to failure, do prevent sexually transmitted diseases. Whatever the validity of the argument for The Pill as important for women's health, it is safe to say that the vast majority of women support this argument and hence are in favor of coverage under medical insurance; probably the opinion of men on this issue -- though pretty nearly in agreement -- is irrelevant.

3. Limbaugh et. al. have suggested that arguing the health benefits of contraceptives is similar to arguing the health benefits of running shoes; since the shoes are not covered under healthcare policies, neither should the contraceptives be. In point of fact, even though running shoes themselves may not be covered, many health insurance plans (including my own) regularly cover gym and fitness club memberships. The reason is that insurers know that having members physically fit -- especially non-obese -- actually decreases their chances for contracting chronic debilitating diseases such at diabetes and heart conditions. This in turn reduces insurance payments for treating these diseases. This is sound economics and makes health care less expensive for all (since the reduced risks are spread around). By the same token, reducing the risk of unwanted pregnancy reduces the costs of pregnancies and instances of abortions. Once again, paying for contraceptives is good competitive economics for insurers. The particular example of (the cost of) running shoes is probably too trivial, but the argument for covering preventative fitness programs is a good one and is already being widely implemented. The analogy with contraception reverses the argument (if there was a serious one) of Limbaugh and others who had hoped to mock it.

4. It has been traditional for health insurance to cover medicines and treatments that are prescribed by doctors. The physician-patient bond has long been recognized legally in many forms. The specter of the old HMO plans standing between a patient and doctor is still a source of discomfort, so modern plans attempt to give at least the appearance of granting the doctor the final say in treatment. Since The Pill, IUD and diaphragm are always doctor-prescribed, they tend to be covered by health insurance. That's why condoms are not covered even though they could be even more expensive than other birth control methods -- they are bought over-the-counter without doctor intervention.

In short, then, there is no one overwhelming and unanswerable argument that "proves" birth-control pills should be covered under "ObamaCare". Probably the best talking points are that they promote women's psychological health, and that they actually reduce the cost of health insurance premiums for all by largely eliminating the expenses of unwanted pregnancies; they also avoid many abortions. In any case, claims that tax-payers are financing anyone's sex is total nonsense.

Both sides now?

2012-03-03T08:14:00.000-08:00

I really don't understand phrases like "the poisonous atmosphere in Washington these days" or "the prevalence of hyperpartisanship" etc. Only one party has been guilty of creating a poisonous hyperpartisan climate and that is the Republican party. Its representatives are vying with each other over who is more absurdly reactionary: denying the Theory of Evolution and obvious climate changes, wanting to establish Christian ayatollahs and disestablish public education, and having its spokespeople smear anyone who departs from its crazy mishmash of medieval ideas. What passes for ideas from the TeaScreamers, Fox News and Rush Limbaugh has now become the guiding ideology and talking points of the Party for The Rich.

There's too much passive voice in press commentary on this subject. It's not the Dems who pushed Olympia Snowe to quit the Senate (more on this disappointing political figure in a future blog). It's not the Dems who call advocates of birth control sluts. It's not the Dems who think the dream of a college education is elitism and deliberately lie about Obama's words on the subject. It was Newt Gingrich who called Obama "the most dangerous president in modern American history." It was Rick Santorum who completely distorted John Kennedy's remarks about religious liberty, saying “What kind of country do we live [in] that says only people of non-faith can come into the public square and make their case?”

The Republicans, in their anger and frustration over having a non-white and mildly liberal president, are the ones creating a poisonous and hyperpartisan atmosphere in this country.

Ayatollah Santorum: a rant

2012-03-02T18:14:00.002-08:00

Apparently, for many, to get to know Rick Santorum is to despise him. He lost his Senate seat in 2006 by a huge margin -- he went down still claiming that George Bush (then at about 38% approval rating) was a great president.

Like the early puritans in New England, Santorum's version of "religious freedom" means freedom to trample on the rights of other religious people as well as the non-religious. Although he claims to be a conservative favoring a much smaller role for government in general, and the federal government in particular, he believes that government has the right to legislate what goes on in the privacy of peoples' bedrooms. He is not only against gay rights and abortion, but even against birth control as well -- a "Catholic" position pretty much confined to Santorum and the hierarchy of the Catholic church -- you know, the same hierarchy that turned their eyes the other way while priests were raping young children. (Yes, the word is rape not just the vague and milder term "abuse"; nearly every state defines what many of those priests were doing as rape.)

Polls indicate that Santorum's fellow Catholics are firmly in favor of birth control coverage under the national healthcare plan -- by nearly a 2 to 1 margin; in fact, a huge majority of sexually active Catholic women use birth control methods other than abstinence or the "rhythm method" (the only two approved by the old men who lead the church). This majority is at least 2 to 1 and perhaps as high as 9 to 1 (depending on how you split semantic hairs).

Santorum is also against "separation of church and state" (Jefferson's phrase); of course, for him, "religion" and "church" mean mostly the Catholic religion and Catholic church; failing that, he means "Christian" church. He is, however, really worried about "Islamic fascism" and thinks that is one of the greatest threats facing our country. I don't think he's interested in letting Sharia Law have much to do with our state, or even laws about Halal or Kosher food.

The idea of real religious freedom, according to which no religious belief can have ascendency over another, is an elusive concept for Santorum. It is one thing to argue against abortion by claiming it is murder, or to argue against contraception by claiming that it is obvious that sex is for procreation. It is entirely another thing to legislate against these things because your god has told you they are wrong.

Santorum is also upset that colleges are teaching students to read, think about, and discuss these issues. While the vast (and I mean vast) majority of Americans, while enjoying the benefits of birth control, also want their kids to enrich their lives -- as well as enhance their employment prospects -- by going to college, Santorum thinks that advocating some post high-school education is "elitism."

Has anyone ever so missed so many points?

Just as we should be calling the Republican Party the Party of The Rich (PTR) instead of the GOP, we should be referring to the lobbyist and former Senator from Pennsylvania as Rick "The Ayatollah" Santorum (or worse).

Blunt and Sharia Law

2012-02-15T07:49:00.000-08:00

Sen. Roy Blunt (R. Mo.) filed legislation to amend the Affordable Care Act (Obama's healthcare reform) so that any employer can refuse to pay premiums on a healthcare plan that pays for procedures that the employer finds morally objectionable. This would apply to any employer, not just religious organizations.

The stupidity of this bill is so breathtaking that it could only come from a southern Republican (well, OK, Missouri was a border state during the Civil ... er ... "War Between the States" AKA the "Northerners' invasion to destroy our Peculiar Institution"). I presume that the next step is to make payment of taxes subject to the same "freedom."

Anyway, fools are usually arrogant and so it is with Blunt and his supporters. They assume that this reasoning will help just Christian yahoos. But the old Law of Unintended Consequences provides a delicious irony. The Bluntniks hate Sharia Law but have now suggested providing followers of Islamic law tremendous power to enforce it on others. Would devout Moslem employers pay premiums to any plan that had hospitals or doctors who violated the Sharia precepts? Of course not: such care-givers could not have females treating males, say, or serve non-Halal (say pork) food, or ... who knows what?

And of course, once you start exempting all the various shades and sects of religion and superstition (Jehovah's Witnesses, Orthodox Jews, Christian Scientists, Wiccans and whatever) there won't be anyone paying for anyone else's healthcare. Eventually, if they get their way, no one will pay taxes at all. At which point we won't be any more than a tenth-rate septic field in the "community" of nations.

Yes, that's what I mean by "What part of beneath contempt don't you understand?"

It's the birth control, stupid

2012-02-13T14:58:00.000-08:00

The Republican party, to its electoral disadvantage, is being dragged around by its right-wing faction. Couldn't happen to a nicer party. Of course, one wonders exactly what the Republican party is these days outside of religious fundamentalists and economic reactionaries.

The latest Republican no-win position has been staked out by the Holy Rollers with the very public help of the U.S. Council of Bishops. One might have some sympathy for a church that has opposed birth control for nearly two millenia. Demanding that the Catholic Church pay directly for birth control for its direct employees (priests, bishops, Church administration) is a little like demanding that synagogues provide ham sandwiches for yeshiva students: This is a obligation to provide a service that is against the principles of those who are asked to provide it, and -- presumably -- is undesired by those for whom it must be provided.

However, extending this line of reasoning to employees of religious organizations who are not involved directly in religious work is quite a bit more problematic. An employee of a Catholic public charity -- say a hospital -- may very well not be a Catholic (nor can any church demand that such employees adhere to specific religious beliefs). The Church can no more avoid the standards of healthcare established by our secular government than it can avoid the standards of competence associated with professional licensing established by that same government.

Another problem with the Catholic Bishops' argument, and similar arguments from other large and aggressive Christian groups, is that there are unforeseen (for them) consequences. For example, does the Church of Christ Scientist (love that use of "scientist") have to pay any healthcare premiums to any of its employees, since it advocates prayer as the sole source of healing? Jehovah's Witnesses object to, among other medical procedures, blood transfusions. And what about asking female Moslem nurses and doctors to attend to male patients, or be associated with non-Halal meals (similarly for Jews)? Mainstream or majority religions -- all Christian -- tend to think that the prerogatives they demand will be exclusively theirs, and not be extended to religions that they ignore or disdain. In fact, if history is any guide, they would actively fight against providing these dispensations to these other religions or belief systems.

Even the mainstream media in this country have pointed out that the vast majority of Americans strongly support both birth control, its universal availability, and its coverage under health care plans. A recent Fox News Poll records Americans in favor of birth control coverage by insurers by a nearly 2 to 1 margin. Yet Fox News dutifully attacks the Obama administration for simply recognizing this clear mandate.

Support for birth control has been strong for many decades now -- even among Catholics (better than 58% according to the Fox poll mentioned above). Yet, true to the traditional desire of religions to impose their will on others, the Catholic hierarchy -- yes, the same hierarchy that shuttled priests out of harm's way when they were found to be sexually abusing young children -- along with the crusaders of the religious right still want to decrease Americans' access to family planning.

There are several reasons for opposition to birth control. First, there is the biblical injunction "Go forth and multiply" and its corollary that the primary -- if not only -- purpose of sex is reproduction, and any of use of sex is sinful. Pope Pius XI complicated the issue by asserting (19030) that sex also has the "unitary" role of encouraging love (between married couples). In any case, the only contraceptive measures allowed (religiously) for Catholics is timing of intercourse with infertility (the "rhythm method"). This seems to me more a political dispensation than a consistent religious one, since the intent of this method is clearly allowance of sexual pleasure accompanied by avoidance of pregnancy.

The Christian right, in general, opposes birth control outside of marriage because it believes that removing the "threat of pregnancy", or even knowledge of how to do it, will encourage promiscuity among the young (and the not-so-young).

Abortion is another but not separate issue. Those religions which forbid it do so because it is considered murder. But to be murder, one has to define when there is a human to be murdered. The scholastic Thomas Aquinas (1225 - 1274) defined life to begin at quickening (when the fetus can be detected by its movements); this is similar to the classical Jewish definition. Since then, however, the Church has set back the moment of life to the instant of conception, where it is asserted that the soul enters the body. Until recently the exact mechanism of conception/fertilization, implantation and growth was not known. This is important because chemical/hormonal methods of birth control work at various moments in this sequence, disrupting the entrance of the sperm into the ovum, then the process of fertilization, and finally the implantation of the fertilized egg into the wall of the uterus and its further development. The medical definition of the term pregnancy is the period immediately after implantation but before birth. The American Council of Catholic Bishops defines pregnancy, however, as beginning with fertilization. (Barney Frank famously asserted, in reference to the fact that anti-abortionists were often very tight-fisted with programs to help the sick and poor, that "they believe that life begins at conception and ends at birth" -- Sept. 7, 2005.)

The political problem that the anti-choice and anti-birth-control people have is that contraceptive pills sometimes work by preventing the fetus -- i.e. the fertilized egg -- from implanting, thus preventing it from developing, thus resulting in its destruction. It necessarily follows that if you are anti-abortion you must be anti-birth-control-pill. Since "The Pill" is overwhelmingly popular (even among Catholics), this forces anti-abortion people into a politically untenable position. Outlawing The Pill is simply not going to fly. This is not such a problem for orthodox Catholics, since they are opposed to contraception in any case, but it does put anti-choice people who support birth-control (or at least say they do) in a bind.

(Of the other contraceptive defices, the IUD's problems are even worse than the pill since it always destroys the "fetus" by preventing implantation, though this wasn't always known. Condoms work only by preventing sperm-egg contact so are innocent of any charges of causing abortions.)

As usual, the tactic taken by these people and their Republican allies is to attack on other fronts -- mostly by starving out those who try to offer the services that they don't approve of. We just saw this in the flap around the Komen breast cancer fund's refusal to continue working with Planned Parenthood. Only a small fraction of Planned Parenthood's efforts go toward abortions (at most 2%) but the organization is an important agent working for women's reproductive health, including birth control. The attacks on the Obama administration over whether churches must supply contraceptive funding under the new healthcare act is not just about churches -- it is yet another attack on the healthcare plan itself and part of a larger attack on contraception itself.

President Obama didn't take seriously warnings about the overall strategy and tactics of his enemies on the right (which includes the entire Republican party); he lost a considerable amount of political skin over that mistake. If he thinks that the Council of Bishops or the religious right will accept any sort of compromise over birth control he still hasn't learned enough.

Fairness in taxes, part II

2012-02-05T13:05:00.000-08:00

While millions of Americans are struggling to get by under the Great Recession of 2008, largely brought on by the investment community, lobbyists for that community are still trying to preserve one of the worst loopholes that it managed to obtain for some members of that group: the so-called carried interest tax break. Here's how Carl Levin, Senator from Michigan, described it:

Hedge fund managers generally make their money by charging their clients two fees. First, the manager receives a management fee, typically equal to 2 percent of the assets invested. Second, the manager typically receives 20 percent of the income from those investments above a certain level. This 20-percent share of the investment returns from hedge funds is known as "carried interest.'' Under current law, most hedge fund managers claim that this carried interest qualifies as a long-term capital gain, currently subject to a maximum tax rate of 15 percent, rather than being taxed as ordinary income, currently subject to a maximum tax rate of 35 percent.

But a moment's analysis shows that this money is ordinary income by any fair definition and should be treated that way. The 20-percent fee is not capital gains, because it applies not to capital that the hedge fund manager has invested, but to the payment he receives for investing capital that other people provide. Pretending that the 20-percent fee is capital gains when, in fact, it is payment for a service is an `"Alice in Wonderland'' argument that elevates fiction over fact.

(for full text of Sen Levin's comments, click here.)

Once again we see an attempt to twist capitalist theory to support a class of wealthy people who neither need nor deserve this support -- they are getting a tax break simply for doing their jobs. For example, take a plumber or carpenter who takes some work on spec: he works on a project for a "retainer" or the price of materials, and if it is successful, he gets paid the rest of the commission. Should payment then be given the capital-gains "discount" simply because he risked the commission on the successful completion of the job -- something that would be expected in any case? In fact, doesn't any worker risk her salary by performing work which, should it be shoddy, would result in her being fired?

And, of course, there is also the question of why the payoff is such a high percentage? If the investor makes $1 billion dollars, the hedge fund manager stands to make $200 million! It is only because the possible reward is so absurdly high that the risk of not getting it seems so dire. How much is that per hour of actual work? Does anyone deserve that kind of money (not to mention a preferred tax treatment as well)? Michael Milken, the purveyor of junk bonds, made this kind of money for years -- until he was thrown into prison.

It is this kind of gross favoritism of big money managers that has made the message of the "Occupy" demonstrators so compelling to so many people.

This series of blogs on tax fairness in not an attack on all wealthy people. It is hard to blame an investor for taking advantage of the tax breaks that are available. However, actually paying lobbyists and influence peddlers to get congressmen to vote for them is, in my opinion, antisocial behavior, as is the soliciting and acceptance of favors from these people unethical behavior on the part of senators and representatives.

As one of the readers of this blog (Anonymous) has pointed out, not all wealthy people enjoy the kind of tax breaks that Mitt Romney, for one, gets. He pays only about 15% of his huge income (almost all capital gains) in taxes, while, recently, the wealthy (top 1/10 %) have averaged close to 30%. You can read some of the breakdown in this article (forwarded to me by Anonymous). This is up from the average rate of less than a decade ago simply because, as happens in most recessions, capital gains income has been severely reduced for members of the investing (and coupon-clipping) class. Don't shed any tears for them: unless tax policy changes, the growing surge in the stock and bond markets will have many of them riding high again, taxwise, before long. Also, as this article mentions, the percentage of all taxes paid by the upper class is higher than for those in the bottom 50% or so. This doesn't make them virtuous, simply very highly paid in comparison with the lower brackets. Also, this percentage that they pay is down from pre-Recession times -- also because recessions hurt many rich people as well as the non-rich (though usually not as seriously).

Fairness in taxes, part I

2012-02-01T19:49:00.000-08:00

Like it or not, we have a graduated not level federal income tax. This means, roughly speaking, that the tax ones income is not a fixed percentage of the entire income, but is, rather, a changing percentage on various segments of that income, with the percentage increasing as the segments have higher and higher endpoints. The number of segments and the percentages used have varied over the history of the federal income tax. This history began during the Civil War with the first -- and, even then, graduated -- income tax. This was declared unconstitutional in 1895 and so disappeared until the the 16th amendment legalizing it was passed in 1913; since then the federal personal (and corporate) income tax has been with us, and always in graduated form.

Why has the tax been graduated and not flat -- say 15% of ones entire income? Taking fixed percentages -- or applying proportionality -- is a rather primitive mathematical response to computation of quantities that change. It's basically saying that if the value of the quantity at input level A is P, and at input level B is Q, then the value for input halfway between A and B -- i.e. at (A+B)/2 -- should be halfway between P and Q, or (P+Q)/2. This is fine for computing say interest on bank deposits of varying sizes, but it doesn't work for lots of things; for example, the light intensity 2 meters from a bulb is not half the intensity 1 meter from that bulb. The value of a college education is not proportional to the number of years spent in college or the dollars in tuition paid. While the force of Earth's gravity one an object is proportionate to the mass, it is not proportionate to the distance of the mass from the Earth.

In the areas of economics and morality the assumption of strict proportionality is particularly questionable -- especially in the matter of taxation. A simple example shows that a strict flat tax is unfair. Suppose that a person needs $8000 a year simply to live -- to purchase adequate shelter and adequate food. If you tax a person who is making exactly that amount of money at a 10% rate, that person will die (you have to make nearly $9000 to survive that kind of tax). So, clearly, you have to adjust your tax structure to be fair on even this basic level.

A slightly more sophisticated approach is to exclude from taxation the amount it takes to survive, and tax the remainder at a fixed level. This is the modified flat tax. In the above example, this would levy a tax of 10% only on that part of a person's income above $8000. More generous plans would tax income only above say twice that -- i.e. above $16,000.

How fair are these plans? Well, that depends on what you mean by fair. Perhaps in the dim dark past, when mere survival was the basic goal, this would be OK. But there are many things in life, especially in modern countries, that we consider important besides food and shelter. Almost everyone these days would include among them medical care, education to varying degrees, a reasonable amount of vacation or leisure time, spiritual and cultural enrichment etc. As you can see, the situation becomes rather complicated, and determining values and cutoffs for these kind of expenditures is not at all easy.

There is also a challenge of another type to proportional taxation. What is a fair income anyway? Is ones success completely independent of the success or failure of others? If not, then one has to assess how ones income depends on ones "societal worth" or even on ones work or effort. If I make lots of money by oppressing others, how does that count? Should I make up for it by contributing more to the social effort through taxes? What if I consume more than my (proportional) share of natural resources such as clean air and water? If I work 80 hours per week instead of 40, should I be entitled to twice as much? Conversely, what if I make 200 times the average national wage, how much socially useful work should I have done?

These are not easy questions. There are simple-minded answers at both extremes. The radical right-wing response is that ones income, since it reflects the free market, is the sole measure of ones worth, and that beyond an exemption for strict cost-of-living or survival expenses, taxes should be flat all the way out on even the highest incomes. (Well, the really radical position would be 0 taxes beyond a certain range, but few would go that far.) The radical left-wing approach might be strictly graduated taxes above cost-of-living, with a salary cap, beyond which taxes would be close to 100%. Remember the Beatles' line, reflecting the British tax (at that pre-Thatcher time) on their very high income: "One for you and nineteen for me, 'cause I'm the Tax Man."? (A 95% top tax bracket for them.) In the not too distant past, the highest bracket here in the USA was at least 70%.

What we have now is a sort of compromise. Here are the current brackets, which include the Bush cuts due to expire next year.

Year 2012 income brackets and tax rates

Marginal Tax Rate	Single	Married Filing Jointly or Qualified Widow(er)	Married Filing Separately	Head of Household
10%	$0 – $8,700	$0 – $17,400	$0 – $8,700	$0 – $12,400
15%	$8,701 – $35,350	$17,401 – $70,700	$8,701 – $35,350	$12,401 – $47,350
25%	$35,351 – $85,650	$70,701 – $142,700	$35,351 – $71,350	$47,351 – $122,300
28%	$85,651 – $178,650	$142,701 – $217,450	$71,351 – $108,725	$122,301 – $198,050
33%	$178,651 – $388,350	$217,451 – $388,350	$108,726 – $194,175	$198,051 – $388,350
35%	$388,351+	$388,351+	$194,176+	$388,351+

Note that the graduating cuts out above $388,351; i.e. the tax is flat above this income.

In some sections of the country -- mostly parts of the East and West coasts -- this salary is also roughly the cut-off for the "1%" as it's called these days (99% of earners make less). Few people who work for wages ever make a salary this large. (After 42 years of college teaching I never made it into the 6 figures, though some professors and lots of college administrators do much better; many college presidents make it into the 1%.)

Anyway, it's not this table that is getting folks aggravated these days, but it's the tax rate that the table doesn't show: the Capital Gains Tax. At some point lobbyists for the very rich and/or the securities industry somehow convinced Congress -- made up of plenty of wealthy people but also mostly people who could use lobbyists' money for campaigning -- that we're all equal under American capitalism, except (to quote Orwell) some are more equal than others. People who make money from the rise in value of assets held at least a year ("long term capital gains") are taxed at a maximum rate of 15% on this income. This is basically a tax rate for the wealthy, since most people don't have that much income qualifying as capital gains (IRAs don't count since they are payed for in pretax dollars.)

So why is income from capital gains given a favorable tax treatment?

The standard answer is that capital is so important to the functioning of our economic system that we must use tax breaks to encourage folks to take the risk of investing their money. The main problem with this argument is that there is no evidence to support the belief that tax policy affects how people behave with respect to investing. There is no more nor less investment now than there was when the capital gains tax was higher 30-40 years ago (20% - 28%). People invest in business because they can make very large amounts of money: that's the way most large fortunes are obtained. Professional investors also like what they do (ask Warren Buffet). It's really odd that the same people who scoff at using tax policy to affect behavior like cigarette, alcohol and candy use, so readily buy this capital gains argument. Also, one could make the argument that after the financial debacle of 2008 (and even after the Savings and Loan Crisis several decades previous), encouraging yet more risk-taking in investment may not be what we should be doing.

Another argument often given for the separate treatment of capital gains is the argument the it amounts to a double taxation. The corporate income tax is collected on a company's profits, and then investors in that company have to pay a capital gains tax on their share of these same profits. This is really a stretch of logic. First of all, the whole point of a corporation is that it is walled off from its shareholders. The value of its stock is set by the market, not by the company. Its investors are shielded from everything other than the market's determination of its worth. If the company loses more than it has, the shareholders can only lose the value of their investment. If the company acts badly, the shareholders pay no fine and serve no jail time. Most investors don't even buy their securities directly from the company but through a third party who makes a market in the stock. The corporation is a legal entity and is taxed as such; although this tax may affect the value of its shares, it is no more a tax on the shareholders than the corporate tax on the Nestle company is a tax on the purchasers of its chocolate Kisses.

This argument also begs the question: What exactly is wrong with taxing the same money twice? People may not like it, but it is not logically contradictory or inherently evil, though it is somehow made to seem that way. We do it all the time to Social Security retirees. They paid income tax when they made the money that they put into the fund, and then again when they collect their pension checks. We also do it when we pay sales, excise and gasoline taxes. We decided that certain government services are highly desirable, and we raise taxes to pay for them. The federal ones pay for some things (e.g. food and drug inspections, defense, research); the state taxes pay for other things (police, public transit, education). If we eliminated one tax we would either have to increase and redirect the other, or give up the services which we have time and again deemed important to us. So-called "double taxation" is as American (and wholesome) as apple pie.

Cutting federal pay

2012-01-28T09:28:00.001-08:00

This is an excerpt from my commentary on the State of the Union Address:

Could we have some explanation of why cutting the incomes of federal employees is a fair idea? Sure we can do it, but that doesn't mean it's right to do it. As long as there's one highly profitable industry that gets a tax break, or one wealthy citizen who is not shouldering a fair tax burden, why should we cut the salary of a worker simply because that person is a federal employee? Doing this sends the message that somehow working for our -- our! -- government is not quite valuable. This is part of the Republican propaganda position that "government is the problem." Government is the problem mostly for people who want to cheat or endanger the rest of us. Government was not the problem when we fought WWII or protected our elderly with Social Security and Medicare. Government was not a problem when we abolished child labor and sweatshops or when we cleaned up our air, rivers, lakes and harbors. Working for our government and being paid a decent and fair wage for doing so is a very honorable thing for an American to do. Why should we be freezing government wages simply because we can?

Annotated State of the Union Address, part II

2012-01-28T09:27:00.000-08:00

My comments are in blue.

Over the years, a parade of lobbyists has rigged the tax code to benefit particular companies and industries. Those with accountants or lawyers to work the system can end up paying no taxes at all. But all the rest are hit with one of the highest corporate tax rates in the world. It makes no sense, and it has to change.

So tonight, I’m asking Democrats and Republicans to simplify the system. Get rid of the loopholes. Level the playing field. And use the savings to lower the corporate tax rate for the first time in 25 years – without adding to our deficit.

The thing about the corporate tax is that it is largely passed on to the consumer -- something to think about when arguing about whether to increase or decrease it. Certainly taking away grotesque loopholes is a good idea, as is ceasing to reward companies that transfer their operations overseas.

To help businesses sell more products abroad, we set a goal of doubling our exports by 2014 – because the more we export, the more jobs we create at home. Already, our exports are up. Recently, we signed agreements with India and China that will support more than 250,000 jobs in the United States. And last month, we finalized a trade agreement with South Korea that will support at least 70,000 American jobs. This agreement has unprecedented support from business and labor; Democrats and Republicans, and I ask this Congress to pass it as soon as possible.

The Republicans have been screaming about China, but history shows that negotiating with the Chinese is far more productive than threatening them. After all, they hold more of our debt than any other country, and are our second-largest trade partner (after Canada). China is also an important source of solar and wind energy products -- and inexpensive ones at that.

Before I took office, I made it clear that we would enforce our trade agreements, and that I would only sign deals that keep faith with American workers, and promote American jobs. That’s what we did with Korea, and that’s what I intend to do as we pursue agreements with Panama and Colombia, and continue our Asia Pacific and global trade talks.

To reduce barriers to growth and investment, I’ve ordered a review of government regulations. When we find rules that put an unnecessary burden on businesses, we will fix them. But I will not hesitate to create or enforce commonsense safeguards to protect the American people. That’s what we’ve done in this country for more than a century. It’s why our food is safe to eat, our water is safe to drink, and our air is safe to breathe. It’s why we have speed limits and child labor laws. It’s why last year, we put in place consumer protections against hidden fees and penalties by credit card companies, and new rules to prevent another financial crisis. And it’s why we passed reform that finally prevents the health insurance industry from exploiting patients.

Industries do not like to be regulated; many tend to throw financial support to the Republicans to oppose most regulations in a knee-jerk way, whether they protect miners or oil workers from on the job injuries, or all of us from severe environmental damage.

In fairness, however, we have to weigh the damage that a large hydroelectric project may do to an obscure creature like a snail darter against the good that such a project will do to thousands of other organisms -- such as ourselves -- by eliminating dangerous pollutants caused by burning fossil fuels.

Also, we have to realize that so-called "clean fuels" may not be as clean as is claimed. If the cost of making coal "clean" is taken into account (as well as the dangers of mining it), coal becomes a very expensive fuel indeed. Similarly, atomic energy still has the same problem it always has had: No one knows what to do with radioactive waste. I haven't heard Obama or the Republicans suggest which area in which state we're going to dump all that stuff.

Now, I’ve heard rumors that a few of you have some concerns about the new health care law. So let me be the first to say that anything can be improved. If you have ideas about how to improve this law by making care better or more affordable, I am eager to work with you. We can start right now by correcting a flaw in the legislation that has placed an unnecessary bookkeeping burden on small businesses.

What I’m not willing to do is go back to the days when insurance companies could deny someone coverage because of a pre-existing condition. I’m not willing to tell James Howard, a brain cancer patient from Texas, that his treatment might not be covered. I’m not willing to tell Jim Houser, a small business owner from Oregon, that he has to go back to paying $5,000 more to cover his employees. As we speak, this law is making prescription drugs cheaper for seniors and giving uninsured students a chance to stay on their parents’ coverage. So instead of re-fighting the battles of the last two years, let’s fix what needs fixing and move forward.

Yes: the correct strategy is to ask people exactly which part of healthcare reform they would like removed. Do they want to get rid of keeping their kids on their insurance? Do they want their healthcare rationed by income or the whims of big insurance companies? If they don't like the "individual mandate" but don't want to be bumped because of "pre-existing conditions," they ought to be ask how insurance companies can afford to insure only sick people. The Republicans ought to explain why they supported (even invented) the idea of an individual mandate, but now oppose it.

Now, the final step – a critical step – in winning the future is to make sure we aren’t buried under a mountain of debt.

We are living with a legacy of deficit-spending that began almost a decade ago. And in the wake of the financial crisis, some of that was necessary to keep credit flowing, save jobs, and put money in people’s pockets.

But now that the worst of the recession is over, we have to confront the fact that our government spends more than it takes in. That is not sustainable. Every day, families sacrifice to live within their means. They deserve a government that does the same.

This is not really correct. It's the size of the deficit that matters, not deficits themselves. We had fairly large deficits before Clinton took office, but we eliminated them by the time he left office. The problem is that now we are accumulating debt so fast that if it continues this way we will never be able to pay it off before we go bankrupt. But it doesn't have to be done tomorrow or even next year. There is nothing like a recovery to help with turning things around. More people working and more products being sold will generate more tax revenue and fewer unemployment benefits being paid. Taxing millionaires so that they share the same tax burden as the rest of us will help. These things won't solve the problem themselves, but they will help. Containing medical expenses is crucial, and continuing in anything like the way we were before "Obamacare" will be ruinous. In the long run, our only hope is a single-payer plan. We will eventually have it since there really is no alternative; whether we get to it soon enough to avoid disaster is the question. Nevertheless, all the other industrialized countries pay less for their healthcare and have healthier (and happier) citizens; we must learn from them, not sneer at them.

So tonight, I am proposing that starting this year, we freeze annual domestic spending for the next five years. This would reduce the deficit by more than $400 billion over the next decade, and will bring discretionary spending to the lowest share of our economy since Dwight Eisenhower was president.

This freeze will require painful cuts. Already, we have frozen the salaries of hardworking federal employees for the next two years. I’ve proposed cuts to things I care deeply about, like community action programs. The Secretary of Defense has also agreed to cut tens of billions of dollars in spending that he and his generals believe our military can do without.

Could we have some explanation of why cutting the incomes of federal employees is a fair idea? Sure we can do it, but that doesn't mean it's right to do it. As long as there's one highly profitable industry that gets a tax break, or one wealthy citizen who is not shouldering a fair tax burden, why should we cut the salary of a worker simply because that person is a federal employee? Doing this sends the message that somehow working for our -- our! -- government is not quite valuable. This is part of the Republican propaganda position that "government is the problem." Government is the problem mostly for people who want to cheat or endanger the rest of us. Government was not the problem when we fought WWII or protected our elderly with Social Security and Medicare. Government was not a problem when we abolished child labor and sweatshops or when we cleaned up our air, rivers, lakes and harbors. Working for our government and being paid a decent and fair wage for doing so is a very honorable thing for an American to do. Why should we be freezing government wages simply because we can?

I recognize that some in this Chamber have already proposed deeper cuts, and I’m willing to eliminate whatever we can honestly afford to do without. But let’s make sure that we’re not doing it on the backs of our most vulnerable citizens. And let’s make sure what we’re cutting is really excess weight. Cutting the deficit by gutting our investments in innovation and education is like lightening an overloaded airplane by removing its engine. It may feel like you’re flying high at first, but it won’t take long before you’ll feel the impact.

Now, most of the cuts and savings I’ve proposed only address annual domestic spending, which represents a little more than 12% of our budget. To make further progress, we have to stop pretending that cutting this kind of spending alone will be enough. It won’t.

The bipartisan Fiscal Commission I created last year made this crystal clear. I don’t agree with all their proposals, but they made important progress. And their conclusion is that the only way to tackle our deficit is to cut excessive spending wherever we find it – in domestic spending, defense spending, health care spending, and spending through tax breaks and loopholes.

This means further reducing health care costs, including programs like Medicare and Medicaid, which are the single biggest contributor to our long-term deficit. Health insurance reform will slow these rising costs, which is part of why nonpartisan economists have said that repealing the health care law would add a quarter of a trillion dollars to our deficit. Still, I’m willing to look at other ideas to bring down costs, including one that Republicans suggested last year: medical malpractice reform to rein in frivolous lawsuits.

To put us on solid ground, we should also find a bipartisan solution to strengthen Social Security for future generations. And we must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans’ guaranteed retirement income to the whims of the stock market.

Fixing Social Security is a trivial problem to solve: we've worked on it since Reagan was president: raise or eliminate the upper cut-off on income so that everyone including rich folks pay the FICA tax on their entire income. (Now, only poor and middle class people pay their share.)

And if we truly care about our deficit, we simply cannot afford a permanent extension of the tax cuts for the wealthiest 2% of Americans. Before we take money away from our schools, or scholarships away from our students, we should ask millionaires to give up their tax break.

It’s not a matter of punishing their success. It’s about promoting America’s success.

Let's remember that when we do this we are not increasing their taxes but simply restoring them to the level that they were under Ronald Reagan. With those taxes the millionaires were happy to invest and grow very much richer under Clinton. They didn't need the extra tax breaks that Bush gave them, and we should restore things to they way they were.

In fact, the best thing we could do on taxes for all Americans is to simplify the individual tax code. This will be a tough job, but members of both parties have expressed interest in doing this, and I am prepared to join them.

A lot of this talk about the complicated tax code is humbug, although many people feel uncomfortable with filling out the IRS forms. Politicians try to pander by demonizing the IRS, even though most folks have a pretty straightforward filing. A lot of the tax code is written to promote fairness -- e.g. various deductions for medical, mortgage and childcare expenses. If you benefit from these deductions, you certainly can't complain about the time you spend claiming them. Similarly, businesses are allowed to take all sorts of deductions which save them money; they likewise can't complain. If you want a very simple tax form and simple laws, then you have to agree to forgo specialized breaks to which you are now entitled.

Preventing big business and the wealthy from getting unfair or undeserved tax breaks is not the same as "simplifying the tax code," and it is dangerous to confuse the two.

Of course it is outrageous that lobbyists for the investment industry have convinced lawmakers that some ways of making money are more "valuable" than others and need to be encouraged by tax breaks -- sort of "social engineering via tax policy". The example that is most egregious is the capital gains tax, which enables quite a few people to pay a low tax rate (15%) on some or all of their income simply because it is from investments. Firefighters, police, teachers, Warren Buffet's secretary, and even members of the military are apparently not as valuable as those who make money by having money. This arrogant claim is finally being aired publicly, and it is safe to say that most people -- even some investors -- are unhappy with this policy. Furthermore, as Warren Buffet has pointed out, it is unnecessary to encourage investment since people do it because they like to or are good at it -- after all, people don't become musicians or physicists because they get tax breaks.

.... (Some bombast eliminated)

Now, we have made great strides over the last two years in using technology and getting rid of waste. Veterans can now download their electronic medical records with a click of the mouse. We’re selling acres of federal office space that hasn’t been used in years, and we will cut through red tape to get rid of more. But we need to think bigger. In the coming months, my administration will develop a proposal to merge, consolidate, and reorganize the federal government in a way that best serves the goal of a more competitive America. I will submit that proposal to Congress for a vote – and we will push to get it passed.

.... (Some more bombast-trimming here.)

Look to Iraq, where nearly 100,000 of our brave men and women have left with their heads held high; where American combat patrols have ended; violence has come down; and a new government has been formed. This year, our civilians will forge a lasting partnership with the Iraqi people, while we finish the job of bringing our troops out of Iraq. America’s commitment has been kept; the Iraq War is coming to an end.

The timetable for leaving Iraq was, in fact, negotiated by then-president George Bush. It's nice that we are being congratulated for getting out of a war we never should have entered. Let's not forget that millions of people in the U.S. and millions more abroad, protested vigorously when it became clear that Bush intended to invade Iraq. It is even likely that a majority of Americans actually opposed our intervention. It was only after some American troops were killed that the usual jingoism of supporting our troops and high-held-heads took over and lead to the deaths of thousand more.

Of course, as we speak, al Qaeda and their affiliates continue to plan attacks against us. Thanks to our intelligence and law enforcement professionals, we are disrupting plots and securing our cities and skies. And as extremists try to inspire acts of violence within our borders, we are responding with the strength of our communities, with respect for the rule of law, and with the conviction that American Muslims are a part of our American family.

We have also taken the fight to al Qaeda and their allies abroad. In Afghanistan, our troops have taken Taliban strongholds and trained Afghan Security Forces. Our purpose is clear – by preventing the Taliban from reestablishing a stranglehold over the Afghan people, we will deny al Qaeda the safe-haven that served as a launching pad for 9/11.

Let's hope so, but it is unlikely.

(... more stuff deleted here)

In Pakistan, al Qaeda’s leadership is under more pressure than at any point since 2001. Their leaders and operatives are being removed from the battlefield. Their safe-havens are shrinking. And we have sent a message from the Afghan border to the Arabian Peninsula to all parts of the globe: we will not relent, we will not waver, and we will defeat you.

It is interesting the different ways Pakistan and Iran are referred to. Pakistan has nuclear weapons and has certainly been guilty of all sorts of coddling of both Al Qaeda and the Taliban. Yet this seems to produce nothing close to the bipartisan sabre-rattling that is directed against Iran (see below). Wouldn't it be wonderful if some intrepid reporter actually asked Obama and others why this is so -- and waited and followed up until there was an actual answer?

American leadership can also be seen in the effort to secure the worst weapons of war. Because Republicans and Democrats approved the New START Treaty, far fewer nuclear weapons and launchers will be deployed. Because we rallied the world, nuclear materials are being locked down on every continent so they never fall into the hands of terrorists.

Because of a diplomatic effort to insist that Iran meet its obligations, the Iranian government now faces tougher and tighter sanctions than ever before. And on the Korean peninsula, we stand with our ally South Korea, and insist that North Korea keeps its commitment to abandon nuclear weapons.

This is just a part of how we are shaping a world that favors peace and prosperity. With our European allies, we revitalized NATO, and increased our cooperation on everything from counter-terrorism to missile defense. We have reset our relationship with Russia, strengthened Asian alliances, and built new partnerships with nations like India. This March, I will travel to Brazil, Chile, and El Salvador to forge new alliances for progress in the Americas. Around the globe, we are standing with those who take responsibility – helping farmers grow more food; supporting doctors who care for the sick; and combating the corruption that can rot a society and rob people of opportunity.

Of course the Republican candidates in Florida are screaming about Cuba and Castro and Venezuela and Chavez; Obama chooses not to mention them here. His actual policy has been one of admirable restraint.

Recent events have shown us that what sets us apart must not just be our power – it must be the purpose behind it. In South Sudan – with our assistance – the people were finally able to vote for independence after years of war. Thousands lined up before dawn. People danced in the streets. One man who lost four of his brothers at war summed up the scene around him: “This was a battlefield for most of my life. Now we want to be free.”

We saw that same desire to be free in Tunisia, where the will of the people proved more powerful than the writ of a dictator. And tonight, let us be clear: the United States of America stands with the people of Tunisia, and supports the democratic aspirations of all people.

We must never forget that the things we’ve struggled for, and fought for, live in the hearts of people everywhere. And we must always remember that the Americans who have borne the greatest burden in this struggle are the men and women who serve our country.

The speech ends with the usual which you can read for yourself. As a State-of-the-Union address it wasn't bad. The economic news is largely mediocre so is largely omitted. In comparison with the idiocy of the Republican "debates" (which have largely not been debates about issues but about who is less like the fictional European-Socialist-who-hates-all-we-value-about-America and is also not white like the candidates) it is full of optimism, good will, and good sense. Roughly speaking, there is more of these qualities in Obama's little finger than in the entire B-Team of Republican contenders for his job.

Fidel evaluates the Republican Team B

2012-01-26T10:14:00.000-08:00

He may be an old authoritarian figure, but he knows baseball and he knows a Team B when he sees one. Here's Fidel's take on the Republican candidates:

"The selection of a Republican candidate for the presidency of this globalized and expansive empire is – and I mean this seriously – the greatest competition of idiocy and ignorance that has ever been."

This may be slightly hyperbolic, since I doubt that either he or any of us know all the competitions of idiocy and ignorance that have "ever been", but it is substantially correct. The so-called "debates" have drawn out the incompetence, cruelty and logical fuzziness of these tenth-raters and their dim followers. It's all name-calling and tossing out rotten scraps of red meat to an audience of superficial morons.

That's why it's harder and harder to write blogs about them. It's Team B of a party that has no Team A.

(In case you think this is hyperbole, read or listen to what they had to say in the last Florida "debate" about the "Dream Act" or about making war on Iran . These guys are heartless and dangerous.)

Annotated State of the Union Address: Part I

2012-01-25T19:24:00.000-08:00

I have gone through the State of the Union Address (in italics below) delivered by President Obama and interspersed comments (in blue below). I have deleted some puffery and yadda-yadda-yadda where it seemed appropriate (e.g. how much we will miss Gabby Giffords); put "...." to indicate this. The full text can be found here.

....

At stake right now is not who wins the next election – after all, we just had an election.

Well, this is disingenuous since how we proceed will depend to a great deal on who "wins" the election. Surely if John McCain had won the last election things would be a lot different now in terms of health care and consumer financial protection to name just a few things. What we all should have learned by now is exactly the point that winning or losing election has consequences. Had Gore won in 2000 (or Kerry in 2004) we would have had a different Supreme Court and almost undoubtedly had a very different political campaign since the ridiculous "Citizens United" decision based on "corporations are people" would not have happened. We simply can't afford to have the right wing win elections: IT REALLY MATTERS.

We did that in December. Thanks to the tax cuts we passed, Americans’ paychecks are a little bigger today. Every business can write off the full cost of the new investments they make this year. These steps, taken by Democrats and Republicans, will grow the economy and add to the more than one million private sector jobs created last year.

But we have more work to do. The steps we’ve taken over the last two years may have broken the back of this recession – but to win the future, we’ll need to take on challenges that have been decades in the making.

It's difficult to say that the various investment tax credits and the cut in the FICA tax did much good. There is a huge amount of money that businesses and banks are sitting on, waiting for consumer demand to make investment worthwhile. I think there was a real danger in cutting the FICA tax, and it would have made more sense to accompany that with a raising of the income ceiling of this tax. However, Obama did what he could, so we'll just have to hope that recovery proceeds as quickly as possible. Only Republican ideologues think that taxes and regulations have anything to do with the anemic nature of the recovery: most business say that it's the lack of consumer demand, and most consumers say that job uncertainty and income stagnation leads to their lack of confidence.

Many people watching tonight can probably remember a time when finding a good job meant showing up at a nearby factory or a business downtown. You didn’t always need a degree, and your competition was pretty much limited to your neighbors. If you worked hard, chances are you’d have a job for life, with a decent paycheck, good benefits, and the occasional promotion. Maybe you’d even have the pride of seeing your kids work at the same company.

That world has changed. And for many, the change has been painful. I’ve seen it in the shuttered windows of once booming factories, and the vacant storefronts of once busy Main Streets. I’ve heard it in the frustrations of Americans who’ve seen their paychecks dwindle or their jobs disappear – proud men and women who feel like the rules have been changed in the middle of the game.

They’re right. The rules have changed. In a single generation, revolutions in technology have transformed the way we live, work and do business. Steel mills that once needed 1,000 workers can now do the same work with 100. Today, just about any company can set up shop, hire workers, and sell their products wherever there’s an internet connection.

Meanwhile, nations like China and India realized that with some changes of their own, they could compete in this new world. And so they started educating their children earlier and longer, with greater emphasis on math and science. They’re investing in research and new technologies. Just recently, China became home to the world’s largest private solar research facility, and the world’s fastest computer.

True, but not completely. In search of bigger profits, businesses abandoned American workers and moved a lot of their operations overseas where there were fewer regulations protecting workers and the environment. In many cases they were able to do this while paying lower taxes in other countries and without penalties from the IRS. There are still many unemployed American workers who are quite well-educated and able to perform the jobs that need to be done -- they just aren't cheap labor.

So yes, the world has changed. The competition for jobs is real. But this shouldn’t discourage us. It should challenge us. Remember – for all the hits we’ve taken these last few years, for all the naysayers predicting our decline, America still has the largest, most prosperous economy in the world. No workers are more productive than ours. No country has more successful companies, or grants more patents to inventors and entrepreneurs. We are home to the world’s best colleges and universities, where more students come to study than any other place on Earth.

While it is very true that we must make our education more rigorous, and students must work harder to master the more difficult subjects that are important in the modern, highly technical world, it is important to recognize as well that one of the reasons we have been so successful is that we have had for over a century an effective and relatively democratic education system. I say "relatively" because we had a very long period of segregation, and even now there remain great disparities; yet, in comparison with the class divisions of Europe that existed until fairly recently, our educational system provided a pretty good opportunity for people of talent to learn skills that enabled them to rise in society. Unfortunately, recent cutbacks in education have hit schools very hard, and the cost of college has risen far faster than middle-class incomes. Republican tax and social policies are making this worse -- cutting Pell grants, for example. A country's intellectual resources, in theory, are proportional to the size of its population -- provided there is equal access to education. Once vouchers that don't pay the costs of instruction and cuts in support for college and university education become the norm, our intellectual resources will be too largely concentrated in the hands of the wealthy and the legacies.

What’s more, we are the first nation to be founded for the sake of an idea – the idea that each of us deserves the chance to shape our own destiny. That is why centuries of pioneers and immigrants have risked everything to come here. It’s why our students don’t just memorize equations, but answer questions like “What do you think of that idea? What would you change about the world? What do you want to be when you grow up?”
........
The first step in winning the future is encouraging American innovation.

None of us can predict with certainty what the next big industry will be, or where the new jobs will come from. Thirty years ago, we couldn’t know that something called the Internet would lead to an economic revolution. What we can do – what America does better than anyone – is spark the creativity and imagination of our people. We are the nation that put cars in driveways and computers in offices; the nation of Edison and the Wright brothers; of Google and Facebook. In America, innovation doesn’t just change our lives. It’s how we make a living.

It is worth remembering that one of the major contributions of American industry was Henry Ford's realization that he couldn't sell cars unless people could afford to buy them. This meant not just making them cheaply, but also paying his workers a decent wage. Up until recently that was a vital part of the American way, but the incomes of working people hit a plateau decades ago and have remained stagnant, while other expenses (energy, education etc.) have gone up. The ratio of income between the wealthy, owning classes and the working classes has soared in recent years; it is higher than in any other major industrialized country.

Our free enterprise system is what drives innovation. But because it’s not always profitable for companies to invest in basic research, throughout history our government has provided cutting-edge scientists and inventors with the support that they need. That’s what planted the seeds for the Internet. That’s what helped make possible things like computer chips and GPS.

Just think of all the good jobs – from manufacturing to retail – that have come from those breakthroughs.

Not just techy stuff though. Don't forget that taxes pay for infrastructure without which making money would be impossible. This includes building and maintaining the highway system, paying police, firefighters and medical personel, and maintaining public elementary and secondary schools. (This is an important point made recently by Elizabeth Warren in cautioning us not to over-credit the wealthy for their success and their contributions.)

Half a century ago, when the Soviets beat us into space with the launch of a satellite called Sputnik¸ we had no idea how we’d beat them to the moon. The science wasn’t there yet. NASA didn’t even exist. But after investing in better research and education, we didn’t just surpass the Soviets; we unleashed a wave of innovation that created new industries and millions of new jobs.

This is our generation’s Sputnik moment. Two years ago, I said that we needed to reach a level of research and development we haven’t seen since the height of the Space Race. In a few weeks, I will be sending a budget to Congress that helps us meet that goal. We’ll invest in biomedical research, information technology, and especially clean energy technology – an investment that will strengthen our security, protect our planet, and create countless new jobs for our people.

And it's important to point out that this is a very good time to make these investments, when interest rates are historically low, and when the whole country will reap their benefits.
......
At the California Institute of Technology, they’re developing a way to turn sunlight and water into fuel for our cars. At Oak Ridge National Laboratory, they’re using supercomputers to get a lot more power out of our nuclear facilities. With more research and incentives, we can break our dependence on oil with biofuels, and become the first country to have 1 million electric vehicles on the road by 2015.

We need to get behind this innovation. And to help pay for it, I’m asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies. I don’t know if you’ve noticed, but they’re doing just fine on their own. So instead of subsidizing yesterday’s energy, let’s invest in tomorrow’s.

Now, clean energy breakthroughs will only translate into clean energy jobs if businesses know there will be a market for what they’re selling. So tonight, I challenge you to join me in setting a new goal: by 2035, 80% of America’s electricity will come from clean energy sources. Some folks want wind and solar. Others want nuclear, clean coal, and natural gas. To meet this goal, we will need them all – and I urge Democrats and Republicans to work together to make it happen.

At least two of these, nuclear and coal are highly problematic. No one knows what to do with nuclear waste: everyone knows it's unsafe and no one wants it in their "backyard." Clean coal is so difficult and expensive to create that it is virtually and contradiction in terms. In fact, if one includes the costs of safe and ecologically sound production, as well as the cleanup of residues and waste products on the earth, and in the water and air, wind and solar are quite competitive already with oil and perhaps with gas (the safety of "fracking" is not yet determined). Some environmentalists also have to lighten up on hydroelectric, which is clean and already more that competitive with fossil fuels; geothermal and tidal are already factors in some areas.

Maintaining our leadership in research and technology is crucial to America’s success. But if we want to win the future – if we want innovation to produce jobs in America and not overseas – then we also have to win the race to educate our kids.

Think about it. Over the next ten years, nearly half of all new jobs will require education that goes beyond a high school degree. And yet, as many as a quarter of our students aren’t even finishing high school. The quality of our math and science education lags behind many other nations. America has fallen to 9th in the proportion of young people with a college degree. And so the question is whether all of us – as citizens, and as parents – are willing to do what’s necessary to give every child a chance to succeed.

That responsibility begins not in our classrooms, but in our homes and communities. It’s family that first instills the love of learning in a child. Only parents can make sure the TV is turned off and homework gets done. We need to teach our kids that it’s not just the winner of the Super Bowl who deserves to be celebrated, but the winner of the science fair; that success is not a function of fame or PR, but of hard work and discipline.

... Stuff on Race to the Top omitted.

You see, we know what’s possible for our children when reform isn’t just a top-down mandate, but the work of local teachers and principals; school boards and communities.
.....
Let’s also remember that after parents, the biggest impact on a child’s success comes from the man or woman at the front of the classroom. In South Korea, teachers are known as “nation builders.” Here in America, it’s time we treated the people who educate our children with the same level of respect. We want to reward good teachers and stop making excuses for bad ones. And over the next ten years, with so many Baby Boomers retiring from our classrooms, we want to prepare 100,000 new teachers in the fields of science, technology, engineering, and math.

In fact, to every young person listening tonight who’s contemplating their career choice: If you want to make a difference in the life of our nation; if you want to make a difference in the life of a child – become a teacher. Your country needs you.

Exactly one party is blaming our problems on teachers, calling them overpaid and underqualified. This is mostly because most teachers are unionized, and only one party wants to smash unions and set back the labor movement a century. It's the same party whose presidential candidates mock child-labor laws and union wages and contracts. It's the same party that thinks that worker safety and its federal enforcer OSHA are legitimate subjects of ridicule.

Of course, the education race doesn’t end with a high school diploma. To compete, higher education must be within reach of every American. That’s why we’ve ended the unwarranted taxpayer subsidies that went to banks, and used the savings to make college affordable for millions of students. And this year, I ask Congress to go further, and make permanent our tuition tax credit – worth $10,000 for four years of college.

Because people need to be able to train for new jobs and careers in today’s fast-changing economy, we are also revitalizing America’s community colleges.
....
If we take these steps – if we raise expectations for every child, and give them the best possible chance at an education, from the day they’re born until the last job they take – we will reach the goal I set two years ago: by the end of the decade, America will once again have the highest proportion of college graduates in the world.

One last point about education. Today, there are hundreds of thousands of students excelling in our schools who are not American citizens. Some are the children of undocumented workers, who had nothing to do with the actions of their parents. They grew up as Americans and pledge allegiance to our flag, and yet live every day with the threat of deportation. Others come here from abroad to study in our colleges and universities. But as soon as they obtain advanced degrees, we send them back home to compete against us. It makes no sense.

Now, I strongly believe that we should take on, once and for all, the issue of illegal immigration. I am prepared to work with Republicans and Democrats to protect our borders, enforce our laws and address the millions of undocumented workers who are now living in the shadows. I know that debate will be difficult and take time. But tonight, let’s agree to make that effort. And let’s stop expelling talented, responsible young people who can staff our research labs, start new businesses, and further enrich this nation.

In the Republican "debates", several of the candidates -- Romney among them -- when asked to discuss the "Dream Act", kept yacking about people who came here to work illegally and how unfair it is when others came legally. The so-called moderators refused to point out that the proposal was all about little kids who were brought here illegally and who had no idea what was happening to them. It seems typical of what passes for (some) Christians these days to want to punish them for acts committed by parents or relatives. The questioners should have said: "What do you do to a person who was brought here as a little kid, grew up and was educated here, and is now in HS or college and is doing well? Throw him/her out -- perhaps back to a country they never really knew, and whose language they may not speak?" For this lack of compassion alone Mitt Romney shouldn't be elected dog catcher. For Gingrich's recent comments on Romney's position, see this article. Gingrich's history shows him to be, in general, a rather vile person, but in this particular case his position is more humane than Romney's -- though that's not saying much.

The third step in winning the future is rebuilding America. To attract new businesses to our shores, we need the fastest, most reliable ways to move people, goods, and information – from high-speed rail to high-speed internet.

Our infrastructure used to be the best – but our lead has slipped. South Korean homes now have greater internet access than we do. Countries in Europe and Russia invest more in their roads and railways than we do. China is building faster trains and newer airports. Meanwhile, when our own engineers graded our nation’s infrastructure, they gave us a “D.”

We have to do better. America is the nation that built the transcontinental railroad, brought electricity to rural communities, and constructed the interstate highway system. The jobs created by these projects didn’t just come from laying down tracks or pavement. They came from businesses that opened near a town’s new train station or the new off-ramp.

Over the last two years, we have begun rebuilding for the 21st century, a project that has meant thousands of good jobs for the hard-hit construction industry. Tonight, I’m proposing that we redouble these efforts.

We will put more Americans to work repairing crumbling roads and bridges. We will make sure this is fully paid for, attract private investment, and pick projects based on what’s best for the economy, not politicians.

Within 25 years, our goal is to give 80% of Americans access to high-speed rail, which could allow you go places in half the time it takes to travel by car. For some trips, it will be faster than flying – without the pat-down. As we speak, routes in California and the Midwest are already underway.

Within the next five years, we will make it possible for business to deploy the next generation of high-speed wireless coverage to 98% of all Americans. This isn’t just about a faster internet and fewer dropped calls. It’s about connecting every part of America to the digital age. It’s about a rural community in Iowa or Alabama where farmers and small business owners will be able to sell their products all over the world. It’s about a firefighter who can download the design of a burning building onto a handheld device; a student who can take classes with a digital textbook; or a patient who can have face-to-face video chats with her doctor.

All these investments – in innovation, education, and infrastructure – will make America a better place to do business and create jobs. But to help our companies compete, we also have to knock down barriers that stand in the way of their success.

See the article The Dangerous Notion that Dept Doesn't Matter for a businessman's take on the need for investing in infrastructure. (This was mentioned in a previous blog.)

More about the State of the Union Address later.

Debt matters

2012-01-20T16:47:00.000-08:00

Here's an interesting article by a Wall Street exec who's both a deficit hawk and an advocate of immediate investment of federal dollars in American infrastructure:

The Dangerous Notion that Debt Doesn't Matter