14 May 2011

Have you flown recently in a commercial airliner?  If so, who did you see the most in the airport? It was not the passengers on your flight.  It was not the airline ticketing and baggage check personnel.  It was not the vendors and shop keepers who are all over airports these days. It was members of Homeland Security, the smiling TSA (Transportation Security Administration) agents.  They are everywhere.  They check your ID.  They screen your hand bags, and for good measure, they pat you down. To the department’s credit, they are all polite and professional.  They appear to take their jobs seriously.  Their physical appearance is neat and orderly.  They are, in a nut shell, what a government worker should look like. So what is the issue? There are several.  All these people earn salaries and benefits.  This means our ticket fees and taxes are higher. In performing their duties they unnecessarily slow down the process of getting from...

13 May 2011

As frustration builds with many (should I say, most?) voters, the call for a third party gets stronger.  With hypocrisy, corruption, and empty headed thinking abounding with both Republican and Democratic parties, the idea of a third party absent these qualities seems alluring. Is this real or simply a mirage? The odds against a third party winning a US national election are staggering.  Individual State requirements work to restrain any national candidacy.  Given today’s campaign financing expenditures, where would the money come from to support a third party. Some simplistically suggest the individual voter will abandon the major parties and flock to the third party with votes and money.   And, if your name is Bloomberg, why worry. Pundits say that President Obama will spend over $1 billion on his reelection. A third party candidate will be lost at sea. So is that it for third party power? I do not think so.    A third party candida...

08 May 2011

Gasoline prices are rising. There seems to be no end to the almost daily increases. At week end, the average US price of a gallon of regular gasoline was almost $4.00. For many, this is an ugly slap in the face. For others, it is another sign of the vanishing American dream. There are some important lessons, however, wrapped up in this situation. First, most of us do not have a clue how the price of gasoline is established in the first place. We show up at the gas station and there is a price on the machine. Pay it or go without. But, how did it get so high? We are told that the price of gasoline is rising, due to this reason or that. The simplest answer is to look at oil prices. The higher oil prices rise, voila, higher gasoline prices go. While this is basically true there is much more to the story. For example, supply and demand can explain rising oil prices. Oil producing countries deliberately determine how much oil is available. Co...

26 Apr 2011

Traveling in the UK for a few days does not make one an expert.  However, if you are listening, you might hear something vaguely familiar.    Guess what the British media is reporting this week? First, it seems the government has budget difficulties and must reduce its deficit.  Unbelievable!  How could a modern government allow its finances to get so out of balance?  The answer is not clear but the remedy is straight forward. The UK has decided to reduce teachers pensions and require teachers to pay more towards their retirement.  How draconian.  Guess what the teachers are considering? Why yes, they are talking “job action” (more simply a strike). This approach to balancing budget should sound familiar.  Governments may mean well but they routinely miss the important steps.  Just because it is more difficult to increase taxes, the government thinks it can, instead, take away salaries and benefits.  This must be universal government pro...

23 Apr 2011

Just so you know - Jack is reporting from a vacation in Scotland. - SK Things are not always what they appear to be.  Here in Scotland there is scant news of the American crisis around the deficit.  It turns out that the UK has its own budget and debt difficulties.  The one advantage of being in Scotland is to pause and think about the American political crisis without all the Washington or media 7/24 spin. Upon reflection, I had hoped that the Democratic and GOP deficit reduction plans would be much more than what they appear to be.  Silly me. The GOP “Paul Ryan” plan is bold (at least a little bit) but shameful.  It slashes discretionary spending and tackles Medicare/Medicaid.  For no apparently good reason, however, it heaps the costs of tax breaks for the wealthy upon the middle class.  It is doubly shameful because it will drive the middle class and the most vulnerable to skimp on medical care because they might not be able to afford i...

15 Apr 2011

The country is doing battle these days with the twin deficit and debt dragons.  This is a necessary war, not one of choice.  Our country has wandered so far off course that it is hard to understand what possessed our previous leaders to acquiesce.  Do you think they believed there would be a free lunch. In the past, large deficits were associated with great wars and war efforts.  This time there is a war component but by far the largest segment comes from health care costs.  The Defense Department and Department of Homeland Security registers present when it comes to adding to the deficit.  The sleeper, however, is the tax code which allows and enables all sorts of tax evasion (all legal). Any path to correcting this serious deficit problem must involve serious cuts to spending.  Spending reductions, however, are not free either.  Some spending promotes social good.  All spending in some way or other is connected to jobs.  Reductions must be m...

11 Apr 2011

Every night it is an honored practice.  Common Sense finishes its day's work, paddles out, and join the sun as it goes to rest.  This timeless task keeps the sanity of humans in check.  The night follows, common sense rests, and the next day rises with the sun and is prepared to tackle the intractable problems of the day. This is a lonely job.  One never can be sure the sun will rise the next day.  So far, it always has.  Sometimes, however, the sun comes back alone.  Its friend “commonsense” gets lost or is left behind.  I think we are living in a period where common sense is missing. Take the current deficit discussions.  Who do you hear referencing data?  What proposals do Democrats have to eliminate the deficit and reduce the debt?  Why would Republicans propose to cut the deficit by $600 billion a year and simultaneously give millionaires a tax break with lower tax rates?  What would common sense do? Mathematically one can imagine a st...

04 Apr 2011

The Cato Institute is now advertising a “let’s get serious” message aimed towards Congressional efforts to reduce the deficit.  This is commendable.  Cato’s view is that both Republican efforts at $60 billion reductions for 2011 and the Democrat’s at a much lower number are clearly not meaningful and totally insincere. In the ad Cato lists some $1.4 trillion in cuts which would reduce the current $1.6 trillion deficit significantly.  I cannot comment on the practicality or unintended consequences of most of these cuts.  I will comment on two which in turn make me worry about the rest. Cato addresses Social Security and claims a potential $40 billion in yearly savings.  Their approach is to tie future benefit increases to increases in prices, not wages.  They also want to establish a voluntary private investment sector where citizens could voluntarily opt for private (re Wall Street) accounts. This recommendations begs the question for what ...

26 Mar 2011

The imposition of the no-fly zone over Libya harkens memories of the heady days of the great decider.  We must remember while George W. Bush was the face, the real body of his Administration’s policies came from Dick Cheney’s office.  These policies were built upon false assumptions that victory would be easy and a new “America loving” Iraq government would quickly follow.  Eight years later, we know better. We would do well to also remember the complicity of the news media.  The invasion and occupation of Iraq was great news.  Twenty-four hour coverage was assured.  Profits rolled in.  We now also know that what “imbedded” reporters said in their news reports was not all that was going on.  It is not that they concealed, they were just conveniently someplace else. The unrest we are seeing today in many Middle East countries reflects the long term effects of failed economic policies amplified by the apparent borderless reach of social media.  ...

24 Mar 2011

Pelicans have survived a long time.  In some ways they have it pretty good.  They live in warm climates and if they are careful, don’t have much to worry about.  They do, however, have to eat each day.  That means they have to take the time and do the work of fishing.  They must find their lunch.   And for sure, they know there are no free lunches. It is strange how Pelicans can know this fact of life and so many Americans do not.   America is a wealthy country.  Compared with the rest of the world, the average American enjoys a relatively high standard of living.  This is something most of us have always known and take for granted. Yet what’s wrong with this impression? The US has a $1.5 trillion deficit and projects deficits as far a we can see.  Some people do not see a problem and point out that the Treasury has no problem auctioning T-bills at very low interest rates.  What better endorsement is there than for others to buy our debt at...