Friday, June 30, 2006

Fishing on the Spokane River

Fishing on the Spokane River, originally uploaded by drtaxsacto.

The last two days were spent at the Orvis Fishing School in Coeur d'Alene. For thirteen students there were four instructors. We spent a fair amount of time in the classroom learning a lot about fly fishing. But we also spent an equal amount of time practicing technique.

At the end of the second day we spent about three hours on the water in the Spokane river practicing technique. I had several impressions in addition to the fact that it was an interesting couple of days. First, as I think I have commented before - a lot of what you do in fly fishing seems not entirely natural. But the Orvis instructors have a lot of patience. They also had some very good ideas about how to get what at first seems strange to seem logical. And like some of the best guides I have met - they did not have one way to think about a problem but several alternatives that could help me as a student advance. There was a lot of care put into this program and the instructors were well chosen. Second, at the end of the second day my left arm (my casting arm) was tired. There was a lot of practice over the last two days. The second day made me feel pretty lame - a lot of the things I had thought were complete were up for grabs again - unfinished. There is a lot to learn. But time on the water - just like any other sport - seems to help. Third, the course has a couple of manuals which give you a lot of take aways - about knots and bugs and all the other things you need to know to do well in fly fishing. Finally, soemthing bears repeating. There is a lot to learn in this new sport of mine. But while learning you never have to go to ugly places. You also have the chance to meet some pretty interesting people. That sounds like a good deal to me. So was the Orvis school.

Wednesday, June 28, 2006

Why the New York Times is dying

In an editorial today in the NYT there is a valiant attempt to defend the indefensible. They call it "Patriotism and the Press." It attempts to defend the NYT outing of the SWIFT program which used information on financial transfers to limit terrorist transfers of funds. The Times editorial concludes - "The free press has a central place in the Constitution because it can provide information the public needs to make things right again. Even if it runs the risk of being labeled unpatriotic in the process." Indeed, the press should serve the role as a watchdog. But in this case the Times served more like a lapdog to the terorists. The Times editors believe that they are above the national interest. The reporters involved should be prosecuted. Press credentials should be lifted for six months or so. This was a clear effort to undermine the efforts of the government to disrupt terrorists. The Times claims that was not their intent but that is simply BS. They know it, but so do we.

Their role in criticizing the administration is perfectly appropriate but this story and their subsequent defense undermines the national defense.

What is the intent of the Times in making this disclosure? Was it, as they imply - to inform the public? If indeed that was the purpose what is the news value of the story? Any thinking person would assume that the government can and should use every power available to disrupt the efforts of the terrorists. So why do we need to know the details of the program? Who does that benefit? Last time I checked I had not transferred money to a terrorist organization - so this program does not affect me. Indeed, conceivably this program could be used domestically for a number of other purposes - but does anyone with a brain in their head think that would happen?

In reality, the role and goal of the Times on this issue was to cause political damage to an administration that they dislike. There is no other conceivable motive. The Times editors should have the backbone to admit what they tried to do - but of course they wrap themselves in the First Amendment. As we all know - the First Amendment is not absolute.

John Snow, the Treasury Secretary did a wonderful letter on the issue to Bill Keller the managing terrorist editor of the Times. The letter stated the following -

Mr. Bill Keller, Managing Editor
The New York Times
229 West 43rd Street
New York, NY 10036

Dear Mr. Keller:

The New York Times' decision to disclose the Terrorist Finance Tracking Program, a robust and classified effort to map terrorist networks through the use of financial data, was irresponsible and harmful to the security of Americans and freedom-loving people worldwide. In choosing to expose this program, despite repeated pleas from high-level officials on both sides of the aisle, including myself, the Times undermined a highly successful counter-terrorism program and alerted terrorists to the methods and sources used to track their money trails.

Your charge that our efforts to convince The New York Times not to publish were "half-hearted" is incorrect and offensive. Nothing could be further from the truth. Over the past two months, Treasury has engaged in a vigorous dialogue with the Times - from the reporters writing the story to the D.C. Bureau Chief and all the way up to you. It should also be noted that the co-chairmen of the bipartisan 9-11 Commission, Governor Tom Kean and Congressman Lee Hamilton, met in person or placed calls to the very highest levels of the Times urging the paper not to publish the story. Members of Congress, senior U.S. Government officials and well-respected legal authorities from both sides of the aisle also asked the paper not to publish or supported the legality and validity of the program.

Indeed, I invited you to my office for the explicit purpose of talking you out of publishing this story. And there was nothing "half-hearted" about that effort. I told you about the true value of the program in defeating terrorism and sought to impress upon you the harm that would occur from its disclosure. I stressed that the program is grounded on solid legal footing, had many built-in safeguards, and has been extremely valuable in the war against terror. Additionally, Treasury Under Secretary Stuart Levey met with the reporters and your senior editors to answer countless questions, laying out the legal framework and diligently outlining the multiple safeguards and protections that are in place.

You have defended your decision to compromise this program by asserting that "terror financiers know" our methods for tracking their funds and have already moved to other methods to send money. The fact that your editors believe themselves to be qualified to assess how terrorists are moving money betrays a breathtaking arrogance and a deep misunderstanding of this program and how it works. While terrorists are relying more heavily than before on cumbersome methods to move money, such as cash couriers, we have continued to see them using the formal financial system, which has made this particular program incredibly valuable.

Lastly, justifying this disclosure by citing the "public interest" in knowing information about this program means the paper has given itself free license to expose any covert activity that it happens to learn of - even those that are legally grounded, responsibly administered, independently overseen, and highly effective. Indeed, you have done so here.

What you've seemed to overlook is that it is also a matter of public interest that we use all means available - lawfully and responsibly - to help protect the American people from the deadly threats of terrorists. I am deeply disappointed in the New York Times.



John W. Snow, Secretary
U.S. Department of the Treasury

The First Amendment implies two things in relation to the press - first it requires that the press be active in its pursuit of news at the same time it requires the press to think carefully about the impact of their actions. In this case, as in a couple of others, the Times and the LA Times, failed to think carefully about their appropriate role in working within the national interest. No matter of flag wrapping of the First Amendment will eliminate the true damage that the Times and its allies have caused to the efforts to hamstring terrorists.

On Powerline a soldier in Iraq (who incidentially is a Harvard law grad) commented to Keller about how his story affected the soldier's troops. He said,

Dear Messrs. Keller, Lichtblau & Risen:

Congratulations on disclosing our government's highly classified anti-terrorist-financing program (June 23). I apologize for not writing sooner. But I am a lieutenant in the United States Army and I spent the last four days patrolling one of the more dangerous areas in Iraq. (Alas, operational security and common sense prevent me from even revealing this unclassified location in a private medium like email.)

Unfortunately, as I supervised my soldiers late one night, I heard a booming explosion several miles away. I learned a few hours later that a powerful roadside bomb killed one soldier and severely injured another from my 130-man company. I deeply hope that we can find and kill or capture the terrorists responsible for that bomb. But, of course, these terrorists do not spring from the soil like Plato's guardians. No, they require financing to obtain mortars and artillery shells, priming explosives, wiring and circuitry, not to mention for training and payments to locals willing to emplace bombs in exchange for a few months' salary. As your story states, the program was legal, briefed to Congress, supported in the government and financial industry, and very successful.

Not anymore. You may think you have done a public service, but you have gravely endangered the lives of my soldiers and all other soldiers and innocent Iraqis here. Next time I hear that familiar explosion -- or next time I feel it -- I will wonder whether we could have stopped that bomb had you not instructed terrorists how to evade our financial surveillance.

And, by the way, having graduated from Harvard Law and practiced with a federal appellate judge and two Washington law firms before becoming an infantry officer, I am well-versed in the espionage laws relevant to this story and others -- laws you have plainly violated. I hope that my colleagues at the Department of Justice match the courage of my soldiers here and prosecute you and your newspaper to the fullest extent of the law. By the time we return home, maybe you will be in your rightful place: not at the Pulitzer announcements, but behind bars.

Very truly yours,

Tom Cotton
Baghdad, Iraq

What is most troubling about the TImes campaign here is the linkage of the editorial and news sections of the paper. While it is not hard to understand that the Times and other major papers have some story selections based on editorial philosophy a great newspaper tries to separate opinion from reporting. The Times has a strong commitment to bringing down this administration at seemingly any cost and that has blurred their responsibility to separate the functions.

The state of academic research according to Ward Churchill

In the response of Ward Churchill to his dismissal, the soon to be former professor expresses his understanding of how academic research is conducted. It is so bizarre that it needs little additional explanation. But more importantly, it also suggests how shaky the state of some academics is in today's environment of political correctness.

Here is part of what he said - "Instead, they indulged in a repetition of the "Scopes Monkey Trial," presuming to assert the "truth" of the various historical and legal questions involved, in a manner comfortable to themselves and to those they seemingly perceive as comprising the "American mainstream." Such enforcement of orthodoxy was plainly not within the panels legitimate mandate.

Indeed, as regards the allegations of fraud raised by Interim Chancellor DiStefano, whether what I wrote is true or false is irrelevant. The ONLY relevant consideration is whether I had reason to believe it was true.

On this score, I did, and still do, and the panel proved nothing to the contrary. This is amply reflected in the evidence the panel left largely unaddressed in its report. Much the same pertains to my having supposedly "invented" historical incidents, and the alleged implications of my ghostwriting."

So I guess truth in research is limited to what the researcher believes is true. I wonder if Mr. Churchill would be willing to submit to an operation with a doctor trained to that same level of excellence. The only concern I had about the report from the university is why they believed that Churchill's original outrageous statement about the victims of 9/11 is within the bounds of academic freedom.

Tuesday, June 27, 2006

Hitler and a Deadhead?

Is Ann Coulter hot or what? This morning there is a post in which Ms. Coulter opines on the Grateful Dead. Evidently she attended about 67 concerts and the Jerry Garcia memorial. She shows again that she can turn a phrase - she called Deadhead concerts NASCAR for potheads (although she says she never toked up at a concert). She responds to a question - did you ever talk to one of the members of the band - "Oh yes, constantly. None of the band members were present for these conversations, but I talk to them. “Good show! Excellent Olympics opening ceremony, Mickey! Nice uniforms on those Lithuanians. Why don't you ever play “Pride of Cucamonga” in concert? The concert hall would go wild and it would make the cover of the New York Times! Did you guys really used to dose people?” Then she is asked how many other deadheads are conservative (a naive assumption here but the question nonetheless). She responds "Deadheads believe in freedom – not a government telling people how much water they can have in their toilets or where they can smoke or whether they should be allowed to own a gun. (Remember the photos of Jerry testifying before some Congressional committee while chain smoking? Yeah, he'd really bond with Henry Waxman.)"

Yup, Coulter is a marketer first class but also has a lot of intelligent things to say.

Monday, June 26, 2006

Driving Mayor Fargo

On this morning's Eric Hogue show there was a discussion of a story that appeared over the last week in the Bee about Sacramento Mayor Heather Fargo receiving a driving detail. In the last few years the mayor has been increased to a fulltime job and so this latest indignity to the taxpayers is but an extension.

A police official suggested that there might be a threat against the mayor which necessitated having the security/driving detail. In recent years, all levels of the political class have used the risks of terrorism to increase their level of perquisites. This is but another example. In the month of June, Fargo had one scheduled public event. The cost of this service is worth at least a couple of officers time - either fulltime or parttime. The best guess on the dollar value is in the range of $100,000 and that is probably low. The real threat here is the level of gang violence - which over the weekend produced 4 murders in the area. Is there any direct correlation between taking the officers off the law enforcement job and putting them in the driving role?

One caller this morning suggested that it would be more effective to spend the money for the mayor to be trained with a hand gun. I would throw in a defensive driving school. Taken together that might cost a few thousand dollars. Plus, she woud understand what faces the average citizen in the city.

Saturday, June 24, 2006

National Leadership

Investor's Business Daily in an editorial yesterday pointed out a number of quotes from John Kerry including this one from 2003 - "I fear that in the run-up to the 2004 election the administration is considering what is tantamount to a cut-and-run strategy," Kerry told the Council on Foreign Relations. He said it would be "a disaster and a disgraceful betrayal of principle" to allow "a politically expedient withdrawal of American troops."- which does not exactly square with his stance this week on the resolution to pull us out in one year from Iraq. The editorial also highlights his admiration for Jane Fonda at the height of the Vietnam war and his support of the Sandinistas.

Every politician is guilty of some flip flops. Kerry just happens to be a bit more guilty than almost any other politician in America. The conclusion of the editorial just about sums it up "So when Kerry isn't flip-flopping for the sake of politics, he's serving the purposes of our adversaries — from Vietnam to the War on Terror. Whether it's poor judgment, or something more sinister that animates John Kerry, it's remarkable that someone so dangerous could have come so close to occupying the Oval Office."

But there is one other piece of history that does not get covered enough from my perspective. When Kerry came back and worked on Vietnam Veterans Against the War (VVAW) he got a pretty large contingent to come to Washington during the early part of the year - when DC is cold and miserable. This bonus army encamped around the Washington monument and the poor soldiers got mired in the cold and mud. Kerry was their leader and the Washington Post covered him in depth - including a Style section piece on where he was camping at the time (the Watergate). Each morning, after partying with the glitterati of the DC left, he would put on his fatigues and smear on a bit of mud and then go down to spend some time with the suckers who were carrying his message. Some leader, huh?

Thursday, June 22, 2006

Ann Coulter v. Hitler

Recently Ann Coulter - who IMHO is one of the most brilliant marketeers I have ever encountered has gotten a lot of liberals and some conservatives to be twitterpated about her outrageous remarks. So some wag decided to list a bunch of Coulter and Hitler quotes. The quotes are as follows:

"Liberals have a preternatural gift for striking a position on the side of treason...Whenever the nation is under attack, from within or without, liberals side with the enemy."
"We must study this vile liberal technique of emptying garbage pails full of the vilest slanders and defamations from hundreds and hundreds of sources at once, suddenly and as if by magic, on the clean garments of honorable men, if we are fully to appreciate the entire menace represented by these scoundrels of the press."
"Taking these consequences into account, it is no accident that it is always primarily the liberal who tries and succeeds in planting such mortally dangerous modes of thought in our people."
"Liberals are always wrapping their comically irrelevant charges in a haze of lies..."
"Hence it is that at the present time the liberal is the great agitator for the complete destruction of America. Whenever we read of attacks against America taking place in any part of the world the liberal is always the instigator."
"It was a crushing defeat for the liberals, not because liberals were necessarily Communists, though many were, but because they had been morally blind to Communism...Liberal elites defended traitors. In response to the Soviet threat, the Democrats consistently counseled defeat, supplication, and retreat."
"These scum manufacture more than three quarters of the so-called 'public opinion,'...To give an accurate description of this process and depict it in all its falsehood and improbability, one would have to write volumes."
"The immediate consequence of the Bolshevik Revolution in Russia was a wholesale abandonment of morals. Laws against divorce were loosened, promiscuity was encouraged, and marriage was demeaned as a "bourgeois institution." Providing a battle cry for the sexual anarchists, Vladimir Lenin had famously said that the act of sex should "be as simple and unimportant as drinking a glass of water." American liberals have used their hegemonic control of...newspapers to create a charming world in which women apparently cannot bear to keep their shirts on."
"As long as millions of the bourgeoisie still piously worship their liberal democratic press every morning, it very ill becomes these gentlemen to make jokes about the stupidity of the 'comrade' who, in the last analysis, only swallows down the same garbage, though in a different form. In both cases the manufacturer is one and the same liberal."
"The foremost connoisseurs of this truth regarding the possibilities in the use of falsehood and slander have always been the liberals..."
"The truth is another hateful "bourgeois institution."...liberals always seem to be enthusiastically defending liars. Lying is their most cherished human activity."
"Here the liberal's procedure is as follows: He approaches the worker, simulates pity with his fate, or even indignation at his lot of misery and poverty, thus gaining his confidence...With infinite shrewdness he fans the need for social justice, somehow slumbering in every American man, into hatred against those who have been better favored by fortune..."
"Liberals always get a lot of credit for suffering, while never actually being made to suffer."
"It is this press, above all, which wages a positively fanatical and slanderous struggle, tearing down everything which can be regarded as a support of national independence, cultural elevation, and the economic independence of the nation."

I took the test and got 9/14. I am not sure what that means. Obviously, Coulter and Hitler made outrageous statements. But then most anyone in the public light makes sharpened statements and Coulter is an adept self promoter. A good deal of what she says and writes is designed like most any other celebrity to encourage people to buy her product. The Dixie Chicks and Madonna on the left are also guilty of making outrageous statements and I am sure if someone had the energy one could find comparisons to Mao. The difference is, obviously, when the Chicks (whose current tour is bombing) make statements the press applauds them for their insight. When Madonna desecrates religious symbols the press remarks on her "artistic" talent. And when Hitler spoke he followed up with actions. Coulter, at least as far as I can see, is merely a cheeky conservative writer.

All the news that fits (our beliefs) we print

The discovery that Iraq did have some significant quantity of WMDs including quantities of poison gas has not gotten a lot of press. One wonders since the MSM has spent a lot of time saying there were no WMDs why they have not bothered to cover this story. I am not sure how big the find of 500+ WMDs is but it should have been covered. I guess the fair and balanced side of the news is some other definition of fair and balanced.

Part of this is ideological - the news source was a conservative senator (Santorum). But part of it also may be the inherent bureaucracy of government. There is a lot of CYA in the CIA (not my line but a good one).

But this looks like a bigger story than the coverage we have seen so far. Clearly Saddam was an active participant in the terrorist activities around the world. Of course there is a legitimate difference in opinion about what should be done with that information - but we need to have all the facts and for whatever reason this story did not merit enough coverage. Sarin and Mustard gas are not like Nukes but they are WMDs and clearly Saddam's regime was not going to use these for peaceful purposes.

All things to all people and none to any

Yesterday I spoke at a conference of educators about a long range plan developed by the California Community Colleges. I was troubled when I thought about what to say because a) I am skeptical of any long range plan - educators are prone to make these things up, spending a lot of energy in developing them, only to let them have a shelf life of about 30 minutes. and b) because as they developed the plan they almost consistently ignored the contributions of the independent colleges. So as I said to my colleague with the community colleges - "do you want me to be naughty or nice?" I ended up being mostly right. I spoke about a couple of areas - finances (the long term prospects for more money in massive amounts is small), the role of the California Master Plan (the long term statutory demarcation of power in the public segments has served the state well for more than 40 years), and what is lovingly called intersegmentality - that is the mentality to think about how to work together with your other colleagues in education. Clearly the challenges facing the state are huge and no single group of higher education is going to be able to solve the range of issues that need to be dealt with. But in the last several years - the groups(segments) in higher education (UC, CSU, the Community Colleges, and the independents) have shown less of a propensity to work together.

This is especially critical for the community colleges. There are some internal problems - for example the sector has only about 40% of its students pursuing a degree nationally - that leads to a lot of cross purposes which ultimately dissipate resources. But the community colleges presumably need to think more carefully about how they relate to the four year segments. Precious few students in the sector (fewer than 100,000 of 2 million students) transfer to one of the four year segments. There are lots of explanations about why that happens and none of them are especially satisfying. Indeed, a good number of matriculants in the community colleges may not be thinking about getting a BA - but there should be some lines of demarcation that make sense.

A couple of places are thinking creatively about the lines between the community colleges and the four year institutions. For example, Alliant International University has made a determined effort in the last year or more to define programs which would articulate student desires coherently from the two year to the four year program. This would accelerate study from the AA to the BA to the MA. It would make all of the parts of higher education a lot more efficient - and that might actually free up some additional money.

Likewise National University has done some careful thinking about how to assure that students get to the next level - but a lot more among the four year institutions needs to be done. Without it this four year plan will look like all the other shelf place holders and this generations will not be well served. We cannot afford that.

Tuesday, June 20, 2006

Old Time Radio

For the last week I have had a rental car with XM radio. On the drive to Buttonwillow I found that in addition to a pretty good bluegrass channel that they have 24-7 editions of old time radio. The bluegrass channel had a wonderful interview with Rhonda Vincent - who is one of my favorite performers. She played a bunch of stuff off her new album. But as important she did an interview which showed her personality - which seems to be very upbeat. I met her at the California Bluegrass Association annual event last year and she was wonderful when she found that I had one of her songs as my ringtone she thought that was great.

But the radio has also been a revelation. Last night as I was driving back from the ballgame (great until the seventh inning) and not wanting to listen to the recap I heard an edition of something which I think was called "I was a commie for the FBI" - this particular show was done at the height of the McCarthy period. This morning I listened to Frontier Town where the sidekick of the hero was Cherokee O'Bannon who did an amazingly weak imitation of WC Fields - by the time the show aired Fields was dead but he would have had a heck of an intellectual property case if the show had aired in modern times.

Then there is My Best Friend Luigi - a seeming celebration of immigrants. Sure the characters were stereotyped but they evidenced good values.

The last set of shows are the crossovers. Our Miss Brooks is one. My favorite was the Lone Ranger. The radio version did not use Clayton Moore and Jay SIlverheels - who I remember from the TV series. But like many of the other dramas things get complicated and wrapped up in about 30 minutes. When I was young you were either a Hopalong Cassady or a Lone Ranger fan - while I have heard both on XM - I am definately a Lone Ranger fan.

The quality of the shows is variable some lame but some are really excellent. There is a mix of humor and drama. Two things became clear to me on listening to these shows. First, the ability to recreate something in one's mind is powerful with radio. In the California legislative process we have something called a SQUAWK BOX that allows one to listen to a sound version of hearings. I used it for years and actually find the now televised versions of the hearings distracting. My younger colleagues need to see the pictures of what is happening. Second, is the recognition about how long radio lasted as a powerful force in American culture. I tend to think of the decline of radio as equating when we got our first TV set (which was when I was about 6) but radio shows went on for a lot longer than that. Most of the XM programming is from the early fifties (through about 1956) that is much later than most people think radio was a force. Obviously, after that radio had two other periods of resurgence. First, when Rock and Roll became big and second when talk radio began to blossom radio began to surface. These shows give you a good idea of the power of the medium. Since I really remember the dawn of the TV era (I was about five when we got our first TV - the last week has been an interesting digression.

Martin Luther In Riyad

In today's Wall Street Journal Bret Stephens argues that the Islamic world is "inching toward a reformation (Subscription Required). It is an interesting article. He suggests that a decade ago the ferment in this part of the world was at the edges but there is the beginning of a movement in the centers if the Islamic world that is beginning to question the extreme interpretations of the imams and other fanatics. The premier Middle East scholar Bernard Lewis commented (and it is repeated in the article) that muslims often asked "who did this to us?" as a way of responding to the tragic events and circumstances in large parts of the muslim world. Now, according to Stephens, people are beginning to ask "What did we do wrong?"

Part of those questions have come from the increased numbers of random attacks that the fanatics have mounted against those who are not pure enough. At some point one wonders how much people of faith are willing to give up their own beliefs to lunacy. Stephens describes this as an intial step. But it is a hopeful one.

This is the third column this month that Stephens has penned in this general area. Soon after Al-Zarquawi was killed he wrote an interesting piece on what might happen next. He argued there that Al-Zarquawi could well have been a liability to AlQuaeda. Then in early June he wrote a piece on how to deal with the Muslim Brotherhood. In that he wrote about an Egyptian politician who figured out that the "people want services" - that ultimately government must be able to do some things. All three articles are worth reading.

Sunday, June 18, 2006

Unnatural Acts

Buttonwillow Raceway, originally uploaded by drtaxsacto.

Over the weekend I took a try at club racing. Unfortunately, my S-2000 was not available so I had to exist on the kindness of strangers including this 911 and a Shelby Mustang. When you are a rookie you get an instructor to help you go through the course. Many of the things you do on a race course seemed unnatural to me. You go far out on a curve and then turn into it, for example. And the width of how far you go out on the curve is pretty far - at least at first, but when you get up to speed - it begins to feel natural. Depending on the configuration of the curve you do slightly different things.

There was a lot to take in on this - beyond simply when to accelerate and when to brake. So I suspect that to get comfortable you need to have a lot of time on the wheel. In this venue, I got to drive a total of four times - I could have done two more but wanted to do one session where I took pictures. Each session you are on the track for about half an hour. I think my top speed for either day was over 70 miles per hour but not much more.

One other interesting thing - today one of the instructors took me out on the course and showed me how he would drive it. The most natural feeling when you get on this kind of track is to act quickly - but his moves were calculated and actually gradual. There were a range of cars on the track and if you would like to see some of the hotties you can go to my flirkr site. By the way there were a couple of S-2000s on the track. In the race on Saturday - which had a whole lot of Vipers and Beasleys and other things that were pretty hot - the S-2000 came in near the top.

Wednesday, June 14, 2006

Stolen Cars

One insurance site I visit published the vehicle theft rates for the last year. The National Insurance Crime Bureau compiles the list each year and rates the 10 metropolitan areas with the highest level of thefts and the ten types of vehicles with the highest number of thefts. No the 1959 Edsel is not on the list. But surprisingly, this year California had six of the top ten metropolitan areas. Modesto ranks #1, followed by Stockton (3), Visalia (5), Sacramento (7), San Diego (8) and Fresno (9). If you look at the six areas - five are in the Central Valley. That is pretty amazing. San Francisco, Riverside and Bakersfield finished right out of the top ten. And we have 14 of the top 30. The rates are based on thefts per 1000 population.

The bureau suggests that motorists use a layered program for protecting their vehicle which would first alarm the vehicle and then offer an immobilizing device and then a tracking device. Those sound like pretty good ideas to me.

The Absurdities of Life - A continuing series

This afternoon I needed to rent a car to use while my new S-2000 is in the shop. I am going to need the car for a week because some bozo (DEFINITION - BOZONE - a place which is completely devoid of intellectual activity) backed into me in a parking lot and did not bother to leave a note. I had made a reservation this morning but because of a continuing problem with printers in the office, was unable to print the confirmation sheet. So I got to the car rental facility and was told even as a Whoopie Doodle level of customer (I rent from these guys about 50 times a year) there were no cars available. I was about ready to rip the guy's head off when I thought of another strategy. I called my office and asked one of my staff members to get on the company's site and use the "special rate" for a weekly rental. She got on the site and went through the routine. I got a confirmation number and then went back to the counter. I got the car at the rate I had for the original reservation. (Including the $20 thank you coupon as a "loyal customer")

Now, mind you that I am a very loyal customer (three rentals in the last two weeks - not counting this one). It seems to me that if I knew the amount of the rental for the week and even if I did not have my confirmation number they still should have busted their pick to get me a car.

Question - had I accepted the counter agent's assertions I would have left without a car but I would also have left with the clear impression that they did not give a hoot for me as a customer. Something tells me I would rent from them less. That seems like a consideration that someone might want to include in the training of the counter people.

Friday, June 09, 2006

Michael and Emily

Engaged 6.3.06, originally uploaded by drtaxsacto.

On the weekend that our son got married, my daughter's (now) finace asked for her hand. We were pleased. No doubt about it! Our daughter called us last weekend to tell us Mike had actually asked her. (Again pleased).

Mike talked to me about it on the afternoon of Peter's wedding. It was one of those awkward moments in life. I had a pretty good idea what he wanted to talk to me about and yet in my role this was not something I could initiate the conversation on. Like a lot of other things I have seen him do, he thought this one out. Not in the way one would memorize a speech - but with care for the important step that he was taking.

Michael went to USC (a plus), to the film school (a major plus), and he seems to genuinely appreciate Emily's qualities (a bazillion plus). He decided this spring to go to business school at UCLA (remember there are two large research universities in Southern California) (Not a minus - Anderson is an OK place - especially for someone who wants to make a career in the pictures and especially for one who already went to USC). He seems genuinely commited to building a career but as important he is also commited to building a relationship with Emily that will grow over time.

They are a great couple. Over the last year I have had the opportunity, when on business in LA, to have dinners or breakfasts with them. They complement each others' strengths. But they also seem to know how to supplement each other's frailties. And in many cases that is just as important.

To give you an idea about them - or at least Michael. He designed the engagement ring. When I saw the picture, I was amazed at how he caught the essence of my daughter in his design.

Ok, so with all this good news, how come it did not get blogged until now - almost a week later? There are several possible explanations -
1) I was so excited about it that I could not figure out what to write.
2) I was on an airplane (for the whole week)
3) I was stuck in #7 of the 7 deadly sins list
4) The internet was down for positive posts
5) I was so excited about Phil Angelides being nominated for Governor that I could not write about anything non-political or related to baseball.
6) My wife could not show me how to get on the internet until now.
7) I thought Jay Leno had covered it on his show.
8) I was worried that if I posted this photo that all the young men and women in LA who had not met Emily or Michael would be despondent.
9) I actually did post something but there was a harmonic convergence that karmaed this post out until now.
10) I was at a Barbra Streisand rehersal for her 100th final tour which starts this summer.

In reality, none of those is correct. We are very excited about this couple.

As is required in this Motion Picture code of ethics - no animals were harmed in making this announcement. And it has a WVH rating - We're Very Happy.

Headlines and Motives

The death of Abu Musah Zarquawi was covered in all papers in the US. But in the LA Times coverage one wonders what the intent of a story placed in the center of the page was. The story in the right column details the atrocities that Zarquawi was guilty of and his absolute brutality. He was responsible for "hundreds of deaths." He was truly an evil man, blinded by a bizarre interpretation of Islam and of politics. There is little question that he was personally responsible for some of the most horrendous crimes in this conflict. Will this end the conflict? No one has claimed that it will. Obviously any insurgency movement is more than one person.

Mr. Zarquawi was labeled as a "high tech" terrorist. Many of his atrocities were videotaped and put up on the web. Presumably he is not likely to do another video. And if the forces are at all lucky the site where they caught him will yield intelligence that will help to break down the network he built up - things like computers and hard drives are likely to be found and will be valuable for at least a short time.

The story in the center of the page was a bit different. "He was More Symbol Than Sweeping Leader" seems to have been written with a purpose. The opening paragraph states "His somber face, fiery invective and bloody legend helped lure foreign volunteers and case to the insurgency in Iraq" By its very nature an insurgency is less organized than a traditional military. But presumably with the death of this symbol - contributions will be harder to come by, and foreign volunteers may think twice about vactioning in Iraq. The Times story correctly points out that the motives of the insurgents are mixed. Some are there as a "holy" war (Zarquawi) was one of them. Others are Baathists who want to re-establish the dictatorship toppled by US and British troops.

Zarquawi is credited as being a "charasmatic" leader. As Madison correctly pointed out in Federalist #10 - one way to control charasmatic movements is to kill them off. Yesterday's bombing of his "safe' house got rid of one of the leaders of one of the movements that is trying to destabilize the new government. The Bush administration, to its credit, claimed nothing more. But in the continuing effort by some in US journalism, they felt they had to respond to what might have been claimed.

Thursday, June 08, 2006

Taxing Death or Making things Right

The Senate dropped an attempt to eliminate the death tax today. The Congress set this one up when they wrote the Bush tax bill and created a series of time bombs including the one on the inheritance tax which repeals it in one year only to have it reinstated in the next. The first attempt was to waive the sunset - failed but I expect the next step will move toward a solution - not full repeal but substantially moving in that direction.

In the Senate vote today - two GOP members voted against the repeal (Voinovich and increasingly dead meat Lincoln Chaffee). But then so did four democrats who made an explicit promise that they would vote to repeal the tax - they were Mark Pryor, Evan Bayh, Ron Wyden and Mary Landrieu. Hopefully, their constituents will listen to them when they come up for reelection again.

The inheritance tax generates only a little bit of money but a lot of rancor. USC Tax Ace Edward McCaffrey comments that "if breaking up large concentrations of wealth is the intention of the death tax, then it is a miserable failure." But while some of the richest in America support continuing the tax, the American people are against it. The rich can modify their behavior so the death tax does not affect them - they can use foundations and other planning instruments that are simply not available to taxpayers with some accumulated wealth but whose estates come from places like businesses they have built up over their lifetime. Of course the life insurance industry has a strong lobby against repeal. But in today's politics common sense does not appeal to many politicians.

Opponents of modifying the tax argue that it prevents the creation of an aristocracy. But that is not at all what it does. For small family businesses and some other assets like those- it forces families to establish schemes to avoid taxes - either though insurance vehicles or other planning mechanisms. The ceiling needs to be raised and the rates on the overall tax needs to be lowered. Afterall, these assets are already taxed once as income. (or gains or dividends).

There is yet hope that the bill will be amended again and an amendment by Senator Kyl will be adopted - the Kyl amendment would significantly raise the ceiling on the tax and lower the effective rates. While that would not protect the broader principle it would forestall this fight for another decade for the vast majority of taxpayers. That may be about all we can expect from this congress.

Keep Hope Alive - Improbable baseball

Tonight the Sacramento Rivercats defeated the Portland Beavers 12-11. It was an odd game. For the last four home games the Rivercats have not had any zip. But in this one they seemed to have winning on their mind. The game started out OK - we went ahead in the first and then added two in the third. But then Portland added 5 in the fourth, 4 in the sixth, and 1 in the ninth. So we came into the 9th six down. We decided to leave at the top of the ninth- based on their performance in the last four games against Las Vegas we could get home on time and listen to the inevitable.

But the inevitable was not to happen tonight. Ron Flores who came back down from his major stint at Oakland - won the game. And in the 9 th we started to come back. In the game Perry got two home runs and McClain got one too. But the key one was Perry's in the bottom of the ninth. The set up was wonderful. Clark started off with a walk, then Beattie got on - Espy hit and Clark scored. Ginter must have hit a ton of fouls and then got a hit - one more run, Then Kiger got up and added one more. But we still needed three runs to tie. And by that time we were down to our last out. But then Jason Perry got up and after a bit, hit his second homer of the game - with two on. That tied us up.

In the tenth - Flores came in and pitched 2/3 of an inning with two strikeouts. Tony D came out and it looked like he would pull Flores - but he kept him in. Flores faced and then struck out Johnson. We went into the bottom of the tenth and after some prelims we got some guys on base. A balk by the Portland pitcher moved Clark to third and when Scott McClain flied out - it was enough to allow Clark to score.

Baseball is an odd game - by any standard no team comes back from a six run deficit - but they did. What is best about leaving a game like this (if there can be something) is Johnny Doskow - he is the Rivercats' Ace announcer - like Vin Scully he does not get into the game but he gets you into the game - so as we were driving home we heard the last inning and we got into the house in time to listen to the 10th.

This game puts us back up to 1 over .500 - but to get into the playoffs we will have to be a lot better in June, July and August. Tonight gave us some hope. The win gets us to one under at home (14-15). Tomorrow is a double header.

Wednesday, June 07, 2006

Pompous Asses and the UN

In a speech that the Deputy Secretary General gave yesterday - Mark Malloch Brown - was criticized as making harsh comments on the US political system. I can understand the criticism but I wanted to read the actual speech for myself. When one does, the criticism that Brown received in the blogosphere seems justified. Forget the comments about Fox news or the assumption that somehow the media in the US has prevented people in middle America from knowing the truth about the UN. The speech is a good example of what is fundamentally flawed about the UN.

Brown started early in the speech to comment "I am going to give what might be regarded as a rather un-UN speech. Some of the themes -- that the United Nations is misunderstood and does much more than its critics allow -- are probably not surprising. But my underlying message, which is a warning about the serious consequences of a decades-long tendency by US Administrations of both parties to engage only fitfully with the UN, is not one a sitting United Nations official would normally make to an audience like this."

He goes on to argue that our lack of consistent support (certainly he does not mean fiscal support - remember we pay about a quarter of his bloated tax free salary) will ultimately undermine the UN. The UN is ultimately a product of the political environment. Even in its founding years, despite what Brown suggests, it was not without criticism. But in the last decade under Annan's leadership the UN has drifted. Is Brown suggesting that diplomatic rules preclude domestic discussions from raising questions about effectiveness? If the UN wants to use the money that the US political system offers to it, they should be willing to give more than lip service to reforming the institution. But Brown does only the minimum.

Brown toadied for his boss "Today, we are coming to the end of the 10-year term of arguably the UN’s best-ever Secretary-General, Kofi Annan. But some of his very successes -- promoting human rights and a responsibility to protect people from abuse by their own Governments; creating a new status for civil society and business at the UN -- are either not recognized or have come under steady attacks from anti-UN groups." Who actually successfully promoted civil society in nations around the world - the UN or can it be argued that the UN actions in many venues impeded the improvement of civil institutions?

Isn't this the same administration that is tainted and rife with the corruption of the oil for food program? Isn't this the diplomatic organization that had some of the worst abusers of human rights in the leadership of the Committee on Human Rights (I will talk a bit about the proposed reforms in a minute)? Brown continues "Yet for many policymakers and opinion leaders in Washington, let alone the general public, the roles I have described are hardly believed or, where they are, remain discreetly underplayed. To acknowledge an America reliant on international institutions is not perceived to be good politics at home." Of course not, when the UN has consistently shown a lack of even a basic understanding of the principles that helped to create the organization - the role of the Security Council, the need to take action, etc.

The US needs to maintain a delicate balance with international institutions. We need to be willing to work with them - but at the same time, there are times when we should not be restrained from criticizing the institution and likewise from trying to use any reasonable tactic to get the institution to reform or die.

Brown said "However, inevitably a moment of truth is coming. Because even as the world’s challenges are growing, the UN’s ability to respond is being weakened without US leadership." It is also being weakened by Annan's lack of leadership. He then goes on to agree with the critics "More broadly, Americans complain about the UN’s bureaucracy, weak decision-making, the lack of accountable modern management structures and the political divisions of the General Assembly here in New York. And my response is, “guilty on all counts”. - So just how long should the major financial support of this organization that is guilty on all counts continue before we demand changes or pull the plug?

The founding of the UN reflected the world political situation at the time. It balanced the need between a world forum and a place to make the key political decisions of the time (the Security Council) but under Annan's leadership there has been some movement on the human rights absurdities (although Annan's proposals are fundamentally flawed) and almost complete denial of a problem in the administrative roles, costs and accountability of the UN. Brown himself admits that these very real criticisms are correct. But then he blames the situation for the UN on a lack of consistent support from the major financial supporter of the current body. Has he made any credible proposals to clean up the administrative mismanagement of the body? What he referred to as (guilty on all counts) the "UN’s bureaucracy, weak decision-making, the lack of accountable modern management structures"? - of course not. Isn't that something he should be responsible for? Is America supposed to be a black check for bureaucracy, weak decision making and lack of accountable management strucutures?

Brown then uttered the most quoted offending remark " But that is not well known or understood, in part because much of the public discourse that reaches the US heartland has been largely abandoned to its loudest detractors such as Rush Limbaugh and Fox News. That is what I mean by “stealth” diplomacy: the UN’s role is in effect a secret in Middle America even as it is highlighted in the Middle East and other parts of the world." Does he really believe that the news media is so monolithic that the good news about the UN cannot get through to "Middle America" - what a crock. The UN was founded on fine principles - but the current administration has substituted principles for expediency that kowtows to the worst kind of petty dictators while lining the pockets of bureaucrats like Brown. In my opinion, that does not offer much of an opportunity for growth or redirection. If this were a serious speech and not a political screed, he would first have done some basic work on his own house. But I guess I do not get that one because Fox news or Rush Limbaugh limits my vision.

So what did happen in the California primary?

The California election was a lot less exciting than expected. There are a couple of key indicators. First, the anger by the voters at the GOP does not seem to have held up - Pombo won easily. So did Doolittle. That was obviously partially a result of the amount of money sloshing in each of those districts for the incumbents. Second, the low turnout seems to have concentrated both primaries on ideological voters with little regard for electabilty in November and to some extent with the most common names. Democrat voters seem to have gone for common names - Garamendi and Brown for Lt. Gov and AG - neither is a very inspiring choice. The GOP selections - Parrish for treasurer and Strickland for controller - overlooked candidates that would have had a much better chance to be elected in November.

For all the wishful thinking of the dems on the 50th CD (Cunningham's district) Francine Busby did not even beat the Kerry/Gore percentage (45.5%) and Brian Bilbray won pretty easily. If there were going to be a big change in the House that district or the Pombo seat would have been a bit closer. Busby did make a huge error a couple of days before the election when she told a Hispanic group something to the effect of "you don't need papers to participate" - in immigration charged LA - that was just plain dumb. But I think what really happened is that there is a good deal of wishful thinking in the dems claims about taking over the house or senate. In the end this might have been the lowest turnout since the 1920s - and that makes the November election volatile but not one which puts the GOP in special jeopardy.

But the voters did show some grump. They rejected Proposition 82 - which was a terrible piece of initiative writing but they also rejected a pretty simple library construction bond (only 13 counties voted for it and those were by pretty small margins). For 82 only Alameda and Imperial voted for the turkey and again that was by small margins. I guess if you want to find the young socialists groupies in California look to those two counties.

Then there was the race for Governor. Westly won exactly where Schwarzenegger will concentrate in the fall - in the central valley. It was a closely fought race but Westly did not seem, in the end to connect with the voters with a message. When one meets Mr. Westly you are left with the vague impression that you are meeting "McKay the better way" (Robert Redford in the Candidate) and I think the voters saw through that.

One final issue - Measure H - which the Bee opposed vigorously - which will require our local municipal utility to seek voter review before completing a proposed annexation of customers in Yolo County - won by 2:1. I guess the Bee forgot the meaning of a voter owned utility. Evidently the voters did not.

Tuesday, June 06, 2006

Polls and their meaning

The last Field Poll before the primary suggests that we will have a very low turnout today for the California primary. They estimate that less than 35% will show up to vote. One wonders why it will be that high. This season has come to new lows which should depress most voters. The Founder of the Lincoln Club of Fresno County wrote a piece this morning called the "Political Misery Index" That is a good metaphor. If you live in Placer County, John Doolittle offers up a host of reasons not to vote - from his 15% rule (his wife takes 15% of all your contributions as a campaign consultant's fee), to the bizarre defense he has made of his lackluster career in Congress. If you live in Nevada all one needs to look at is Harry Reid. The rest of the country is replete with other indicators of the misery index. But in California, the Field Poll points out that respect for the Legislature is at new lows. The Governor is back up to just over 40%. We have a lefty idealogue named Reiner who has pushed his harebrained ideas about preschool using tax dollars as campaign contributions(increase taxes on the wealthy to force all little nippers to go to one kind of government sponsored preschool) and know that even if Proposition 82 fails (as it should) we are stuck with his prior initiative. If you look at the business of the US Senate for the next couple of weeks - can you believe that the five most important issues the country needs to deal with are the five the leadership has chosen to highlight -regardless of how you feel on any one of them? There are plenty of reasons to be disconsolate. California may not be unique but we certainly have many reasons to be glum.

But I would also contend that some of the misery index is unjustified. The economy has done pretty well in the last 12 months. There are other positive indicators. There are some movements to change the system in a number of ways. From reforming the parties to changing the way we elect people. Some of the ideas are downright looney. As noted in an earlier post, I believe the movement to change the Electoral College by fiat is a bad idea both from a Constitutional perspective and from a policy one. But as one looks at this growing ferment one can have hope. The old media is increasingly being challenged. So are old ways of doing things in politics. At some point, the political class, should begin to recognize what the media are beginning to perceive - the formula approach (whether it is the formula of the left or the right) is not something which inspires confidence.

I am going to vote today - because in a small turnout my vote counts even more. But I also am going to vote because it is an ultimate optimistic expression of what our representative system can become. But after this campaign, that optimistic feeling needs a lot of reinforcement.

Saturday, June 03, 2006

Is Social Security a Fiction?

Beat the Press is an economics blog that attempts to deal with the problem of how badly the subject of economics is dealt with in the press. It often has some interesting commentary altough it also frequently starts with a liberal bias. The moderator of the blog, Dean Baker, who is from the Center for Economic and Policy Research, authored a couple of books including the Conservative Nanny State and Social Security, the Phony Crisis.

Earlier in the week the blog opened a commentary on whether Social Security is a fiction. Baker starts from the position that Social Security is just like any other government program. He opened his comments with the following "Nothing like some comments on the trust fund to get the blogging juices flowing. It is amazing how metaphysical these discussions on the trust fund get. I don’t really see anything very complicated here. I am simply referring to the law as it stands."

This morning Baker made a long commentary responding to most of the commenters who believe Social Security is a fiction. In part he said "First, none of the "fiction" advocates here has explained how the bonds held by the trust fund are different from any other government bonds in that they are only backed by claims on future tax revenues. If this somehow makes them a "fiction," then all government bonds are a fiction. " The concepts here are pretty simple. First, are the bonds that cover the obligations in Social Security different from other government bonds? In a very real sense I think they are. But second, if this is just another government program, why maintain the fiction that this is a "retirement" or "insurance" program when the program fails to follow any reasonable actuarial or fiduciary standards?

There are three kinds of bonds in government finance. The closest analogy for Social Security is either a bond or an insurance program or an annuity. If Social Security is like a bond (a pledged asset in the future) then it must be either asset backed or not. Asset backed bonds are linked to a specific project or tax source. For example, when you build a construction project and borrow the money to do it, you pledge a fixed asset that if the government were to default, could be seized. (Unlikely, but it is possible.) The second are fundamentally borrowing against the good name of the government. When a government slows its payment or defaults there are consequences. In a state government, the credit rating is lowered and the ability to borrow more money is limited. In the federal government, if the government begins to not honor its obligations, the currency is devalued. I would contend that the Social Security Trust Fund is a third type of bonds. Here is where Baker and his types fundamentally misunderstand or mis-state the nature of Social Security. When the program was established it was set up with a specific tax source to create the impression (I would call it a fiction) of a reliable funding source. The sponsors wanted us to believe that it functions like a retirement program or an insurance program - when the thing gets actuarily out of whack it is corrected. Baker makes no difference between Social Security and any other program supported by taxes - but were this true we would not use a separate taxing source to fund the program. Baker would probably be fine with moving this to a general tax revenue based program. There was a reason for creating the program in the way that we did. For other programs created at the same time, with separate revenue streams - things get adjusted when there is an imbalance - but for many of those programs the long tail (how long it takes liabilities to be actualized) is simply not there. For Social Security, as opposed to programs like Unemployment Compensation, one might wait 30-40 years for a claimant to demand money.

When the program was originally established it was called the OASDI - Old Age (Pension), Survivors (Partially Pension) and Disability Insurance (Welfare payment) program. The first two parts had elements of a pension system. The third - less so. But the founders of the program understood the need to link this to a specific set of revenues.

How have the politicians treated the program. For the last several years they have used the "excess" contributions as a check book. Funding which was in excess of current needs was spent in the unified budget to reduce the appearance of a deficit. That compounds a problem. One the one hand the deficit appears lower than it is. On the other we keep building up chits in the retirement accounts which are funded with unbacked bonds. Is there a problem with increasing the deficit? I am sure Baker would argue that there is. But for some reason on this program he seems to think that the issue is neutral.

The way the federal government accounts for some asset based transactions is a subject of debate among some experts in public finance. That is an esoteric argument that adds to the problems described here - but it is a bit off track. But the increasing reliance on debt to finance government activities is a problem. In the case of Social Security there is a double problem because we have made the explicit promise that sometime in the future we will get something back. Baker argues that this is no different than any other program - but that is not correct. If we spend too much on something like environmental protection we can curtail it if the deficit is too large. We could do that here too but not without some substantial political fights. Is not the AARP one of the most virulent defenders of the entitlement mentality of the Social Security program? If the added expectations of this program were not greater than other programs, why would the Social Security Administration send out those annual calculations about how much money each of us has put into the system and how much money we can expect at 65. Do the Treasury notes which finance our other debts make similar claims?

We maintain a fiction that the Social Security program is financed by tax contributions that are somehow dropped into a trust fund for a future draw. That gives the appearance to the program to be a retirement program. But the federal program does not follow the accounting rules of either pensions or insurance. In private companies the accounting rules require an actuarial estimate of the fund and its future draws. If there is not enough money in the fund to pay future draws, then the company's balance sheet gets dinged. Likewise, the pension systems for governmental employees, including the Civil Service Retirement System, are governed by actuarial rules. Assets have to equal future obligations. In the case of Social Security, those rules do not apply. Right now we are exchanging the tax revenues for bonds which are ultimately conditioned on a tax contribution which we can estimate. But the supposed deposits actually go into nothing and the obligations are real - with the continuing expectations created by those little slips sent out by the SSA each year.

There are a couple of alternatives available when we come up to the problem, sometime in the future, when the number of taxpayers putting money into the fund comes a lot closer to the number of people drawing out. First, we could slash benefits for those currently receiving payments. A second alternative, would be to increase fairly substantially the taxes paid by the current payors. That is what we did in 1983. In our current political environment neither of those options is likely to happen.

So you are left with a couple of misimpressions. On the Social Security Administration page - FICA taxes are described thusly "The payroll taxes collected for Social Security are of course taxes, but they can also be described as contributions to the social insurance system that is Social Security. Hence the name "Federal Insurance Contributions Act." The page on the history of social security also comments "Retirement programs for certain groups of State and local government employees—mainly teachers, police officers, and fire fighters—date back to the 19th century." There is a clear implication that Social Security is different from other programs. Indeed, there are multiple motives for the program - that include social welfare programs. But the main emphasis is the look and feel of a retirement program. If Social Security is not bound by insurance standards of actuarial standards then why refer to it as "social insurance?" Does government insurance work differently than other insurance programs? Does one government retirement program operate by entirely different rules than programs like the Railroad Retirement or Civil Service systems? If it goes by different rules yet calls itself the same thing - doesn't that make it a fiction?

Baker and others like him, ultimately would like to move Social Security into a general tax obligation. The FICA tax would be eliminated. But there was a reason why, when the Social Security program was created, we created a separate tax stream for this program. In part that distinction came with the recognition that people above the income ceiling of the tax would realize smaller benefits net than those who paid into the system for all of their income. Those above the ceiling would finance their retirements with private assets and programs. That is less true for Medicare (again a separate tax but again a long term problem where the tax will not cover the costs of the program). Politicians have complicated the distinctions by adding a lot of social welfare payments under the guise of Social Security. As opposed to Baker, I would separate the welfare payments from the rest of the system. One can calculate how much it costs to offer those payments and use a separate tax to fund them. But the real obligations of the system - which are health and retirement payments - should be treated like an insurance or retirement program.

Not doing that makes the program look like a Ponzi scheme. Indeed, if one looks at the payouts of the first 30-40 years of recipients versus the projected payouts of the next 30-40 years, the program looks like a classic Ponzi. The first recipients received huge rewards for their contributions. The current generation will barely be able to generate something close to passbook savings returns. Future generations, without a significant bump in contributions will see some form of either reduced benefits or increased tax contributions or more likely both. Again, that payout scheme, which Baker seems almost oblivious to, is a fiction. Why would any sane person contribute to a retirement system that guaranteed his father significantly higher returns than he would get and guaranteed that his children would potentially get negative returns?

In Alice and Wonderland characters are able to change the definition of things at their whim. That is a classic fiction. If this "social insurance" program is not bound by the standards of any other insurance or retirement program then why continue to refer to it in those terms? One cannot have it both ways.

Just How Dumb Do They Think We Are?

We are into the final days of the primary in California and what we now see is almost a repeat of an old joke. When I first got involved in politics there was a joke that a politician who was running against a female opponent who had done acting in high school once charged "My opponent is a known thespian." The problem is in today's world someone must have taken this as a guidebook. The intensity of attacks at the end of an election cycle are significant and troubling. In the last couple of days the intensity of the mean-spiritedness has multiplied. Then some politician asks "Why is turnout so low?" It does not take even a dim bulb to figure that one out.

The last field poll shows Angelides and Westly in a dead heat in the democrat Governor's primary. It shows Brown handily beating Delgadillo in the democrat AG race. Spier winning against Garamendi in the Lieutenant Governor's race. And Ortiz beating Bowen in the democrat Secretary of State race. Spier is the better choice but the others are ones, were I a democrat, that I would not choose.

In the GOP races - Strickland seems to have it over Maldanado in the controller race and Richman and Parrish are in a dead heat.

In most of the races there is a high component of undecideds - that is except in the Reiner plan to increase income taxes on the wealthiest to pay for mandatory pre-school - that is losing by 5% with only 13% undecided. And the trendline has continued to deteriorate. The voters seem to have gotten that one. One wonders how to fix the problem of the consultant's perception that going negative works.

Friday, June 02, 2006

Sign of the Times

Campaign Signs in Auburn, originally uploaded by drtaxsacto.

As I was coming back from a wonderful day of fishing the lower Truckee river I saw these signs in Auburn. I think Doolittle will win on Tuesday. That does not mean that he should.

Thursday, June 01, 2006


This morning I had to have a blood test as a part of my annual physical. The woman who took the blood was originally from Guanajuato - which is where Vicente Fox is from. I asked her if she was following the election and she said she was. She said she was sorry that the Mexican Constitution has term limits. She thought Fox had done a pretty good job - "not perfect by any means - but he made some real progress." She said "the PRI was in there for a long time and Fox only had six years and most of the people who served in his cabinet were really PRI people - so with all that he did a pretty good job." "He faced some real obstacles from the Congress and even from some of his own ministers - and yet Mexico is better off than it was six years ago."

She was wary of Lopez Obrador and unsure about Calderon. But while she was interested in the politics in Mexico she made an even more important point. "i hope" she said " that the Mexican people realize that their government does not assure their success. The hard work of the people is what does that." Would that more people in the US would understand that simple truth.

A burden in two languages

For the past couple of years I have been learning Spanish - well congratulate me. I am now receiving Spam in two languages. The bank security alerts that have become such a staple of American spam are now coming to me from Mexican banks!

Whoopie Doodle.