7-7 Compensation

On July 7, 2005, terrorist bombs ripped through the London transportation system killing 52 people. During the recent anniversary of the attack, there were discussions, aired in the United States, as to whether the victim’s families should receive monetary compensation from the government as a result of their loss. The debate stems from the Victims’ Compensation Fund that was established in the United States after the 9-11 attacks which killed over 3000 in the World Trade Center, Pentagon, and in Pennsylvania. After the fund was created there were a number of voices from the Oklahoma City bombings that were saying that if the 9-11 victims were being compensated, then they too should receive compensation for their loss in 1996, five years earlier.

The clamoring for compensation for the London and Oklahoma City attacks misunderstands the reason for the Victims’ Compensation Fund and why the United States Government paid money to many of those who lost loved ones on September 11, 2001. The basis for the Victims’ Compensation Fund does not exist for the other two attacks, and the respective governments should not provide the families compensation.

September 11 was largely a result of airlines being negligent in the safety features placed in their airplanes. The airlines had a major hand in the security screening that passengers underwent prior to boarding the airplanes and were solely responsible for the specifications of the airplanes themselves. As a result of United’s and American’s negligent actions, the planes were susceptible to being taken over by hijackers.

For instance, the security screeners were forced to be sure people moved quickly through the security line, so the airplanes were not delayed as a result of security procedures. This allowed for people to go through a security line with a number of dangerous items, including straight razors. At the time, it is unlikely that even if security guards were more diligent in the screening process, they would not have confiscated box cutters since no one would have seen them as a threat to the safety of the passengers or airplane. What was a greater looming threat that the airlines knew about and were responsible for not correcting was the lack of security for the cockpit. Flimsy doors with inadequate locks separated the cockpit from the passenger compartment. Pilots had complained a number of times long before September 11 that dunks were known to have breached the door and gotten access to the cockpit placing the airplane in danger since the pilots were required to address a drunk in the cockpit opposed to flying the airplane. Despite the complaints, the airlines chose to be cheap and not put in reinforced doors and secure locks to protect the pilots from drunks to terrorists. This negligent act of failing to secure the cockpit resulted in the terrorists being able to get into the cockpit and taking charge of the airplane.

After the attacks, it was apparent that the airlines were negligent in their actions and faced lawsuits from all of the people who were onboard the four airplanes and those who were killed in the four crashes. This exposed two major airlines to endless lawsuits which likely would result in forcing both of them to go under.

Due to deregulation, the legacy airlines have been disappearing. Many of those that used to exist have been subsumed into other companies resulting in only a handful of companies continuing to operate. A loss of two of those legacy carriers would reduce the competition in the airline sector allowing for the remaining airlines to have a monopoly on the market and anti-competitive advantages over any new airline which may try to fill the void left by the collapse of United and American.

The United States Congress understood the economic calamity that would result in these two airlines folding, so it created a corporate welfare program in the form of a bailout. The United States Government established a policy whereby it would make payments to the victims families based upon an archaic formula devised by a bureaucratic committee, and in exchange for receiving the payment, the victims’ families waived their right to sue the airlines. The waiver provision was the most important part for the Government because it helped protect the legacy carriers.

The possibility of major economic ruin for a large sector of the economy or even the overall United States economy was not present in the Oklahoma City attack and similarly not in the London attacks. No one was suing Ryder truck claiming that it was negligent in renting the truck to Timothy McVeigh. Even if they did, Ryder going out of business as a result would not have major implications on the rental truck industry or the overall US economy. Nor is it likely that the London transit system is going to be put out of business if it gets sued by the 52 victims families.

In the end, the underlying need for a government funded compensation program is not present in the other two incidences to justify a compensation fund being created. Further, what consideration would there be in victims taking the money? Would they waive their right to sue the transit system in London or the Ryder Truck Company in Oklahoma City? Such a waiver is not really necessary in either case, and there is no other incentive to provide such compensation. Moreover, governments do not want to establish a policy whereby they become the de facto insurance policy for terrorist attacks, when in reality, the private sector needs to take steps to protect the people they serve and the private companies need to take out their own insurance policies for such attacks on their businesses.

More of the Same

In May, United States Attorney Chris Christie gave a speech during which he stated that the most controversial aspect of the Patriot Act has never been utilized and citizens should not be fearful of whether their library records are vulnerable to government inspection. The USA Patriot Act allows for the FBI to demand that a public library disclose what patrons have checked out and the library cannot disclose to anyone, including the patron, that the demand has been made. However, what US Attorney Christie did not explain was how it is that if this provision has never been utilized, why is it the FBI has dropped its demand that a Connecticut library produce records regarding computer use by its patrons.

The instant case exposes the flaws in the provision of the USA Patriot Act, which need to be remedied. The FBI demanded that files from a computer be produced as a part of its investigation into alleged terrorist acts. However, after more than a year with the library system refusing to produce the documents, it turns out that the terrorist threat that was being investigated was not a terrorist threat at all. Rather, through other means, the FBI determined that the threat was "not viable."

This determination shows that the FBI does not need to demand these private records from libraries without a warrant if it just uses its other investigative tools and sources to assess the alleged threats. The Patriot Act’s provision which allows for the library records’ warrantless inspect is nothing more than a lazy shortcut that the FBI is trying to use in violation of the privacy rights of the citizens. Considering the majority of the so called leads that the FBI engages in regarding terrorism are false, the FBI’s attempt to use lazy shortcuts for investigation techniques exposes too many people to having their library records inspected needlessly.

The fact that a U.S. Attorney knowingly tells people that we should not be fearful of having our library records inspected pursuant to the library provision of the Patriot Act because this provision has never been utilized is disconcerting. This administration has a habit of lying to the public to serve its political gains, and it loses more credibility each time it is caught in the lies. However, as is typically in any administration, the lower you go on the organizational chart the less likely it is that they will be engaged in the systematic talking points. Despite this, a lowly U.S. Attorney has been schooled in the distortion of the truth process that the White House has engaged in for five years. This not only undermines the credibility of the administration, but also the U.S. Attorney’s office, regardless of who is in office, and law enforcement agencies in general.

These deceptions and lies undermine the veracity of all who have come before and will come afterward, and when tools which may be similar to the library search provision are really necessary and real threats are investigated, no one will allow the inspections because too many times will we have been lied to and deceived by all levels of administrations.

Personal Savings Rate

The United States’ personal savings rate is -1.7%. The numbers are a bit skewed because people at the bottom of the income scale are continuing to save the way they always have; however, the people at the top of the income scale are disproportionately affecting the statistic by spending significantly more than they earn. Even so, there is consensus that we are saving less today than ten or fifteen years ago. But there are some things that likely account for this lack of savings which is not being discussed or acknowledged.

First our entire retirement system has changed. Fifteen years ago, employees were not required to put much money aside to cover their retirement because they were enrolled in defined benefits programs. Now, employees who are not making much more money in inflation adjusted dollars are required to take money out of their budget and put it toward a 401(k). The average savings in 401(k) is about 8%, and if you take the first 8% of a person’s income and put it in unliquidated accounts while other bills like rent and food continue going up in cost, there is less money available to the person to save. It should also be noted that 401(k) savings is not accounted for in the personal savings rate, so this savings is not included in the -1.7%.

The government has created a generation of debt in Generation X and those coming up through the ranks afterward. It used to be that college students were able to rely upon grants and other subsidized money to pay for college tuition. Today, college, the road to the middle-class, has increased substantially in cost, which is in part due to the government’s refusal to provide money to institutions of higher education, and the government has taken away the last bastion of assistance to middle-class students – subsidized student loans. As costs have gone up and the obligation to pay for school has shifted from subsidized funds to personal loans and the personal loans have become more burdensome on the students, when a student graduates, they are saddled with more debt than other generation before it. The average student is graduating with more than $20,000 in debt, although this statistic is likely very low compared to the real debt level students have upon graduation. Being saddled with debt and likely low incomes immediately after college these students have no way to save money for their rainy day fund.

The Baby Boomers are getting squeezed too. Their parents are getting older and there are no safety nets for the aging. Medicare and Medicaid are not sufficient to provide medical coverage for those who need long-term care, so their children are looked to for the funds to cover the costs. At the same time, the Baby Boomers have children in college who are looking for assistance to cover the ever increasing tuition costs. So any disposable income they have is likely going to others to assist them in covering their essential needs. As these resources decrease, the ability to save money goes down.

If having people save money is important to the nation, then the nation needs to reevaluate how people should come up with the cash for the greatest drains on people’s finances. The retirement burden needs to be shifted away from the employee, college tuition needs to be reduced and government assistance needs to be reinstated, and elder care needs to be established. As the GOP starves the beast, they are destroying the minimal safety net that used to exist and the end result is that the economy is precariously teetering because while the people could afford the taxes that established the safety nets and could afford increased taxes to strengthen these safety nets they cannot afford the significantly greater expense of building from scratch the personal safety nets especially while wages stagnate. Without any savings to fall back upon because all their money is going into the building of the safety nets, when (not if) the economy collapses, due to irresponsible economic policies, all of the middle-class will get lost into poverty and there will be no one to assist in the rebuilding of the national economy. In other words, it is in the nations economic interest to rebuild the safety nets and remove these burdens from the middle-class.