Deficit Spending

There is a correlation between the tax rate and the revenue generated. If a tax rate is too high or too low, then the government does not maximize the tax revenue it could achieve. This theory is called the Laffer Curve, which has previously been discussed. The same kind of principal applies to the amount of tax received and the amount of spending in which the government engages.

If the government receives too little revenue, it spends more than it receives. If it receives too much money through tax revenue, then it spends too much. The end result in either case is deficit spending. There is, however, a solution. If the tax rate is too low, as it currently is, the tax rate needs to be increased to prevent overspending. If the tax rate is too high, the tax rate would need to be decreased to prevent overspending. Apparently, the ideal tax rate to prevent deficit spending is 19%.**

The rationale for the required tax rate is that Congress and the public need to feel the pinch of government. If the perceived cost of government is that it is cheap, then overspending results. In more micro terms, if a person has a high credit limit and low monthly payment, then it does not seem to cost a lot to spend a lot so debt is incurred. If the cost of high spending is perceived to be expensive (a higher monthly credit card payment), then it is less likely that a person or Congress will over spend. If the spending curve was graphically superimposed on the Laffer Curve, it would show an increase in spending by .15% for every 1% of tax rate reduction and a decrease in spending of .15% for every 1% of tax increase.

Many said that the balanced budgets during the Clinton Administration were a result of the GOP Congress being so disciplined. Considering the deficit spending that the GOP has engaged in while controlling the Congress and White House, this is obviously not the case. Rather, it was the tax increases that the first Bush and Clinton Administrations imposed that controlled spending. The reason for today's deficit spending is the ill conceived tax cuts that were given to the wealthy in 2001 and 2003 because now the cost of government seems low so it is easy for Congress to continue to spend too much money. Had these cuts not gone into place, the perceived cost of government would have remained high and the spending would have remained under control, and the debt imposed upon the future generations would not have been imposed.

To prevent future generations from being saddled with continued debt, this new Democratic Congress needs to raise taxes to maximize revenue and eliminate deficit spending. Taxes need to be raised and the debts which have accumulated over these past six years need to be paid immediately so that the American Public is not saddled with the significant debt and high tax rates that will be necessary in the future to correct the fiscal mismanagement done by the Bush Administration.

* The diagram is from Wikipedia
** More information on this can be obtained in the June 2006 Atlantic Monthly; however, a subscription to the website is required.

GW's Tax Increase

The deficit spending that the GOP has engaged in over the past six years has direct and immediate impacts on the American population. Everyone is talking about saddling future generations with taxes to pay the debt that has been incurred today, but Americans are having to pay the equivalent of higher taxes today to prevent themselves from being hit with even bigger taxes tomorrow to compensate for the deficit spending.

All financial advisors say that you need to start planning for your retirement as early as possible. The benefit of compound interest and maximizing your contributions to a 401(k) or IRA will assist in ensuring that you will be able to pay for your retirement when that day comes. If you do not start early, the compound interest will not have long enough to provide maximum benefits, and if you do not contribute enough money to the retirement plan, you will not get enough compounding to total the amount necessary for retirement. However, there is another element to this that is not being discussed: tomorrow's tax rate.

Today, you can put your money into a traditional 401(k) or IRA. Either allow you to deduct the contribution from your taxes. Thus, you get the benefit of saving pre-tax dollars and allowing the compounding effect to occur until you withdraw the money. When you withdraw the money after retirement, you will be required to pay tax on all the money withdrawn (contributions and earnings). The theory is that when you are working, you are going to be in a higher tax bracket than when you are retired and have no working income. This may not come true. Due to the deficit spending this administration has embarked on, when today's 30-somethings start retiring, Congress may need to significantly raise the tax rates to pay for the Social Security IOUs that have been accumulating since the Reagan Administration and crescendoing during this Administration as well as pay for all of the accumulated debt that has been incurred during the past six years. The end result is that today's tax benefit will become tomorrow's tax burden. Those who benefitted by deferring the tax consequences of the traditional 401(k) and IRA will get hit with a higher tax burden than if they had originally saved post-tax dollars.

Many retirement advisors are telling people to save money in a Roth IRA or the newly created Roth 401(k). These are post-tax dollars saved and when they are withdrawn no tax is paid. The net result is that people are having to pay more in taxes today, by not getting the tax deferred traditional retirement plans, so they can avoid having to pay the possible excruciatingly high tax that will be required tomorrow to pay for the fiscal mismanagement we are currently under.

No one explained to the tax payers that the tax cuts for the rich in 2001 and 2003 were going to immediately increase the tax burden of the middle class. This is the bait and switch in which the GOP consistently engages. Deceive the public into thinking that they will benefit by sending them a check for $300.00 and then increase their effective tax rate significantly, but don't tell them what you are doing until it is too late for them to stop you from giving significant benefits your rich country club buddies. Worse yet, most people do not have access to a Roth 401(k), so they cannot even protect themselves from getting hurt upon retirement. Shame on the Administration for continuing to undercut the middle class in this manner.

Sideline Suits

Last Monday during the Monday Night Football Game, Jack Del Rio the Jacksonville Jaguars Head Coach was wearing a business suit on the sidelines. One of the commentators mentioned that there are league rules the prohibit coaches from wearing suits on the sidelines, which apparently is true; however, Del Rio got an exemption in order to wear one. The San Francisco Coach, Mike Nolan, has received a similar exemption. These exemptions are for only a couple of games. The idea of prohibiting coaches from wearing suits is ridiculous and needs to be reevaluated.

George Steinbrenner, New York Yankees owner, requires that all of his baseball players cut their hair appropriately and cannot have beards. Additionally, each of them must wear a suit when they are traveling to a game. Steinbrenner requires that his players show respect and look respectable when they are seen in public. This is a stark contrast from what the NFL requires of its representatives.

The NFL does not allow suits on the sidelines because it wants the free promotion from the wearing of hats and sweatshirts. NFL Properties wants to sell its wears and apparently suits do not accomplish this. There is more to the game than how much money is paid for jerseys and other paraphenalia. The coaches and players are role models for many, and the way they look and act has a direct impact on the way others look and act.

A stroll through the criminal court on sentencing day is an indication of how influential the sports franchises are. When one is trying to make a good impression in an effort to obtain lienency, what they wear is important. However, virtually none of those who have been arrested and pled out to a crime or been found guilty are wearing a suit. Some are in sports jerseys while others are in jeans and a t-shirt. While many of the sports jerseys cost more than most dress shirts, they are not a substitute for a shirt and tie when that is what is appropriate. Educating people when a suit is appropriate and when street attire is appropriate is important. Having football coaches look and act respectfully when they are on camera could go a long way in providing this necessary education, just as Steinbrenner requires of his players.

New Late Policy

The next time you are stuck in traffic that you did not anticipate on your way to work and end up being a few minutes late consider the new Wal-Mart lateness policy. Wal-Mart employees, if they are going to be absent or late for work, no less than an hour before their shift starts, must call a central number. At that time they will receive a confirmation number and then they must call their manager and provide that confirmation number to the manager. If this is not done, or not done at least an hour prior to the shift begins, the employee will receive a demerit. After a certain number of demerits discipline including termination will result.

This is an egregious policy for even the most responsible of people. All parents know how likely it is that a child will not cooperate in getting ready in the morning and getting dropped off at the daycare resulting in being a few minutes late to the office. This cannot be anticipated an hour in advance. Also, anyone who commutes to the office knows that unexpected traffic can occur, causing some ont to sometimes up to an hour late, and despite appropriate due diligence a person can be late a number of times in any given time period due to the unexpected.

Now couple the ordinary difficulties of getting to work on time with the people who work at Wal-Mart. The low wages the Wal-Mart pays can result in people not owning a telephone because they cannot afford one. This prevents them from calling the required number an hour before work. Additionally, a number of people who work low wage jobs do not have reliable vehicles or take public transportation such as a bus to work. The car can unexpectedly break down and public transportation in many areas is far from being reliable. These kinds of problems are not known an hour prior to work. They are also confronted with childcare issues and the standard traffic congestion that we are all confronted with.

This policy appears to be a system designed to have employees live in fear of losing their jobs. It is nothing more than a strong arm tactic so that managers can laud something over the heads of already demoralized employees. Having employees live in fear of their continued employment is not conducive to having a productive workforce. It is when employees feel comfortable in their surroundings and feel that they are contributing to something good that they will have the incentive to work hard opposed to doing just enough to get by. Wal-Mart apparently does not seek to have such an environment.

Of course, the more animosity it shows toward its employees, the more likely it is that the employees will leave and less likely Wal-Mart will be successful in finding replacements. Word gets around about where is a good and bad place to work. The good employees will know they do not want to work in a place like Wal-Mart and the bad employees will be late often enough that they will be fired. That does not leave too many people to work at the store.

Employers need to start taking lessons from Wal-Mart as to what they should not do such as skimp on health benefits, continuously cut wages to benefit the bottomline and now force employees to live in fear of their jobs by instituting bad beauricratic policies that are bad on paper and bad in practice.

The Big Three Healthcare

Recently there was a meeting of the Big Three with GW. While the agenda was not provided to the public, it was speculated that one of the topics was going to be the pinch the car manufacturers are feeling due to their healthcare costs. As previously discussed in this blog, GM has to increase its sticker price by approximately $1,500 per vehicle to pay for health insurance for its workers and retirees. This places GM at a business disadvantage since its major competitors, Toyota and Honda, do not have the $5 billion per year health insurance bill and can price their vehicles at a lower cost. Business is finally realizing that they are at a disadvantage due to the current health insurance system. Until universal healthcare is implemented in the United States, U.S. companies will not be able to compete in a global market. Maybe the politicians will begin to listen now that the business community is supporting universal healthcare since it really is good for business and the economy.

Box Store Healthcare

Maryland passed a law requiring that stores with a specific number of emplolyees and making a specific amount of sales was required to provide healthcare to its employees. The law was pointed at the box stores that pay subprime wages and cuts costs by not offering healthcare to its employees. The law was relatively recently struck down by a Federal District Court and Maryland has taken an appeal. The Federal District Court determined that a federal law, ERISA, preempted the state law and, therefore, the state law could not contradict or alter the ERISA requirements. While the Court may be correct on the legal analysis and it may be upheld on appeal, the issue has been squarely confronted by the states and calls to arms will likely rise to the Federal level requiring that Congress act.

A Berkeley Study concluded that tax payers are subsidizing Wal-Mart. The Wal-Mart employees do not receive health insurance and when they get sick they end up at the emergency room. (for more infomation on Wal-Mart Healthcare) Joe Taxpayer ends up flipping the bill. Thus, the cost for low prices is higher taxes to pay for the corporate subsidies Wal-Mart receives. Maryland's law sought to end these subsidies.

A number of other states were considering similar laws and they likely will not pass these laws until resolution is brought to the Maryland case. At that time, they may try to tailor new laws to the court ruling or they may start to put pressure on the Congress to amend ERISA to allow for the state mandates or they may call upon Congress to pass a similar law to Maryland's. Of course the latter is better than the former since it would impose a universal solution opposed to the piecemeal solution that would result from state by state laws. Further, Wal-Mart and other companies would be knowledgeable of all of its obligations under a universal federal law opposed to having to interpret each state law and trying to find the loopholes available in the various state laws, which will inevitably be found and exploited (better to pay the lawyers than the workers apparently.)

With a Democratic Congress Wal-Mart should be concerned that this type of legislation will start to get traction. While the Democrats are not enemies of business as they were once perceived to be a popular policy change such as this is the very type of issue they campaigned on to get elected and the new Congress should take this issue up as one of its first pieces of legislation. In the meantime, Maryland is right to continue the legal battle and attempt to salvage its healthcare law.

Why They Lost

This administration apparently believes that the voters are stupid. Rumsfeld's recent statement that the the strategy in Iraq is "too complex" for mere mortals to understand shows the contempt this administration has for the voting public. To assume that those who have a vested interest in the strategy, namely those who may be called to serve and those with family members serving, and those who follow the administration military decisions, are too stupid to understand the strategy is fatal to any elected official.

The American public is a lot of thing including apathetic, disinterested, busy and suffering at the hands of government decisions to cut back on various social programs. One thing it is not is stupid. The strategies that are being implemented in Iraq are far from being too complex for the average American to understand. There is nothing confusing about Cheney's statement that the insurgents are in their last throws, Bush's statement that he want's Bin Laden dead or alive and his statement during the debates that he does not give Bin Laden much thought, or other administration statements indicating that (1) we should expect immediate result from their brilliant decisions and (2) there is no coherent strategy except the "stay the course" mentality that has been the policy from the beginning.

The GOP has blindly followed the administration into the war. At no time has the GOP controlled Congress or Senate tried to call the administration to account for any of its actions. There were never questions about why the administration was firing generals who said things that were true but not part of the scrpt they wanted to read from. There were never questions as to why the soldiers were not being provided the proper equipment. There was never a question as to why Haliburton and Bechtel were receiving huge contracts. There were never questions as to why the cost has topped $10 billion per month. This lack of independent thought by the legislature and the contempt the administration shows the general public comes through in an election. The results of this past election provided the just dues to the party that does not believe in the people's ability to question the war and understand that those who are in charge of the military do not know what they are doing.

Potatoes From A Box

We are all busy. With the boss’s demands, the long commute, shuttling kids between activities, community service and other obligations, the day is stretched thin, and as a result sacrifices are made. Everyone needs to prioritize. They need to determine what activities they are going to focus on and what they are going to drop by the leeway.

For many families, dinner together has been dropped. When dad works late, mom is picking up junior from soccer practice and sister is being shuttled with the neighbor friend to dance class, many families do not have an hour in the four o’clock to eight o’clock zone to get together at a single dinner table. This is a reasonable sacrifice considering everyone can have a healthful dinner without sitting at a single table at the same time; however, if marketing and items in a grocery store are any indication, many families are not ensuring that there is a healthful meal to be eaten for dinner.

Among the ready to eat items being advertised is a bagged pot roast. Apparently everything someone needs for a pot roast is in the bag: the roast, vegetables, gravy mix, potatoes, everything. All the person has to do is add water and throw it into the crockpot and go. There is something seriously wrong with this concept. Pot roast is about the easiest meal that anyone can make. Cut up a few vegetables, wash and slice a few potatoes and throw the roast into a crock pot for ten hours. It is perfect for the busy family. It can be put into the pot in the morning before anyone goes to work, and it will be hot and cooked when the first person gets home. The simplicity of the meal makes the idea that some families are making it out of a bag appalling.

Of course pot roast is not the only easy to make item people are buying in a ready made form. Potatoes have for years been available in an instant form. Either through power or sliced and dehydrated for potatoes au gratin these may have been one of the first ready to eat boxed meal sold to the masses. It is disappointing since these are easy items to make. Why is it that we have concluded that we do not have ten minutes to boil some potatoes or slice a few potatoes and add the basic ingredients needed for potatoes au gratin?

These kinds of food items are hurting us more than they are helping. First they cost more than the raw ingredients. Second they are all high in preservatives and sodium and other food stuffs that nutritionists and doctors warn us against eating. By having bad eating habits, we are reducing our efficiency at work causing us to work longer hours and be away from home more. It is only through proper nutrition that a healthful living can be achieved. Moreover, it is unlikely that we as a society are actually so busy that we cannot spend the ten or so minutes that are necessary to make basic healthful meals for ourselves and families. There is just no reason why we need to continue eating potatoes out of a box.

School Days

A typical school day for public school highschool students begins slightly before 8:00 a.m. and goes until about 2:30 p.m. This is less than seven hours of class time minus time for the students to eat lunch. Thus, there is approximately five hours of actual education time for students and a number of high school students have a period or two for a study hall during which they are not receiving lectures. One of the basis for justifying "No Child Left Behind" was to determine which schools were failing and assist the United States in rising in the international statistics. Creating new tests will not benefit the schools; rather, we need a complete overhaul of the way we address the education process. First we need to start spending time educating students. A six hour day with study halls is not sufficient time for students to be educated. This is a nominal part of the day and the amount of time students can spend learning needs to increase. There is no reason that students cannot have their academic day go from 9:00 a.m. to 5:00 p.m.

The second basic change that needs to occur is the academic year needs to be lengthened. Most schools have only 180 days of class. Students get holidays throughout scattered throughout the year and are out of class by the end of June. With so much time out of class, students are not reaching their maximum potential of learning. There is no reason for a mid-winter break or a spring break and the reasons for having long summer breaks is obsolete. We are no longer an agricultural society and the students are not needed on the farm. Thus, we need to make the academic year a minimum of 220 days with only a short break (two weeks) between academic years. This will allow students to spend more time in the classroom learning opposed to out of the classroom forgetting their texts.

If we want to rise in the international rankings we need to look at what the other countries are doing to out educate the US. The most basic items are that they require the students to actually sit in class during the day, not just a nominal portion of the day, and they require that the students spend the majority of the year in the classroom, not just six months. Lets require our students to start spending time learning opposed to being on break and start trying to compete on a real basis with the international community with our education system.

School Is For Academics

Friday Night Lights is a fictional account of a Texas highschool football team. Some but not much of the show portrays the students’ lives in the classroom and in the school halls. What is evident from the show is that football is an important part of the highschool experience, at least for the players and possibly the cheerleading squad. While the show is a fictional account, the impact of school sports in actual schools is real, and much of it is adverse for the majority of students. It is time to reconsider whether sports should remain part of public education institutions.

A minority of students in either a highschool or university actually partake in extracurricular sports; however, all students are impacted. The after school games are scheduled for times when travel to and from the event will put the child home at a "reasonable" hour. The academic schedule is designed to prevent the athletes from missing too much class time. The end result is that classes start earlier in the day then they would if the sports schedule was not accounted for. Students who are highschool and university age have brains that do not function fully until later in the morning, yet due in large part to the athletic schedule, schools start at 7:30 a.m. or earlier. Thus the first hour and a half to two hours of school are unproductive because the students’ brains are not yet awake. Worse yet, a number of students throughout the nation have a bus ride of an hour or more, which requires that they get out of bed before 6:00 a.m. to prepare for school and catch the public school bus. Requiring that students get up this early is detrimental to their learning abilities. This basis alone is sufficient to justify removing sports from school or at least adjusting the academic schedule to be less beholden to the athletic schedule.

Here in New Jersey schools are funded through property taxes. At least one half of a resident’s property tax goes to the public school districts. A not insubstantial amount of a school budget goes to the funding of extracurricular sports. By removing this budget item a number of books and possibly additional teachers could be paid for. Again, a minority of students are directly benefitted by school sports in comparison to the number of students in any given school; however, all students are having a reduction in the number of teachers, books and quality of education materials they receive due to the athletic budget.

Academics suffer as a result of sports. There are a number of incidents throughout the country whereby a budget battle erupts within a board of education or a budget is voted down by the electorate and libraries, arts, music and other classes are cut from the budget in a supposed attempt to balance the budget. Rarely does the athletic budget get cut. Such acts by board of educations are purely political. They believe that a budget will pass if the electorate believes that the alternative is cutting academic programs.

The United States lags far behind other first world nations in the quality of education that public school students are receiving. One thing that needs to be addressed is how to raise the quality. By requiring schools to be for education opposed to having a major focus on sports as currently exists, the US education quality will rise. By starting classes at hours that are more conducive to a student’s education abilities and funding education opposed to sports, this can be achieved.

Alternate Path

Report after report concludes that the middle-class is being squeezed out of being able to afford college costs. As previously argued in this blog, (Middle Class Tax; Personal Savings Rate; The Lost Generation) much of this debt is a result of less governmental assistance for students to pay for college and a shift from need-based assistance to loans. Coupled with a 375% increase in tuition and fees between 1982 and 2005, the financial shift has had a disproportionate impact on the middle and lower class. With such staggering numbers and no change in sight, its time for the marketplace establish new options.

Colleges do not produce students who are ready to work in the marketplace. Prior to Airborne Express being purchased by another company it had a fairly large computer programming department. Whenever it hired a new computer programer who had recently graduated from college the company wrote off the person’s first year salary because that person was going to spend more time in training, at a significant cost to the company, than performing actual work. If the private company is burdened with training the employee, then there is little or no difference between the current student and someone without a college education that has some basic background in computer programming.

The marketplace needs to establish an alternative to the overly priced college education that does not prepare someone for work. An intense two year program in computer programming which is conducted in cooperation with local and national businesses to determine a curriculum, that is cheaper than the current college tuition, will be better for the students and businesses than the current system. In addition to providing the students the actual necessary tools, not just the ones some academic thinks is necessary, by having business connections and cooperation will assist the students in establishing connections with possible employers and creates a greater chance of the students becoming employed.

This educational model will benefit all. The students will have less costs since the education process will be for fewer years and the business community will benefit since it will not have to retrain new employees coming from these institutions. It is time to reevaluate the educational process and start preparing students for the work they are going to do upon graduation instead of preparing them for a life of student loan debt.

Class Warfare

For years we heard the Republicans explain that President Clinton was passing balanced budgets because there was a Republican Congress. However, now that there is a GOP dominated government – White House, Congress and Supreme Court – we see the most fiscally irresponsible government this nation has had in generations. Their actions show that the balanced budgets of the 1990s was due solely to the Democratic leadership of President Clinton and had nothing to do with a Republican Congress.

In 1993, President Clinton passed an economic package by a single vote in the Senate, which was cast by Vice President Gore. From that point on, the government was on a defined economic plan that over the course of five years resulted in balance budgets being submitted to the Congress and budget surpluses being established. The fiscal discipline extended to President Clinton vetoing irresponsible bills such as the repeal the Estate Tax. President Clinton vetoed the bill after it was delivered to the White House by a farmer on a tractor. The GOP argued that it is the farmers and small business owners who were hurt by the Estate Tax, yet despite this argument neither the farming lobby nor the GOP could show one farmer who lost his farm due to the tax. It was just a give away to the rich, and President Clinton did the responsible thing by vetoing it.

In contrast the House of Representatives, among other things, passed a $50 billion spending cut package. The spending cuts include reducing funding for food stamps, student loan subsidies, farmer subsidies, child care assistance, and medicare funding. The Senate passed a $60 billion tax cut package, most of these tax cuts were for the nation’s wealthy. These bills as a whole required the poor and middle class to sacrifice their well-being for the sole benefit of the rich. Ultimately, it will be the poor and middle-class who will have to pay the large deficits that will result since the rich are on track to pay no taxes whatsoever.

The biggest disappointment with these actions is that it was the government that created the middle class, and now it is the government that is going to destroy the middle class. After World War II, the GI Bill was created. Tens of thousands of soldiers where able to go to school when they returned from Europe and the Pacific. Also, the government created programs for veterans to obtain affordable mortgages so they could purchase their first homes. Through programs like these, the vets became the first solid middle class this nation had ever had.

Since WW II, the middle class has relied upon the government to allow it to continue to exist. Access to college through student loans, PELL grants and other financing mechanisms has allowed the middle class to send their children to college. Fannie Mae and Freddie Mac have been integral in ensuring that interest rates would consistently be low enough and stable enough for the middle class to get mortgages, and the one tax shelter the middle class has access to is the tax deduction for mortgage interest - this is a tax deduction that a panel has recommended having removed from the tax code because it gives too much money to too many people.

All of this assistance will soon be gone due to the GOP’s actions. When the assistance disappears so will the core of the middle class. Additionally, there will be unsustainable deficits left in their wake and those who used to make up the middle class will have the burden of paying off the deficits which destroyed their livelihoods in the first place. Ultimately, there will not be enough money to reduce the debt; therefore, there will not be enough money to reestablish the middle class either. If the GOP is left in control of the government, the only ones who will suffer will be those who once thought they were living a comfortable life.

Predictions

Last March I commented that the Democrats could not take over Congress because the electorial math did not work out - there just were not enough competative seats for the Democrats to get fifteen new seats. While that may still be true, it is a lot more exciting and at least possible that fifteen or more GOP incumbents will be ousted.

The election gets much more exciting if one pays attention to specific races. For instance, two time incumbent Mike Ferguson who is a hardcore Bush follower and about as far to the right as Rick Santorum to the West is in a tight race with Linda Stender. The New York times says that the district is leaning Ferguson, but some polls have it as a statistical dead heat.

The district has been cleverly drawn to support the GOP candidates by incorporating much of the western part of New Jersey. So the fact that there is a possibility that Ferguson will lose is a significant statement of the local and national political sentiment.

This of course should be contrasted with what is thought to be a more liberal district to the north, which ironically has an even more conservative GOP incumbent, Scott Garrett. He is being challenged by Paul Aronsohn, who held a position in government with the Clinton administration and Governor McGreevey's administration. It does not appear that it is going to be a close election there regardless of the reasons for Aronsohn's strong political resume.

What is known, is that November 7 is going to be a very interesting night, one that should be watched closely by all.

A Few Simple Words

In the course of history some of the most powerful statements have been made by using a minimal number of words. General Colin Powell, in his letter to Senator John McCain, has once again achieved this remarkable feat.

The world is beginning to doubt the moral basis of our fight against
terrorism. To redefine Common Article 3 would add to those doubts. Furthermore, it would put our own troops at risk.

In all of the blogs that have been discussing this issue, it could not have been said any better.

New Definitions

A couple of weeks ago, President Bush declared that some of the people he decreed to be the top terrorists who had been captured by the United States were going to be transferred to Guantanamo Bay in Cuba. He also stated that these top terrorists were going to be put on trial for their actions now that their use in interrogations has been exhausted. The problem is the tribunal process implemented by the White House was overruled by the United States Supreme Court on the grounds that the Congress is the governmental body that needed to implement the tribunal process; the President was not authorized to act as he did. The Court also determined that the Geneva Convention applies to all aspects of the so called "War on Terrorism" including the black ops prisons where these people were held.

The relevance of the later determination is that the secret prisons, which the White House denied existed and accused journalists of treason for having disclosed, engage in torture tactics to acquire information. However, these techniques violate "Common Article Three," which is a general article that is in all of the Geneva Conventions. It prohibits, among other things, "outrages upon personal dignity" and "humiliating and degrading treatment." Bush claims that these are vague and undefined terms that the US Congress needs to define; however, the White House is wrong to make this allegation.

While the terms do not have definitions set forth in the Treaties themselves, there are international tribunals which have interpreted these treaties and these interpretations are internationally recognized. This is the same as the interpretation of vague statutes that Congress drafts. Once the courts interpret statutory language, that becomes binding on all acting under the statute. The Treaties have been interpreted and these interpretations are binding on all governments that are signatories to the Treaties, including the United States. Just like individual states are not allowed to pass laws declaring that they are going to interpret a federal statute different than the federal courts have interpreted it, nations are not allowed to pass laws with different definitions than those which have been established by international tribunals. Thus any interpretation by the White House or the Congress which deviates from the international norm of Common Article Three is a violation of the Treaty.

Violating a treaty is significant. Treaties signed by the United States become the law of the land. The only laws in the United States that are given greater weight than a treaty is the United States Constitution itself. No statute can overrule a treaty and violating a treaty is virtually the same as committing a constitutional violation. Thus, the White House and the Congress are committing violations of the magnitude of a constitutional violation by refusing to follow the Geneva Convention and trying to manipulate the language to meet the White House’s nefarious desires regarding it.

Committing constitutional violations rises to the level of high crimes and misdemeanors which justify impeachment.

Market Manipulation

Tough times for BP. There is an investigations into Prudhoe Bay and a recent court decision finding that it manipulated propane prices, a lawsuit is about to go to trial regarding an oil refinery explosion and now it is being investigated for manipulating oil and gas prices. It comes as no surprise that an oil company might manipulate its prices. With oil companies recording record profits and the cost per barrel of oil not being in direct relation with the prices at the pump. As has been previously discussed, prior to Hurricane Katrina, gas prices went up faster than the cost per barrel and then as the prices came down, they did so out of sync with the price of a barrel of oil. All of this likely occurred due to manipulation, and it should have been ferreted out long before this.

Oil companies have finally established the perfect storm. There is a virtual monopoly on all oil production, refining and sales in the United States. The five major companies have reported the highest corporate profits in history, yet people are comfortable that they are playing by the rules, not taking advantage of their market dominance. While they may be playing by the rules, the rules are what they decided they are. The government has gotten out of the way of these companies. The current administration has given the oil companies a blank check; Congress has yelled at the oil companies in hearings telling them to stop price gouging, but they have done nothing more, no winfall tax has been imposed, no regulations regarding the production and pricing have been put into place and no one is doing anything to prevent the environmental disasters that are befalling the areas where there is drilling - worse, there is a push to open up new protected areas for drilling like ANWAR and national parks in Utah and other states have been opened for exploratory drilling.

So long as the oil companies are allowed to decide how they are going to operate and no checks on their authority is imposed, they will of course use their information on the drilling side to manipulate prices to ensure the greatest profits. As long as the companies are allowed to control the drilling and distribution of oil and gas, they will be able to use the information on both sides of the production line to maximize profits to the consumer’s detriment. Rest assured the stock holders are not making enough on their investment to cover their new gas and oil prices. Exxon’s price is up about 55% over the past two years, so the profits are not going to the investors, but rather to the corporate fat cats.

BP is not the only company that is using its inside information to manipulate the oil prices, but it is the only one that is currently being investigated. The question is what will be done when the investigation is completed. Will BP be required to disgorge their profits and will comprehensive reform be put into place, or will the company receive a slap on the wrist and allowed to continue performing business as usual. It is likely that no real consequences will result from this and everyone will continue as usual, the oil companies will continue to record record profits, and the average person will continue to feel the wallet pressures of the inflated prices at the pump that allows the record profits to continue soaring.

Middle-Class Tax

Recently, Congress voted not to raise the minimum wage. In typical congressional fashion, riders were attached to the minimum wage bill, but one rider received more attention than others. The GOP attached a rider that would have required the repeal of the estate tax. At the same time Congressmen were voting to raise the wage that must be paid to the nations lowest paid workers, it was also voting to make the richest of people richer by allowing them to avoid the estate tax.

The estate tax already exempts the first million dollars of an estate and affects only the richest 2% of all Americans. Nonetheless, the GOP has been relentless in trying to destroy this tax. It passed a bill that was vetoed by President Clinton and in the tax reform bill that passed in 2001, it raised the cap significantly and actually eliminates the tax for one year prior to the law’s sunset. Since then, the GOP has been trying to make the repeal permanent.

The GOP spends a great deal of its time trying to convince middle America that they are supporters of the little guys and that they are looking out for the middle-class. The rider on the minimum wage bill proves otherwise. There was no indication that the GOP was interested in changing the parameters of who is required to pay the Alternative Minimum Tax (AMT), which is a tax that is unintentionally subsuming more and more middle-class Americans. Rather, the GOP relentlessly attacks a tax that affects few rich people. The AMT was intended to prevent the rich from avoiding taxes by placing significant amounts of money in tax shelters, but the threshold amount has not been adjusted for inflation. The end result has been that people lower and lower on the economic scale are being penalized by the AMT. Now, mostly only the middle-class is paying the tax opposed to the intended targets, the rich.

The GOP has also gone out of its way to force the middle-class to pay more in other respects as well. The GOP has systematically reduced federal funding to institutions of higher education and at the same time destroyed the subsidized loans that students used to be eligible for. This has resulted in the middle-class having to pay more in initial costs for education and they are paying higher amounts of interest because the government is not assisting them through the subsidies it used to provide.

If this is not enough, a recent study regarding the tax code suggested that mortgage interest be removed as a tax deduction. Considering this is the largest tax deduction must middle-class Americans receive, reducing or removing it as a tax deduction would have a disproportionate impact on the middle-class.

Everything the GOP does is designed to hurt the middle-class. The GOP is not at all interested in bringing the middle-class up to the upper thresholds of the wealthy. They are trying to push them back into the throws of the poor. Until the GOP stops hurting the middle-class, it cannot and will not be known as a friend of the middle-class. It is time for the middle-class voters to stop voting for the GOP so long as they are being hurt by this party.

Prudhoe Bay

BP has closed down its operations in Prudhoe Bay, Alaska. Up to 400,000 barrels of oil are pumped out of the oil field every day, and after learning that there are corroded components, BP determined that opposed to risking a major oil spill it would shut down its operations. Some oil has spilled in the area; however, BP claims that if it did not shut down the operations, a larger oil spill could have occurred. Now, BP is conducting maintenance on its equipment and trying to prevent any spillage from occurring, so it can restart its drilling operations.

The State of Alaska heavily taxes the oil that comes out of the ground. Nearly 80% of the State’s revenue is generated by oil tax. Losing a tax on 400,000 barrels of oil per day for who knows how long results in Alaska losing a lot of money - billions of dollars. Due to this loss of revenue, the Governor of Alaska is having his Attorney General investigate whether there is any liability which BP may have to the State for this lost revenue.

So BP is put in a bad spot. It could shut down the oil fields and prevent a larger oil spill than that which has already occurred and face liability to the State for its lost revenue. Alternatively, it could have continued operations, tried to make the repairs while active drilling continued and risked an oil spill for which it would have had to pay an environmental penalty and the cost of clean-up. Either way it was losing money. So at this point BP was in a no win situation. Should it protect its coffers or the environment. Oil companies are not known for being too concerned with the environmental impact of their operations. Thus, it would be more likely that facing this dilemma, the environment would be expendable in its opinion. Considering the alternatives, maybe BP should be commended for have protected the environment from more significant damage.

Then again, maybe BP has been delinquent up to this point and should be penalized through fines by the State and Federal Governments. BP did not engage in the preventative maintenance to ensure that the equipment was not corroded and dilapidated in the first place until it was already in a failing state. By failing to ensure that the pipes were in proper condition, BP placed itself in a position whereby it faced the option of causing a major oil spill or being sued by the State for lost tax revenue. This decision to not perform preventative maintenance placed the environment and the company at risk, yet BP did nothing until it was too late.

Corporations failing to ensure that its equipment is was not in proper condition seems to be habitual. The northeast blackout was caused because an electrical company chose to not maintain electrical lines. There was no profit in maintaining the electrical lines so it was a low priority. This low priority cost the nation billions of dollars in lost revenue when the lights went out for several days in the entire northeast.

BP has committed the same crime. It chose to not maintain essential equipment and risk the consequences regardless of what they may be. Deregulation allowed for the Ohio electrical company to not properly maintain the electrical lines, and lack of government oversight of the oil fields allowed BP to not maintain its equipment properly. In both cases, the public has been harmed as a result of a lack of government oversight.

Brand Names

First impressions are the most important thing a person can make. Once that first impression is made, typically the other person holds on to the impression, and it is difficult to change. Businesses seek to create impressions too. Obtaining a reputation or "brand" is important for a business. The brand can be established through a company’s actions or clever marketing. When one thinks of G.M. they likely think about possible bankruptcy and pension default; Ford - the Pinto; Exxon - obscene profits and the Valdez. There are people who still refuse to purchase gas at an Exxon station due to the Valdez accident which occurred seventeen years ago (March 24, 1989). In other words, the actions of a company can break a company.

Clever advertising can create a brand, too. Ben and Jerry’s, even though it is now owned by a huge corporation (Unilever), still has the reputation of being a small town company which is concerned with the environment, donates to charity, and is involved in progressive social programs. All of these things may have been true before the company was acquired by Unilever, but it is unlikely that much if any of it is true today considering it has to be more concerned with stockholders’ returns opposed to social welfare.

Clever advertising can also change a brand. BP is an oil company that engages in all of the bad things that oil companies do. In fact, they are currently embroiled in a dispute regard oil leaks in Prudhoe Bay, a pristine environmental sanctuary. Nonetheless, BP has changed its brand from a nasty oil company to a "green" company because it reduced its own emissions by about 20% and claims to be focused on alternative energies. To create this image, BP spent untold sums of money, a lot of time and a lot of energy.

When the average American is asked about labor unions the likely impression is corruption. They know the stories of Jimmy Hoffa and others who where involved with the mob or were skimming money from the till. While the FBI spent a decade or more infiltrating organized labor and the mob, the reputation of the corrupt unions which are out more for their own gain opposed to the interests of the workers they represent remains. This reputation or brand is detrimental to the union movement. If the unions want to increase membership, infiltrate Wal-Mart and other large employers, then they need to rebrand.

Unions as a whole need to create an image which is advantageous to the workers and not adversarial. Low wage workers, who think the fat cats at the top of the union organizational chart are making millions off their union dues, which they see as a hardship to pay in the first place, will not voluntarily give up part of their small salary if they believe that they will not benefit from the membership. If the goal of the AFL-CIO or SEIU is to unionize Wal-Mart, then they need to be in a position to convince the employees that they will benefit more from the membership than the union will benefit. This is a difficult sale to make based upon the animosity toward unions that has established itself and the reputation unions created for themselves. Until this is done, however, the unions will merely spin their wheels and continue to fail in expanding their membership.

Failure to get more members could also result in the final destruction of unions. One of the main reasons people join unions today is for the pension system. If there are more retirees than workers, then the pensions will go bust. Loss of the pensions will result in a loss of membership. The continued loss of members be it for reduction in pension benefits or due to general attrition, will ultimately result in unions folding up shop and organized labor will become a thing of the past.

With union membership at about 13% of the US workforce, the Unions need to find ways to attract new members and become a force within the nation again. While their reputation remains as corrupt organizations, their membership will remain low and continue to decrease. Absent rebranding, the unions will not accomplish their goal and all workers, union and non-union will suffer as a result.

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.