February 28, 2011

Progressives have a problem

Posted in 2012 Elections, federal budget, Obama administration, role of government, U.S. Economy tagged , , , at 11:20 am by realitytax

We all get that advertising makes an impact, and it follows that our military recruiting benefits from marketing expenditures.  Should voters tell our representatives in Congress to micro-manage ad campaigns for the Defense Department?  In a word, no, but that’s what this hullabaloo is all about.

“There is no argument from Democrats or Republicans that we must reduce our massive debt. But there is fierce discussion and passionate debate concerning how to reduce our deficit.”

The Pragmatic Progressive Forum
28 Feb 2011

If Congress chooses to set limits on what part of the Defense Department budget goes to advertising, including “none,” that’s possibly within their role in tackling the budget deficit. At what level do we want to spend time controlling the specific choices?

According to Wikipedia (see citations below) for the 2010 fiscal year, “the president’s base budget of the Department of Defense rose to $533.8 billion. Adding spending on “overseas contingency operations” brings the sum to $663.8 billion.” Now I know the Pentagon pays more than seems reasonable for hardware, and consulting, and other services, and that a penny saved is a penny earned, but when it comes to advertising it’s also a question of return on investment — and while the roughly $16 million that we’re talking about is a lot of cash, relative to that $600+ billion, folks, it’s chump change: less than 1/100 of 1%

So tell me, how much time is it worth arguing over, relative to the other 99.9975% of the Defense Department budget? All progressives will accomplish, other than distracting from other spending decisions, of course, is alienating NASCAR fans: ultimately that mind-set drives them to think their values are more in line with the Republican party.

Image via Army.mil

With over 15 million viewers a week ago for NASCAR’s Daytona 500, the appeal is undeniable even to folks who can’t imagine why “just watching cars driving in a loop” is entertaining. The biggest companies in the U.S. wanted in; they know the value of having their logo seen by that many fan-eyeballs, associating their brands with the race and drivers tends to make influence purchasing. Would Target®, Burger King®, Sherwin-Williams®, and Budweiser® be there if advertising didn’t matter?

Progressive columnists and pundits need to learn two things, fast, if they want to take advantage of the attention that the struggle in Madison is finally generating in the media. First, diversity is good, even when it comes to what we do for entertainment. Second, avoid falling into traps that emphasize differences. It doesn’t help their causes to focus on stuff that makes middle-class Americans think liberal neighbors and/or Democrats in Congress are somehow less in touch with regular people than the elite GOP strategists and politicians.

Winning elections is about more than just getting people to vote. If the Democrats in Congress get drawn into this argument, and start arguing against an iconic pass-time, in a process where narrow margins determine who holds an office and makes budget choices they’ll be conceding electoral might to their opposition for years to come.

Wikipedia citations: 

Updated Summary Tables, Budget of the United States Government Fiscal Year 2010 (Table S.12)

August 5, 2010

Survey says

Posted in media coverage, Obama administration tagged , , , at 9:09 am by realitytax

You may have seen stories telling you that over 40% of Republicans or Tea Partiers think the current President wasn’t born in this country, or heard Rush Limbaugh talking about them in dramatic terms.

One small problem, no matter if you’re listening to Limbaugh, watching cable TV, or reading in Salon: Surveys only tell you what people say – what they claim, not what they actually think. Pundits who go beyond that are guessing.

Some may want to infer the Republicans responding to such surveys “think Obama wasn’t born in America,” but it’s equally valid to infer they wish he wasn’t, or to suggest they want you to think they think he wasn’t, or any number of other possible interpretations.

But the data, the only factual material, is how those surveyed responded, nothing more. You can’t know what a person is thinking, which is why the American legal system is predicated on actions, not media coverage, commentator speculation, or inferences drawn by partisan pundits.

February 11, 2010

Is the gridlock finally breaking loose in DC?

Posted in GOP, government pork spending, Obama administration tagged , , , at 10:42 pm by realitytax

President Obama’s statement following action by the Senate to confirm twenty-seven nominees:

“Today, the United States Senate confirmed 27 of my high-level nominees, many of whom had been awaiting a vote for months.At the beginning of the week, a staggering 63 nominees had been stalled in the Senate because one or more senators placed a hold on their nomination. In most cases, these holds have had nothing to do with the nominee’s qualifications or even political views, and these nominees have already received broad, bipartisan support in the committee process.

Instead, many holds were motivated by a desire to leverage projects for a Senator’s state or simply to frustrate progress. It is precisely these kinds of tactics that enrage the American people.

And so on Tuesday, I told Senator McConnell that if Republican senators did not release these holds, I would exercise my authority to fill critically-needed positions in the federal government temporarily through the use of recess appointments. This is a rare but not unprecedented step that many other presidents have taken. Since that meeting, I am gratified that Republican senators have responded by releasing many of these holds and allowing 29 nominees to receive a vote in the Senate.

While this is a good first step, there are still dozens of nominees on hold who deserve a similar vote, and I will be looking for action from the Senate when it returns from recess. If they do not act, I reserve the right to use my recess appointment authority in the future.”

It’s amazing to many to realize that it was one Senator, Alabama’s Richard Shelby, on a quest for a Richard "earmark" Shelby embarassed the GOP massive earmark for his home state, that was able to suspend all progress in filling key leadership roles. It’s no wonder some in the GOP think government can’t be effective, if their own party can’t be relied on to let so many agencies have leaders — Americans were stunned to learn that the objections weren’t about qualifications, but rather a partisan ploy that amounted to demanding a kick-back for Alabama.

There’s nothing inherently wrong about earmarks – they allow for quick resolutions to funding decisions that don’t require much, if any, debate. They can be used to replace a fallen bridge, or abused to fund a pork-barrel project that benefits a key constituent or city… but Shelby’s audacity has backfired, and he’s walking back from his stand after embarrassing his party — claiming after the fact that it was just to get attention.

Well, Senator, you’ve drawn attention, your bluff has been called, and people around the country are starting to call your Grand Old Party the Republi-can’ts.

November 9, 2009

Imperfect Information Undermines “Free-market” Economies

Posted in economic recovery, media coverage, Obama administration, taxes, U.S. Economy tagged , , , , at 8:09 pm by realitytax

It’s no secret that a variety of interested parties exert influence over both economic policies and the general understanding (and reporting) of the effects of changes, just as they do in energy, health care, education, the financial sector, and/or anything else that the Congress or various federal agencies have a role in shaping. Misinformation can lead a seemingly honest, open debate far afield from reality, inhibiting the efficiency of the process while at the same time warping the outcome.

If you don’t understand fiduciary relationships, and you still think most corporate actions reflect the same sort of priorities that pertain when a truly small business is owned by a single person, or a couple, you’re missing a key factor. Shareholders, for instance, seldom have any significant influence on the pay (or bonuses) of officers engaged in potentially risky decisions at major corporations – auto manufacturers, for instance, or the financial institutions that crumbled on Wall Street as the financial crisis became obvious to virtually everybody at home and abroad near the end of the Bush administration, when we ended up dumping billions of dollars into banks without any obvious benefit (it certainly didn’t stimulate consumer lending, as both Bush and early Obama administration initiatives were intended to do.)

In fact, if you look closely, the problem of banks that are “too big to fail” is getting worse, not better, due to consolidation. But that’s not what they tell Congress or the media; the bankers speak instead of “economies of scale” to justify even further growth. Banks are tied to the model that’s ruled economic policy for decades: debt-fueled consumer spending.

Those who talk about concerns over finite resources, such as clean water, are scoffed at, and the countering rhetoric lumps them in with “climate alarmists” and “tree huggers” in such a way that genuine free market forces are not even close to determining the value of any natural resource that cannot be mined – with the curious exception that there are some cities who have privatized their formerly municipally controlled water systems, which does begin to result in a certain market value being placed on that particular resource. Of course, once a profit motive starts driving the price up, citizens in the U.S. and abroad often agitate to re-socialize their water supplies, in an era when “socializing” is used by some to imply everything that went wrong with every non-U.S. form of government.

Similarly there’s an obvious bias in the talk about income tax cuts – it generally originates from those who are well to do, and stirs the emotions of those who have much less, but more importantly if one looks closely at the data, there’s been a strong correlation in the past between those with wealth and those whose tax rates truly go down under most of the recent approaches. Would tax cuts stimulate the economy? Assuredly so – but in what way? A tax cut on income doesn’t have the same effect as, say, a tax cut (or tax credit/investment credit) for spending consistent with our national priorities, such as alternative energy sources, or research and education, etc. Such selective, targeted changes spur spending in specific areas — a very straightforward function of supply and demand, and the result is tangible — money flows to those areas, stimulating job growth and additional investment without any necessary growth of the government (growth which makes most of us justifiably cautious in the wake of the Bush administration’s under-reported increases.)

The reason that governments trying socialism, such as the USSR, to manage resources and markets for the good of the people have consistently floundered and failed is that they don’t — and can’t — have good enough centralized information to succeed making the rapid decisions necessary to control what is arguably the most intricate challenge of any “man-made” system, the decentralized activity of a vibrant, balanced economy. Markets are efficient at managing that information; but we’ve seen a dramatic example of why they cannot be expected to function for the good of the consumers when government fails to regulate those with the profit motives.

Consumers, too, need access to better information than they typically get under the current system, no matter if you’re considering tax-cuts, politics, the price of peanut butter, new home-buyer credits, or anything else. When misinformation is tolerated (or encouraged) it undermines the effectiveness of capitalism. Free markets rely on timely, accurate information – we need to consider new incentives for the reporting of “news” and information systems we base our choices on, or capitalism is absolutely doomed to implode.


October 29, 2009

CNN & Money.com aren’t qualified to assess “Cash for Clunkers”

Posted in economic recovery, media coverage, Obama administration, U.S. Economy tagged , , , at 3:38 pm by realitytax

You’d expect an author at this CNNMoney.com to understand the role of money in business.  You’d expect an editor to send this back to re-write.  Here was the basis of Peter Valdes-Dapena‘s misguided assessment:

“…majority of sales would have taken place anyway at some time in the last half of 2009, according to Edmunds.com”

So? This isn’t news, and it misses the point of the Cash for Clunkers initiative.

Valdes-Dapena and/or his editor may think selling cars sooner rather than later is a valid reason to criticize the program, but as any businessman can tell you: success in business is about cash flow. Any retail operation needs to keep their stock turning over. At a time when the inventory was sitting idle on the lots this program provided a much needed infusion, enabling dealers to pay staff, utilities, creditors, and suppliers.

Did the Cash for Clunkers program solve the economic crisis? Of course not.  The goal was to turn over inventory in one segment of the industry – to keep dealerships from failing in huge numbers just before the manufacturers started to recover, thereby saving some jobs and hopefully averting a situation that would spread and further exacerbate the economic downturn.

The article may fool a person with no entrepreneurial experience, but it reflects either a shallow grasp of money and business or a thinly-veiled attack on the government’s attempt to avert a breakdown in the delivery mechanism of an industry it was actively seeking to save – without proposing any alternative that might have been even marginally effective.

The public may think “Cash for Clunkers” was as simple as just selling cars, the author evidently wants to; the reality is much subtler. Edmunds didn’t surprise anybody (except maybe CNNMoney.com staff) with the news that one of the primary effects was to accelerate the decisions and purchases – that was the point.

In business, my friends, timing is everything.

October 27, 2009

Recent tax cuts increased the 2009 deficit

Posted in economic recovery, GOP, media coverage, Obama administration, taxes, U.S. Economy tagged , , , at 3:11 am by realitytax

Bruce Bartlett was a domestic policy adviser to President Ronald Reagan, and conservative supply sider. He did a little simple math and uncovered that the cause of the deficit increase is revenue-related.

The increase cannot be blamed on spending – the Obama administration’s spending has been more conservative than was forecast – $28 billion less than was predicted.  This math strongly suggests that more tax cuts, as some in the GOP are advocating, would actually further increase the deficit; tax cuts were unambiguously a major factor in the problematic revenue decline that underlies the deficit growth.

Mr. Bartlett, in a column dated October 24th, was responding to the theory that tax cuts were the best way to solve the deficit, as was advanced by Mort Zuckerman recently in a New York Daily News opinion piece.

Here’s an excerpt:

According to the Congressional Budget Office’s January 2009 estimate for fiscal year 2009, outlays were projected to be $3,543 billion and revenues were projected to be $2,357 billion, leaving a deficit of $1,186 billion. Keep in mind that these estimates were made before Obama took office, based on existing law and policy, and did not take into account any actions that Obama might implement.

Therefore, unless one thinks that McCain would have somehow or other raised taxes and cut spending (with a Democratic Congress), rather than enacting a stimulus of his own, then a deficit of $1.2 trillion was baked in the cake the day Obama took office. Any suggestion that McCain would have brought in a lower deficit is simply fanciful.

Now let’s fast forward to the end of fiscal year 2009, which ended on September 30. According to CBO, it ended with spending at $3,515 billion and revenues of $2,106 billion for a deficit of $1,409 billion.

To recap, the deficit came in $223 billion higher than projected, but spending was $28 billion [less] and revenues were $251 billion less than expected. Thus we can conclude that more than 100 percent of the increase in the deficit since January is accounted for by lower revenues. Not one penny is due to higher spending.

It turns out you have to go back to 1950 to find a year when federal revenues were lower as a share of GDP. So Bartlett, who is happy to say there is some basis for criticism of the Obama administration’s anti-recession tactics, points out that excessive spending isn’t the problem.

In fact, with much of the revenue that was not collected due to the tax cuts sitting more-or-less idle in savings accounts, and certainly not trickling down to stimulate job growth, or bank lending, etc., Bruce Bartlett concludes that:

The idea that Reagan-style tax cuts would have done anything is just nuts.

Bartlett’s article is a must-read for anybody involved in the U.S. economy – which should include every voter and pundit, not just those elected to Congress.

September 29, 2009

How the U.S. government spends your money

Posted in government pork spending, Obama administration, taxes tagged , , , , , , , , , , , at 5:21 pm by realitytax

Billions of tax dollars are going for a US-Mexico border fence, but is it doing any good?  Well, if you read the Christian Science Monitor article by Daniel Wood you’ll have more questions than answers.

In 2006 DHS awarded a “virtual fence” contract to Boeing for a stretch of the border in Arizona as part of President Bush’s “Secure Border Initiative.” The budget grew to nearly $1 billion just two years later. So far, no virtual fence; just a very real budget. DHS recently decided to extend its contract with Boeing for another year.

Several sites now report that the Government Accountability Office (GAO) recently predicted that $6.5 billion will be needed to maintain the rest of the actual, though still incomplete, multi-billion dollar non-virtual fence over the next 20 years, addding:

“So far, it has been breached 3,363 times, requiring $1,300 for the average repair.”

Just so you don’t have to reach for your calculator, the math works out like this:

3,363 breaches x $1300 = $ 4,371,9000

But the kicker is there’s no way to prove if it’s actually making any real difference – well, beyond fattening the wallets of the folks awarded the contracts and costing tax-payers money, of course. So, we’ve spent about $2.5 billion so far on construction, we’re seeing several new breaches each day (on average), and CSM interviewed one woman, Dawn Garner, who says that 40 illegal immigrants a day cross her small ranch.

Sound bad? Don’t answer yet.

Ronald Reagan famously urged Gorbachev to tear down the Berlin Wall. There was a lesson there we’ve somehow forgotten about what the effects and effectiveness of walls really are.

Yasha Levine, writing at The Exiled, reports he’s interviewed a Border Patrol agent who asserts that it’s not just breaches – in some cases ramps are deployed on both sides and smuggler’s caravans drive right over!  Levine has more bad news:

There is one thing we can be sure of:

the massive steel pylons have been a boon for Mexican scrap metal entrepreneurs, who are able to supplement their incomes by dragging off whole sections of the fence right under the nose of our beefed up Border Patrol.

And those we capture trying to make the crossing? We spend a bit of money to detain them, a bit to process them, a bit to send them back home again, and – you guessed it – start the cycle over. Because if there’s one other thing we can be sure of:

No matter which country they’re a citizen of, the folks who prefer the USA to Mexico aren’t likely to change their minds.

But DHS, born under former GOP President George Bush, sees no reason to change course, or deny money to Boeing or the other contractors.  They’ve got a mandate for, “more effective use of personnel and technology” and “physical infrastructure enhancements to prevent unlawful border entry,” and so spend they will. But are we stopping the drugs and other smuggling? Honestly, nobody knows.

It’s past time to think about our priorities, particularly our spending/funding priorities and the role of the federal government.  It grew larger than ever over the early part of the 21st Century, but failed to address the needs of our nation.

Instead politicians awarded lucrative contracts as political favors. It’s no wonder the trust for Congress has plummeted – the scrutiny has them scurrying for cover, and some of them are talking out of both sides of their mouths.

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