is reporting that an additional 10,000 to 11,000 more soldiers will be required in Iraq for election security than currently available. The current plan is to accelerate deployment of elements of the 3rd Infantry Division and the 82cd Airborne Division while also keeping some Marines and elements of the 1st Cavalry Division in country for longer than anticipated. No big surprise here as the nominally allied security forces nominally loyal to Allawi are completely ineffective
despite the occassional moments of good news.
Right now, I don't expect this to change at all. The situation is not getting better as one of the primary supply routes
from the primary logistics distribution center to the seat of government is now too dangerous for the British to want to use.
I aldo expect that the pattern that we have been seeing for the past twelve months will continue: the new temporary surge of troops into theatre for a special event becomes the new floor and still there are not enough.
Not a worthwhile worry
has good instincts and a damm impressive knowledge base combined with a willingness to learn. He also has tended to be right more often than he is wrong. He is worried
that the Iranians may decide that this winter or next spring would be a good time to launch a main force offensive (concurrent with an Iraqi Shi'ite uprising) against either Baghdad or the shrine cities in order to force the United States out of Iraq.
This is one of the times that I think that Steve is wrong, and wrong in a fairly significant manner. The probability of this option is non-zero, but I think it is far lower than most other potentially catastrophic outcomes. There are a couple of reasons, starting with the strategic, and then moving to the operational.
First, why should Iran get itself into a massive war with a country whose leadership wants to destroy the current Iranian leadership? Right now the primary Iranian objectives are to buy enough time to construct a credible nuclear deterrant for security purposes. And then to also see a Shi'ite Iraq that is weak
and dependent on Iranian influence and money. Right now, it seems that the Iranians are able to buy sufficient time to assemble a nuclear deterrent, increase their ties to the Chinese and see a useful level of chaos occur in Iraq. So why take the risk of engaging in a large scale conventional war with high costs when the current strategy of sending covert and gray "ops" aid to any group of three anti-American Iraqis that can find a convienent and sympathatic Iranian agent in any major city?
Secondly, the Iranian military is more professional and less internally paranoid than the Iraqi military, but the level of training in the vast majority of units are significantly below NATO standards. Going through a full training cycle to get units to that level would take five to ten years and include at least one, and most likely two major doctrinal shifts towards greater autonomy for decision making. If the Iranian military does not do that, they will get eaten up if they hit US or British forces that are not surprised.
Yes, the US military is spread thin. Yes, there are weaknesses for if there were not, the CENTCOM commander (Gen. Abizaid) would not be reminding the world of the power of US nuclear weapons
. However with that said, even if strategic and operational surprise is achieved, the times needed to go from the Iranian border to Baghdad or the Shrine cities would be sufficient for US airpower to beat up on any armored columns. The Iranian Air Force
would have an extraordinarily difficult time maintaining a contested air environment against US forces which are either in theatre or able to surge with 5 days notice to the theatre.
To me, it does not make sense of Iran to seriously think about large scale Yalu River/Chinese style interventions in Iraq. Their strategic objectives are being met, and their aims can be furthered by much cheaper and more reliable means. I would be shocked if some smart major at the Iranian equivilant of the Army War College has not wargamed this operation out for his final paper, but it is not a probable worry.
Gas Station Productivity Improvement Query
I had to fill the company minivan with gas this morning, and an idea that has been plopping around in the back of my brain started to bother me. I was thinking that Giant Eagle (the local grocery chain) has the automated check-out lines (which I hate) that accept cash through a typical dollar bill change machine input interface device. Why not use the same for a large gas station. As it is, most gas stations built or rebuilt since the 90's can handle credit and debit card transactions at the pump, but they can not handle cash transactions at the pump. The need to handle cash transactions takes up some percentage of the labor budget of the station, and labor is relatively expensive. Even minimum wage labor is costing the station owner $7.50-8.00 an hour once factoring in indirect costs. Why not install a cash collection device similiar to the ones used in automatic check-outs at grocery stores at the gas station?
I can see a couple of problems. Small stations may only have a single employee on the clock at any one time, and that employee is needed for other things (selling soda and smokes mainly) so there is no substitution possibility, only a shifting possibility. The capital costs may be expensive for small stations, and for most urban stations, expansion space is limited. Secondly, the business model for many gas stations is to get people to come to get gas at low margins and then drop a couple of high margin bucks at the convienence store. If consumers with cash never have to enter the store to pay, the probability of them making an impulse buy is significantly lower.
What other problems do you see with this basic idea?
Week 11 Patriots Thoughts
The Patriots beat the Baltimore Ravens by a score of 24-3
although the first half was played to a 3-3 tie. The offense never quite impressed me, as Tom Brady was forcing several throws into double coverage as he tried to incessentantly connect with David Givens, and the rest of the wide receivers seemed to have some trouble creating space and openings on an extraordinarily slick and muddy field. The defense on the other hand dominated the entire game. They were aided by the fact that the Ravens, due to injury, were reduced to a fundamentally one dimensional offensive team and that dimension (passing) was their weak dimension. However the starting cornerbacks were the starting free safety, and a rookie free agent, so the Ravens should have been playing weakness against weakness.
Corey Dillon (as usual) was a damm bright spot on offense. He proved his worth yet again yesterday afternoon as he was able to effectively gain yardage and first downs in the fourth quarter. This despite the fact that the Ravens knew that the Patriots wanted to run in order to kill the clock. If the Patriots can continue to rely on Corey Dillon to put up roughly 100 yards per game the offense should be in good shape. The trade that brought Corey Dillon to the Patriots has to compete with the Terrell Owens trade as the best offseason move.
My biggest worry coming out of the game was the health and availability of starting left tackle, Matt Light. He twisted wildly without engaging in any contact late in the game, and then limped out with some sort of lower leg injury. According to the Boston Globe
, the injury is not serious, but the Patriots were reduced to have a journeyman back-up right tackle play left tackle and a de facto rookie as the sole remaining reserve offensive lineman backing up the entire line. Depth is an issue. However if Light is only out a week or two, the Patriots should be fine for the playoffs.
Bye Bye Mario
Via Jonathan Potts
I saw this Post-Gazette
article in which Mario Lemieux is going through the several stages of new arena extortion rather quickly. Now he is threatening to move the team to either Houston or Kansas City if he does not get what he wants.
He owns the team, so he can do what he wants with his private property, I just have severe doubts that there is all that much competition for a low performing, low revenue hockey team which plays in a league with a significant risk of low long term attendance trends and a horrendous television deal. The lock-out will probably do more damage to the league attendance and revenue attraction ability than the baseball strike did because the existing league market is so much smaller than the potential pool of casual baseball fans. Finally, the existance value
of having a hockey team is pretty low, especially in an environment of low disposable income growth.
So if Mario wants to leave, good luck, and I'll flip to ESPN three times a year for when I want to see professional hockey.
I am amazed at the positive response that my piece on Steven Roach's concerns in non-financialese has gotten at the D-Kos diaries.
I was asked a question on how to properly defend one's asset positions if one believes that the probabilistic payoffs of Steven Roach's concerns are the highest value probabilities. I have a couple of thoughts on this subject, but before I proceed please strongly heed the following sentence:
I AM NOT A FINANCIAL ADVISOR, these are just thoughts from an interested individual. YOU SHOULD NOT MAKE FINANCIAL DECISIONS ON THE BASIS OF THIS OR ANY OTHER PIECE THAT I HAVE OR WILL HAVE WRITTEN. If you are interesting in knowing more, SPEAK TO A LICENSED, PROFESSIONAL FINANCIAL ADVISOR
are right in that the primary concern that Steven Roach and Paul Volcker is not strictly an economic worry, but a question of political will that spills into the economic arena. The US was able to grow quite well in the 90s on a tax and spending profile that would convince the rest of the world that we were fundamentally responsible. The Bush administration has decided to run on that credibility for short term ideological gains (successfully). As I noted in my previous piece,
the Chinese and Japanese have their own internal political economy reasons to encourage a stronger than the fundamentals suggest dollar policy. As someone has noted many times (I can not remember the link), no one wants to the first mouse to get the cheese from the mousetrap. Every country is waiting for someone else to initiate the general devaluation of the dollar as the first iniator will get hammered the most. (Hello EURO!)
I am making several assumptions; first that we will not see an Argentina situation, or at least not that bad. Secondly, that interest rates will increase and short term rates will rise from their near negative real values. Thirdly, national savings will not immediately increase. Fourthly that the following suggestions and strategies should not dominate your planning. This is contigency planning for a moderate to severe crisis.
1) Make a complete inventory of your debts and assets along with expected income streams. Be conservative, don't assume too much asset growth. Before you can effectively plan for the future, it helps to know where you are right now.
2) If you believe that interest rates will rise significantly (at least 1-2% points) above the current interest rates, convert as much long term variable rate debt into long term fixed rate debt. Make sure that the increased short term payments do not blow a hole into your current ability to pay, and also remember that a refinancing of your mortage has significant costs. Throw your inflation and interest rate to someone else. You'll pay fr the privilege in the short term, but you may win the gamble long term. If not, you can always unwind your hedge in a couple of years with another refinancing. This is a step that Paul Krugman
took in March of 2003.
3) If you are a college graduate, or a soon to be graduating student, lock in your consolidation loan rates as soon as possible.
4) If you know that you are going overseas for one reason or another in the relatively near future, buy the foreign currency as soon as possible. One of my friends will be moving to Canada in the next 18 months, and he is converting 30-40% of his current US $ savings into Canadian $ savings. Only do the small scale cash conversions if you know that you'll use the foreign currency no matter what. For someone in my circumstances, it does not make sense to have thousands of Euros and Yen in mattresses. Go to #5 for currency spreading.
5) Look through your retirement and other investment portfolios and see if you can shift some of your underperforming US assets into internationally focused mutual funds. Talk to someone other than me for recommendations for these funds. This is just your basic diversification and risk spreading scenario.
6) If you will be buying a new vehicle, look at buying for fuel efficiency because if the dollar significantly devalues, oil will continue to increase in nominal terms while real, non US$ prices will be relatievly stable.
7) Look at the items that you buy which are imported from non-dollar bloc countries, be aware of substitutes and replacements.
8) MOST IMPORTANTLY, SPEAK TO A LICENSED FINANCIAL ADVISOR
before you make significant changes to your investment portfolio.
Going off the books
A probable plan for Social Security
has most of the new realized debt to be counted off the books
in order to make the campaign promise of cutting the deficit in half by the end of the 2cd Bush term vaguely credible. Fine, there is some political logic to this equation, I just have a single question of practicality here. Off-the book accounting entities such as the ones employed by Enron and Worldcom to make themselves look better only work when they are confusing, unnoticed and uncommented upon by outsiders. Insiders know that they exist, know the risks, and know the upside and downside, but outsiders have a much harder time gaining insight due to the nature of an off the book entity. With this assumption, why does the political folks think that the bond market won't notice the actual increase in US debt. Even if the off the book entity is the "US Indepedent not connected to the Government in any Way, Old Age Stock Account Fund", there will still be assumed to be an implicit federal guarantee of all the new debt that is issued to the USINCTHGIANWOLDSACF, just as the PBGC, Fannie Mae, Freddie Mac, and Sallie Mae, other independent entities chartered for expressly governmental purposes also receive the implicit assumption that they are backed by the full faith and credit of the US government. If you are going to play accounting shell games, don't announce that you intend to cook the books before hand.
Steven Roach's worries in non-financialese
A couple of days before Thanksgiving, I promised an individual at Atrios a quick brief in layman's language what Steven Roach of Morgan Stanley is worried about when he said that there was a 10% chance
that the US could avoid a major fiscal crisis in the next couple of years. Paul Volcker, the previous Federal Reserve Chairman before Greenspan, is also worried that there is a 75%
chance of a fiscal crisis in the United States within the next five years. So two highly intelligent and well respected individuals who forget every morning more about macro economics than most policy makers ever learn are extraordinarily worried about the future fiscal health of the United States. Roach is more extreme in his probability adjusted outcome matrix, as his is nature as he has
long term concerns
on the bubblization of the American economy as the US jumped from a high technology bubble, to a real estate bubble and now to an oil bubble. He was not able to correctly time the popping of the housing bubble as interest rates have been able to stay low and American consumers have been able to successfully flee to adjustable rate mortages.
with even lower interest rates. But this is the last gasp of a bubble.
So what is Steven Roach worried about? He is worried that the worlds' creditors will soon start thinking that the "full faith and credit" of the US government is not worth quite what it used to be, and that the worlds' lendors will refuse to lend to the US the 2+ billion dollars a day that the US is currently consuming in excess of what we are producing. Or at least to refuse to make these loans at the currently low real and nominal interest rates.
Why is this bad? The US economy is based upon easy access to capital in order to finance debt. Debt in and of itself is not a bad thing for a nation, a corporation or an individual. The things that matters is what the debt is used to finance. If it is used to finance a long lasting productive asset, then the lender should feel pretty comfortable in receiving their money back, so therefore the interest rate is low. My decision to go into debt for a college education and then grad school is partially based on the high probability that my lifetime earnings profile will be dramatically higher than if I had stopped my education at high school. California's recent decision to go into debt to finance stem cell research has a decent to high probability of creating a higher earnings profile for the state than the counterfactual of no stem cell research funding.
However, there is also bad debt, and that is debt for short term consumption. For instance if I grab my fiancee's credit card and went on a ten day bar crawl that starts in Pittsburgh and ends in some shady bar in Bangkok, that is not a constructive or productive use of debt. My long term earnings profile has not changed in a positive direction and I still have to pay off X thousands of dollars of new debt. My standard of living and my ability to pay will have been negatively affected. Right now, the US government is in the middle of a great bar crawl as the deficits are not being used to significantly finance new investment or infrastructure. Instead it is being used for current consumption (military and domestic) while the costs are being pushed off as long as possible.
There are a couple of ways for individuals and countries with high levels of debt to deal with their bad debt problems. The first is to dramatically cut back on current consumption and devote a larger portion of their income to debt service. This is relatively easy for an individual (move from a 3bedroom apartment for a single person back into Mom and Dad's basement) but hard collectively. Secondly, both individuals and nations can attempt to earn more income. You can do this buy getting a new job working 3rd shift at the gas station down the street, or a country can do this buy encouraging new export manufacturing. Both these steps don't put any pain of your debt problem on the lenders, so they are happy and will keep interest rates low.
But there are a few steps that can get the problem under control, but spread the burden and pain around. First, both an individual and a government can try to renegoatiate their higher interest rate debts into lower interest rate debts. This is real common, and not too hard to do; it is the basis of the refinancing industry for home mortages, and muncipal governments do it all the time. The US federal government does this when it can as it called in bonds issued in the high interest rate 70s and replaced them with much lower interest rate bonds. Lenders lose some of their profits on these transactions but will engage in them for their competitors will do so also. Refinancing reduces a borrowers outgoing cash flow for debt service.
The next step if there is a significant debt problem is bankruptcy, or at least the threat of bankruptcy/default. At this point a borrower says "I have too much debt and no reasonable way to pay it off, so I'll only pay a portion of it." The lendor takes a hit, and then significantly raises that individuals' future interest rates if they ever try to borrow again. Governments have one other device that they can use to get out of a painful debt situation and that is inflation. The vast majority of loans are written to say that I owe the bank X amounts of dollars and not K% of the US GDP. If the money supply chasing the same number of goods doubles, the nominal prices of everything doubles, (including my income stream) while the percentage of my income that is needed to pay off my fixed rate debt is cut in half. Variable rate debt will quickly consume the same percentage of my income for debt service as it did before the general inflation. Higher interest rates on fixed term debt will compensate lenders for this risk.
These are the basic ways to avoid a debt crisis. The lendors of the world like to create incentives for countries not to get into debt crisis, so interest rates are seen as the guidelines for borrowing. As interest rates go up, the riskiest borrowing that previously was done under the lower interest rates, no longer occurs. High interest rates encourage borrowers to only engage in safe and sure activities that will definately allow for repayment of the loans. However this pure system is not pure in practice as capital does not always seek the highest rates of risk adjusted return. Sometimes, capital will be allocated for short term political reasons which creates more systemic risk.
Foreign private capital
is losing interest in US debt at the current interest rates. The buyer of last resort right now is the Chinese and Japanese central banks. The Chinese are trying to defend their hard peg of 8.28 yuan/$ in order to encourage a strong soft landing for their urban economies and to buy time to work out their urban/rural divide. The Japanese have a strong interest in not letting the dollar get too weak as they are trying to defend their manufacturing base against the locked into the dollar Chinese. If the Japanese were to let their currency float without a credible promise of intervention, Japanese goods and services would get more expensive compared to Chinese goods and services, provided that the Chinese maintain their hard peg.
Steven Roach is worried that the Japanese or the Chinese are going to say that the current benefits of supporting a stronger than the fundamentals suggest US dollar will soon outweight the very signifcant costs of maintaining either a hard peg (China) or a soft currency band (Japan). Once this decision is either made, or collectively occurs without conscious thought, than the US will quickly see the ability to borrow 2+billion dollars a day at cheap interest rates disappear.
If that happens, then the entire US economic system which is based on easy access to cheap debt comes under some very serious threat. Housing has been the major store of value for most American families in the past ten years, and especially in the past five as we are experiencing localized bubbles (thankfully not in Pittsburgh). Higher interest rates means that the individuals and families with fixed rate mortages will have a harder time selling their houses, while homeowners with variable rate mortages will see their payments increase and a harder time to sell their house at current prices.
This means that prices will fall and therefore previous evaluations of creditworthiness that take into account an individuals' ability to pay by measuring their equity and asset net worths will take a hit, thus neccessitating higher interest rates. This is Steven Roach's concern, that the circle of debt may be broken in the relatively short term by the refusal of either or both the Japanese and Chinese central banks to fund US debt at the currently low levels of interest/return.
So the date has been set (Jan. 30) and it will be happening, or at least planned to happen only a couple weeks after martial law is officially lifted when the Allawi government's emergency decree ends. That is the neutral news.
The good news is that the Iraqi Islamic Party, a Sunni group that had been thinking of boycotting the elections are participating in the elections.
The bad news is that they are the only Sunni group participating in these elections; all others are boycotting.
The I think this could be bad news, but it might not be is that there are 156 parties
participating in the elections. This breaks down to a seat allocation of 1.76 seats per party if we were using straight PR and no threshold and equal distribution of votes to all parties. All of these are very unrealistic assumptions, but we know that there will fundamentally be two lists; the first is the Sistani Shi'ite/nationlist "get the occupiers out"
platform, and the second is the exile/Kurdish/other US dependent parties banding together. A lot of parties are going to be coming out the election with absolutely no seats in any government. The entire goal of the elections process is to give enough Iraqi factions some stake and power that they have a vested interested in protecting.
Costs of Iraq
The following is from a single article by the Chicago Tribune
so take it for what you may. The costs of operations in Iraq are even higher than I thought were being reported if the following information is true:
"Weapons, vehicles, aircraft and other equipment are operating at grueling rates in harsh conditions. Military spending in Iraq is now $11.5 billion a month."(bolding mine)
If that is the real rate, than spending in Iraq along is consuming roughly $138 billion dollars for the fiscal year. Actually it is probably a little less than that because there were fewer troops in country in January and less combat occurring, so fewer operations were needed. However you slice it, this sum is still significantly higher than any projected supplemental budget request. Most of the difference is probably due to non-marginal costs such as the cost of paying personnel their base salaries etc.
"Gen. Michael Hagee, the Marine Corps commandant, told a congressional committee last week that one of his officers reported that 150 vehicles under his command had accumulated 825,000 miles on 700 convoys over a seven-month period. Normally, Hagee said, it would take 13 years to acquire that mileage."
The Marines have been pretty successful in maintaining their seven month rotation schedules, but this unit is probably on the high end of normal in their wear and tear upon the equipment. Assuming Army units are running their equipment at the same pace as the Marines, and assuming that these units are only in country for a year (a more and more questionable assumption) then there are most likely Army units that have put on twenty-two years of use on their equipment. This means that a massive rebuild and repair reconstitution period will be required if exisiting equipment is to be useful that much longer, or massive expenditures will be needed to buy new stuff.
The above is the reason why I am slightly (not much, but still slightly) skeptical about worries about a major Iranian ground war in the next two years. The US military's logistical infrastructures are being held together with duct-tape and baling wire right now.
I have some experience in working with long range budget projections and those numbers can be absolutely massive. However, the way that we dealt with them was to either work in scientific notation (X^10) or drop everything into current dollars or to just use words for the last nine or twelve zeros. It is just amazing how big some budgetary numbers can be. I say all of this because I saw a post at Angry Bear
that hit me in the head with a clue by four. PGL states: "especially since $44 trillion invested in bonds paying 5% for a 74-year period would become $1627 trillion by 2075." or $1,627,000,000,000,000.
Do you think that there is any possibility that the US will do what the French did with the post-war Franc and just drop a couple of zeros so a bottle of water will not cost $US 100?
A little good Dem News
The following two items are via Needlenose.
( A great blog, by the way)
From the Annenberg
election survey, party ID advantage still favors the Democrats, but not by a significant margin. +2.8 versus the traditional ~3% to 4% advantage that the Democrats usually have in self-identifiers.
From the NY Times' Matt Bai
we see that the traditional recipe for winning Ohio for a Democrat worked well: win huge in Cleveland, keep it close in Columbus, and minimize the damage from Cincinatti. This is mainly the efforts of ACT and the other 527s. The Democrats got creamed in the other counties.
Now why do I say that both of these things are relatively good pieces of news for the Democrats. Simply because it gives us something to work with in the near future. Urban mobilization should be strong in the future elections due to the increased number of first time voters. Less resources can be devoted to these efforts in 2006, and 2008. We also know that these efforts worked. Now the question is how do we expand out of the traditional Democratic areas, consolidate gains in Republican areas like Hamilton County, and get more Democratic self-identifiers to the polls. These are big problems, but they are being identified now.
Reperations and Debt Relief
The Paris Club
of major Western creditors, has forgiven 42 billion dollars in Iraqi sovereign debt. But there are still roughly $10 billion owed to the Paris Club plus very significant sums of loans that are owed to members of the Arab League and the Kuwaiti reperations.
Bush will spin this debt forgiveness plan as a major concession given by France and Germany. However it is not for two reasons. First, Bush originally wanted either 95% or 100% debt forgiveneness from the Paris Club. He did not get that. Secondly, this reduction in the Iraqi sovereign debt was not an altruistic action nor even a piece of realpolitick
; instead it is a recognition of reality that the eventual successor state to Saddam Hussein has absolutely no ability to pay back the debts that the Hussein government incurred.
The Paris Club is a comparatively minor creditor group that is writing down the value of its loans to a level that is more realistic to expect repayment, and then they threw in a little extra for diplomatic reasons. Sovereign Iraqi debt was selling for roughly 25% of face value last summer, so the total real value of this debt relief package is $1 or $2 billion dollars spread over twenty to thirty years. Yes, a couple of billion dollars is not chump change, but it is not a lot either when discussing international finance.
UPDATE Brad Setser
goes into way more detail over at his blog. The basic points are as follows:
1) The elephant in the room is Kuwaiti reperations and non-Paris club debt.
2) Even an across the board 80% write off would leave the debt to GDP ratio at ~100%
3) This debt relief does little to promote investment in Iraq. Security is the problem as the risk of getting blown up is too high.
It is a minor win for the Bush administation, a good week of PR and then nothing really changes on the grounds of reality.
is reporting that Central Command is looking to add yet another brigade to their order of battle for the next three months in order to conduct "pursuit" operations against the insurgents flushed from Fallujah. This is all well and good, it is better to attack an enemy when he is disorganized and seperated from his familiar environment, but it also indicates that all the pronouncements of good news and sufficient forces have only slightly more credibility than Ron Artest when he advertises his mediation services.
The current favorite way of finding this bridge is to take the American strategic reserve, the Division Ready Brigade from the 82cd Airborne, put them in charge of the Green Zone security and shift a brigade from the 1st Cav. Division to pursuit operations. This move indicates that there are enough forces to chomp and stomp, but not enough to occupy the country as the airborne brigade has three battalions which will replace the Blackwatch (they leave Dec. 3), the Stryker battalion recalled to Mosul and provide one net new battalion for Al-Anbar/Babil province operations.
The Bail out has begun
The State has passed
the Pittsburgh fiscal trainwreck bail-out bill before it adjourned. I need to take a much greater look into the details, but it is not as painful as I thought that it could be. The highlights of the bill include two provisions that let the city take over some school district funds (not passing through a RAD transfer, changes in income tax allocation), an increase in the occupation tax to $1/week, and a reorganization of the city business taxes as a new 0.55% payroll preperation tax is being put in place for all non-profits as the business privilege and mercantile taxes are to be reduced and eventually liquidated.
A couple of minor things did not happen. I was under the impression that the city's live, performing arts non-profits had a tacit deal with the city that fell through. The 5% amusement tax was supposed to be eliminated and the funds were to be made up with a payment in lieu of taxes from these groups. The amusement tax was cut in half for this form of entertainment. I also expected the parking tax rollback to be significantly faster than the one that is currently in place.
Now the bad news is that the Port Authority did not gain any new funding
from the state. I personally believe that the state should lift the $75 million dollar cap on earnmarked sales tax revenue and keep the percentage in place, but that is another argument for another post. But given the situation on Friday, and given the situation this morning, the city is in much better shape. It is out of the ICU.
This has been one of the weeks that just feels unconsciously long. Work has been long and tiring despite the fact that there is no pressing reason for it to be so except for yesterday's board meeting. Yet somehow I have been in the office @7:00 and leaving for home at 7:00. I'm tired right now, and stuck in meetings all day and tomorrow is a walking, shopping, laughing day.
Secondly, I should not read investment books as I felt myself getting progressively dumber after each chapter. Oil going through the roof is not good for the economy, and deflation is most likely not a good thing either. The two books that I was reading were trying to make the converse case.
Thirdly, Tyler Cowen's book, Creative Destruction
is damm good so far. I am only two chapters into it, but I believe it is repairing the damage that I noted in the previous paragraph.
The Marines on the ground in Fallujah believe that they can pacify and hold the city
if they keep the current force of 12,000 US soldiers in the city once the civilian population returns. This force level, assuming every civilian returns to their home, would be roughly 4% of the population or twice the force proportion that was used to seperate the warring sides in Bosnia after Dayton. It is also roughly the force level that Shineski and other leaders believed would be needed to win the peace. So, if the Marines can keep most of an equivilant division in the city, they can hold it and deny the city as a rebel base.
However the problem is that the US does not have sufficient troops to put a division into every temporary autonomous zone and hotspot. To assemble the short division used to take Fallujah meant that the US had to leave other hotspots exposed (Samarra, Mosul) and beg the British for forces to temporarily backfill for some of the US assault units. So, I have severe doubts about the US ability to hold Fallujah and garrison the other cities that need to be garrisoned. Therefore, the third assault on Fallujah should occur sometime next summer.
I am pissed as I hear that the Kerry campaign kept over $15,000,000
in primary campaign funds under its own control during the general election that it could not spend. Now he is trying to use this big pot of money (which would replenish DNC coffers) to get Vilsack (D-Iowa Caucuses forever)
into the DNC chairmanship. I am pissed because this money was money that could either have been used to help bridge the August air gap when Kerry was getting SwiftVetted to death, or be passed along to help out in tight Senate races. Keeping this non-GELAC money shows a massive lack of either confidence or political skill as it could have helped Kerry win and provide coattails for Kentucky and South Dakota where a couple million would have been useful.
The backdrop on this is the DNC chairmanship which right now is reduced to Dean v. Anti-Dean '08.
As anyone who has been reading this blog, I like Howard Dean, I have supported Howard Dean, and I have contributed Howard Dean. I also think that the Demorcracy for America
Dean Dozen program is one of the keys to rebuilding the party as it will be rebuilding the Democratic farm system with candidates.
But, as Morat,
notes, something different needs to be done:
Isn't that the DNC chair's job? Raise money, support the party, and support races up and down the ticket?
And tangential to this, regarding the DLC, Kerry's Iowa victory, and Clinton's "Third Way" (it keeps coming up in reference to Dean) let me point out this: Kerry's path -- which was Clinton's and the DLC's -- lost. Clinton's strategy has never worked for anyone but the Big Dog. It failed for Gore, it failed for Kerry, and it's failed for quite a few Congressmen. We might have won the Presidency twice, but we lost it twice too. And the House and the Senate to boot.
So yeah, Dean's different than Clinton.
The Democrats need to rebuild their infrastructure, make dramatic changes and make bold and strong moves and be proud of those moves. Kerry keeping money in the bank for use after the election is not a bold move, it is not a smart move. Pushing Vilsack for DNC chair when his priority is protecting the Iowa caucuses first and foremost is not infrastructure construction. This is why I am pissed, we need to make changes past the incremental
Clintonion triangulation and big fish in a small (non-governing pond) mode.
That style worked for a once in a generation politician. There is only one or two of those every twenty years, and none of the probable Democratic nominees for President look like they are Clintonion in their "I feel your pair" ability to charm. That is not an insult to anyone, just a statement of fact. And this style does not help the Senate candidates or the Congressmen either. A strong national brand of a party that can aid campaigns down to the dog catcher level and send aid up to the Presidential level is needed.
We know that the public, when you strip party identifying information away from descriptions, prefers Democratic policy positions over Republican positions. So it is a matter of creating pride in the party, reconverting moderates into liberals and conservatives back into moderates, and projecting strength and certainity. Kerry keeping his money for a post-election internal party fight does neither.
Resistance is Futile
My fiancee and I are becoming more and more part of Pittsburgh. This afternoon I caught my self saying kellah (ie "color" in a combination of Pittsburghese and a horrorendously thick Boston accent) and this evening, as I had to drive to the West End from Squirrel Hill, my fiance said "Isn't that too far away to drive..." as there is a bridge and a tunnel between the apartment and the destination.
We are being assimilated.
With Powell, Ashcroft, and now Tom Ridge
either leaving or strongly rumored to be leaving the Bush administration, that is three of the top five national security/international affairs positions being vacated immediately after the election. Only Rumsfeld and Snow at Treasury are staying on board, and Snow is an absolute joke.
Condeleeza Rice is being promoted to America's chief diplomat who will now be responsible for managing an extremely difficult Iran policy, an almost intractable North Korean policy and continuing to go for an economic balancing act in which the BOJ and BOC act as lenders of last resort if the private markets don't step up (they did this month
. This is for a woman whose only relevant asset she has over Colin Powell is that everyone knows that she is speaking for the President instead of not knowing when (not if) Powell will be contradicted.
For Attorney General, we are getting a guy who believes that the Geneva Convention is "quaint" and irrelevant to the current situation. This legal opionion has done quite a bit to create an atmosphere of command indifference that has led to actions which have dramatically cut down the moral superiority that the United States has enjoyed throughout the world. This decline in soft power leads to a greater reliance on hard power in order to accomplish national objectives, and we are going bankrupt at the same time.
I wonder who may replace Ridge... and I wonder why Ridge would be going as this is his best chance to make a legit run in '08 on the "I kept you safe" platform.
G-Man's Thoughts on Workforce Development
G-man just forwarded to me the following piece of policy analysis and thought questions. I find this area to be one of extreme interest, although I know that I do not know enough to intelligently comment upon it, so I will leave it to G-man as this is one of his areas of expertise. Basically the Bush Administration wants to transfer a significant amount of funding away from voke-tech and potentially shifting it to academic high school programs. The rest is G-man's words, not mine.
Another potential example of bad policy by the Bush Administration.
Although frankly, if they do what they are threatening, I'll be a bit
---Thoughts on Bush Policy---
Although Gray zings the administration a bit in the article, I assure
you he does not do it from a political or ideological standpoint, but an
institutional one - his life is workforce development, and he sees them
about to make a bad decision. In fact I attended a convention last week
and the policymakers their seemed to think federal cuts for vocational
education were inevitable.
For my part, I'm partially bewildered that Bush is thinking about doing
this. In fact, early on they made noises as if they were about to
increase support for this kind of thing, but now the position seems
reversed. I would think also that they would be more interested in
getting kids through technical, perhaps more economically relevant skill
sets that the treatment they get in our liberal arts colleges and
universities (a treatment Rush would remind us is liberally mind
The best possible explanation is that this is simply a political
First, almost every parent out there is convinced that a four year
degree is the key to their child's success, and many think vocational
education is strictly for losers (an impression that is partly due to
the habit of school systems shunting poor performers to vocational
schools to improve the scores of their academic schools). So few will
likely bat an eye if they do it.
Second, few will complain if Bush addresses the so called funding
problem of NCLB by redirecting funds to the academic schools. Based on
stuff I know that I will not relate here, additional funding will likely
raise these scores in aggregate, but have very little impact on outcomes
that matter, i.e. graduation, employment, and income.
Sadly, everything I've seen suggests we really *need* to keep an expand
our vocational programs, even if it's at the expense of academic high
school programs (although like Gray I think they can be integrated).
Just think about what's happened to the labor market over the last 25
years, and the implications for the standard liberal arts degree.
(1) First, we saw a *reduction* of middle manager positions in corporate
America thanks to Japanese competition.
(2) Then we saw a *reengineering* of corporate America, in which many
jobs were eliminated (ex: secretaries) and many more were outsourced
domestically to contractor firms - resulting in less pay and benefits
for the casualties.
(3) During the boom of the 90s we saw *insourcing* of 1 million H1-B
visas, which allowed firms to import IT workers who would work for
substantially less (35-40K vs. 55-60K) than domestic workers
(4) An now we have *off-shoring.* It's now $60 an hour vs. $6 an hour.
The government doesn't collect these numbers (and I'm not holding my
breath that they will) but several private firms (Mckinsey, Forrester,
Goldman Sachs) and universities have. Here are some figures:
Goldman Sachs - 300-500K jobs off-shored in last three years
Business Week 400-500K
Forrester 400K off-shored last year alone
These numbers are all rough, and 500K jobs represents a small part of
the 137M folks in the workforce (although it's a tasty part in terms of
income). But the gut clenches when you consider the future.
Forrester predicts that by 2015 3.3 Million positions will be
off-shored, meanwhile a UC Berkley study has identified 14 million jobs
in occupations at risk for off shoring.
So I would claim the prospects for the four year degree are dimming -
corporations don't value it the way they used to, and in any case they
don't need as many domestic liberal arts graduates. Although a "good"
bachelor's degree gives one a hedge against a changing labor market, the
increasing demand for technical skills is reducing the usefulness of
that hedge. Plus a lot of people with the degree never acquired enough
skills to effectively hedge anyway.
But you can't off shore a nurse, pipe fitter, or construction worker.
Many of the un-offshorable job opportunities can be realized through
vocational education (and these jobs pay well).
As I said, I don't know what they are thinking. Hopefully they'll
correct before they announce official policy (because once they utter
something, they seem reluctant to change their minds).
[Note most figures are from an article by the Brookings Institutions]
The US is about ready to declare Fallujah secured,
so now is a worthwhile time to review what we have learned over the past two weeks. Some lessons are good, some bad, some are indifferent and dependent upon the future courses of actions taken by the different players involved.
1) The US, when it can assemble a division sized attack force and proceed with a set piece battle can and will run over any opposing conventional force. This is a no "duh" but important to note.
2) The guerilla/insurgent leadership knows #1
3) The enemy leadership also has a strong operational knowledge of guerilla warfare as evidenced by their decision to flee the city of Fallujah and to conduct spoiling and diversion attacks
throughout the rest of Sunni populated Iraq.
4) The US strategy
for Fallujah is to run up the body count and hope that the US can kill faster than the Sunnis can reproduce.
5) The US does not have enough troops in Iraq. Mosul, one of the potential flashpoint cities (yes, I know there are a half dozen) for a free for all ethnic conflict, was left exposed in order to provide forces for the Fallujah cordon, and then the police and local security forces were routed by insurgents. This led to the redeployment of a US battalion from Fallujah to Mosul. If this was the closest "free" battalion, then the US has next to no deployable reserves in Iraq.
6) The British have little appetite to relieve the US. The Scotsman
is stating that the Black Watch will be quickly withdrawn from northen Babil province, and that no replacements will be available because the only reserve force the British have is their theatre reserve battalion.
7) Iraqi cops and security forces
infilitrated or both.
8) The only exception to #7 are the Kurdish units that are re-uniformed Peshmerga
9) The insurgency is overwhelmingly local in nature. A Department of Defense briefing
stated that 99.8% of all prisoners taken in Fallujah are Iraqis. This is consistent with other prisoner ratios. So that means one of four things (best to worse); all the foreign fighters were killed in action, the US DOD knows the insurgency is a local uprising but are that cynical in selling fear to the US public, the US intelligence was that bad and this is an unhappy surprise, or all the foreign fighters left the city before the assault.
10) The US is losing the international public opinion wars. The US needs to learn not to commit war crimes or at least not do it in front of the press if we do not want to hear snickers and guffaws every time we try to grab the moral high ground. Execution
of unarmed, wounded prisoners qualifies as a war crime.
back unarmed, civilian men
who are trying to flee a combat zone is a war crime.
11) The January elections will be a joke as the Sunni leadership is boycotting the elections and Sadr
is suspending his participation in these elections. So ~30% of the population's recognized leadership will not recognize the results of the election as legitimate and this is the segment with both the guns and the demonstrated willingness to use them.
Labels: insurgency, iraq
Snowballs in the Desert
One of the prime political and geopolitical assumptions that the Republican Party has been making for the past five years is that people like to go with the winners (see Bush in California in 2000, see "fuck the French, they'll come back for the oil" in Feb. 2003) so efforts made to secure acquiesance before the fact of a victory is a waste of time and a diversion of resources from more pressing priorities. Sometimes it works, sometimes it fails, and when it fails, it fails miserably. One of the articles of faith on the more of the same side in Iraq is that after Bush's re-election, everyone else would have to contribute forces or money or political influence to pulling the US's nuts out of the fire because they need to get on the US's good side.
Well, we are not seeing that. We are seeing some nice words from NATO, but no troops. Hungary
has not extended its mandate, Poland is cutting its troop levels and France and Germany are unwilling to send troops under any circumstances. They are also wiping their hands clean of Iran (if you believe that Iran will not enrich uranium or look to acquire plutonium, I have a bridge to sell you). Snowballs are rolling allright, but away from the US.
Labels: iraq, oil
Grad School enrollment drops
is reporting that the overall number of students who are attending grad school in the United States is declining 2004 v. 2003. Of particular interest is the substantial decline of students who are coming in from overseas. This is vital because the US does not produce enough American citizens who are masters and Ph.D level hard science researchers, engineers and mathamaticians. The gap between current US supply and current US demand is made up primarily by attracting top tier immigrants who have been trained in US universities. One or two years does not make a trend, but this is an area of worry.
I am strongly suspicious that a portion of this drop-off in attendance is due to the political climate in this country. It is getting harder to do interesting research in controversial subjects (stem cells for instance,)combined with the increased number of hurdles it takes to get a visa. I know that the cost of an education has gone done for the European students, thanks to the significantly weaker dollar v. the Euro, and South Korean has seen the won appreciate since 1997. So costs are not the explaining factor here.
Fallujah, PT 2 Casuality question
I asked the following question:
Does urban warfare increase the number of wounds inflicted while inflicting proportionally fewer fatal wounds?
I asked this because the wounded:fatality ratio showed more wounded than dead US soldiers than past experience had predicted. Mark Barton
(THANKS) showed in comments that the confidence interval for the ratio of 178 wounded: 18 dead was wide enough to say that nothing unusual beyond statistical noise was occurring. However we were operating off of incomplete information. This Washington Post
article, via Fort Wayne, Indiana, has the following passage:
Lt. Gen. John Sattler, the Marine commander in Iraq, said 22 U.S. troops have been killed and more than 170 seriously wounded in and around Fallujah since the offensive began Monday night.
An additional 490 troops suffered wounds but were able to return to duty, he said
Assuming that this is good information, my question is answered in the affirmative; urban warfare produces more wounds of all types, but fewer fatalities.
Evidently Lt. Gen. Sattler was misquoted, as Reuters is reporting
that he said "40 wounded but returned to duty" out of the ~170.
11/23/04 This Yahoo
report states that there has been 51 dead in Fallujah and roughly 425 wounded which is a ratio of 8.3:1. This is slighlty higher than the 7:1 ratio that the US has been seeing, but not wildly so. The null hypothesis that there is no difference in the ratio of wounded:dead in urban fighting than general insurgency warfare is upheld.
US Airways and the PBGC
US Airways has asked
its bankruptcy judge to terminate the collective bargaining agreements with three unions, to terminate any further responsibility for its healthcare obligations to retirees, and to transfer responsibility of these CBA agreed upon pension plans to the Pension Benefit Guarantee Corporation. The PBGC will be accepting
the defined benefit(DB)pension funds and obligations up to a certain point. The maximum payout that the PBGC can give to any single retiree is slightly more than $36,000 per year even if that retiree previously was promised significantly more money than that.
This is going to be the largest single cost shifting of obligations in the transportation industry that I can remember. Only the steel industry shake-out has generated similiar size transfers in the past decade. US Airways is not the only airline in trouble, it is just in the most trouble. This is going to be a significant problem because as is, the PBGC is underfunded by any measure of potential risk assessment. The current rules that allows DB pension funds to assume 9% return on investment allows for many more marginally solvent funds to be at significant risk of failure because we are not seeing that ROI. The pension "reform" that passed last year is just a cost shifter into the future which opened up some cash flow for large companies. We'll be seeing ever more risk and volatility transferred to the individual in the near future.
Bumperstickers I saw today
On my drive to work this morning, I saw a couple of interesting bumper sticks that made me think.
"Get the US out of the UN"
" Damm Jack-booted thugs"
"IF you did it, it's not racial profiling"
All of this was on the back of an old blue pick-up truck with the stars and bars driving through Squirrel Hill.
"Fuck the French"
"99 dead liberals is a start"
On the back of of 92(ish) Escort
"All evil needs to flourish is for good men to do nothing: Bush-Cheney 04"
(I am not sure what the point of this sticker was; who is the evil?)
Now my question is what happens when their expectations are dashed by either Bush's actions (withdrawing from the UN actually has some supporters in positions of power) or reality. Who will be the next bogeyman for bad bumperstickers?
Fallujah Casualties Question
Right now, the Centcom report for Fallujah casualities states that there are 18 US dead and 178 wounded
from the fighting in Fallujah. This is a ratio of 10 wounded for every fatality. This got me scratching my head because using the data at Iraq Coalition Casualities
the typical ratio of wounded to dead US troops is 7.3:1. Does urban warfare increase the number of wounds inflicted while inflicting proportionally fewer fatal wounds?
I am looking back at April 2004 wounded:fatal data and the ratio was 6.1 wounded for every fatality, including non-combat deaths. This was the period of the most intense urban fighting in Fallujah, Ramadi and the Shi'ite shrine cities. The fighting from Aug. 12 to Aug 30 (the height of the fighting in Najaf) produced a wounded:fatality ratio of 14:1... so is something going on here, or does urban warfare increase the number of less than lethal wounds?
Via Angry Bear
I learned that John Kerry won the NFL major markets 22-8 and that Bush won the country at a higher rate than he won in Dallas.
Going on about the NFL, the new TV deals
with Fox and CBS should increase the salary cap in 2006 by roughly 3 million dollars above the current baseline, and the deal with Direct TV will add another 1.5 million in player salaries and benefits per year. Once the ESPN and Monday Night football contracts are negoatiated, I expect the 2006 cap to be by a total of 7-8 million dollars compared to the baseline.
Now this means a couple of different things. First, the Collective Bargaining Agreement extension is most likely close to being done because the NFL tries to be able to guarantee labor peace when it signs the TV contracts (that is one of the major attractions of the league for broadcasters, they know the games will be played). Secondly, it will allow for signing bonus prorations to be carried out over a longer time period once the CBA is signed which should reduce the number of rookie holdouts next year. Thirdly, this gives the Patriots some options.
Right now it seems that the Pats will have to make some extremely significant roster moves no later than the end of the 2005 regular season by getting rid of through free agency, retirement or cuts, several significant, but expensive older veterans if they are to have a chance in hell to sign the new talent that has exlcusively developped under Belicheck. Mike Vrabel, Troy Brown, Willie McGuinest, Roman Phifer, are all under contract for at least one more year past this year, but are getting to be very expensive. At the same time, Tom Brady, Richard Seymour, David Givens, Eugene Wilson and others will be looking for contract extensions in the next two years and these extensions will most likely have significant salary cap impact. An increase of 6 million dollars in the cap will ease the pain of these decisions.
Next, via Brad DeLong
I see Vox Baby
, a somewhat conservative economist from Dartmouth, lay out a damm good case for Social Security reform that acknowledges reality; private accounts are not a panacea, but just an interesting option. Vox is arguing that Social Security could be made whole if we indexed the normal retirement age with average life expectency changes so that the percentage of ones' life that one spends collecting benefits would stay constant over time. If we are moving to a society of longer living, and better living in old age, which I believe we are, then this is a damm good idea that can be implemented cheaply (my normal retirement age, for instance would be pushed back by 4.5 to 5 years, which I don't care about either way at this stage in my life. I assume that I'll be working or at least earning money until I am senile.) The only legitimate argument that private accounts make sense in is the political argument that the courts are more responsible than Congress in protecting those funds from being diverted for general spending. I agree with this argument, but it does not lead directly to private accounts as a similiar system of dedicated investment could be made by cannibalizing the Federal governments' employee thrift savings plans as the shared collective investment vehicle. This would reduce the administrative headache and costs of running individual accounts, thereby increasing the probability of making future retirees whole when their diverted payroll taxes into investments and normal DB OASI benefits are collected.
National Sales Tax (Pt 2) Roth IRAs
In comments, Jonathan Potts
notes that the current income tax structure has strong incentives for individuals to save money for a wide variety of preferred outcomes by the creation of special tax incentives/rules for this privileged money. Under a national sales tax system, these incentives disappear. He is right, but on the matter of retirement accounts, this point is mostly irrelevant.
The vast majority of tax advantaged retirement accounts work the following way: The government says that an individual can take X amount of pre-tax income, save it within a somewhat restricted structure (ie no withdrawals for that Paris vacation at age 43) and not pay taxes on the accumulation of the income. Once your account passes the restrictions, you can withdraw the money and pay normal income taxes. The advantage is that you get to avoid capital gains taxes, and theoretically as people get into retirement age, they drop their income tax brackets, so they pay less. This is fine and good, and if a national sales tax was passed, the money going into the account will be treated the same way (no taxes) and it will be treated in a similar way (being taxed) when it is taken out in retirement. I need to run a couple of examples later today, but I think that the effective percentage of income taxed for most retirees with median or below income would significantly increase (not sure on the higher end), but the treatment is similar enough to not affect the incentives.
Now the people who are getting screwed are the people who bought into Roth IRAs. These plans allow individuals to pay post tax current dollars into an investment/savings vehicle and then withdraw the money at the appropriate age without any tax obligations. Now if a national sales tax is implemented and it is policy for the lifespan of most current Roth IRA accounts, expect one hell of an ugly work-around because these Roth IRA holders will be getting screwed twice if there is not one. First, they put their money in after receiving no current tax advantage and then they get taxed on their consumption once they take the money out.
“Double Taxation” does that sound familiar? I thought so, so an ugly workaround will be found in which individuals will be able to shelter some of their retirement spending from consumption taxation. Hey this sounds like it is starting to get complicated and confusing and inefficient…. FUN FUN FUN FUN!
It looks like the US is having significant tactical success in Fallujah. That is to be expected, as the Marines and the Army have more men, more firepower and better command and control elements than the guerillas. But this will be an operational and strategic failure if the goal is to reassert US control over the city without requiring a division sized occupation force that can sit platoons on every city block and cafe. The Iraqi units which are supposedly loyal to the Allawi government are doing their normal routine during intense combat; deserting at atrocious rates.
One battalion of Iraqi security forces has seen a 66% desertion rate even before it has entered combat in Fallujah, and this is a unit which was reconstituted to be higher quality after the systemic failure of the US (barely) trained forces last April. The only units which are fighting as units are the Kurdish companies. As I said before, this is counter insurgency whack a mole, as the insurgents can see the brigades come down the road, disperse
to other friendly towns, and repeat.
I don't see a crisis
The city is due to run out of cash next month, but Murphy said the city could likely find ways to get through the end of the year. January "would be a more difficult situation," he said.
The City Council is starting to play around with the budget. It was recently approved by the Act 47 recovery team and under the original plan, it would provide the city and the Act 47 team some leverage in the form of a commuter tax petition when we go to Harrisburg to ask for some serious tax reform and increases. I am under the impression that the city has fundamentaly cut as much as it can before bare minimal public services start to be affected, but even now some good ideas such as a productivity bank
that pays for increased efficiency are being slashed.
With this situation, the Council is being stubborn and unrealistic (I do not like sounding like a Murphy supporter, I'm sorry) in hoping that the state will approve a $350 million dollar bond issue to refinance and to shift responsibility for the city's debt. This bond would be backed by gambling revenue which I believe will not be directly competing with Las Vegas on a per machine tax productivity level. The council is behaving in a manner which is consistent with the previous councils that got us into this mess. Let's defer costs some more, shift things around for another year or two and then the magic anti-crisi fairy will come down and take it all away......"There's no place like Delusion, there is no place like Delusion, there is no place like Delusion."
Via Marginal Revolution
I see that the traffic congestion pricing policy adapted by London seems to have resulted in a close to Pareto improvement to society as traffic congestion in the central business district is down, commute times are down and public transportation is getting a fairly significant boost in usability. Overall, a pretty good set of outcomes by intelligently enacting a government policy designed to correct for a market inefficiency. I like this idea, as I have blogged about in the past.
Pittsburgh has a similiar policy already in place, we just call it the parking tax. This policy discourages individual motor vehicle trips to downtown as staying at the destination (the point of the trip) is now pretty expensive. However, we do not have London's problem of too much traffic throughout the day; instead we have too much traffice for about 45 minutes in the morning and evening, and then emptiness. Congestion taxing might work better at the tunnels as they back up for no good reason.
National Sales Tax Pt 1 of many
, has the correct Senatorial strategy for the Democrats on the national sales tax; acknowledge that it is extraordinarily unlikely that the Democrats can either implement preferred policy OR strip the bill of anything but for the most absolutely horrendous pieces with the help of the few, remaining but increasingly marginalized
moderate Republicans and deficit hawks. Bi-partisanship
from a position of lesser weakness, was already a losers' game for the Democrats in the Bush style of governance, and it is more so now. So the proper strategy is to be utopian, and to be a very clear and definative opposition party.
So lets' assume that a revenue neutral national sales tax is passed. This is what Bush wants, or at least has publicly indicated that he wants. Any simple and all inclusive national sales tax will have a rate of roughly ~30% to be revenue neutral. This will apply to the sales of houses, food, milk etc. It will strongly encourage a net decline in consumption (given the US current account deficit, that is not a bad thing). As soon as you start adding exemptions, deductions and credits, the minimal rate on the remaining taxable goods starts going up.
Housing is one of the two sources wealth that most voting Americans either own, or can realistically aspire to own. The other source is their automobiles. Moving to a simple national sales tax means junking or greatly reducing the current income tax system. One of the largest tax expenditures/incentives in the current income tax code is the home mortage interest deduction which is worth at least 70 billion dollars
(Huge PDF, p.139) according to the OMB for FY 2004. A comprehensive, simple rate national sales tax eliminates that tax deduction and transfers this wealth from middle and upper class tax payers straight to the government at the time of a transaction.
However, this is not the largest threat to middle class taxpayers, it is the implied loss of value in their house. The current tax deduction increases the value of a house by roughly 25% when compared to renting the equivilent home. This value is added because a home owner can dedicate a larger portion of their income to paying for the mortage than a renter due to the tax treatment of the payments. When you buy a house, you can pay more per month than when you were renting. This dynamic enters into the bidding considerations for property and raises home values. Now if we remove this tax incentive and treat the consumption of housing (owned v. rent)prices will drop. Now this is great for first time homebuyers, like myself and my fiancee, as we'll be paying the same or slightly lower prices for the same home. However it eliminates a major source of wealth for people who already own houses (who also tend to vote more) and places their retirements plans and personal balance sheets in doubt. They lose big time on this proposal unless Bush wants to throw in a convoluted out option for home ownership exemptions. Finally, this will crash the general US credit market as so many loans are based on using housing as collateral; it would be very plausible for a bottoms up situation to occur to many more homeowners.
So now that I have laid out a doom and gloom economic scenario that the Democrats can use as a convienent framing mechanism for the Bush tax plan, what is the positive economic tax plan? I think that an argument for going back to the Clinton rates is a viable option, due something about the estate tax reimposition with some type of "happy puppy/family farm" super exemption, and then a basic tax proposal that all forms of income are to be treated equally and that corporate tax shelters will be closed. Will this be implemented? Hell no, but is a clear contrast that won't be shafting 75% of the American voting public.
Pats beat the Rams
I know it has been a while since I have posted on football, something about an election and getting engaged has eaten into my football watching time last month. But yesterday evening, the Patriots utterly dominated the St. Louis Rams by a score of 40 to 22.
The Patriots were able to use an extraordinarily aggressive front seven to cover for their weakness in the secondary while the offense was able to consisently run the ball down the Rams throats. A very enjoyable game to watch, especially after watching the beatdown administered by the Steelers. (I agree with Captain Salty,
that the Stillers deserve to be #1 right now)
Right now, I am expecting to get a phone call from Bill Belicheck as he is looking for more cornerbacks. I have good size, a strong willingness to hit people, good flexibility. The downsides are that I am the slowest person on Earth who has both legs working and I have never played a down of organized football in my life. But yesterday the Patriots started an undrafted rookie and a second year 4th round pick at the corners and ended up playing the undrafted rookie and a player who was not good enough to be on any teams' regular roster last week at the corner positions due to injuries. Ty Law and Tyrone Poole (the regular starters) are both expected to be out for several more weeks so I expect to see a lot of teams playing a lot of outside passing to take advantage of the secondary.
Small Short, Big Long
Where should the Democrats go next? That is a question we will be facing for a while. The typical circular firing squad from the establishment Democrats has been "suspended due to a lack of attendance.
I am not sure where and if the blog/new activist circular firing squad convention will be held, so that is probably a good thing. But even without this distraction, a lot of work needs to be done to strengthen up the party. I think that we need to embrace a short term/long term strategy. No, correction, we need to continue some of the long term work that was started after the 2002 fiasco while making short term tactical moves.
suggests that we should be going for narrow casting of the small electorate clusters in order to cobble together a majority.
I say: think small! This is the internet era. Think narrow-casting, not broadcasting.........
A shift of about 1.8 million voters would have won Kerry the popular vote, and a shift of much less could have won the electoral vote, if it came in the right places. So, what are Estonian Americans thinking? What was Kerry's stance on Bear Baiting (a hot topic in Maine)? On ethanol? (Undoubtably Kerry was pro-ethanol, a big issue for Iowa corn farmers). Nuclear waste? (Nevada). Admittedly, ethanol and nuclear waste didn't put Kerry over the top. But what if he had proposed something for the Iowa potato growers too?
This may work, but it is at best a short term expedient and extremely risky because the Bush Administration and the Republican Party message dissemination machine has shown itself to be extraordinarily adept at grabbing a Democratic issue, saying that they are going to the same exact thing, confuse the waters, and then make the Democrats look bad.(Department of Homeland Security, Accelerated Income Tax refunds from the 2001 tax cut, education reform.) Next, I just question the credibility of these promises because it is extraordinarily unlikely that the Democrats will control the House before the next Census and the Senate is a slightly better probability, but still a very steep climb. Tactical gambits are a necessity, but they are not sufficient to form a strong and vibrant party that is capable of governing. Instead, they should be used to buy some time, buy some marginal votes and buy some marginal seats while the long term policy creation, message dissemination, and party mobilizing infrastructure gets built up.
This is a ten year plan that will be in year 6 by 2008. I believe that we need the infrastructure to counter the GOP's vastly improved few to few face to face GOTV operation, we need the infrastructure to develop coherent frames and meta narratives about where we will take this country, and we need this infrastructure so that effective communication and counter communication campaigns will be sustained and supported.
Coalition of the Shrinking (Pt.9 and 10)
Well, that grand coalition that President Bush was talking about, (I am not forgetting Poland) keeps on showing its steadfast resolve and iron determination to get the hell out of Iraq. Hungary
is pulling its logistics support element out of the Polish led division by March 31, 2005. The Hungarian government may not be able to delay the withdrawal that long due to the need to get a Parliamentary mandate for any deployment past Dec. 31, 2004. Oh well, it is just a logistics unit and that is a core US competency... easy enough to replace.
But wait, the Dutch
are pulling out their Marines, including a combat infantry battalion at the same time. They will be withdrawn by March, 2005 also. Again, no need to worry at all, as the US has plenty of spare infantry units lying around. Whoops, we don't have the spare units; every high readiness National Guard
brigade is either recovering from Iraq, prepping for Iraq, in Iraq, or slated to go next year. But hey, we have plenty of IRR vets available who have not been activated and who may or may not report. Things are going great!
As Jonathan Potts
notes, Bush was able to repeatedly hammer in a simple message. From my liberal Democratic perspective, it seems that there were three positive words used by Bush and every damm Republican surrogate out there to describe Bush and three negative words/small phrases used to describe and frame Kerry.
Positive for Bush: Negative against Kerry
Decisive Massachusetts Liberal
The Democrats ran on several dozen words that changed on a weekly basis and often seemed to change just as the last round of words were starting to reach penetration in the collective psyche of the American people. I am not a linguist and I don't even play one on this blog, but I believe that we need to train Democratic surrogates to stick to talking points and word frames that stay consistent over the course of a campaign. I am not sure what the positive words should be for the 2006 midterms or the 2008 Presidential elections because I need to see what the party is looking like in several months as we develop policy and message for 2006, but I can offer a couple of negative words to try and frame the Republicans.
Stick to basic talking points no matter what the situation is and pound them. This strategy will piss off people who want intelligent debate on the issues, but the swingable contigent of these people are fairly small and I think that the undertone of Democratic competence or at least Republican incompetence on economic policy will do most of the talking there. But a consistent message (no matter how dumb it seems at times) could be a useful starting point to take advantage of the new infrastructure that the Democrats are putting into place.
Rural Voter Outreach
I am a city dweller and a hardcore urbanist with all the biases that implies. I like my cities, I like my dense environments, I like running into bizarre people every day, and I like to rely on cooperative and collective action problem solving institutions. I have absolutely no insight on the matter of rural issues. But these issues are most likely not just cultural, but fundamentally economic issues
masquerading as cultural issues.
notes, the Democrats, on a policy level had pretty good agricultural/rural outreach programs for both the Gore and Kerry campaigns. However once they were developped, they were not heavily promoted in any significant national forum. Instead, city and suburban issues were heavily flogged.
So we have good policy, and assuming that the Democratic base, or at least the Internet base is willing to continue to keep open their wallets and pocketbooks, we can communicate this policy position if we want to. That means us urban Democrats need to be willing to spend money, thought and time looking at issues from a cosmopolitan and catholic perspective, and not just from our own. Hell, we already had a candidate (Dean) who achieved some national prominence who "got" this fact. He was well supported in the primaries, and still has a hardcore cadre of supporters who will be willing to listen to new ideas from him on this issue.
G-Man's pre election thoughts
G-man sent to me a very long piece right after the debates in which he was arguing that there is a good possibility of what did happen last night would happen. We kept the piece off the blog because it needed a little bit of work, but here it is, retrospectively. I am also attaching an addendum that he sent to me this morning. I have made no changes from this point onwards:
The point is that we are all capable of believing things which we know to be
untrue. And then when we are finally proved wrong, impudently twisting the facts
so as to show that we were right." -- George
A Sweep that Meant
After three debates in which John Kerry not only
displayed presidential timber, but also seemingly dismantled much of the GOPs
attempt to frame him as a waffler and a war coward…after three debates in which
Bush shocked and awed his base with a horrible first outing, and then followed
up with two other performance which, if improved, were still peppered with the
sort of inexplicable mental and linguistic farts that no federal candidate for
any office but W. would ever get away with, I score the debate perception game 3
to 0 for Kerry, with one big win followed by two very small
His reward? In the immediate aftermath of the debates
national polls revealed a boost (or at least a maintained lead) for Bush where
· USATODAY/CNN/GALLUP had
Bush up by eight in likely voters.
NEWSWEEK had Bush up by six for likely
· ZOGBY which I trust the
most based on past performance, has Bush up by two (but four just a little while
· Washington Post Tracking Poll
had Bush up by 4.
· Rasmussen, which
is a tracking poll, has Bush by two.
First, for you Kerry
partisans, spare me the results of polls paid for by the party okay? Yes I
know that across the battleground states, in aggregate, Kerry has a lead.
But you don’t win based on aggregate sets of states, you win state by
state. And yes I know the “cell phone only” folks aren’t counted, and I
know all polls are just samples, and that despite the fact that a lot of them
are in agreement, this could be due to inherent bias in the sampling
methodologies they share. And of course, I know that it’s not over yet and
Kerry might still win.
But I don’t think so. Look, he
basically won 3-0 and the polls did not respond, and because of this, I believe
we are going to lose this election. And given our current national polling
results, I don’t know why anyone thinks that after the Waffle House and Swift
Boat initiatives, and the upcoming “Stolen Honor” initiative at Sinclair
that anyone believes that Rove is out of tricks to continue to chip away at
those at dullard-or –just-dishonest undecided voters
Possible Reason Why
The main mechanism responsible for the
race’s latest turn appears to be that “grotesque process of self-deception” that
Mark Twain so aptly described in the Mysterious
Stranger. To me the post-debate poll results were a resounding “clack”
certifying the completion of the furious activity of gears and wheels in the
minds of undecided or uncertain GOP voters; allowing them to finally rationalize
their continued support for another term for a man they love to love, in a way
that will enable to sleep comfortably after election day. Considering the
constant stream of information on the failures of the administration in terms of
its assessment and subversion of intelligence about the threat of Iraq, the lack
of post invasion planning, the collapse of the case on WMD, the yet to be
admitted zero relationship between the Baathists and al-Qaeda, an eroding
security situation on the ground, and the constant casualty reports, it must
have been a Herculean effort, or perhaps a Triumph of the Will.
wondering about what the true nature of this process, I sometimes fancy that it
has a lot to do with religious undertones. After all why would a person at
the bottom of the income scale knowingly support policies that will advantage
the rich with little, zero, or negative benefits for themselves? I suppose
some folks are “one issue wonders” and, for example, “just hate taxes.”
Others may support the GOP in order to ensure jobs in certain sectors – i.e.
oil, coal, and military/industrial production in their state. And for some
I’m sure it’s just a “sports” thing, where the voter has all the objectivity of
a die-hard NFL fan. But these items can’t account for everything,
especially among female and black voters with which Bush has made gains.
So what could it be then? Just his personality? Actually, I think
religion has a lot to do with it.
If you are poor, the idea that
there is a better life after death is appealing, especially if you have few
options available to improve your current one. Perhaps the process,
rational in its own way, goes something like this. I could benefit myself
economically now by voting for Kerry, or I could save my soul from eternal
damnation (or at least achieve eternal life) by voting for Bush. Assuming
one’s life is really eternal in heaven, and assuming one enjoys an eternal
stream of benefits from being in a heavenly state, that kind of position is hard
to argue with from a cost-benefit standpoint, with or without the time value of
money (is heaven timeless).
But of course, to exploit such a belief
politically, you have to attach your political positions to the pearly gates in
way that serves, but does not interfere with your interests. An economic
policy designed directly and comprehensively on the quotations of Jesus would be
extraordinarily inconvenient to the interests that support the GOP. Better
to choose or manufacture less threatening issues from religion – like requiring
school kids to begin their day mechanically mumbling a generic prayer,
triumphantly installing faux iron plaques of the ten commandments on federal
buildings, providing an alternative to evolution in science class, banning
abortion, and banning stem cells. Issues that will tangentially but
effectively harness the holy aura of Jesus, rather than acknowledge what he said
about Caesar, the poor, and the meek.
Whether you really
believe that W. attempts to channel the Lord earnestly or cynically
(read and judge for yourself), his administration works this angle well.
As for me, I happen to believe George W. Bush believes in God, while at the same
time I in no way believe that Dick Cheney does, although I think he finds
religious conventions useful. If any reader doubt this encourage them to
read up on one of Cheney’s favored philosophers, Leo
Strauss. I think rationalizing Strauss with the New Testament would be
My Preferred “W win”
So here is my idea to preserve the
republic. If W. wins, let’s hope for a GOP sweep. Let’s hope the
retain sole possession of control and responsibility. Let’s keep our name
off this project.
Let us then bear witness to what Bush/Cheney
would accomplish unfettered by an uncooperative Senate or House, allied with a
friendly Supreme Court (4 slots are expected to be up for grabs in the near
future). Let Bush/Cheney continue what they started, the mighty
transformation of this great nation to their own libertarian ideal, perhaps
coated with a thin veneer of religiosity.
Now of course,
such a transformation would involve the continued shifting of economic income
and wealth away from the poor and middle class, and to the upper deciles of our
economy, and to offshore economies as well. But I actually don’t think
that will cause the GOP any serious political problems as long as enough of
their base voters stay carefully tuned to their preferred propaganda providers,
as long as the holy aura is maintained, and as long as employment and income of
the middle and lower classes in key states doesn’t fall too
But on the other hand, no one likes surprises, and unpleasant
surprise will be this nation’s eventual salvation.
should expect Bush/Cheney to *continue* to heap enormous health, security,
environmental, and economic risk on the individual heads of the non-rich.
This shifting of risk will be even less detectable than the shifting of wealth
and income…at first.
And I say, if W. wins, let them do
it. Let the country find it’s inner 19th century. Neuter the
EPA. Neuter the Highway Safety Administration. Neuter the Energy
Department. Neuter the FDA. Cancel the unfair cost burden of local
restaurant inspections on the small business man.
stop there. Dismantle the social safety net – public health insurance for
the aged and poor, regulation of private insurance policies, unemployment
insurance, old age insurance, and disability. Get rid of it all, it’s completely
incompatible with the core principles behind the W. façade. Let the
“compassionate stuff” be handled by the governments new helper, The Church, via
a stream of funds with no accountability for use or results.
the risks pile up. And then, sit back in a chair with some popcorn, and
watch them eventuate with me. Because folks, that’s the only way this
public is going to learn. As J.R.R. Tolkien’s Gandalf once said, “The
burnt hand teaches best, after that, advice about fire goes to the heart!”
It will take a wide scale
loss of blood, money, and life for the public to really understand the
implications of Bush/Cheney-style “freedom.” If the choice is between a
long slow political defeat over 50 years with millions of economic (and actual)
casualties occur over and the dissipation of some of the most precious
foundations and institutions of this country vs. a total political defeat
followed by a collapse, followed by the restoration of the great things that
underpin this nation, then I prefer the latter -- a principled sacrifice to
ensure that future generations can enjoy what’s best about our
And no, I’m not looking to score some snotty sense of
Schadenfreude, too many innocents would actually suffer, and of course many of
those responsible would not – there is no grim satisfaction in that, only
My preferred scenario has come true, and then some. Not only did theyhold power, they increased the margins of power. This will lead to anincreased margin in the SC as well. To me any idea of a revolution within the GOP against Bush is now dead.There will be no alliances between "moderate wings" now. Bush andcompany stand supreme. So expect the following over the next fouryears: (1) The continued dismantling of the social safety net, governmentregulations, and the shrinking of the public sector in general. (2) The erosion of rule based, institutional, and traditional checks andbalances holding such policies back. Ex: funding cuts for the GAO. (3) A new thought last night - the elimination of publicly producedinformation -- i.e. the scope and coverage of the census, the economic,and employment statistical programs of the BLS, and especially (actuallythe canary in the information coal mine for me), the collection ofenvironmental protection data. These will be axed in the name ofcutting costly bureaucracy -- one by one, our ability to gauge what'shappening will go out. As I pointed out to you during our hour longconversation, information is not useful for those who already feel theyknow what is right. It is an inconvenience to idealogically baseddecision making.
Labels: iraq, oil