Taxing Employees Who Receive Health Insurance

The health care policy debate rages within the Washington, DC Beltway. Recently, President Obama's first nominee for Secretary of Health and Human Welfare, Tom Daschele, along with Obama's head of his transition, John Podesta (both whose wives as well as themselves are highly paid lobbyists...remember, the reason Daschele withdrew is because he neglected to pay tax on the limos he rode around in while he was lobbying) have announced that they believe employer provided health care plans should be taxed as income to the recipients. That means if you have a benefit at work, a health care plan, you will pay income tax for the benefit.

Remember, John McCain believed that if there was health care reform, this would have to be instituted in order to pay for the reforms and candidate Obama rejected the idea. But here it is, several months later, and two of his closest advisors are advocating for the tax.

Which seems like a great idea, but...

Medicare is taxed as income, why not employer provided plans?

However, if the idea is to get people insured, to get them using preventative medicine, like annual check-ups, mammograms, and vaccines, then what will a tax do to that policy goal? Won't many people, particularly those who we want insured, opt out? And aren't we in a depression (oops, sorry) where every single nickel and dime matters to working folks?

I think it is going to be harder and harder to keep our eyes on what is happening during this policy debate. But I also believe if we leave it to the swanky operatives, the same folks who live inside the DC bubble, we might all wake up one morning with a bad headache.

150 Years?

Wow. I thought we were a country of compassionate people. Wrong. To read the victim's statements much less what the judge said in his sentencing ruling we seem to be similar to some sort of Islamic justice system. Not only did we sentence this man to three times his life expectancy if he'd committed his crime in his prime, but we yelled humiliations at him. What the heck does that get us?

And for deterrence to other Ponzi scheme or corporate crime? Well, most of those guys are now booking flights to countries without extradition treaties. Why bother confessing?

In the federal system, even if his sentence was 12 years, he would still have to serve 85% of his time. That's a lot of time for a 70 year old man.

So remind me, what was the point of this sentence? Oh, I know, we are into vengeance. And that's good because....?

America's Middle Class

Finally, someone wrote the article that says what I have been railing about for the past few years. Not only are the middle class jobs disappearing, but the impacts on African-Americans will be devastating.

Who To Trust

It's way too tempting to write about politicians and affairs, but I found this article about the commodities markets far more fascinating.

We're told time and time again that "markets" are perfect barometers for consumers. That allowing markets to wheel and deal will achieve the lowest price and greatest quality for us. And if you believe that...

Now, evidence is beginning to leak out (pun slightly intended) that commodities brokers in cahoots with banks and oil companies have, similar to Enron, created false shortages, thus driving up the price of fuel oil and gasoline. Surprise, surprise!

The list gets longer of who not to trust. And the problem is voluntary transparency will not solve these issues...

Earmarks for Exclusive Clubs

The Rainier Club in Seattle, Washington, is a private, exclusive club. Up until the mid-1980s it's members were only male. There is still only one woman's bathroom. On the other hand it has one of the best private collections of Edward Curtis's amazing photographs of Native North Americans (displayed on the stairwell leading to the one woman's bathroom. Curtis exchanged photos for a room). John Muir and Gifford Pinchot are among the historical figures known to have stayed in the Club.

But for the past thirty years it has mainly been a base of power in Seattle. Political fund raisers have been held there, law firm dinners, and banking deals drawn up in it's men's grill.

Now, apparently, it needs some remodeling. To the tune of $500,000. And because the building is considered historical (although it is not on the National Register of Historic Buildings) it can qualify for federal funding. So the local Congressman (who probably collects lots of fund raising dollars at the Rainier Club) submitted a federal earmark for $250,000 to be matched by the members (many of them wealthy beyond belief).

My house was built in 1924, and while not historic, it's old and needs a lot of work. Hmmmm.

US Open Championship

Wow. There are some who pooh-pooh golf. Particularly men's golf. But these guys went through Biblical weather, intense play, and horrific course conditions. In the end, a really good guy won and several amazing runs to take the lead.

Congrats to all of you!

Fear Itself

I thought this piece in today's New York Times was perfect. Obama is not Franklin Roosevelt. The President's financial overhaul proposals reek of compromise and caving in to the banking industry.

The barn door was shut months ago and the cows and horses are laughing all the way to the fields.

It seems the Obama Administration is fearing the worst thing for a "change" politician. Getting re-elected.

Trying to Close the Barn Door When the Cow Has Already Left

Well, it seems to me that the proposed legislation and subsequent regulation on the financial industry is like trying to close the barn door once the cow left. And it seems that the financial industry is winning this battle.

Another Rant on Transportation Planning

First, let me get my defensiveness out of the way. Years ago I was going from mid-town Manhattan to the upper east side for an event at Christies (I wasn't bidding, just there to drink wine). It was a work event, so as I left the building my boss and another colleague decided to join me. My colleague, a long time New Yorker flagged a cab. And we promptly got stuck in traffic. My boss, a native New Yorker dryly said: If only we'd taken the subway...I love mass transit. Particularly in cities where it actually gets you somewhere you want to go and works. The whole time I lived back east I rarely rarely drove my car into the city.

Having said that, in cities like Seattle there really is no mass transit. Oh, I know, in a month we will be having a huge hoopla about a light rail link opening from downtown to the airport. Good idea, except a small problem. Parking.

Parking in Seattle has become a new form of social engineering and taxation. First the social engineering part. When the light rail opens it will run from downtown Seattle through a tunnel bored under one of our famous hills, out through a neighborhood south east of the city, then back west toward the airport. Along this whole route, except for downtown Seattle, there will be no parking. Unlike the Bay Area Rapid Transit (BART) which has parking lots near BART stations, Seattle and the regional government bringing us this light rail (billions over budget and years late) want us to bus to the light rail station, light rail to the airport, stand in the TSA line, and what was a two hour flight to San Francisco has now become a 5 or 6 hour ordeal. Great.

And while the city is eliminating parking, in other areas, small business districts, where parking was once free, they are putting up meters as fast as they can.

Chicago is finally admitting there are some unintended consequences to this parking meter taxation. In Chicago, Mayor Daly (a good friend of Seattle's mayor) "sold" the parking meters to a private company who promptly made them 24 hour. With 2 hour limits. And parking rates in private garages soared. So if you want to attend an art event or a movie, you begin watching the clock and you don't linger. Arts organizations have begun to notice their customers are leaving quickly and don't seem as relaxed during performances.

Remember, having density in urban areas is a good thing. But if these social engineers in transportation (and planning) offices make it hard for people to live in cities, well, be ready for another flight to suburbia. The unintended consequences of social engineering. I am old enough to remember all the planners ideas in the '50s, '60s, and '70s just had to be implemented and we spent the '80s knocking them all down! We should really try to learn from our history.

Wealth, Greed, and Punishment

There were two interesting articles in the New York Times yesterday. One about Ruth Madoff (oddly, the article was placed in the Style Section) and how vendors, restaurants, and even her hairdresser have shunned her since her husband's arrest and subsequent guilty plea. Although she has not even been questioned by the US Attorney's office, "the street" belief is that she is as guilty as her husband, or at least, seemed to enjoy spending the "ill gotten" gains as much as he did. So New York restaurants, Hamptons florists, and her upper east side hairdresser have all asked her to disappear, to not patronize them.

Her hairdresser, with whom she loyally went to every six weeks for dozens of years, said that he knew people who lost "millions." Same thing with the florist. And the restaurants didn't want other patrons to leave if she showed up.

As the Madoff story continues to unfold, it is becoming clear that most if not all the investors will recover their principal. In other words, the amounts they gave Bernie Madoff to invest. What they "lost" was the unrealistic profits he promised them. The gains.

So here is this woman, not guilty of anything, being punished for something her husband did. And because, according to the article, she is not playing the public relations game. It's ironic, isn't it, that the people who sought Madoff's investments did so because he made them think they were getting something exclusive, something for only a few people. The peons were not able to get these massive returns. Yet when it all fell apart, these investors still have not learned a lesson about humility. They still seek exclusivity. God forbid that they get their hair cut next to someone who is married to a felon! Or show some empathy. Or compassion. Or even loyalty to someone who was loyal to them. But then, those very same "triggers" are what made Madoff so successful, he played into the emotions that these investors continue to have.

The second article was about the Yellowstone Club. I have talked about this place in previous posts. An exclusive club in Montana where just to join you have to have something like 5 million in liquid assets. It advertised itself as a place where the rich could "check their egos at the door." Well, clearly that never happened. The owners of the club, Tim and Edra Blixith, made and lost several fortunes, but finally figured out, like Bernie Madoff, that appealing to the need of the rich to run with the rich could make them money.

Now, of course, the Yellowstone Club is in bankruptcy, as is Edra Blixith who is divorced from Tim. The Blixiths took the Club and leveraged it for over 300 million, using much of that money not to improve the Club, but rather to buy all sorts of things for themselves and a failed "swanky" time share idea further enabling the really wealthy to stay away from the rest of us.

It now appears, like the Madoffs, that the Blixith's new occupations are responding the lawsuits.

There are dozens of morals in both of these stories. Hopefully we begin to look at our seemingly insatiable need for money and more money as an illness rather than something to celebrate. That we begin to really examine how we got into this age of greed not as a "fad" of self examination as we read our new subscription to Living Simply, but really as a means to understand how unhealthy this past decade or so has been for us, the planet, and our future. And maybe Rith Madoff's hairdresser can find it in himself to just cut her hair.

The Way We Were

The fact over 70% of our economy is driven by consumption, you know, retail sales, is disturbing. Even more disturbing is that we seem to be fixated on an economic recovery that is dependent upon the same idea: people spending lots of money (or mostly debt) to buy several different colors of the same thing (I am guilty of the pleasure myself).

While this ramping up of consumption may have been sustainable for several decades, it clearly is not economically, environmentally, or socially sustainable for the future. We must figure out ways to enjoy our free time that don't require spending lots of money on jeans that will be thrown out in less than a month or a new Coach purse that looks just like the last one but is in a new color. As the divide between the haves and the have-nots deepens, it seems that unless we begin to save money, there will be more and more have-nots and fewer haves.

A vibrant middle class is the hallmark of a healthy democracy. People vested in their country's future. If the divide between rich and becoming poorer continues to swell, our own democratic fabric may begin to tear.

So while it is fun to speculate what swanky store will lease expensive space at the mall, it seems to me we need to have a national dialogue about the foundation of our economy. Is it Costco or Ford? Manufacturing or buying stuff? Going further into debt or having countries and people owe us money? Is this really a choice?

On Foreclosure, Again

As if to add insult to injury.

Many of the new residences built during the past ten years were constructed in planned communities. Large subdivisions with lots of houses that mega-developers convinced politicians would be good for "affordable housing." Of course, not one house was "affordable," but they got their permits and ran with it.

Since they were planned communities, part of the selling point were the covenants, conditions and restrictions (CC & Rs) which had requirements on everything from paint colors to maintaining common areas and landscaping. It created a homogenized look.

Of course, those things cost money, so homeowner's associations were created which established fees for each home.

And now, as money gets tight, many homeowners, while still paying the mortgage are not paying homeowners dues. And the homeowner's associations are filing for foreclosures.

The way this works is that the homeowner's associations are in junior positions to the lenders, which means if they foreclosure, they have to pay off the lender in order to own the home. Could be expensive. But in the meantime, it's pitting neighbor against neighbor. And that is frightening.

Something is still seriously wrong in this country.

Green Shoots Doused?

The Obama Administration is touting "green shoots," their language for signs on progress the economy is turning around. Small pieces of data, they say, indicate that their stimulus package is beginning to work. One such data point is the unemployment rate which was announced last week. While 9.5% is the highest in over 20 years, the Administration asserts that the rate of increase in unemployment is slowing down. I feel better already.

But really, the economy is still reeling and the slightest hiccup can cause problems. Over the past few weeks gas prices have soared. The price of a barrel of oil has risen even more and for the first time in a long long time, gas prices have not even kept up with the price of oil. Increasing oil prices are frequently a sign that the economy is growing. Most oil traders subscribe to the notions of supply and demand. If the economy is growing, demand for oil increases and given the oil cartels and, well, er, greed of the big oil companies, supply is often limited. When the Obama Administration announces there are green shoots, in other words, hope for the economy, oil traders boost the price of oil and gas prices soar.

But here is the problem. Over 9.5% of Americans are unemployed. In most places it takes a car to look for work. Go to the unemployment office, to job interviews scattered throughout the area, pick up kids from school, network with employed parents on the sidelines of the soccer game, you get the idea. If the cost of gas increases, as it has, then something on a fix income has to go. Green shoots wither.

And of course, there are the transportation wonks who advocate increasing federal gas taxes so people can not afford to drive (one of these days I will talk about all my environmental colleagues who owned large cars and drove to work, every day).

I don't envy the economists and budget gurus advising President Obama. This is a delicate and tough time. Hopefully, however, they are paying attention to the little things that can send families over the edge. Gas prices are certainly one of them.

Imprisoning Terrorists

I remember driving up Prospect Street in New Haven the morning of June 24, 1993. Fire trucks and aid cars were blocking the street and I had to take a detour to get to Sage Hall, the Yale School of Forestry. I later learned David Gelernter, a computer science professor, had opened a package which contained a bomb. While his injuries were not fatal, he was lucky. Gelernter was another victim of what the FBI called at the time, the UNABOMer, or as we now know, Ted Kaczynski.

Earlier that year, I was returning from lunch along Broadway when I heard hundreds of sirens and watches police cars, fire trucks, and ambulances careen through lower Manhattan traffic. It was February 23, 1993. The first attempt at bombing the World Trade Towers. That night, when I left the subway at Grand Central Terminal, there were armed National Guardsmen along the train platforms. Eery sight at the time.

Both Kaczynski and the militants responsible for the World Trade bombing in February, 1993, were arrested, tried, convicted, and sentenced in federal courts. Kaczynski and Ramzi Yousef, the mastermind of the 1993 World Trade bombing, are now incarcerated at the federal super-maximum security prison in Florence, Colorado.

Recently, the federal Bureau of Prisons has established other prisons within prisons to incarcerate terrorists. So far, there are two Communications Management Units, one in Marion, Illinois and Terre Haute, Indiana. Among other inmates in these units are two of the Earth Liberation Front members who committed a number of arsons throughout the west. These CMUs constrict communication by the inmates with the outside world and closely monitor the inmates while they serve their sentences, but they are not held in solitary confinement as the inmates are in Florence, Colorado.

As the Obama Administration begins resolving what to do with the more than 200 detainees held at Guantanamo, Cuba, the politicians concerned about public backlash against these so-called "bad guys" have raised a strawman argument that these men should not be incarcerated in federal prisons because of safety issues. And President Obama has rightly responded by saying no one, not one convicted terrorist, has escaped from a federal prison.

If it is one thing we do well here in America, it's our prisons.

Today, the first detainee from Guantanamo was brought to the United States for a trial on his involvement with the bombings of US embassies in Kenya and Tanzania. Our justice system is a model of fairness and impartiality. While there are many things wrong with our system, it sure beats what we have witnessed recently in North Korea or Iraq.

If this man is found guilty, he should be incarcerated in one of our prisons. They work well. Often too well, but that is another discussion. It is the role of politicians to help calm unjustifiable fears. In this case, our leaders are not serving us well by flaming the fires of fear that we can not imprison the convicted terrorists.

Post Script: After I did this entry, I found a piece on Huffington Post by Daniel McGowan, one of the more vocal ELFers. He is currently incarcerated at the Communication Management Unit in Marion. It's amazing, frankly, that this piece somehow managed to get out of the prison, which essentially shoots down my theory the federal Bureau of Prisons can "contain" terrorists! But it's an interesting read, nonetheless.

Making It In the New Economy

Almost two years after introducing the iPhone and a year since giving the world a new operating system, Apple had a splashy ceremony today showing off yet another iPhone, operating system upgrades, and new laptops.

But, Apple, realizing that these one-right-after-another "new models" reeks of Detroit's now famed planned obsolescence is offering consumers something not many manufacturers are doing these days: price reductions.  Not a lot, but enough to perhaps disguise the lack of sustainability in the constant "newness" they are pumping up.

So it seems the new economy isn't that different from the old economy.  Spend money on the new and shiny!

I Am Shocked!

Shocked!  The former CEO of Countrywide Mortgages, Angilo Mozilo,  has been civilly charged by the Securities and Exchange Commission (note, not criminally charged) with fraud and insider trading (that is selling off stocks based on information you have because of your position in the company that no one else has, as in, this company is going down so I need to get rich now...think Ken Lay telling his employees to buy Enron while he was selling).  

Not that I advocate for retribution, but with all the financial hanky-panky that went on during the most recent financial industry led boom, some folks must be "brought to justice," as they say.  Perhaps this is the tip of the ice berg.  And maybe, just maybe, there will be subsequent criminal charges.

Plus, what is up with that sun tan anyway?

Meanwhile, Back at the Homefront

It was a small article, not the lead, in the New York Times, about how the Obama Administration's program to help troubled homeowners prevent foreclosure, is failing.  This is the second article with similar facts, that homeowners who ought to benefit from any relief, are being either ignored by their banks, or offered new loans with higher interest rates and even more fees.  The Administration, sadly, has no idea how many people the program has helped.  Which means, of course, they have no idea how many have been rejected by the lenders.

It's as if the banks listened to the public relations department and behaved for a few minutes in front of the cameras while President Obama chastised them.  It seems it was all a show.  Then those banks went back to business as usual, or even worse, banging away at the folks who have been responsible but are now on the edge, struggling a bit.  It's as if these behemoths want to rub-out the last remnants of middle class Americans.

And I keep wondering where is the outrage?

China and the US Economy

News that a Chinese company may buy Hummer from GM along with Secretary of Treasury Geithner's comments that "China feels secure with the US economy," seems startling.  Several years ago a the Chinese government voiced it's interest in purchasing Standard Oil, the company started by John Rockefeller, but the idea was quashed by the government.  Now that we, the taxpayer, owns Hummer, along with the rest of GM, we may sell it to China.  

So let's see how this works.  The largest polluting country in the world purchases a large, gas guzzling car manufacturer.  Analysts say the company would be moved to China to sell Hummers to Chinese and Russians.  Adding, of course, more carbon into the air as well as consuming more oil.  Makes sense?

Then, of course, there is the comment by our own Secretary of the Treasury.  He went to China to assure them, our largest creditor, that we are solvent.  Think about that.  He did what thousands of home owners are having to do, call their mortgage company to tell them the check is in the mail!  

May we live in interesting times.

What's Good for America

Rarely in my life have I felt that every time I glanced at headlines I would consistently shake my head in amazement.  But these past few months have been non-stop eye popping headlines.  Today's is no different.

Charles Wilson, the chairman of GM during the early 1950s was appointed by President Eisenhower to be the Secretary of Defense.  During his confirmation hearings he was asked whether he could make decisions which could adversely affect GM.  His answer, often misquoted is: I thought what was good for the country was good for GM and vice versa.  We all know what the misquote says, but this statement is actually playing out today.  

The problem is that, among other things, no one who is of an age, say under 40, that will continue to buy cars, is buying American made automobiles.  Something like 40% of Americans under the age of 40 have at one time bought an American made car (that is, a car made by Ford, GM, or Chrysler).  

Regardless whether the "Big Three" fumbled the customer needs test, the lack of manufacturing jobs in America is deeply troubling.  Michigan used to be the epicenter of middle class jobs for blue collar workers.  And those jobs were relatively color-blind.  If you could train to screw bolts, you made good money.  And those employees bought cars, appliances, homes, took vacations, went to the doctor, had dinner out, and raised their kids.  Money flowed throughout the economy like blood through arteries.

The tragedy in this bankruptcy filing is the utter failure of American manufacturing.  We pride ourselves as a smart, technologically savvy country, but the failure of our "made in America" companies seems to be prescient to a worsening of our economy.  

It also has to be noted that the federal government is "guiding" GM through this bankruptcy.  It makes me wonder who is "guiding" all the homeowners desperate for help with their mortgages that are deeply underwater and in delinquency.  Ah, but that is right, the tables have turned, and what is good for GM certainly doesn't seem to be good for the country.