Last Build Date: Thu, 09 Apr 2009 00:30:00 -0600Copyright: Copyright 2009
Thu, 09 Apr 2009 00:30:00 -0600
But isn't this a curious way to run environmental and energy policy? It is, and the about-face in Santa Barbara only reflects the national tendency to lurch between cheap-oil complacency and expensive-oil panic.
Time and again, the national will to address America's dependence on crude withers as energy costs ebb. Three decades ago, a quick tripling of oil prices ignited a crusade to end "our addiction to oil." Americans weatherstripped their homes, and Detroit started making fuel-efficient cars. Those efforts and a recession sent oil prices into collapse. And soon after, SUV sales took off on the wings of cheap gas.
In the first Gulf War, Americans sent half a million troops to liberate Kuwaiti oil fields from Saddam's grip. Again we rued our addiction to oil and vowed to change. The war was won, the price fell back, and everyone forgot about the whole thing.
Climate change now dominates the energy agenda in Washington. How should we curb the planet-warming gases that fossil fuels emit? The president and House Democrats have a cap-and-trade plan: It would limit greenhouse gas emissions and create a market in which companies could trade their pollution allowances.
But in his determination to not solve a problem, Republican House leader John Boehner simply tars cap-and-trade as an "energy tax." Now Boehner is not being inaccurate. Cap-and-trade and its variations do amount to a tax. If Boehner wished to be constructive, however, he'd join a call by other House members to pass the proceeds of any carbon-trading regime back to consumers in the form of a monthly dividend.
Others want special protection for American manufacturers that compete with rivals in low-carbon-tax countries. That's only fair and essential to gaining the support of Midwest lawmakers, Democrats included.
The objective here is to control greenhouse gases, not raise tax revenues, but the deficit-swamped federal government can sure use the dough. Obama's budget relies on revenues that would be raised by cap-and-trade -- an estimated $645 billion over the next 10 years. Europe has long used high gas taxes to pay for a bundle of social benefits, as well as cut oil consumption. These are regressive levies to be sure, as are American gas taxes. But they do change consumer behavior, and the money pays for progressive programs.
Some economists say, "Let's drop this complex cap-and-trade fan dance and impose a straightforward, grownup carbon tax." That gets my vote. Again, vulnerable industries could be helped on the road to reduced emissions.
Call it a tax. Call it cap-and-trade. Call it ice cream. The best time to put forth policies that may raise energy bills is when oil prices are low. Santa Barbara County used that opportunity to resume its outspoken defense of local beaches.
Congress should do likewise. Energy is an economic, national security and environmental challenge all wrapped into one fat issue. Let's not blow it this time.
Wed, 08 Apr 2009 00:30:25 -0600
Nearly 40 percent of babies now born in America are to unmarried women. The birthrate for unmarried women in their 20s is higher than for teens. Sociologists say that these new mothers often assume that the baby will "cement" the relationship. But these arrangements rarely last.
Some single fathers no doubt gallantly pitch in. (And some married ones don't.) But that's not the norm. Most such single mothers become beasts of burden.
A PBS "NewsHour" segment about "people hard hit by hard times" featured Heather Scharf. A 37-year-old single mother, Scharf recently lost her good-paying job. She's scared, stressed and depressed.
We learn a lot about her: She dropped out of a community college at age 20, then worked her way up in the mortgage business. She cares deeply for her 5-year-old girl. She's found a lousy-paying temp job an hour's drive away -- and spends $800 a month on a school where her daughter can stay during her late hours at the office.
But there's not a single word about the father. Was he married to Heather? Is he paying any child support? Where the heck is he?
The story of the struggling single mother has become so commonplace that few even question why she's doing this so utterly alone. There should be a standing newsroom rule that all such accounts include some reference to the fathers.
I wonder most about women like my friend. She was not an impoverished teen lacking a traditional family model. She was not one of those well-to-do professionals buying the sperm of an anonymous high-achiever. She belongs to the hardworking middle class. In olden days, she would have had a frilly wedding before starting a family. (She did have a baby shower.)
Perhaps I'm making too much of marital status. After all, many divorced mothers engage in similar toil. For the legalities, I spoke with Barbara Glesner-Fines, a professor of family law at the University of Missouri-Kansas City.
Regarding children, the law treats the father (or mother) who breaks up with the other parent much the same whether there was a marriage or not. A court will impose the requirements of support and privileges of custody and visitation.
The difference is that when a child is born during a marriage, the husband is presumed to be a father. That is not the case when the couple is not married. "He has neither the rights nor responsibility until he is found to be the father," Glesner-Fines said.
I ask a sociological question: Does a marriage intensify one's sense of duty?
"Formality in the law serves some important purposes," Glesner-Fines responded. "It cautions people that what they are getting into is serious."
Yes, that's it. The seriousness of the legal bond between the parents -- as well as from parent to child -- helps foster a partnership in childrearing, even if that bond later dissolves in divorce. Why so many women take on motherhood without such formality in place is a mystery. The sad result is a growing sisterhood of drudgery.
Thu, 02 Apr 2009 00:00:00 -0600
What's a liberal to do? First, recognize that the Blue Dogs are the reason Democrats have such nice majorities. They are why the dreams are even on the menu. Second, concede that the Reluctant Ones have a point.
Good advice not taken. Activist groups have launched a "Dog the Blue Dogs" campaign to pressure moderate Democrats to back President Obama's program with a more open heart. Ads are being run in the Dogs' home states.
Singled out for special attention is Sen. Evan Bayh of Indiana. Bayh recently organized a group of 15 centrists queasy over the big numbers in President Obama's budget plans.
In a call to the media last week, the campaign's sponsors chided the centrist Democrats for airing doubts about the Obama agenda. William McNary of USAction hinted in a pleasing heartland voice that Bayh could be beholden to "powerful special interests."
Other Blue Dogs, he added, "could become the unwitting accomplices of those who don't want change." And he gently noted that Bayh and fellow Blue Dog, Arkansas Sen. Blanche Lincoln, are up for re-election in 2010.
A reporter asked what options the activists had if the Blue Dogs don't come around. Robert Borosage, of the Campaign for America's Future, responded that the groups assume "that if you hear from constituents, you'll get with the program."
This is a curious strategy: The semi-conservative parts of the country that elect Blue Dogs are not thickly settled with liberals. Forty-nine House Democrats come from districts that backed John McCain in 2008. They have no reason to relax. As a reality check, the special election in upstate New York to replace Blue Dog Kirsten Gillibrand (now in Hillary Clinton's Senate seat) remains too close to call.
And Republicans totally understand the Blue Dogs' vulnerability. House Minority Leader John Boehner called them "lap dogs" for Obama.
These Democrats are dogged if they do and dogged if they don't. But let's set aside the politics and look at the policies. Are they right?
This year and next, big deficits are needed to pull the economy out of the ditch. But in the longer term, deficits must come down. The "pay-go" rule, a Blue Dog obsession, is the way to impose discipline. It requires lawmakers to offset the costs of legislation with tax increases or spending cuts.
By the way, these centrists are not Lite Republicans. When Rep. Paul Ryan, a Wisconsin Republican, said, "I want to ask my friends, the Blue Dog Democrats, do you really want all this government?" he truly asked the wrong question.
The Blue Dogs have no ideological objection to government. They support such Obama priorities as health-care reform. They just want them paid for.
And Blue Dogs hold undisguised contempt for recent Republican conversions to fiscal rectitude. Ryan's appeal "to help us defeat this unprecedented taxing, borrowing and spending spree" drew a tart response from Louisiana Rep. Charlie Melancon.
"These statements come from the same individuals who wrote the president a blank check for eight years, driving spending to the highest levels in our country's history," said Melancon, a co-chair of the Democratic Blue Dog Coalition.
What's a liberal to do? Be very nice to the Blue Dogs.
Tue, 31 Mar 2009 00:00:00 -0600
None that anyone has noticed. Obama's economic team won't even nationalize the broken banks. But that doesn't matter. The S-word can signify anything conservatives want it to.
Real-life socialists scoff at this whole back-and-forth. Obama is "a hedge-fund Democrat," Billy Wharton, editor of Socialist magazine, writes in The Washington Post. "Not only is he not a socialist, he may in fact not even be a liberal."
Grasping both the gut-level response to the S-word and the meaninglessness of it, urbane conservatives try to have it both ways. In a kind of bait-and-switch, The National Review plasters "Our Socialist Future" on the cover, but the story steers clear of the S-word. It's used only once -- in a misleading reference to "socialized health care."
No fool he, author Mark Steyn replaces "socialist" as everything red-blooded Americans scorn with "European." Obama's Washington, he says, is offering "Euro-sized government with Euro-sized economic intervention, Euro-sized social programs and Euro-sized regulation."
But ... but even the 27 countries within the European Union differ a lot on the size and role of their governments. And if Europe is so hot to regulate, how come it let its 12 biggest banks go leveraged 35 to one? The biggest American banks were leveraged less than 20 to one; they were a model of restraint by comparison.
The label "socialized medicine" gets glued onto any national health plan. In a true socialized system, all the doctors work for the government. That's the case in only a few countries.
The more accurate term is "socialized insurance": The government picks up the bills but doctors work for themselves. By the way, socialized insurance has already established a beachhead on our shores. Ever hear of Medicare? And the emerging Obama health care plan, with its heavy reliance on private insurers, happens to be less socialistic than Medicare.
Now, how many of our Republican lawmakers want to dismantle Medicare? Let's see a show of hands.
Details, details. Most European health-care systems are multi-payer. They allow both government and private coverage. Some have very strong free-market components.
Steyn frets that a stronger social safety net would strangle "the American virtues of self-reliance, entrepreneurial energy and the can-do spirit." Workers need the whip of insecurity to go forth and conquer whatever.
There are nightmare visions of a Frenchified push for "legislated sloth" -- that is, a codified right to time off. Steyn quotes the following passage in the proposed European Constitution: "Every worker has the right to limitation of maximum working hours, to daily and weekly rest periods and to an annual period of paid leave."
Where do we sign? -- I mean, what gutless little locavores those Europeans must be! Real Americans work three jobs with no health care, no vacation and no retirement benefits. They bow before the executive who nabs a quick fortune through a short-term bonus scheme, preferably completed before the taxpayer bailout. Of course, he must be lightly taxed.
As Joe the Plumber put it, "Why should they (millionaires) be penalized for being successful?"
Regulations? Progressive taxation? Secure health care? Socialism on the march! None of that Euro-puff stuff for the Joes who detest the S-word, however defined.
Thu, 26 Mar 2009 00:30:00 -0600
But green Republican shoots are emerging from the spring muck. The most conspicuous one involves the falling fortunes of embattled Connecticut Sen. Christopher Dodd, up for re-election next year. A new poll has the once seemingly invincible Democrat tied with former Congressman Rep. Rob Simmons, a Republican from eastern Connecticut.
Contrary to myth, New England is not firmly sewn in the Democratic bag. Three of the states -- Connecticut, Vermont and Rhode Island -- have Republican governors. Meanwhile, independents comprise huge voting blocs throughout the region.
In Connecticut, 45 percent of registered voters are independents. Only 34 percent are Democrats, and the remaining 21 percent Republican.
True, a Democrat took away Simmons' House seat in 2006. But the three-term rep lost it by only 83 votes and in a dismal year for Republicans nationally. In recent elections, two other Connecticut House Republicans, Nancy Johnson and the aforementioned Shays, were defeated but not trounced.
"All those Republicans lost because of George W. Bush," Kenneth Dautrich, an adviser to Republican Gov. Jodi Rell, told me. "He's gone."
Rell now enjoys a 75 percent approval rating. That's remarkably high for a governor at any time but extraordinary in the middle of a big, fat economic crisis. It's another reason why Democratic overconfidence would be ill-advised.
Dodd's career may fall victim to a series of careless acts. As a presidential candidate, Dodd sought to curry favor with Iowa caucus-goers by moving the family to Des Moines. Many folks back home took offense, and understandably so.
More troubling was his relationships with the financiers who contributed to his campaign -- and whom he was supposed to regulate as chairman of the Senate Banking Committee. Not everyone buys Dodd's conflicting accounts of why he changed language in a bill to protect $165 million in AIG executive bonuses. And similar doubts follow his explanation of his sweetheart mortgage, courtesy of Angelo Mozilo, head of the infamous Countrywide Financial.
Dodd is also linked to some questionable real estate deals, including one with convicted insider trader Edward Downe. In 2001, Dodd urged Bill Clinton to grant Downe a presidential pardon, and the president delivered one.
The pace of any Republican recovery in New England will depend on several factors, Dautrich believes. One is the economy, which by 2010 will belong to Barack Obama and the Democratic majorities in Congress.
"If we're in double-digit unemployment and the stock market hasn't bounced back and inflation has reared up, the Republicans are going to have a cleanup year," Dautrich contends.
As for 2012, New England Republicans will need an acceptable presidential candidate. "If it's Sarah Palin, forget it," Dautrich says. "But not if it ends up being (Minnesota Gov.) Tim Pawlenty or another different kind of Republican."
Are today's New Englanders the same cranky people who once filled their congressional delegations with Republicans? The GOP obviously hopes so. And every day that plants the Bush administration deeper into history brightens the party's prospects in New England.
Tue, 24 Mar 2009 00:30:00 -0600
"The economy is something he should focus on, probably more than the (tournament) brackets," Krzyzewski advised.
And what about the 55 percent of Americans who told pollsters that Obama is doing too much? They see his tackling of health care, education and energy -- on top of fixing the economy -- as issue overload.
And the president's political foes are happy to stoke those concerns: They would fight his agendas were the American economy floating on Cloud Nine.
The public's sense of poor prioritizing rests on a flawed assumption -- that fixing the economy can be separated from health care, education and energy. These issues all go into the big enchilada of American competitiveness.
If Obama ever has to throw any of them off the agenda island, he must ensure that health-care reform remains a survivor. The inability to afford needed medical treatment is among Americans' most primal economic fears. (Ask think tanks why, when they sponsor polls on issues Americans worry about, they list "the economy" and "health care" as separate items. They'll respond that they don't know why.)
In the bigger picture, soaring health-care costs are busting federal and state budgets. They put Americans at a comparative disadvantage to foreign companies whose governments curb medical spending.
The Business Roundtable has found some remarkable disparities in health-care spending and quality between the United States and four other leading industrial democracies (France, Germany, Japan and the United Kingdom). 1) The Group of Five's employers and workers spend 63 percent of what the United States does on health care. 2) American workers are 10 percent less healthy than the G-5 average.
A most amazing number is $8,000. That's a recent estimate of how much America spends on health care for every man, woman and child a year. It is twice the average of other rich countries. And the $8,000 includes the 47 million Americans with no insurance. The other nations cover everyone.
How can America close this gap? For starters, it can curtail unnecessarily expensive care. As a first step, the administration put $1.1 billion in the stimulus package to compare the success of different drugs and treatments for the same illness.
Of course, interfering with anyone's revenue stream will ignite a campaign to kill off real health-care reform. But making rules for what gets covered is the only way to contain costs. Private insurers do it. All other industrialized countries do it.
Consider this: America could set its health care spending 50 percent higher than the rich-country average and still see enormous savings. This doesn't sound like much of a sacrifice for the American health-care consumer.
The challenge for reformers will be gaining the trust of Americans happy with their coverage. Many people fear that a national plan would compromise the quality of care they've come to expect. The time to establish their trust is right now, while the Obama administration is still young and enjoying much good will.
In sum, the president's push for health-care reform amid economic crisis is not a symptom of any attention-deficit disorder. It is making good use of political momentum while it lasts.
Health care consumes 17 percent of the U.S. gross domestic product, which is hardly small change. If fixing health care isn't part of setting the U.S. economy upright, then what is?
Thu, 19 Mar 2009 00:20:00 -0600
What truly rankles is the argument that AIG, now 80-percent owned by the taxpayer, has no choice but to cough up the money: The sacrosanct contract requires the bonus payments. Also, not paying them might prompt the "talent" to depart, leaving less experienced hands to fix the mess.
No "Law and Order" would end like that. Fortunately, other plots are available.
Brush aside the congressional theatrics about taxing the bonuses to their eyeballs. Let's talk jail time.
William Black, a law professor at the University of Missouri-Kansas City, envisions a federal investigation into AIG's past accounting, securities disclosures and executive-pay program. Black was the litigation director of the Federal Home Loan Bank Board and helped bag the "Keating Five" lawmakers during the savings-and-loan scandal in the late '80s and early '90s.
As the bottom was falling out of its derivatives trading, AIG was reporting healthy profits, he told me. That's not allowed. Meanwhile, the company created a short-term bonus system for its top execs.
The massive prior bonuses should be clawed back, he said, "and we do that by establishing that there is accounting fraud and by putting in intelligent, vigorous investigators."
Speaking of which, Goldman Sachs said that it had no material exposure to AIG, but we now learn that it has received $13 billion in AIG bailout money. "That's a felony to make a false disclosure," Black adds.
The solution is to split AIG's financial products unit off of the conventional insurance business and let it file for bankruptcy. Then we'll see what sort of payback is truly due the financiers who gambled on the housing market.
"The contract they (Goldman and others) made was that if you don't pay us because you're insolvent, we're simply a general creditor and we get only pennies on the dollar" in a bankruptcy, Black notes. "How come that contract isn't sacrosanct?"
Back to AIG. In addition to making extremely risky contracts and being leveraged to the hilt, the company failed to put in appropriate loss reserves should something go wrong. The reserves are required under Generally Accepted Accounting Principles (GAAP), according to Black. These are the rules accountants must follow in preparing financial statements.
"If you're publicly traded, the SEC rules require that you follow GAAP," he says. "If you don't follow GAAP, then it's securities fraud."
The excuse that the auditor gave the accounting a green light won't fly. Enron and the infamous Lincoln Savings & Loan had clean opinions, too.
The "buzz on Wall Street" is that the bonus-deprived AIG employees might leave, then "simply turn around and trade against AIG's book," writes Andrew Ross Sorkin in The New York Times Dealbook column. "Why not? They know how bad it is." (Trading against book involves using what is known about weaknesses in what a company owns to presumably short sell the stock.)
I asked Black about this scenario. He almost laughed. Using that inside information would be securities fraud, "and everyone that hires them would be frauds."
It's time that the Obama administration stopped issuing statements of shock as it coddles the Wall Street bankrupts. The public wants more than the bonus money back. It wants justice.
Tue, 17 Mar 2009 00:20:00 -0600
Steele's explanation: Blacks especially are "often born into grievance-focused identities," a response to four centuries of racial persecution. School busing and other liberal attempts at social engineering at least acknowledge that mistreatment. The conservative emphasis on self-control does not.
"Even failed moral activism is redemptive -- and thus a source of moral authority and power," Steele writes. But "conservatism stands flat-footed with only discipline to offer."
Missing in this fine analysis is recognition of what happens when conservative politics takes over from conservative theory. The call for more individual discipline is compelling to most everyone. But in the political reality, the demands for discipline tend to rise the poorer and darker the individual. And the politicians are not above nurturing grievances among working whites by flogging racial preferences that don't exist.
Many are to blame for the housing disaster. Mortgage brokers pushed expensive and complex mortgages loans onto people with no hope of repaying them. Wall Street grew fat passing the risk onto others. Government programs promoted homeownership to people who could not afford to buy a house. And, yes, there were reckless, greedy, lazy and/or dishonest borrowers.
But to the conservative punditry, the true villain was a 1977 law that stopped banks from discriminating against creditworthy homebuyers who lived in minority neighborhoods. The crazy subprime activity didn't go into high gear until almost 30 years later, when most of the bad loans were not subject to Community Reinvestment Act rules. Nonetheless, conservative bullhorns framed the meltdown as some racial preference gone wild.
There's a sliding racial scale of standards regarding what constitutes a healthy family unit. Conservatives may rightly tie high poverty rates among minorities to the prevalence of families headed by single mothers -- and wring their hands over the troubling, out-of-wedlock birthrates among black and Hispanic teens.
But when the Republican candidate for vice president paraded her pregnant unmarried teen before the party's convention, religious conservatives broke out in applause. They saw a pro-life message.
The less appealing message was that of another unwed teen mother -- and in a family that professed to support old-style sexual abstinence. Sarah Palin addressed those concerns by sternly announcing that her daughter and the teen father would marry.
The cynic in me said that the couple would wed right before the election and quietly divorce two years later. But I was not cynical enough.
November came and went. Even the birth of the baby in December did not prompt a marriage. The public was fed bizarre romantic talk of a spring wedding. We learned last week that Palin's daughter and the father had broken up.
It is inconceivable that conservatives would toast the legion of unmarried teen mothers rolling their baby carriages in poor neighborhoods. But if a person is middle-class, white and talks a socially conservative game, inattentive parenting (or, in the case of some leading presidential contenders, trading one's wife in for a younger model) gets a pass.
Shelby Steele is right that the high value conservatism places on self-discipline should appeal to more African-Americans. But beyond "grievance-focused identities" are neon-lit examples of standards that are unevenly applied. Until Republicans pull the racial code out of their politics, minorities will simply not come around.
Thu, 12 Mar 2009 00:00:00 -0600
Democratic leaders are right that "this is last year's business." And it's true that earmarks made up less than 2 percent of the $410 billion spending bill.
But earmark spending is not only about money. It is about enabling fundamentally corrupt practices in the budgeting process. Too often the following happens:
Member of Congress obtains pork for a group or business. The recipient returns some of it in the form of campaign cash or, in at least one case, antiques for the home. Former Rep. Randy Cunningham, a California Republican, was famously brought down by a bribe-for-earmark scandal including Persian rugs.
The FBI is now investigating PMA Group on suspicions of making phony campaign donations to select representatives. Rep. John Murtha has received generous contributions from the employees of PMA, a lobbying firm whose clients have enjoyed earmarks, courtesy of the Pennsylvania Democrat.
Sen. Majority Leader Harry Reid likes the status quo on pork. Waving the flag of American security, a spokesman for the Nevada Democrat recently told The Washington Post that defense-related earmarks "improve critical national defense programs."
No, they don't. Every defense-related earmark goes to something the Defense Department didn't ask for -- and is usually directed to some contractor back in the district. That money could have gone to actually enhancing national security.
Obama's call for still greater transparency on earmarking is a useless gesture. Most lawmakers are darn proud of them. They list the bacon they've bagged for their constituents right on their Websites.
Some portray earmarks as a beautiful exercise in democracy and ask, "Why should unelected officials make decisions?" Frankly, I'd rather have an unelected general in the Pentagon allocate defense dollars than a politician raking in campaign cash from a local defense contractor.
"Earmarks must have a legitimate and worthy public purpose," Obama said. That is true, and many do. But the worthy ones can be part of a rational budgeting process.
A regrettable offshoot of the debate is that good ideas get ridiculed because they are earmarks. Great fun has been made of the earmark for swine odor and manure management in Iowa. Actually, those are very serious concerns in a state that has nearly seven hogs for every human.
We had a good laugh over the earmark for studying catfish genetics in Alabama. But Alabama has 250 commercial fish farmers for whom catfish is by far the dominant species.
And there was a big har-har-har about the earmark for grape genetics research in New York state. New York happens to be home to a large winemaking industry. ("Quick, peel me a grape," twittered Arizona Republican Sen. John McCain, a longtime foe of earmarks.)
Why are earmarks getting so much attention now? Three reasons: (1) They are easy to understand. (2) The public links the current economic fiasco to a "bought government" for which earmarks are one form of currency. (3) With trillions now going out the door for bailouts and economic stimuli, Americans feel they have an enormous stake in clean budgeting.
If Washington can't end a tawdry system that involves relatively small amounts of money, what hope is there for reforming the big stuff? Cutting the number of earmarks to zero shouldn't be that hard -- and should be this year's business.
Tue, 10 Mar 2009 00:00:00 -0600
For example, Shelley McGuire, a nutritionist at Washington State University in Pullman, recently predicted that a return to home cooking would helpfully add whole grains and subtract salt from the American table.
She called this new regime the "back-to-basics bailout diet."
Professor Christopher Ruhm, an economist at the University of North Carolina at Greensboro, studied death rates during the 1974 and 1982 recessions, and found that they dropped significantly. Less heart disease and fewer car accidents seemed to be the biggest factors.
I asked Ruhm whether he anticipates the same trends in this recession. "It's hard to predict what will happen this time," he responded. "This is a different kind of downturn -- longer and more severe than we have seen in recent years."
We believers in the mind-body connection know that stress and anxiety, painful in themselves, can make other conditions worse. And stress is coming at us in battalions. In this crazy economy, we can't plot the extent to which things will get worse before they start getting better. We face the big black box of the unknown.
Those who owe little or no money and have jobs are also anxious. They see their real-estate values shrinking and neighbors' work disappearing. Their investment safety net lies in the gutter. There seems to be no safe harbor anymore.
In a famous experiment, two groups of rats were given electric shocks. The first group received a warning signal before the shock. The second had no warning. The second group showed much more stomach ulceration (a sign of stress) than the first, even though they received the same number of shocks. The conclusion: Lack of predictability increases stress.
And that's the way it is. One day the banks are in super trouble; the next day, it's General Motors. Out comes a horrid employment report, then warnings of economic collapse in Eastern Europe.
Hospitals report pre-existing medical problems growing worse. Diabetics who were controlling their disease with exercise are quitting their gym memberships. Patients being treated for high blood pressure and still taking their medications show elevated readings. Possible causes: a turn to saltier food or to anti-inflammatory remedies, which increase water retention, for stress-induced headaches.
Of course, mental disorders flare up in these circumstances. Ruhm's study found that even in the past recessions where death rates dropped, measures of mental health suffered. Suicide rose 2 percent and homicide 12 percent.
Psychiatric hospitals are filling up with serious cases. McLean Hospital, near Boston, admitted 31 percent more patients in December than it had the same month a year before. And there's been a run on anti-depression pills, including among the relatively secure.
Back in our cage, we await new economic shocks without knowing when or whence they will come. Fortunately, humans retain a measure of control over their health. There are proven ways to lower stress. Exercise can be free, and a good diet may actually save money. Let's unearth one of those silver linings and tell ourselves: We're still in charge of many things.
Thu, 05 Mar 2009 00:00:00 -0600
The president wants to raise the top tax rate to 39.9 percent starting in 2011 (when the economy is presumably on the road to recovery). That was the highest marginal rate at the end of the Clinton administration. From all the garment-rending, you'd think that the top rate was being hiked up to 90 percent, which is where that famous socialist Dwight D. Eisenhower left it.
One of the tax-a-phobes' favorite tactics -- a gotcha for Democrats -- is to reference John F. Kennedy's tax cut. They hail it once an hour. But they always neglect to note what the sainted JFK lowered the top rate to. He lowered it to 70 percent, which is 30 percentage points above the tax rate that Obama proposes.
A stronger argument might focus on Obama's plan to also limit income tax deductions for high-earning families -- including for charitable contributions. That's problematic.
Obama talks of raising the capital-gains tax rate to 20 percent from the current 15 percent for families making $250,000 or more a year. A "War on Prosperity," some declare.
Well, there you go again. Ronald Reagan inherited a 20 percent capital-gains tax rate, then raised it to an effective rate of 28 percent for high-earners.
The thinking went as follows: The top rate was being slashed to 28 percent from 50 percent. Well-off Americans should not get yet another tax break on their investments. Thus, capital gains would be taxed as ordinary income.
Linda Beale, a tax expert at Wayne State University Law School in Detroit, prefers Reagan's base-broadening approach. "It eliminated loopholes, lowered rates and removed the preferential rate on capital gains," she told me. "That was the right solution."
By the way, Obama is not actually raising taxes. He's letting the Bush tax cuts expire. President Bush and Congress could have made them permanent but did not. The legislation purposely canceled the cuts after 10 years to hide their enormous long-term cost.
"Republicans who used the sunset gimmick to justify the big Bush tax cuts knew at the time that they would argue that opposition to making the temporary tax cuts permanent was support for a tax increase," Beale said.
Sure enough, the arguments have arrived, right on schedule.
I would quibble with parts of the Obama tax plan. The president told Americans last month, "If your family earns less than $250,000 a year -- a quarter million dollars a year -- you will not see your taxes increased a single dime."
That's not wise budgeting. It's OK to raise taxes on the elite earners most blessed by the Bush tax cuts. But the huge deficits in our face require that the middle class pay at least something more in taxes. Americans have to be in this together.
Even low-income people can't be left out. Extending new tax credits to low-earners made sense in the stimulus package. But Obama wants to make them permanent, adding to the deficit.
The bonus for the economically insecure should be universal health coverage and money for a college education. And wealthy folk will surely benefit from financial markets kept sane by sound federal budgeting and smart regulations.
The rich can keep their heads -- and may they prosper another day.
Tue, 03 Mar 2009 00:00:00 -0600
The Obama administration has ended that Canadian advantage by reversing the Bush policy. Canadians now fear they might suffer their own brain-drain back to the United States -- and not just of Americans. European, Asian and other scientists, who went to Canada rather than the United States, may decide to head south.
A recent headline from Toronto's Globe and Mail says it all: "As U.S. emerges from Dark Age, Canada's scientific edge fades."
Hemp is a plant used to make paper, oils, textiles and other products. American farmers from George Washington on grew it. But because hemp is related to marijuana, the U.S. government outlawed its cultivation in the '50s.
Now get this: American manufacturers are free to import hemp fibers, oil and seed from other countries. For example, U.S. carmakers use hemp inside door panels and for insulation in seats.
Industrial hemp doesn't contain enough THC (the euphoric agent in marijuana) to get anyone high, but that hasn't stopped the federal Drug Enforcement Administration from sending out helicopters to scour the land for hemp plants growing wild in ditches.
The sight of waving hemp fields just across the Canadian border frustrates many American farmers. One of them, Dave Monson, a Republican, is speaker of the North Dakota House.
Monson and other farmers sued the DEA in 2007, demanding the right to plant hemp. The case was dismissed by a U.S. district court judge in Bismarck but is now before the 8th Circuit Court of Appeals, in St. Paul, Minn.
Monson told me that he tried to reason with the DEA about industrial hemp. The federal agency responded that minuscule amounts of THC could be processed out of the plants, admittedly with great effort.
"Well, why would anybody do that?" Monson asked, especially now that actual marijuana plants are freely grown in California and other states that have legalized medical pot.
"The ironic thing is that they may get medical marijuana legalized before we can get industrial hemp legalized," Monson said. The Obama administration has yet to signal a change in policy toward industrial hemp.
When the United States banned the sale and manufacture of alcoholic beverages in 1920, Canadians found another great export market. Rules governing alcohol varied from province to province, but Canada's generally lighter approach to booze opened new avenues for profit.
Ontario's economy grew off the movement of alcohol into the United States. The black market was exploited by gangsters but also by ordinary office workers who would row their rum-laden boats across the narrow parts of the Detroit River separating Detroit from Windsor, Ontario.
Quebec was the most alcohol-friendly province. During U.S. Prohibition, "historic old Quebec" enjoyed a boom off of American tourists seeking a good time.
Alcohol prohibition is now far in the misty American past, and the anchors on stem-cell research were recently lifted. That would leave hemp farming as a surviving example of an irrational U.S. ban. Whenever the U.S. government discourages Americans from doing useful work, Canadians make hay -- and sell it back to us.
Thu, 26 Feb 2009 00:00:00 -0600
There was no joy in President Obama's discussion Tuesday night of the expensive economic-recovery plan. He told Congress that he asked for it, "not because I believe in bigger government -- I don't." It was because "a failure to act would have worsened our long-term deficit by assuring weak economic growth for years."
Louisiana Gov. Bobby Jindal's Republican response to the speech showed a stunning disconnect from reality. First he called for a pile of new tax cuts, then warned that Democrats would "saddle future generations with debt."
Future generations are saddled with debt precisely because of reckless Republican tax cuts -- and spending. Obama repeated his vow to cut the deficit in half, once the crisis has passed. And he spoke in real-world specifics of tax loopholes to be ended and higher levies on the richest 2 percent.
Well, what about spending? There are fiscally righteous Republicans who fervently believe in small government and have the courage to vote against popular programs. They are but a handful. George W. Bush, working with a Republican Congress, embarked on the biggest spending spree since Lyndon Johnson, even excluding money allocated to defense and homeland security.
A current Republican talking point, repeated by Jindal, holds that "our party got away from its principles." Sadly, the party gets away from its principles most every time it's in power.
Bush wasn't a special case. Under Ronald Reagan, the U.S. government consumed the highest percentage of gross domestic product in American history, except for during World War II.
In his first address before Congress, in 1981, Reagan made shocked reference to the nearly $1 trillion in debt his administration had inherited. He called the number "incomprehensible." But Reagan's rhetoric had no bearing on subsequent policy. By the time he left office, the national debt had more than doubled, to over $2 trillion.
The national debt almost doubled under George W. Bush, from just under $6 trillion to nearly $10 trillion.
The one fiscally honest Republican president in recent decades was the much-maligned George H.W. Bush. Deciding that the time had come for America to start paying its bills, the elder Bush broke his "no new taxes" pledge. For that gutsy move, his party's tax-a-phobes reviled him.
Their barbs multiplied for Bush's successor, Democrat Bill Clinton, who backed higher taxes for some upper-income Americans. That helped create budget surpluses -- a fiscal Eden from which America was ejected soon after.
A recent New York Times-CBS News poll asked Americans whether it's more important for Republicans to stick to GOP policies or work with Obama and the Democrats. Only 17 percent preferred that Republicans stick to their policies. That's not much of a thumbs-up for the Republican way.
Nobody likes the deficits being run up. Everybody gripes about some of the ways the money's being spent. But at the moment, only government can pull us out of the economic swamp.
If Obama succeeds in cutting the deficit in half, he will have presided over a very big government followed by a much shrunken one. Both versions will have been right for their times. Clearly, there's no "one-size-fits-all" circumstances for government.
Tue, 24 Feb 2009 00:00:00 -0600
The idea is to make monthly mortgage payments easier to meet and thereby keep more people in their homes. This can be done by lowering the interest rate, extending the length of the mortgage or cutting the principal amount owed.
Banks can already modify loans, but, notes Kathleen Day of the Center for Responsible Lending, "it's a voluntary system with no repercussions if you don't do it."
Consumers now have somewhere else to go for a loan modification. Knowing that borrowers have that option in bankruptcy court might spur banks to make more of their own revisions.
Foes of such changes warn that they would unleash a new wave of bankruptcies and reward the irresponsible. Scammers able to pay would try their luck with a judge for easier terms. Spendthrifts who borrowed recklessly would get a break in court without having to give back the RV or Mediterranean cruise. Meanwhile, the cost of mortgages would rise to compensate lenders for the risk of having a bankruptcy court possibly change the terms.
Some or all of the above may happen, but let's discard the notion that bankruptcy is a neat way for the indebted to save a few bucks. A bankruptcy seriously impairs one's ability to borrow for 12 or more years. Bankruptcy is a particularly irrational choice for high-income people who can afford their monthly payments. They'd still have to repay the written-down part of the mortgage balance out of income earned for up to five years, to the extent possible, after paying back secured debt.
As for banks, the prospect of a court-ordered change in mortgage terms -- inelegantly called a "cram-down" -- would prompt them to focus on loan applicants' ability to repay their debt. They would check a borrower's income and require a reasonable down payment -- like they used to.
A bill to allow mortgage modifications does offer protections to lenders, setting many limits on what judges may do. And if someone still in bankruptcy sells a house that has appreciated in value, the law guarantees lenders a piece of the gain for the first four years.
The point of this exercise is to stabilize the housing market for the benefit of homeowners and lenders alike. A foreclosure is usually more expensive to lenders than a loan modification. And boarded-up houses depress real-estate values all around.
This logic makes sense to giant Citigroup, which has parted ways with most other banks by backing the legislation. Vikram Pandit, Citicorp's CEO, wrote to several senators that "we support its swift passage."
A moment of silence for all you members of the rule-obeying, mortgage-paying public. Many of you oppose helping the imprudent, and your displeasure is respectfully noted. But there's really no choice right now but to subsidize a variety of foolish or bad actors. Perhaps next time we'll have regulations to rein in the excesses, so bailouts will not be needed.
Empowering courts to change the terms of a mortgage may indeed mean higher mortgage interest rates and fees for everyone, but I see the tradeoff as follows: Borrowing costs may go higher, but future housing markets won't crash, taking our jobs and 401(k)s with it.
If that's the deal, there's only one response: Where do we sign?
Thu, 19 Feb 2009 00:00:00 -0600
Almost one in 10 Latino homeowners reported missing a mortgage payment -- or being unable to make a full one -- in 2008, according to a Pew Hispanic Center survey. Over a third said they feared their own home might go into foreclosure. For foreign-born Latinos, that number rose to 53 percent. (Pew doesn't ask about immigration status.)
Many Latinos bought or refinanced homes at the worst possible time -- just before the housing bubble went splat. Lots of people fell for the pitch that real-estate was an up-only escalator into the American Dream. But with more than half of Latino families still renting their homes, they became a very juicy target for the builders, brokers, loan originators and banks seeking to prosper off mortgage mania.
As with other fans of easy credit, many Latinos were reckless in their borrowing. Some lied about income on their loan applications, often egged on by brokers and mortgage companies. But more were simply clueless. Mortgage companies wrote contracts designed to confuse even the most fluent speakers of English. Those with limited English were especially hard-pressed to understand the terms.
Subprime mortgages were invented for borrowers with poor credit ratings. They come with higher interest rates and often-punishing fees to supposedly compensate lenders for the added risk. But the road to riches was to make the deal, collect the fees, then palm the dodgy loans onto other investors. Wall Street took its cut packaging the mortgages into securities.
For an unscrupulous lender, the ultimate win-win is convincing a good credit risk that he or she isn't one -- and can only qualify for an expensive subprime mortgage. Subprime lenders found minority neighborhoods fertile ground for playing this trick. For example, 40 percent of African-Americans who took out subprime mortgages would have qualified for more affordable mainstream loans.
The subprime craze crested in 2005. That year, less-than-prime mortgages sold to Hispanics jumped 169 percent. (They rose 110 percent for whites and 122 percent for blacks.)
Further lowering the guard of Hispanic homebuyers were the strong efforts of their so-called allies -- low-income housing groups and Latino lawmakers -- to herd them into the tent. The Hispanic Congressional Caucus Institute's Hogar ("hearth" in Spanish) initiative was funded by the subprime industry. Subprime executives served as advisers.
California Rep. Joe Baca, a Democrat, pushed for lower lending standards as a way, he said, to "open the door to the American Dream." Brokers hawking the most toxic subprime products rushed into his 58-percent Hispanic San Bernardino district, now one of America's foreclosure capitals.
The question must be asked: How many people now facing the loss of their homes would be OK had been given the easier terms of a prime mortgage? The Obama Homeowner Affordability and Stability Plan may provide part of the answer.
Things will calm down. The United States will recover from the economic crisis. Debt-burdened families will restore sanity to their personal finances. (They've already begun.) Meanwhile, lower real-estate values could help some who lost their home get back in the homeownership game. For the many Latinos among them, the American Dream is not dead. It's just been put on hold.