Cathy McMorris Rodgers Has A Touch Of The Vapors

Today she posted a link to the 2014 Index of Economic Freedom report posted by The Heritage Foundation, a conservative policy and research organization.

"The US ranked lowest in the category of government spending," says our congresswoman. "We must do better." What is she talking about? Do we need to spend more money? Or less? I don't know what she means.

Let's go to the index and see what it says about the United States.

Checking out the explanation of how the government spending score is calculated, you really have no idea if it should be a high or low or middle-of-the-road number. But there is some useful information.

No attempt has been made to identify an optimal level of government expenditures. The ideal level will vary from country to country, depending on factors ranging from culture to geography to level of development. However, volumes of research have shown that excessive government spending that causes chronic budget deficits and the accumulation of sovereign debt is one of the most serious drags on economic dynamism.

Hmm, so the first two sentences explains this is pretty much all bullshit. Spending untold billions on war and cutting taxes at the same time would be an example of what the last sentence is referring to. You know, like we did from 2001 until present. Less so on the cutting taxes during the last 12 months, but we're still pissing away too much on defense. I hope to hear our congresswoman speak up about that unnecessary government spending. We must do better, right?

The Freedom from Corruption category caught my eye so I dug into how that was computed. It turns out this score is based on the 2011 Transparency International's Corruption Perception Index. I checked out that report and found that the score should be 71. The 2012 and 2013 results were 7.3, which would result in a score of 73. 

But here's the part I thought was the most telling--what contributed to that ranking.

Financial regulation. Although the United States has an effective anti-money laundering framework, experts are concerned about various legislative and regulatory weaknesses. More specifically, there are weak requirements for customer due diligence. Furthermore, there are loopholes that allow entities and persons to use shell companies as well as trusts to hide and launder proceeds from illegal activities. Worries regarding transparency in the U.S. financial system were heightened by the 2008 financial crisis, as well as recent notorious financial fraud and insider trading scandals.

Anti-fraud legislation. In June 2010, the Supreme Court issued a ruling that limits the scope of the “honest services” statute. This was a key national anti-corruption law that – until then – was particularly effective in the prosecution of corrupt acts involving public officials. Following the Supreme Court’s decision, several federal courts have overturned honest services fraud convictions in a number of cases, many of which included public officials. The decision also has serious implications for recent high-profile fraud convictions, and may result in the overturn of other guilty verdicts.

Government and politics. Corruption among government and political figures remains a concern. From fraud and embezzlement charges to the failure to uphold ethical standards, there are multiple cases of corruption at the federal, state and local level. Recent high profile scandals have involved councilmen in California and the District of Columbia, as well as mayors in New Jersey and an Illinois governor. Money laundering convictions and ethics violations by U.S. Congress representatives have also furthered citizen distrust.

Political financing. Transparency in campaign and political financing suffered a major setback in 2010. This followed a Supreme Court decision that de facto removed all limits to political spending by corporations and unions. The decision led to the creation of “super” political action committees, or “Super PACs”, permitting unlimited financing for political campaigns – and without donor disclosure. As a result, wealthy individuals, interest groups and businesses can increase their influence on the country’s political system.

I predict more listening to crickets in my future when it comes to hearing our congresswoman address these issues.

Bugger The Bankers

Thank You, Dysfunctional Ruling Class

  3 7-31-11 Debt Framework Boehner by  

Speaker Boehner's Powerpoint slides from July 2011, which he used to sell the idea of using sequestration as means of holding the Obama administration accountable. I'm guessing the Obama administration regrets making this deal. Cathy McMorris Rodgers has been unusually silent. As concerned about jobs as she always says she is, you would think she would have something to say about the loss of 700,000 of them on the horizon.

If you're concerned about government waste, consider the time spent by all federal agencies figuring out where they will absorb the cuts when sequestration takes effect. Using the home-balancing-the-budget analogy Congress is so fond of, just as erroneous then as it is now, sequestration is like telling you to decide which children you won't feed.

We live in interesting times. Fortunately, we have plenty of armed people ready to protect us from a tyrannical government and stand up for the right to bear arms by fighting against background checks and gun registration in spite of so many Americans being killed by firearms every year, and whose solution is having more guns. It doesn't appear that Congress will do anything about that either. Perhaps it's more palatable to think of it not as killing, but as a way to thin out our numbers--for our own good.

Red Shirt, Green Shirt - What Could Coal Hurt?

One thousand chairs and horrible acoustics awaited the four to five hundred people who showed up at the Spokane Country Fair Expo to comment or hear comments on the scope of the environmental impact statement on the Gateway Pacific Terminal. Of those wishing to expand the EIS to include Eastern Washington, North Idaho, and Montana (against coal), many wore red shirts sporting the PowerPastCoal.org name, wore "No Coal Exports" stickers, and/or held up "No Coal Exports" signs. Those speaking for limiting the EIS to Whatcom County (pro coal and/or pro jobs) ironically wore green shirts with "Let's Get To Work" on the back. Red shirts dramatically outnumbered green shirts. "No Coal Exports" signs overwhelmed the mix of pro signs. (I'll refer to each "side" as red shirts and green shirts.) I figure red shirts outnumbered green shirts by 6 or 7 to 1.

Only the first 75 people would get to make verbal comments. There was some consternation earlier in the day when about 35 green shirts, some of them being paid to stand in line, took places in line today. The first five in line were red shirts who showed up around 7:45 am.

 Red shirts.

 Green shirts.

The audience was informed of the rules: Commenters have two minutes, no cheering or clapping, hold up your hands or wave a sign to show approval, and a thumbs down if you disapprove. Helpful comments included providing alternatives, affected resources, adverse impacts, and ways to minimize effects. Anything else would not be considered substantive. With that, Ben Stuckart, City Council president, was the first speaker, followed by four more red shirts from Spokane and Montana. The next 35-40 speakers were green shirts.

Green shirt commenters spoke about the need for jobs, boosting the economy, and there was a remark or two about the misguided red shirts. My impression was that most of the comments were not substantive. While the green shirts were speaking, I talked to a man wearing a green shirt who had #36. He said he was from Spokane and he was speaking because he was tired of the environmentalists running everything. He realizes we need to take care of the environment, but we need jobs, too. And even though the jobs were in Whatcom County and not in Spokane, the state and the economy as a whole would benefit. I asked him about the guidance concerning substantive comments and he misunderstood what I was talking about. He pointed to a blue sheet of paper on his chair, "It's right there. It's just bullet points." Bullet points? I calmly asked if I could see it. He rolled it up and gave me a suspicious look. "No."

Well, then.

I ran into Bart Mihailovich, Spokane Riverkeeper. He was thrilled that the hearing was taking place in Spokane and that so many people had attended. He shared my concern about the comments being substantive. Bart arrived in time to be included in the 75, but had given his number to a little girl who wanted to speak. Nice.

Pens are in hand.

I later ran into City Councilman Jon Snyder who had a different take on the comments. "Every time you see them (the panel) pick up a pen, you're saying something they're concerned about." Jon had some very nice rhetoric in his two-minute speech. He was concise and on point. He questioned the impact of increased gate times on emergency responders and the transportation plan. Pens were in the panel members' hands. 

As the evening progressed, the red shirt comments did address more impacts on the community, water, air, and more of the various communities being represented. I also noticed that after the bulk of the green shorts spoke, their numbers noticeably dwindled.

By the way, when speaker #36 was called up, the gentleman I spoke with was nowhere to be seen and had been replaced by former state senator Jeff Baxter of Spokane Valley. Well, it's not like Ben Stuckart arrived at 7:30 am and waited all day so he could be the first speaker.

Whenever there was applause or an outburst, the announcer would chastise everyone with a reminder that they were not to do so. After the fourth-grade girl from Roosevelt Elementary spoke, the crowd cheered.

"I'm going to let that one go."

Darn right you will. 

The hearing was moving so smoothly that they announced that more people could sign up to speak and they would get as many in as possible until 7:00 pm. Several ran to the sign up desk. I left around 6:20 so I could get home at a decent time since I was letting Spokane Transit do the driving.

You have until Jan 21, 2013, to submit your comments and there's an easy online form you can use.

Coal For Christmas

To read the guest opinion in today's Spokesman Review, you'd think that coal trains are relatively harmless and are the next best thing to Christmas. 

Image shamelessly copied
from Fish & Bicycles

This brings us to the subject of coal trains, which have long been traveling through Spokane. World demand for energy sources is resulting in planned transport of coal on BNSF trains from the Wyoming and Montana coal fields through Spokane to proposed port facilities on the Oregon and Washington coasts. The Washington facilities would bring much-needed jobs to our state and would promote international trade, the latter of which has had a positive impact on our nation’s trade balance.

Greater Spokane Incorporated supports federally regulated interstate commerce and international trade, and is a member of the Alliance for Northwest Jobs and Exports. The Alliance supports the construction of the Gateway Pacific Terminal, which will be undergoing an environmental impact study that – when finalized – will have incorporated all public and agency comments and proposed mitigation. The Gateway Pacific Terminal would create an estimated 3,500 to 4,400 new jobs during construction, and 300-400 permanent family wage jobs that will generate an estimated $74 million to $92 million in state and local revenues.   

Along with the contribution that burning the coal will make towards accelerating climate change, the concern in Spokane is about people being exposed to the increased amount of diesel exhaust and coal dust from sixty 1 to 1-1/2 mile-long trains each day. Last June, the city council passed a resolution expressing their concern and asking that one of the environmental impact hearings be held here. As it happens, a hearing is being held this Tuesday from 4-7 pm, at the Spokane County Fairgrounds Plaza.

Got something to say? Show up and say it.

What's Her Motivation?

To hear Cathy McMorris Rodgers talk--okay, not talk, perhaps she's preoccupied with getting Washington Republicans to vote for Romney--but post on Facebook, you'd think that there's some sort of bizarro land logic that links gasoline prices to President Obama's energy policy. Yesterday she has this to "say".

It's true gas prices are higher than before. It's also true they've been higher before. Our congresswoman has complained about high gas prices before but also left out important details that contribute to those high prices. Those details are still applicable today.

Demand for gas is down in the United States and production has been up, which means the US has been exporting gas. But that can be problematic.

There's at least one domestic downside to America's growing role as a fuel exporter. Experts say the trend helps explain why U.S. motorists are paying more for gasoline. The more fuel that's sent overseas, the less of a supply cushion there is at home.

So why doesn't the price come down?

The secret to making a profit in refining these days is for refiners to source crude oil domestically and then sell the refined products to US consumers at prices based on imported oil.

And let's not forget the role of speculators.

There's been a huge investment in wind energy production over the last few years and now that is in danger because The Republican House wants to allow the Production Tax Credit to expire at the end of this year claiming it's a waste of money. Jobs, claimed to be a number one priority for Republicans, are already being lost. What effect will this have? A loss of up to 37,000 jobs as well as a decrease in the amount of energy reaped from wind and a decrease in CO2 emissions offsets.

In the meantime, billions in subsidies. i.e., corporate welfare. continue to go oil companies who also continue to make billions in profits.

It appears Cathy McMorris Rodgers is less interested in informing and informed voters than she is in keeping the current president to a single term.

Income Disparity Is Not The Issue

In last Thursday's issue of The Inlander, our former congressman, George Nethercutt, misdirects and misleads the reader about the Occupy movement and income disparity in America. He leads off with this:

In the debate over the legitimacy of the “Occupy” movement and the frustration some Americans feel over the alleged 99 percent vs. 1 percent (poor vs. rich) ratio in the United States, it’s fair to pose the question: “What is the right ratio of rich to poor in the U.S. today?”

First, he seeds doubt in the reader's mind by saying there's a debate over the legitimacy of the Occupy movement and then uses the 99 and 1 percent numbers as a poor versus rich ratio. Establishing that, he leads the reader further away by asking a question nobody else is asking. And then he's off on a "discussion" about tax fairness and income equality.

Mr Nethercutt gets it wrong from the start and the millions poured into this election season provide an example of why he is wrong. The Occupy movement is not about resenting the wealthy for being wealthy. It's not about establishing a specific ratio of wealthy vs poor. It's about the undue influence of wealth in our democracy that benefits the wealthy to the detriment of everyone else. It's about a system that promotes and protects a concentration of wealth. The expanding gap in income equality is a function of this influence.

The market-oriented society he refers to isn't necessarily the same one envisioned by the 99 percent. In Mr Nethercutt's market-oriented society, corporations and businesses are a privileged class always trying to overcome obstacles placed by a government whose sole existence only serves to interfere. Combined with a theme emphasizing freedom and personal responsibility, individuals are left to their own devices when a weakened government is unable to help after fracking makes their their tap water flammable.

Mr Nethercutt's position is hardly surprising when you consider his actions while representing Washington's 5th District. He voted for the Bush tax cuts, which overwhelming benefited the wealthy and became the single largest contributor towards the deficit. He also voted to make those tax cuts permanent. He sponsored legislation to repeal the estate tax, which affected only 2 percent of Americans. The wealthiest Americans. He voted against campaign finance reform banning soft-money contributions. One fight in the area of campaign finance reform ended up with the Supreme Court's ruling in Citizens vs United allowing unlimited donations via purportedly independent groups. One "benefit" of that is that we're now getting to know the billionaires influencing our election process with their millions.

Mr Nethercutt closes his short discussion on poverty with this:

No matter how hard we try to eradicate poverty, we likely never will. While trying to do so is laudable, we shouldn’t stifle the creativity that is a hallmark of American life. Creativity often leads to great wealth for those with ingenuity, drive, energy and free will. Ambition levels, like talent levels, will always be unequal for individuals in a free society, and those disparities will result in disparate income outcomes.

How trying to eradicate poverty stifles creativity taxes even my imagination. But he is right that creativity, ambition, and talent can result in disparate income outcomes. Again, that is not the problem. The problem is the inordinate amount of influence in our democracy by "the haves and the have mores" and the injustices resulting from it. Just look at the criminal behavior by mortgage lenders and the failures of regulatory agencies resulting in the 2008 crash and the disparity in the number of prosecutions there.

Mr Nethercutt closes with this:

While helping America’s poor is legitimate, worthwhile and an American tradition, an income equality goal doesn’t fit a market-oriented society. Capitalism and free enterprise, having produced the strongest economy and most advanced society in world history, should largely be left to reach natural levels, allowing those who seek, and achieve, financial reward to enjoy their good fortune, distribute it as they wish and pay a reasonable income-tax rate.

He again distracts the reader. Nobody is talking about establishing an income equality goal. As for the U.S. being the strongest economy and most advanced society in world history, world history isn't over yet. It has yet to be seen if this most advanced society will allow itself to be bought out.

In Our Country's (Corporation's) Best Interests

In today's Spokesman Review we have another article about a pipeline for transporting Canadian tar sands oil. Some excerpts and comments.

Prime Minister Stephen Harper said Canada’s national interest makes the $5.5 billion pipeline essential. He was “profoundly disappointed” that U.S. President Barack Obama rejected the Texas Keystone XL option but also spoke of the need to diversify Canada’s oil industry. Ninety-seven percent of Canadian oil exports now go to the U.S. (bolding mine)

Hence the reason for the Keystone XL pipeline to take it's oil to a port on the Gulf of Mexico or a port on the Pacific ocean where it can be shipped overseas. Right now Canada is stuck selling most of its oil to the U.S.

Meanwhile, China’s growing economy is hungry for Canadian oil. Chinese state-owned companies have invested more than $16 billion in Canadian energy in the past two years, state-controlled Sinopec has a stake in the pipeline, and if it is built Chinese investment in Alberta oil sands is sure to boom.

It's a simple supply and demand issue where those with greater demand will outbid others to get the oil they need. Canada knows this and wants to use it to its advantage.

But oil analysts say Alberta has enough oil to meet both countries’ needs, and the pipeline’s capacity of 525,000 barrels a day would amount to less than 6 percent of China’s current needs.

That's not the point. Canada doesn't want to supply the U.S. and itself. Canada wants top dollar for its oil and if China--or any other country--is willing to pay more than the U.S., then that is where the oil will go.

Congresswoman Cathy McMorris Rodgers expressed her disappointment in President Obama's decision to delay the pipeline project.

This is a project that has bipartisan support, would create 100,000 jobs, and would reduce our dangerous dependence on Mideast oil.

First, the number of jobs she presents is totally bogus. It's more like 2,500 to 6,000. Second, since the purpose of the pipelines is to allow Canada to sell its oil anywhere it chooses as opposed to just the U.S., it isn't going to do squat to reduce our dependence on oil from the Middle East. Last of all, she never addresses the impact on the environment. Business is a privileged class for our politicians and the "government regulation impeding business" mantra is often used to distract from the reason for regulation--the protection of people and the environment.

Call it being deceitful, duplicitous, disingenuous or all of the above. Cathy McMorris Rodgers is not serving her district's or her country's best interests in this matter.

More To Consider

Occupy Spokane March

Knowing Spokane, I figured there wouldn't be that many people showing up for the march today. I was surprised. My guess is that at least a thousand showed up. The group was a mix of all ages and all walks of life. Click the photos to embiggen them.

A sense of humor is always appreciated.
And the march would not be complete without the obligatory DFH to satisfy some people's stereotypes.

Occupy Spokane - Day 3

Occupy Spokane got a little interrupted today. It was busier this morning with a few extra protesters and a team from KXLY on hand. The police stopped by last night and gave the group another warning about violating the Transient Shelter ordinance and said they needed to have the tents and shelters removed by 6:00 am today. The amenities were improved over yesterday. Tables were set up on the island. they were making coffee on a camp stove. A box of donuts donated from a 7-11 and dropped off by a taxi driver sat at the ready.

Dave Bilsland said he expected the police to show up at any moment to have the tents struck down. His plan was to roll everything up and put it on the island and then maybe camp out on the grass surrounding the statue of Abe Lincoln.


Around 9:00 am, the police showed up. Everyone struck down their respective tents when asked. Bill did once he was cited, but then he wanted to be cited. The tables and anything affixed to a structure or signpost also had to be removed.


The protest continues but anyone wanting to camp out will probably have to park nearby and sleep in their car.

Where Are The 99 Percent?

Spokane's 99 percent camp
On September 17, protesters began occupying Wall Street in New York City. If you haven't heard of this, it's probably because there has been very little news coverage. But now that some New York police officers are pepper spraying nonviolent, compliant protesters and arresting journalists and innocent bystanders, more people are starting to take notice. However, what little news there is is more about the abuse at the hands of the police instead of what the protest is about. And while the heavy-handedness is a far cry from police dogs and fire hoses, unnecessary force restricting our First Amendment rights is anathema to our society regardless of how it is manifested. Aside from that, the message is not getting out to the American public. But similar protests are now taking place in other cities: San Francisco, Chicago, and even Spokane.

On September 28, some folks began occupying the triangle of cement at Monroe and Riverside watched over by a statue dedicated to a Spokane native who died in the Spanish-American War. They held up signs and cheered at cars honking their horns in support. Yesterday was Day One of their "occupation". Last night a few of them set up tents in the grassy median on Riverside Avenue. According to Dave Bilsland, the organizer, their message is, "Join us. We need to change our economic methods. Personhood should invoke a working heart. Corporations don't have a heart--literally and figuratively."

A very small percentage of Spokane's 99 percent.
Ms Johnson, formerly a program director for a public radio station, is the self-appointed public spokesperson for the group. She asked that I leave her first name out. Admittedly, besides being comfortable in the spokesperson role, she is aware how the message is more positively received when delivered by a professionally dressed person as opposed to the very casual clothing of most of her fellow protesters. She also noted that if there was a group of people in suits holding up signs they would garner much more attention.

Dave Bilsland
Johnson explained that many have complained that the Occupy Wall Street protest--now in its 13th day--doesn't have a single message, but that there's an explanation for that. "There are multiple reasons people are unhappy with their government. I'm an educated person with a master's degree in communications and plenty of experience. And I am unable to find a job. I have $75,000 in student debt that I would love to pay off. I am representing one unemployed person in the State of Washington." She went on to explain that the vast majority of people in Spokane are part of the 99 percent who provide the foundation for the wealthiest 1 percent. Her concern is that not only are our elected officials aware of their unpopularity, but that many of them them don't care because it takes money to get elected so looking out for the monied interests is their priority.

That is the main point of the entire movement--the monied corruption of our democracy.

Hilsland said a Spokane police officer stopped by last night and warned the tent dwellers they were in violation of Spokane's Transient Shelter ordinance. Hilsland says they only plan to stay until Saturday.

The group is not without rules. While I was there someone swept the pavement and made a trash run even though there aren't that many people to pick up after. After all, this is Spokane, a place where few people want to make waves and the few that try are easy to ignore.

Profits Vs Everything Else

A couple of researchers with the Asian Development Bank Institute studied up on how the iPhone increases the trade deficit with China (PDF). The paper was published last December and updated last May.

In the study they hypothesize the effect of moving the assembly of the iPhone to the US.

An interesting hypothetical scenario is one where Apple had all iPhones assembled in the US. Assuming that the wages of US workers are ten times as high as those of their PRC counterparts and their productivity would be equal in 2009, if iPhones were assembled in the US the total assembly cost would rise to US$68 and total manufacturing cost would be pushed to approximately US$240. Selling iPhones assembled by US workers at US$500 per unit would still leave a 50% profit margin for Apple. As iPhone sales increase globally, that profit margin would also increase. In this hypothetical scenario, iPhones, the high-tech product invented by the US company, would contribute to US exports and the reduction of the US trade deficit, not only with the PRC, but also with the rest of world. More importantly, Apple created jobs for US low skilled workers; those who could not be the software engineers needed by Apple. Giving up a small portion of profits and sharing them with low skilled US workers by Apple would be a more effective way to reduce the US trade deficit and create jobs in the US.

And their conclusion in part.

PRC workers added a merely $6.50 to the entire US$179 manufacturing cost of an iPhone and the appreciation of the yuan would only affect the assembling cost. Therefore, the appreciation of the yuan would have very little impact on the total manufacturing cost as well as the retail price of iPhones. It is unrealistic to expect the appreciation would lower the demand for iPhones in the US. In other words, the appreciation of the yuan would not help mitigate the US deficit due to iPhone trade. If US high-tech companies, such as Apple, were willing to share their profits with low skilled US workers by keeping assembly jobs in the US, it would be a more effective way to reduce the US trade deficit than by targeting the exchange rate policy of the PRC.

It may also help reduce China's suicide rate.

Teen Employment

State Senator Michael Baumgartner posted this on his Facebook page today.

Have the teens you know been able to find summer jobs? I've heard from several employers in Spokane who won't hire teens for summer work at $10+ an hour, but who would for $7 an hour.

Imagine that. Employers are willing to pay less in order to hire a teen. Along with that statement he posted a link to a National Review Online article, "A Starter Wage For Teenagers".

In that article, the authors state:

While the overall weak economy is certainly at fault, another major factor was the decision by Congress and President Bush to raise the minimum wage over 40 percent in the face of a weak economy, without exempting teenagers — thus pricing teens out of the labor market and denying them crucial work experience.

Their only support for saying this was a "major factor" is by referring to the increase of the wage by percentage points. But what is in real dollars? Before it was raised to $5.85 (Jul 07), $6.55 (Jul 08), and the current level of $7.25 (Jul 07), the minimum wage was $5.15 and had been for almost 10 years. (Washington State's minimum wage is currently $8.67 but employers can pay 14 and 15-year-olds at 85% which is $7.37.)

The authors reference a report from the Organization for Economic Cooperation and Development in April 2010 and say it suggests:

...that teen unemployment could be reduced by exempting teens from the minimum wage and instead instituting a "sub-minimum training wage."

It took me a while to find the report (PDF) but what it actually stated is:

One option would be to introduce a youth sub-minimum wage in those countries with a relatively high and universal statutory minimum wage where such a sub-minimum wage does not exist.

Even at $8.67 the minimum wage hardly qualifies as a "relatively high".

The authors end with this suggestion for Congress to help teens find work.

Exempt teenagers from the 2007 legislation increasing the minimum wage. Let them work for $5.15 an hour — if they want to and that’s what an employer wants to pay. Let them gain work experience and move up the wage ladder from there.

Interesting. If they want to and if that's what the employer wants to pay. If?

I bet Senator Baumgartner could also hear from some employers who won't hire teens for summer work at $7 an hour, but who would for $5.15. Or even less.

The Monkey On Their Back

As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act passed last year, the Federal Reserve was given the task of setting debit card fees. Fees have been averaging 44 cents per transaction. (That's why coffee shops and other small retail outlets ask that you purchase at least $5 with your debit card. They lose money if you buy less.) A study by the Fed (PDF) shows there were 15.6 billion transaction in 2003, 25 billion in 2006, and 37.9 billion in 2009, so we are talking billions of dollars in fees being collected every year. Consumers pay these fees because retailers pass that cost on to them. Back in December, the Fed's proposed rule was a cap of 12 cents per transaction. Yesterday, the Fed released the final rule capping the fee at "21 cents per transaction and 5 basis points multiplied by the value of the transaction". If I understand basis points correctly, a $100 debit card transaction will yield an additional 5 cents in the transaction fee.

So what does this mean for you or me? Basically not much when it comes to retail purchases. The exception may be the odd local place like Froyo Earth where you get a discount if you pay in cash. Other than that, don't expect to see price reductions. But do watch for ways that financial institutions will use to recoup their lost fees. Like addicts they are hooked on those billions and they'll do everything they can to keep pumping that junk into their arms.

It Ain't Looking So Good

The Congressional Budget Office recently released its 2011 Long Term Budget Outlook. It's 100-plus pages of dry, yet important, economic forecast. I don't pretend to understand it all.

The document presents two outlooks. One is called the Extended-Baseline Scenario which "adheres closely to current law." So if a tax is set to increase or decrease sometime in the next ten years, then this scenario assumes that will take place. The other is called the Alternative Fiscal Scenario. It "incorporates several changes to current law that are widely expected to occur or that would modify some provisions of law that might be difficult to sustain for a long period." I.e., the Path to Prosperity that the Republican Congress was all heffered up about until the people got all heffered up about Medicare becoming a voucher system.

Anyway, this chart on page 4 caught my eye. You'll notice that if we leave everything alone for the next four years then revenues will cover expenditures. Note that this doesn't include interest payments on the federal debt. Also note that following the alternative scenario puts us even deeper in the hole as tax revenues fail to match spending. The path to prosperity indeed.

A major contributor to this is the "taxes are off the table" mantra that sells so well in society. If it's repeated enough, many people will believe that they pay enough taxes, that government can't help but be wasteful, and that raising taxes will doom us as a nation.

There's an important statement on page 52 of the budget outlook in the chapter concerning Social Security.

When earnings inequality increases, as it has in recent decades, the taxable share of earnings declines.

In other words, as fewer people make most of the money, most of the people who make less are unable to contribute enough to sustain the system they are supposed to benefit from. It's easy to see how that applies to Social Security, but the same principle applies to the rest of our local, state and federal governments. If you want want law enforcement, fire protection, schools, etc., then you have to pay for them. And if most of the earnings are going to fewer people, you have to raise taxes for them because that's where the money is.

Or you can promote selfishness under the guise of limited government, corporations acting in their best interest, government regulation is bad, and pulling your own weight in a system that heavily favors the few. The alternative is clear.

They Should Be Proud It Worked So Well

The state of Georgia recently passed a bill intended to rid itself of illegal immigrants. And it worked! (Atlanta Journal-Constitution)

Thanks to the resulting labor shortage, Georgia farmers have been forced to leave millions of dollars’ worth of blueberries, onions, melons and other crops unharvested and rotting in the fields.

Nobody wants to harvest fruit and vegetables for eight bucks an hour. So what if they offered more money?

Georgia farmers could try to solve the manpower shortage by offering higher wages, but that would create an entirely different set of problems. If they raise wages by a third to a half, which is probably what it would take, they would drive up their operating costs and put themselves at a severe price disadvantage against competitors in states without such tough immigration laws.

Sometimes you need to be careful what you ask for.

Students Paying Other Students' Tuition

I've been stewing over the news about the University of Washington is proposing raising tuition rates by 20 per cent.

Tuition is skyrocketing because the Legislature has dramatically cut funding to higher education. Over the last three years, the amount of money the UW receives from the state has fallen 50 percent. The UW has eliminated hundreds of positions, cut classes, increased class sizes and frozen faculty salaries for the last two years. Under the current budget, faculty salaries will be frozen for two more years.

College is a very expensive deal nowadays and I appreciate the school has taken steps to help offset the decreased funding from the legislature. Here's the part that really irks me.

In addition, [vice provost Paul] Jenny outlined a proposal to the regents that about half of the money raised through the tuition increase be added to the financial-aid pot. That would raise enough money to cover the tuition increase for the neediest students and also provide enough to award grants of up to $4,000 for as many as 1,000 students, going beyond what the state required for financial aid and helping some middle-class students, Jenny said.

In other words, the students--and parents--that can either afford the tuition or are able to borrow the money to pay for tuition will now subsidize other students.

I can appreciate the need that the neediest students have. And I understand that our state's sales-tax-based economy is hurting in this Lesser Depression (Disclosure: My uncle's site).

But it bothers me a lot that the cost of my child's education is being increased and then half that increase--instead of being an actual cost for my child--is being diverted to someone else.

The Path To Prosperity Bamboozlement

I got to reading Representative Paul Ryan's Path to Prosperity 2012 (PDF) and noticed some disturbing projections in the charts.

These charts are from the Congressional Budget Office, which is a non-partisan organization, and I thought the numbers were...well...off the charts. That's a very depressing outlook presented there. The red in the charts makes it more so. It's like he's pulling levers to make flames to instill us with fear and awe.

Then I noticed the small print "based on the CBO's alternative fiscal scenario". What the heck is that, I wondered. So I went looking. The CBO does a long term budget outlook report and here's the one from last June (PDF), updated in August.
You'll notice there are two budget scenarios in the outlook report. Plus, the scale in this chart is different than the one presented by Rep Ryan. The one he used is at the back of the outlook report. You! Scarecrow, color in the red and stay between the lines!


So what are the two budget scenarios? There's a note at the beginning of the report that states:

The figure on the cover shows federal debt held by the public under the Congressional Budget Office’s extended-baseline scenario (lower line) and alternative fiscal scenario (upper line). The extended-baseline scenario adheres closely to current law, following CBO’s 10-year base-line budget projections through 2020 (with adjustments for the aforementioned health care legislation) and then extending the baseline concept for the rest of the long-term projection period. The alternative fiscal scenario incorporates several changes to current law that are widely expected to occur or that would modify some provisions of law that might be difficult to sustain for a long period.

Essentially the alternative fiscal scenario is based on conjecture. There's more detail later on in the outlook report.

The budget outlook is much bleaker under the alternative fiscal scenario, which incorporates several changes to current law that are widely expected to occur or that would modify some provisions of law that might be difficult to sustain for a long period. In this scenario, CBO assumed that Medicare’s payment rates for physicians would gradually increase (which would not happen under current law) and that several policies enacted in the recent health care legislation that would restrain growth in health care spending would not continue in effect after 2020. In addition, under the alternative scenario, spending on activities other than the major mandatory health care programs, Social Security, and interest would fall below the average level of the past 40 years relative to GDP, though not as low as under the extended-baseline scenario. More important, CBO assumed for this scenario that most of the provisions of the 2001 and 2003 tax cuts would be extended, that the reach of the alternative minimum tax would be kept close to its historical extent, and that over the longer run, tax law would evolve further so that revenues would remain at about 19 percent of GDP, near their historical average.

Rep Ryan is not only selective in choosing the worst case scenario, but also in the parts of the charts he uses. Careful examination of these charts provides an example. OMG, look at all that red. Why, anybody can have a brain. That's a very mediocre commodity.
Pay no attention to that man behind the curtain! The great and powerful Ryan has spoken. And when it's all over he'll leave us behind while he floats off in his balloon saying, "I can't come back, I don't know how it works! Good-bye, folks!"

*** Update
I just wanted to make clear that the alternative fiscal scenario includes extending the Bush tax cuts into the future, something the Republican party has pushed for and succeeded in doing, in part, last December. So a huge part of the road to ruin Ryan wants to save us from is of their own making.

Survey Says

Cathy McMorris Rodgers posted a survey asking us what Congress should do about the debt ceiling.
I enjoyed how the answers are worded, so much so that I thought I'd offer up some of my own.

* No - Congress has been consistently irresponsible in fiscal matters and America should finally pay the price for it even though it would make the economy even worse than it is
* Yes - Congress has been consistently irresponsible in fiscal matters and wants to lower taxes more and add to the debt
* Yes - Congress has been consistently irresponsible in fiscal matters and this would allow more gridlock so each party can blame the other
* Yes - Congress has been consistently irresponsible in fiscal matters and raised the ceiling 74 times in under 50 years. And ten of those increases have occurred over the past decade when there has been a record run-up in debt.
For some reason she didn't discuss the ramifications of not raising it again. Of course, there may be other reasons.