Monday, December 27, 2004
Action and Reaction in Politics
In the present case in California, the interest group of nurses is demanding an improvement in working conditions. This group wants the staffing requirements for hospitals to follow the law enacted a few years ago in the State. The hospital operators, and the Governor want to set aside these requirements. In effect, they want nurses to care for more patients than the law requires. If the operators have to obey the law, they will have to hire more nurses. The result will be more cost in running the hospitals and less profit for the operators. The result will also be better care for the patients, since each nurse will not have as many patients to care for.
Governor Schwarzenegger favors the Hospital Managers and opposes the Nurses. By framing his support as “opposing a special interest” he implies that he is concerned for the welfare of the public. He may also have other motives. The Hospital Managers are business people, like Mr. Schwarzenegger. He understands their problems. As a business man himself, he recognizes the need to maximize profit. The considerable sums of money that the Managers have donated to his political campaigns may also have some effect on eliciting his sympathy for their cause.
Clearly, an interest group may be opposed by several interest groups. As an example, environmentalists are usually found in opposition to loggers. They also at time oppose the interests of real estate developers and home builders. Many politicians choose sides on various contentious issues based on the number and influence of the interest groups on one side. Often when an environmental interest group opposes clear-cut logging of an area, opposing groups include not only the loggers and the lumber industry but also developers and home builders. Even local elected officials eager for the increased tax revenues expected from the new residents that will replace the trees may oppose the environmental group. In such a case, a President or Governor often takes the side of the majority of interest groups.
This method of making policy decisions is messy. No one likes it. However, it is an example of how American democracy operates. Our policy makers, or politicians, must run for office. No matter how well-intentioned a politician may be, he knows that his first objective is to get elected. His second objective is to get himself reelected. He does what he has to do to achieve the goal of simply staying in office. Only after he feels secure in office can he then afford to try to accomplish his original well-intentioned goals. This line of argument confirms to me the foolishness of imposing short term limits on members of legislative bodies.
I must disclose that I am a member of the Sierra Club and contribute to such organizations as the Wilderness Society, the World Wildlife Fund, and other environmental interest groups. Naturally, I would like to see the environmental group prevail in contests such as the one cited. A balance of interest groups can be arranged by seeking allies. Environmentalists opposed to such logging as clear-cutting may find allies in fishermen and other groups concerned about the pollution of water supplies due to the run-off from clear-cut areas next to streams. The fishermen are concerned about the degradation of habitat for spawning fish, particularly salmon. Residents of cities that derive their drinking water from rivers are concerned about the impurities in the water. This process of seeking temporary allies is also messy, and it is also an example of the operation of American democracy.
Saturday, December 11, 2004
Senate Set to Confirm Alberto Gonzales
All of this leads to some thoughts about the process of confirming Presidential appointees, retifying solemn treaties, and other powers and duties of our Senate. The Constitution requires a super-majority of two-thirds to retify a treaty. Treaties stand between the Constitution itself and ordinary laws enacted by majorities in Congress. A treaty trumps a law. The only thing higher or more potent than a treaty is the Constitution.
Presidential appointees are confirmed by a majority vote (51 of 100) in the Senate. These appointees include cabinet officers who serve at the pleasure of the President. They can be dismissed at any time if the President so decides.
Justices of the Supreme Court are also confirmed by a majority vote in the Senate. These appointees serve for life and can not be dismissed by the President. They can be removed from office only by impeachment and conviction. As with the President, it requires a majority vote in the House to impeach and a two-thirds vote in the Senate to convict. The Supreme Court interprets the Constitution. The Constitution is whatever the current majority on the Supreme Court says it is. To me it is anomalous and illogical and wrong that a simple majority can confirm a Justice but a two-thirds majority is required to ratify a treaty or to remove a Justice.
The Senate has tried to get around this anomaly by using the filibuster to block the confirmation of certain Justices. It takes a three-fifths vote to end the filibuster and allow a confirmation vote. It seems to me that a constitutional amendment is in order to require a two-thirds vote on confirming Supreme Court appointments.
Thursday, December 09, 2004
WILL OUR NATIONAL INTELLIGENCE APPARATUS BECOME OUR VERSION OF THE KGB?
However, we do copy European models in some instances. One instance is the combination of all intelligence and police operations under one Director of National Intelligence. If the new DNI is to be more than a mere figurehead, he (or she) will have power and influence comparable to the head of the former Russian KGB. The KGB (the initials stand for “Committee on State Security” in Russian) carried out intelligence operations (spying) both outside and inside the Soviet Union. It also carried out police operations. It was the Russian equivalent of a combination of the American CIA and FBI into one organization.
When my wife and I toured the Soviet Union in 1978, we were provided guides, tour buses, and hotel accommodations by Intourist, a government organization to take care of tourists. Intourist was a branch of the KGB. Our own DNI will have to be involved in keeping track of foreign visitors, those with visas as well as those without. Following the Russian practice, we may set up our own organization to care for and watch tourists. Perhaps we can call it “Ameritourist.” Certainly from the viewpoint of homeland security it is important to keep track of all visitors and control those places that they visit. It was a similar concern that led the new Soviet government in the 1920’s to set up the OGPU (which later became the KGB). The regime was threatened by both domestic and foreign agents.
Our government is in a similar situation. It is possible that agents of Al Qaeda and other terrorist organizations wander about freely in our country. The American public has a hysterical fear of another atrocity like the one of 9/11/2001. The government has to respond. So far the result has been the creation of the Department of Homeland Security and the Director of National Intelligence. The future will show whether these efforts will accomplish their purposes and what other unexpected results may happen.
Monday, December 06, 2004
About SOCIAL SECURITY
The basic argument in favor of privatizing part of Social Security (and, in fact, eventually privatizing all of it) is that the present method of funding by a payroll tax can not be sustained indefinitely. The payroll tax is imposed on the first X dollars (about seventy thousand at present) of a worker’s gross yearly wages, with no deductions allowed for dependants, charitable contributions, medical expenses, or other items allowed as deductions in determining the income tax. It is a regressive tax. Workers who earn more than X dollars a year pay a smaller percentage of their income as payroll tax than workers earning X or less. Although at present the payroll tax rate is set such that the total tax collected exceeds the total sum of all benefits paid, it is estimated that there will come a time when the benefit payments will exceed the tax collected. A simple fix would be simply to increase the tax rate. However, since the tax is already regressive, increasing the rate sufficiently to keep paying benefits to a growing fraction of the population that is retired would become politically impossible. Hence, privatizing the system by giving every worker an individual retirement account would eliminate the need to increase the tax rate. Some advocates expect that the private accounts would produce greater payments than the present scheme because of the growth of value and income provided by the private accounts.
There are other arguments in favor of privatizing Social Security, either partially or completely. I will not go into them here.
My argument against privatizing any part of Social Security is based on these premises:
(1) The behavior of the stock market and private investments in general is unpredictable. There are times when private investments are very lucrative. If a worker retires at such a moment, he or she may receive a very handsome retirement income. There are also times when these investments lose most of their value. If a worker retires during a depression, he or she will find that the retirement income isn’t worth much.
(2) Ours is a prosperous society. Our economic system can easily produce more goods and services than we can consume. There is no question that our society can afford to be generous to its retirees. In addition, society owed a debt of gratitude to those workers who have devoted their working years to producing the goods and services that we all have enjoyed. They are entitled to a decent retirement living. Society can and should provide for them.
(3) The choice for providing old age benefits seems to be between a government pension and a private annuity or savings account. Government is motivated to provide service. Private institutions are motivated to provide profit for themselves. Although there is dishonesty, corruption, and inefficiency in both government and private institutions, I tend to trust government more than private institutions to provide the decent retirement benefits that our retired workers are entitled to.
Having stated my objections to the President’s Social Security proposal, I feel I should suggest an alternative. I believe that Social Security should remain a pension provided by the government. The payroll tax is regressive and I would like to see it abolished. The Social Security Trust Fund is a fiction. The US Treasury Bonds held by the Social Security department should be cashed in and the proceeds used to pay benefits. Future benefits should be paid out of the general fund. The income tax rates should be adjusted as needed to raise the additional revenue lost through the abolition of the payroll tax.
Why do I write that the Social Security Trust fund is a fiction? Just follow the money. At present the payroll tax is high enough to pay all benefits and also invest in a very safe vehicle for future benefits. The safest vehicle is a US Treasury bond. Social Security takes the excess money to the Treasury and buys bonds. The Treasury puts the money into the general fund. The government spends the money. At some future time, Social Security needs extra money. It takes bonds to the US Treasury and cashes them in. The Treasury gets the money from the general fund. The government then has to replenish the general fund by some combination of raising taxes, selling more bonds, and cutting costs. By following the money, you can see that the idea that we are paying now for future benefits is a fiction.
[The idea that the Social Security Trust Fund is a fiction was expressed some time ago in a television interview by Allen Sloan.]