Saturday, January 31, 2009


Best Stimulus: Tax Cuts or Work Programs?

There's a big argument these days about the stimulus package that is finding its way through Congress. Republicans and a few Democrats don't like the version the House just passed because, in their view, it doesn't provide big enough tax cuts to business people and investors. Some Democrats, myself included, don't think that tax cuts are of much use in stimulating the economy at present. We think that people should be provided with more money so that they can buy more things, thereby causing business to expand and hire more people.

It is argued that both approaches have a slow effect. New public works programs will indeed put a lot of people to work, but it will take time to get them started. The existence of more employed workers with money to spend won't have an immediate effect on the economy. Similarly, changing the tax code or even giving tax rebates now won't have an immediate effect, either. The people who receive the tax benefits already have some money and are being more thrifty with it because the future is uncertain. With more money in their pockets, they will pay down credit card debts and build up their savings accounts first before committing to buying new cars, new houses, new washers, new anything.

For the most rapid effect, I think the government should put money in the hands of those people who will spend it right away. Those people are the ones living below the poverty line. Many of them don't earn enough to pay any taxes and wouldn't benefit from any tax reduction. Give them additional money and they will spend it on additional food, medicine, clothing, liquor, personal services, etc.

The Republican approach is based on a belief in supply-side economics. Give entrepreneurs more money and they will produce more products and people will buy them.

The Democratic approach is based on a belief in demand-side economics. Give potential buyers more money or create more potential buyers and the entrepreneurs will produce more as needed to meet the demand.


Tuesday, January 20, 2009


Obama's first speech as President

I listened to President Obama's Inauguration Speech this morning. It was a good speech. It lasted about fifteen minutes. It has some memorable lines. I particularly liked the line about the American People caring more about a government that works than a government that is big or small. He promised to make government smaller by eliminating programs that don't work and to make government more efficient by strengthening those that do. He will, of course, start several new programs to deal with the present crises in the economy and the "war" on terror.

Grover Norquist and other Conservative thinkers have dominated the thinking of Republic elected officials for years. They argue that taxes are too high and government is too big. They base these assertions on two beliefs. First, they believe that individuals spend their money more wisely than government. Second, they believe that government is inherently beaurocratic, slow, inefficient, and unresponsive.

These high-sounding philosophical arguments had their start when a business man, many long years ago, wanted government to be small and ineffective so that it would leave his business alone. Business men are motivated to make a profit, and the more profit the better. In the short run you make more profit by using inexpensive, unsafe cutting machines in a factory that makes object out of wood or metal. You make more profit by urging workers to work as fast as possible and not worry about safety. You make more profit by not buying gas masks for painters who spray paint the things that you manufacture.

I was happy to hear that Mr. Obama's primary goal is to make government work better for people, rather than to make it smaller. Take that, Grover Norquist!

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Obama's first speech as President

I listened to President Obama's inauguration speech this morning. It was a nice speech. It lasted no more than fifteen minutes. It had some great lines and some memorable quotes. The part I liked best was the part where he said that the American People are less concerned about the size of government than about a government that works. That statement encapsulates the ideology, if there is one, of the Democratic Party.

An old Republican mantra is "government is too big and spends too much money." Many conservatives are now spreading the word that George Bush disappointed them. They supported him, expecting that he would make government smaller. Of course, he didn't. He made it bigger, especially to fight his wars in Iraq and Afhanistan.

The idea that small government is desirable and smaller government is more desirable comes from a business man's frustration and anger at having government impose all sorts of rules on how he should run his business. Government supports the right of workers to form unions. Business men hate unions. Government inspects the business itself and imposes rules involving the safety of workers. Cutting machines must have guards to keep workers from cutting off their fingers. Workers who apply spray paint must wear special masks and breathing apparatus to protect them from getting paint in their lungs. Government imposes all sorts of restrictions on business. The business man supports a political party that promises to make government so small that it can't bother him.

It must be said that, even though Bush didn't make government smaller, he tried valiantly to weaken or remove restrictions on business operations.

Grover Norquist and other Conservative thinkers have elevated this business man's complaint about government regulation to a philosophical level. Government is apt to become tyrannical and must be kept as small and non-interfering as possible. One technique of achieving this end is to convince the public that government is inherently inefficient and unable to do anything well. Mr. Bush followed this technique in his staffing of the Federal Emergency Management Agency. FEMA was deliberately staffed with incompetent leadership. The result was the fiasco that followed the hurricaine that devastated New Orleans. The original business man who proposed small government also urged inefficient government.

I am very happy that Mr. Obama believes in efficient government, government that works for the people, without concern as to whether it is too big. Take that, Grover Norquist!

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Monday, January 12, 2009


Mr. Bush's Press Conference

I listened to part of the press conference with President Bush this morning on National Public Radio. As usual, his remarks on domestic and foreign affairs revealed that he apparently has not had an original thought for the past thirty years. His comment on the possibility of a cease-fire in Gaza was simply a repetition of the Israeli line. There can be a cease-fire when Hamas stops sending rockets with grenades attached into Israel proper and when we can be sure that Hamas can not import weapons of any kind. There was nothing about what Israel should do to achieve a cease fire, such as stop the construction of Jewish settlements in land that should belong to a future Palestinian state. In fact, the main purpose of the rockets is to stop the building of settlements. If enough rockets are lobbed into Israel to discourage prospective immmigrants from going to Israel (and demanding a place to live), there will be nobody to live in the settlements and Israel will stop building them. At least, that seems to be the most logical interpretation of the motivation of the Hamas leadership.

I can only hope that Mr. Obama and his foreign policy advisors will be more neutral and even-handed in dealing with the Israel-Palestine problem than the Bush Admininstration (and previous Democratic and Republican Administrations).


Wednesday, January 07, 2009


Obama's Press Conference

I listened to Mr. Obama's press conference this morning (Wednesday, January 7). A reporter asked him what he planned to do about "entitlements." The context was a previous comment about the large deficit that the stimulus package would entail and what he would do to get future deficits under control. Mr. Obama responded that many things would have to be done to correct the problem of revenues not covering expenses. Inefficiency and waste would have to be reduced as much as possible. Adjustments in the tax code would be necessary. And, of course, there would have to be some changes in entitlements and the way they are funded.

It sounded like a reasonable and cautious way to answer a question, and one that would not alarm or excite anyone.

Later in the day I heard in the news on National Public Radio a reporter state that Mr. Obama would make entitlement reform a major part of his program to correct the continuing and increasing deficit. The reporter did not mention any of the other things that Mr. Obama said would have to be done.

Later, in the News Hour with Jim Lehrer, the reporter made the same statement about how Mr. Obama would go about getting the deficit under control.

This strikes me as an example of biased reporting. It galls me to realize that the news reports came from so-called "liberal" sources.


Monday, January 05, 2009


An Ancient Lesson Ignored

To me it seems obvious, but I haven't seen anyone comment on a similarity in the thinking of the Bush Administration, the Israeli Administration, and the leaders of Hamas. All three groups had, or believed they had, a serious problem. All three believed that there was a military solution. All three were tragically wrong.

Bush's problem was Al Qaeda. The organization had just destroyed two very large buildings in New York and had damaged the Pentagon in the Nation's capital. In addition there was the annoyance of Saddam Hussein, still in power after the Elder Bush had moved his armies out of Kuwait and after the Shia Arabs and Kurds should have risen in revolt and overthrown his regime. Bush knew that America had the most powerful and capable military machine on the planet and decided that this military machine could quickly solve both of his problems. It could capture Al Qaeda leaders in Afghanistan and change the regimes in Afghanistan and Iraq in short order. It shouldn't take more than six months.

Israel's problem was Hamas. Hamas was lobbing rockets from Gaza into near-by Israeli villages and cities. Hamas had to be stopped. Israel has the most powerful military machine in the region. In spite of what had happened a few years ago with Hezbollah in Lebanon, Israel retaliated against Hamas with its military machine. We don't know yet what the outcome will be. I predict that Israel will be able to demolish as much of Gaza as it pleases, but in the end Hamas will still exist and will still have the support of the majority of the inhabitants of Gaza.

Hamas's problem was Israel. I have read that the leaders of Hamas wanted to get more favorable terms from the Israelis than they had in the previous cease-fire agreement. Accordingly, they started lobbing the rather primitive rockets. Military means would soften the Israelis and make them agree to a more favorable agreement for Gaza. They were wrong, of course.

I am a secular Christian. I attend church services on Sundays. I pay dues to the church that I have joined. I find it difficult or impossible to believe literally all the things that Christians are supposed to believe. However, I do believe in the Christian teaching of non-violence. That teaching is valid, not because Jesus or God said it, but because of millennia of experience. Buddha gave the same teaching. It's good psychology. If your enemy is angry and attacks you, your counter-attack will simply feed his anger and the fight between you will become more and more intense. However, if you respond peaceably and do not retaliate, your action puts your enemy off guard. He expects you to attack as he has attacked. Instead, you give him a soft answer. He is still angry, but he forgets about his intent to punish you physically. Pretty soon you can negotiate with him.

Non-violent response is a powerful tool for getting along with other humans in this world. It works just as well between organized groups as between individuals. It is a lesson that Mr. Bush, a professed devout Christian, forgot or ignored. The Israeli and Hamas leaders are probably not Christians but they know the lesson. Modern practitioners include Mohandas Gandhi and Nelson Mandela.

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Thursday, January 01, 2009


A Failure of Democracy

I have two friends that I call "H." One is Harry and one is Harold. Yesterday I had an animated discussion with H (I won't say which one) about the current budget problem in California. The Governor and the Democrats in the Legislature agree that a solution to the problem must involve a combination of program cut-backs and tax increases. H disagrees. He, along with the Republicans in the Legislature, assert that the problem can be easily solved without tax increases if only the unnecessary programs could be eliminated. State spending should be restricted to providing only necessary services.

We didn't get to specifics as to which services and programs are not necessary.

I argued that, because we don't have Thomas Jefferson's angels to make decisions for us, we have to use our regular democratic processes to determine what's necessary and what isn't. It turns out that some blocs or pressure groups have more influence on legislation than others. If the bloc or group of which you are a member doesn't have much influence, then programs and services that benefit you are "unnecessary" and will be cut or eliminated. Services and programs that benefit blocs or pressure groups with influence are "necessary" and will be continued.

The trouble remains that even after the programs and services that benefit those groups and blocs that lack political influence are scaled back or abolished, the remaining programs and services still exceed the income from taxes. For years the State has been able to borrow money to make up the difference between tax revenue and "necessary" expenditures.

The present stand-off in the budget is made possible by the arcane 2/3 vote required for the Legislature to enact a budget or a tax increase. The process is blocked by the Republicans who have greater than a 1/3 representation in each House of the Legislature. They have determined that, no matter what, the existing tax revenue is enough and that all programs and services provided by the State must fit into this available money. They have not, however, specified which programs and services they think ought to be eliminated.

The Governor, himself a Republican, thinks that the solution is to elect a more open-minded group of Republicans to the Legislature. He has sponsored a plan to have legislative district boundaries determined by a commission rather than by the Legislature itself. The Legislature's habit of drawing boundaries to create safe districts for incumbents allows the incumbents the security to take extreme positions about taxes and budgets. He believes that if more of the districts were competitive, a group of legislators would be elected that are more willing to compromise. The redistricting plan won't take effect until after the census in 2010. The Governor has no plan for what to do in the meantime about the die-hard Republicans in the Legislature today.

Mr. Schwarzenegger had a chance to head off these recurring budget impasses shortly after he became Governor in the Recall Election in 2003. Later that year there was an election with several ballot measures that he favored. In addition, there was a measure on the ballot to change the required vote for budgets and taxes from 2/3 to 11/20. He refused to support the measure and it was defeated, along with several measures that he favored.

We have interesting and intractable problems in California. They are much more interesting than the problem of having an unpopular Governor who is caught trying to sell a U.S. Senate seat.

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