The realization that nearly 40% of President Obama’s electoral support came from the five fiscally disastrous and chronically blue states of California, Illinois, Michigan, New York and New Jersey apparently hit some raw nerves. Some critics countered with the fair point that red states recover more federal tax dollars then they pay and are consequently subsidized by blue states that pay more than they receive. That assertion is arithmetically correct but the interpretation that somehow red states should be thankful for the generosity of blue states and are financially or fiscally inferior to blue states is fanciful.
First, a significant portion of federal tax revenues flow back to residents of all states as Social Security and Medicare payments, which for the most part have been earned by recipients who paid into those programs during their entire working lives, so they should never be confused as gifts of charity and are certainly not the result of the beneficence of blue states. States also receive significant federal tax revenues for national defense and military spending, which protect everyone, especially coastal blue states, at least more so than interior red states.
Second, blue states generally pay more federal taxes than they receive because their residents and businesses are more affluent. Ironically, if President Obama wins the fiscal cliff negotiations and raises taxes on the wealthy, that blue state-red state tax disparity will widen, but, not to worry, that effect should be short-lived as long term trends show that affluent folks continue to leave high tax/high cost blue states for red states; over time the disparity should narrow.
Third, blue states, not red states, need a financial overhaul. The five states identified herein recover federal tax revenues ranging from only 61 cents (New Jersey) to 92 cents (Michigan) per dollar their residents pay in federal taxes, with the remaining three states receiving approximately 75-80 cents per tax dollar they pay. Those states are trying desperately to stay financially solvent by raising state and local taxes, which for New York, New Jersey and California are already among the nation’s highest.
Those states carry enormous debt epitomized in the extreme by California’s whopping $618 billion; they carry debilitating budget deficits, epitomized by the nation’s worst at $44 billion in Illinois; and carry smothering unfunded state government worker pension and healthcare liabilities that amount to as much as 43%, 37% and 31% of the respective state GDP’s of Illinois, New Jersey and California.
If allowing those states to keep more of their federal tax dollars would enhance their financially viable, such a policy should be considered, but let’s not kid ourselves, there will be no quick fixes to their problems.
Tuesday, November 20, 2012
Tuesday, November 13, 2012
Media Bias: Was History Channel's Postponement of Series Finale Politically Motivated?
The History Channel just completed an eight hour series, The Men Who Built America, about five influential capitalists that almost single-handedly transformed a broken, tired post-Civil War America into a global super power: Vanderbilt (Shipping/Railroads), Rockefeller (Oil), Carnegie (Steel), JP Morgan (Finance), and Ford (Autos). Capitalists will cheer and communists will jeer these men but all will enjoy this extraordinarily interesting story of their lives, their deals and their interactions with each other as they propelled America into the world’s top economy and amassed unsurpassed personal fortunes. During the height of their careers Rockefeller, Carnegie and Morgan were collectively worth in today’s currency some $1 Trillion.
This is an excellent series that everyone should see. However, it is particularly curious that its finale was scheduled to air two days before Election Day but was postponed at the last minute until November 11th because of “unforeseen circumstances.” After viewing the finale, one must wonder if those “unforeseen circumstances” included the potential for that episode to inadvertently help republicans during the elections two days later. The 50-year period depicted in the series touches upon many themes relevant to the election narrative this year, including the role of capitalism, class struggle (99% vs. 1%), labor unions, the role of government regulation, to name a few.
The first six hours of the series, which aired repeatedly during October, clearly made the case for the incumbent president and democrats. Those “robber barons” were depicted as greedy and ruthless and were reviled by nearly everyone in their time; they screwed their customers, their workers, their partners and each other, a pattern that supports the democrat agenda to expand the role of government to reign in and regulate the wealth and influence of the rich and powerful. Given the relentless and slanderous attacks against Bain Capital, Mitt Romney and republicans generally as self serving, greedy capitalists, viewers are likely to draw comparisons between those men and today’s republicans.
However, by delaying the finale, viewers must wait until after the election to find out that those titan figures set up foundations to distribute much of that wealth for the benefit of mankind, through charitable organizations that survive to this day. Additionally, despite all the brutality and hardship inflicted by those men, those men made America the unrivaled economic and military superpower of the 20th century; a nation positioned and destined to defend the free world against tyranny during two world wars.
Our entire way of life today began with the achievements of those men; railroads unified the nation and along with steel made our dense cities possible. Oil and autos made subsequent suburbanization inevitable. Those men also gave us companies that today are known as General Electric, Exxon, Chevron, U.S. Steel, Ford and scores more. The series also makes the point that brutality and ruthlessness was the by-product of the speed with which those industries were expanded and consolidated. We can never know whether a slower, more genteel, less disruptive evolution would have ultimately yielded similar prosperity. Series closing commentary underscores the point that those men and their entrepreneurial spirit “built” modern America, despite our president’s claim about today’s entrepreneurs to the contrary. All of those mitigating factors must weigh into the evaluation of the critics of capitalism.
Was the finale’s postponement an unfortunate coincidence or a deliberate attempt to influence the election? We may never know. If finding politics in a seemingly innocuous postponement of a TV series sounds far-fetched, it is at least consistent with other seemingly innocuous delays by this administration, including and most recently the stonewalled investigation into the Libya attack (Sept 11), the attempted Iranian attack on our drone (Nov 1), and most recently the resignation of CIA Director (Nov 9) for transgressions obviously known well before the election. The American people still wait for adequate answers by this administration. In that light, questioning the motivation for postponing the finale of this politically relevant series is probably not as far-fetched as it might initially seem.
This is an excellent series that everyone should see. However, it is particularly curious that its finale was scheduled to air two days before Election Day but was postponed at the last minute until November 11th because of “unforeseen circumstances.” After viewing the finale, one must wonder if those “unforeseen circumstances” included the potential for that episode to inadvertently help republicans during the elections two days later. The 50-year period depicted in the series touches upon many themes relevant to the election narrative this year, including the role of capitalism, class struggle (99% vs. 1%), labor unions, the role of government regulation, to name a few.
The first six hours of the series, which aired repeatedly during October, clearly made the case for the incumbent president and democrats. Those “robber barons” were depicted as greedy and ruthless and were reviled by nearly everyone in their time; they screwed their customers, their workers, their partners and each other, a pattern that supports the democrat agenda to expand the role of government to reign in and regulate the wealth and influence of the rich and powerful. Given the relentless and slanderous attacks against Bain Capital, Mitt Romney and republicans generally as self serving, greedy capitalists, viewers are likely to draw comparisons between those men and today’s republicans.
However, by delaying the finale, viewers must wait until after the election to find out that those titan figures set up foundations to distribute much of that wealth for the benefit of mankind, through charitable organizations that survive to this day. Additionally, despite all the brutality and hardship inflicted by those men, those men made America the unrivaled economic and military superpower of the 20th century; a nation positioned and destined to defend the free world against tyranny during two world wars.
Our entire way of life today began with the achievements of those men; railroads unified the nation and along with steel made our dense cities possible. Oil and autos made subsequent suburbanization inevitable. Those men also gave us companies that today are known as General Electric, Exxon, Chevron, U.S. Steel, Ford and scores more. The series also makes the point that brutality and ruthlessness was the by-product of the speed with which those industries were expanded and consolidated. We can never know whether a slower, more genteel, less disruptive evolution would have ultimately yielded similar prosperity. Series closing commentary underscores the point that those men and their entrepreneurial spirit “built” modern America, despite our president’s claim about today’s entrepreneurs to the contrary. All of those mitigating factors must weigh into the evaluation of the critics of capitalism.
Was the finale’s postponement an unfortunate coincidence or a deliberate attempt to influence the election? We may never know. If finding politics in a seemingly innocuous postponement of a TV series sounds far-fetched, it is at least consistent with other seemingly innocuous delays by this administration, including and most recently the stonewalled investigation into the Libya attack (Sept 11), the attempted Iranian attack on our drone (Nov 1), and most recently the resignation of CIA Director (Nov 9) for transgressions obviously known well before the election. The American people still wait for adequate answers by this administration. In that light, questioning the motivation for postponing the finale of this politically relevant series is probably not as far-fetched as it might initially seem.
Friday, November 9, 2012
Re-elected President Obama now faces “Sophie’s Choice” on Fiscal Cliff
Re-elected President Obama has a difficult choice to make during his second term. He can stick to his principles and remain loyal to the majority of folks who re-elected him, and hope for the best. Many think that will likely fail him and the nation, leaving America foundering economically and him with a miserable legacy as a failed president. Or, alternatively, he can put the welfare of the nation above his personal ideals, work in earnest with republicans, just as President Clinton did in the 1990’s. That approach worked for Mr. Clinton and just might spur a robust economic recovery, thereby leaving him with a presidential legacy to rival the best in history.
The President’s management of the economy during his first term was at best disappointing. Many think that continuing his liberal agenda with more big government, characterized by more spending, more taxes and more regulation will yield more debt and more deficits and ultimately more disappointment. A large part of the President’s political base hails from states that not only want more of the same, but indeed practice what they preach; so much so that it has lead many of them to financial ruin. Many of the blue states are a fiscal disaster. Five states, which account for approximately 40 percent of electoral votes that re-elected the President, are among the fiscally weakest in the nation: California, Illinois, Michigan, New Jersey and New York. Those and other blue states will continue to weaken as the exodus of population and business from those bastions of big government to fiscally strong red states continues. It is inevitable that the Federal Government will be called upon at some point to bail out many of those blue states, but who will bail out the U.S Government if the nation follows their lead into financial oblivion?
President Obama was re-elected by a narrow margin at this particular point in time by the narrowest of popular margins, by a voter base that represents about 25 percent of the adult population that could potentially have voted in that election. However, millions of businesses and residences have been electing for years to leave blue “big government” states in favor of red “small government” states. The lesson is simple and clear. Instead of fighting republicans that have proven they know how to manage their own fiscal affairs, the President should seek their advice and counsel. Otherwise, and if he emulates the fiscal practices of the states that by-in-large elected him, he is likely to fiscally weaken the nation further and irrevocably, which will be a disaster for the nation and his legacy as President of the United States.
The President’s management of the economy during his first term was at best disappointing. Many think that continuing his liberal agenda with more big government, characterized by more spending, more taxes and more regulation will yield more debt and more deficits and ultimately more disappointment. A large part of the President’s political base hails from states that not only want more of the same, but indeed practice what they preach; so much so that it has lead many of them to financial ruin. Many of the blue states are a fiscal disaster. Five states, which account for approximately 40 percent of electoral votes that re-elected the President, are among the fiscally weakest in the nation: California, Illinois, Michigan, New Jersey and New York. Those and other blue states will continue to weaken as the exodus of population and business from those bastions of big government to fiscally strong red states continues. It is inevitable that the Federal Government will be called upon at some point to bail out many of those blue states, but who will bail out the U.S Government if the nation follows their lead into financial oblivion?
President Obama was re-elected by a narrow margin at this particular point in time by the narrowest of popular margins, by a voter base that represents about 25 percent of the adult population that could potentially have voted in that election. However, millions of businesses and residences have been electing for years to leave blue “big government” states in favor of red “small government” states. The lesson is simple and clear. Instead of fighting republicans that have proven they know how to manage their own fiscal affairs, the President should seek their advice and counsel. Otherwise, and if he emulates the fiscal practices of the states that by-in-large elected him, he is likely to fiscally weaken the nation further and irrevocably, which will be a disaster for the nation and his legacy as President of the United States.
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