Tag Archives: policy

Nouveau Capitalism

The Merriam-Webster dictionary should add the following entry.

Word: Nouveau capitalism (nou·veau cap·i·tal·ism)
Pronunciation: \nÃŒ-vō-ka-pÉ?-tÉ?-liz-É?m\
Function: noun
Date: 2008
: a capitalist economic system characterized by all the risks taken by the state and all of the rewards taken by private parties.

There are several examples of nouveau capitalism in the news during the past few weeks.

First, the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac were placed into conservatorship by the U.S. government. Both GSEs were and are publicly trade private companies whose debts were guaranteed by the U.S. government. That fact was a moral hazard since the companies’ actions were distorted knowing they could take high risks with little personal repercussions. Well, one good thing did happen in that the existing shareholders’ stock values were diluted when the government took a 79% share of each company as they entered conservatorship.

Then, the Federal Reserve Bank and U.S. Treasury provided an $85 billion loan to the giant insurance company A.I.G. in return for 80% stock, a move that, in effect, it nationalized A.I.G. and likewise diluted existing shareholder value.

Now, the Treasury wants to buy all the toxic, bad debt from the credit and money markets.

$700 Billion Is Sought for Wall Street in Massive Bailout – NYTimes.com.

The ambitious effort to transfer the bad debts of Wall Street, at least temporarily, into the obligations of American taxpayers, was first put forward by the administration late last week, after a series of bold interventions on behalf of ailing private firms seemed unlikely to prevent a crash of world financial markets.

A $700 billion expenditure on distressed mortgage-related assets would be roughly what the country has spent so far in direct costs on the Iraq war and more than the Pentagonâ??s total yearly budget appropriation. Divided across the population, it would amount to more than $2,000 for every man, woman and child in the United States.

Whatever is spent will add to a budget deficit already projected at more than $500 billion next year. And it comes on top of the $85 billion government rescue of the insurance giant, American International Group, and a plan to spend up to $200 billion to shore up the mortgage finance giants, Fannie Mae and Freddie Mac.

Well, seriously folks, the bailout proposed by the Bush administration is more than a bailout. It proposes to take only the most toxic debt off the hands of those holding it. That means, we’ll be left holding the bag entirely while the rewards of better debt will be left in private hands. There has to be a better way. I’m certain of it. I’d like to see the investment bankers and those who profited off the toxic debt cough up some most of their gains as a result of this plan.  Otherwise, what will make people think twice about the consequences of their actions in the future? Why can’t the government just accept all debt from a given portfolio, good and bad? I can barely wait to see how economists and financial industry watchers react to the bailout. I’d also like to hear how Bush, McCain, and Obama, Congress, etc. expect to pay for this. More tax cuts?

btw: if you’re wondering why I’m spending time reading/writing about this when I have other, higher priorities, Fannie/Freddie are subjects of a tax policy paper I’m writing. That, and I can’t help but chime in; that’s my son’s future they’re pissing away. 😉

My First Pottytunity

Digital Converter Box is here

I used the analog to digital converter box coupon card this past weekend. So now we can still get TV after the super bowl when the transition to digital television is complete. It is an RCA brand converter box.


I don’t generally shop in Wal*Mart (ruthless and toothless); however the converter box cost $10 after the coupon ($50 retail price). That beat the $65 charged by Radio Shack for a no brand item.

The nice thing I found out about this box is that it includes a V-Chip intended to let parents filter out inappropriate content from their youngsters. It is likely that most people who rely on the government coupons to purchase a converter box will not have televisions built since 2000 when the V-Chip was mandated. The program is still a boondoggle, just not as big as I had previously made it out to be.

In case you still are not aware of the television transition, these are the dates you need to be aware of:

  • January 2, 2008 – Digital to analog converter coupon program becomes available. * Coupons are now available.
  • February 17, 2009 – Last day for analog broadcasts.
  • February 18, 2009 – Analog broadcasts will be turned off. Televisions will need a digital tuner, digital-to-analog converter box, or cable/satellite subscription.

You CAN have a sense of humor in the gov’t

There is a widespread belief that government bureaucrats lack senses of humor and that individuality is discouraged when in the ranks of government. The folks at the Social Security Administration (SSA) disproved that last week in a press release.

“For reasons likely to puzzle baby name experts around the world, American parents have become infatuated by names, particularly for their sons, that rhyme with the word â??maiden.â?Â  …  Social Security spokesman Mark Lassiter indicated that the agency would resist any legislative efforts to standardize the spelling of these names.”

SSA Press Release: Pop Culture Makes Mark on Social Security’s Most Popular Baby Names List

SSA tracks the most popular names born in the U.S. through registrations for Social Security numbers. It publishes its list annually. You can see the most popular names for the past 130 years on its web site.

Race is not always the issue

I think it is unfortunate for African Americans and others who are non-white that some people choose to blame race whenever something goes wrong in life. For example, consider the reaction to a verdict today in New York regarding three police officers shooting 50 rounds from their guns and killing an unarmed man.

NYPD officers cleared in killing; rights leaders want probe – Yahoo! News
NEW YORK – Civil rights leaders demanded a federal investigation and vowed to march through the streets in protest after three police officers were cleared of all charges Friday in the killing of an unarmed man cut down in a hail of 50 bullets on his wedding day.

The verdict by Justice Arthur Cooperman elicited gasps as well as tears of joy and sorrow. Detective Michael Oliver, who fired 31 of the shots, wept at the defense table, while the mother of victim Sean Bell cried in the packed courtroom. Shouts of “Murderers! Murderers!” and “KKK!” rang out on the courthouse steps.

Two of the three police detectives involved were African-American. I don’t understand the connection to the Ku Klux Klan (KKK) to this case. I can see a strong argument for excessive force but I don’t see much, if any, argument for racism.

It is unfortunate for America when the race card is pulled in a situation like this. In fact, it occurs far too often. Another example comes out of the Motor City. Current Detroit Mayor Kwame Kilpatrick has accused numerous folks of racism in his recent text messaging scandal, even though race doesn’t play a role. He is accused of perjury in his testimony during a lawsuit by former cops (neither white) he had fired because they were looking into corruption. Speaking of Detroit, former Detroit Mayor Coleman Young used it too frequently through the 1970’s and 80’s to retain his hold on political power, meanwhile driving his city further into the ground. Remnants of the antagonistic relationships with other local cities is still evident in local life and politics.

Race comes out too often when it has no relevance to a situation and is used only to raise hackles. But the louder and more frequent these cries are, the more they are ignored. Sadly, it has become a situation much akin to the parable regarding the boy who cried wolf. This was demonstrated by the Jena 6 imbroglio. It took weeks before the mainstream press bothered to cover the story and it is still taking a beating these many months later. That story deserved the discussion about racism that our country should have. But it didn’t and has been largely forgotten by most of America less than a year later.

As Barack Obama recently argued, a discussion about race in America does need to occur. However, I don’t think it can be very constructive in a world in which the little boy who cries wolf about racism is ignored. It is time for people to step back and collect all details about a situation before inferring that racism is a cause and, even then, to be more careful before pulling it out. There are many other reasons beyond racism that may cause a person to say or do something. In the case of the New York City cops killing Sean Bell, I would think that there are many, many other reasons such as fear, the early morning hour, a crowd of mostly intoxicated young men dispersing after an altercation, and society’s love for and access to guns. In the end, I think that America has been desensitized to cries of racism, as unfortunate as that is for us all.

BTW: I think Obama’s speech is well worth watching. I wish someone spoke up and made this many years ago.

McCain: Cutting taxes more important than balanced budget

I don’t think John McCain subscribes to the belief that: “A deficit today means a tax tomorrow.”

McCain: Cutting taxes more important than balanced budget – Yahoo! News

WASHINGTON – Republican John McCain said Sunday that cutting taxes and stimulating the economy are more important than balancing the budget, and accused both Hillary Rodham Clinton and Barack Obama of supporting tax hikes that would worsen the impact of a recession.

“The goal right now is to get the economy going again,” the GOP presidential nominee-in-waiting said on ABC’s “This Week,” adding that he would put the country “on a path to a balanced budget” by attacking wasteful spending.

What John McCain asks for is not a tax cut, it is a deferred tax. As far as he’s concerned, he won’t need to pay the tax man today (but his kids/grandkids surely will).

The thing I don’t think John McCain or our Congress quite understands is that they are pushing 96% taxes someday in the future to pay for the war they refuse to pay for today. In the end, someone needs to pay for war spending, in addition to all the regular stuff the government spends on domestically. I’d rather we all pay our fair share today through taxes (yes, even increased taxes) than it be forced on my generation later on. If that’s the case, I’d rather the U.S. Government default on its debt obligations today rather than force the younger generations to do so later.

Note: I’m not against trimming or cutting programs, I just think a balanced budget is required before tax cuts can be implemented. The first place I’d cut is Congressional pay. The second is the war in Iraq. What a boondoggle!

Should prosecutors be liable for prosecutorial misconduct?

That is the gist of a case the Supreme Court decided to hear today. I think the answer is, it depends. If it is egregious misconduct, like using jailhouse snitches and not disclosing any rewards given, then I think the answer is yes. Same with withholding Brady evidence that is material to the case (think, smoking gun).

Court will hear wrongful conviction case – Yahoo! News
The U.S. Supreme Court agreed Monday to decide whether a man who served 24 years in prison before his murder conviction was overturned can sue two former prosecutors for allegedly violating his civil rights.

Thomas Goldstein, now 59, was convicted of a 1979 murder on the strength of a jailhouse informant’s testimony that Goldstein had confessed to the crime. The informant testified he received no benefit in return, but evidence that came to light later suggested he had struck a deal to get a lighter sentence.

Two federal judges and a federal appeals panel eventually ruled that Goldstein was wrongly convicted, and he was freed in 2004.

Individual prosecutors typically may not be sued for their decisions, but Goldstein sued former District Attorney John K. Van de Kamp and his former chief deputy, Curt Livesay, claiming that as managers they had a policy of relying on jailhouse informants even though it sometimes led to false evidence.

If Goldstein ultimately is successfully in suing, the case could lead to higher-ups in other prosecutors’ offices being held liable for the conduct of their prosecutors in the courtroom, Van de Kamp said.

That isn’t such a bad thing if it helps clean up prosecutorial misconduct that happens today but has no real outlet for accountability.

Digital Television Converter Coupons Are Here

I wrote about the need to sign up to receive coupons for the analog to digital television converter coupons back in January (See: Digital Television Transition: Start Preparing Now). Our two coupons arrived this week.

The envelope:

Analog to Digital Converter Coupon

A coupon:

Analog to Digital Converter Coupon

They came with a list of qualified converter boxes and a list of local retailers (all big box stores) that sell them.

Analog to Digital Converter Coupon

This whole television transition is one big bloated boondoggle. These stores and the converter box makers scored with this one. For one, the coupons are good only with stand-alone devices that will convert the signals and not for multi-purpose devices like VCRs, televisions, etc. that build in a converter. Two, television broadcasters don’t need to pay a penny for their broadcast licenses. Three, the converters are expected to cost $75 or more. Four, the converter boxes don’t even include a V-chip (this was a missed opportunity to get a V-chip in every home). There is more to complain about, but I’ll spare myself the time and effort. 😉

No more In-n-Out for a long while :(

I asked In-n-Out to comment regarding the major beef recall from Hallmark/Westland Meat Co. I was sent a word doc in response.

A statement from In-N-Out Burger President Mark Taylor:

â??We ended our relationship with Hallmark/Westland on January 30th. There is no meat from them anywhere in our system.

At In-N-Out burger, we have never purchased any processed patties or ground beef from any supplier. We make every one of our hamburger patties ourselves using only whole chucks from premium, select-type cattle. We pay a premium to purchase high quality beef and we require our suppliers to certify that quality in writing. Our suppliers must all sign our purchase specification agreement which prohibits them from using non-ambulatory or â??downerâ? cattle. They all know we would never accept it.

We individually inspect every single chuck we receive to make sure that it meets our standards. Then our own, in-house and highly skilled butchers remove the bones. We grind the meat ourselves and make it into patties ourselves. We do all of this in our own patty making facility on our property in Baldwin Park, Ca. These steps enable us to completely control the patty-making process and be absolutely certain of the quality, freshness and safety of every patty we make. Weâ??ve always made our hamburger patties this way.

We are confident that every hamburger we serve, and have served in the past, is of the utmost quality and is completely safe and wholesome.�

This is my response:

Thank you for the response. I suggest you band together with other companies and consumer advocates to place inspectors in the facilities of your suppliers. As this incidence demonstrates, you cannot trust suppliers even if they certify they will not provide you with beef from downer/sick cows, and you cannot trust USDA inspectors. Another option would be to buy kosher/halal meat in which observations are made for religious purposes and downer/sick cows would not pass muster.

Although the beef is no longer being served, I’m still concerned about the meat you serve. You are unable to provide guarantees that your other suppliers are not acting similarly to Hallmark/Westland.


We talked about the response from In-n-Out and decided not to eat from its restaurants until it can provide further assurances that downer cows won’t end up in our digestive tracts. Obviously, contractual obligations weren’t enough to stop one supplier from using downer cows. What is to stop other suppliers from behaving similarly? This instance demonstrates that more needs to be done by In-n-Out than relying on its contracts.

We were already concerned about the risk to Mad Cow disease since In-n-Out serves meat that comes from ranchers who might have cows that ate cow. We know this since Mad Cow takes years to incubate and the ban against cows eating meat products barely went into effect a few years ago. As a result, we generally buy from Whole Foods and others who sell Natural Beef (only fed grasses and grains). I sent Whole Foods a similar question but have not heard back from it yet. In-n-Out has been our one detour since it buys cuts of beef it then grinds for itself. That and we trusted In-n-Out. Now we’ve decided it isn’t worth the risk of Mad Cow, in general.

Downer cows in the food supply – ugh!

This past week, the massive beef recall from a Southern California slaughterhouse made headlines. It seems most attention was paid to the inhumane treatment of the cows. I find the use of downer cows to be the most heinous and horrid part of this whole mess.

Lawmakers react to massive recall from SoCal slaughterhouse

Federal lawmakers and watchdog groups had harsh words Monday for the U.S. Department of Agriculture after the agency ordered a recall of 143 million pounds of beef from a Southern California slaughterhouse.Beef products dating to Feb. 1, 2006 that came from the Chino-based Westland/Hallmark Meat Co. are subject to the recall, which is the largest such action in U.S. history. The notice came after the Humane Society of the United States filmed undercover video showing crippled and sick animals being shoved with forklifts â?? treatment that has also triggered an animal-abuse investigation.

USDA spokesman Keith Williams said the agency did not have a shortage of inspectors. He said his department has evidence that Westland did not routinely contact its veterinarian when cattle became non-ambulatory after passing inspection, violating health regulations.

Williams said the recall was done primarily to revoke the USDA’s seal of inspection for the meat â?? not because of the risk of illness.

“Everybody’s going, ‘Oh, a recall, that means death, that means sickness.’ That’s a different kind of issue,” Williams said. “This is a lower severity, where there would be a remote probability of sickness.

This official response by the USDA is not acceptable and is bullshit, pun intended. The inability to stand is one of the signs of Mad Cow disease. It is the reason these rules were put in place. The fact that downer cows were put into the food supply means the USDA food inspection process does not work and we are all at risk of getting e coli, salmonella, and bovine spongiform encephalopathy (BSE), the human version of Mad Cow disease, among other diseases. The link between BSE and downer cows is clear. The possibility is low, but it is still there. Not only that, but in the logic of the USDA spokesman, there is no need to have rules against downer cows since there is low risk of illness.

Deporting American citizens?

This is one example of how inept the U.S. immigration service is and how the immigration system is broken. How idiotic can they be not to run the quick and simple checks?

McClatchy Washington Bureau | 01/24/2008 | Immigration officials detaining, deporting American citizens

FLORENCE, Ariz. â?? Thomas Warziniack was born in Minnesota and grew up in Georgia, but immigration authorities pronounced him an illegal immigrant from Russia.Immigration and Customs Enforcement has held Warziniack for weeks in an Arizona detention facility with the aim of deporting him to a country he’s never seen. His jailers shrugged off Warziniack’s claims that he was an American citizen, even though they could have retrieved his Minnesota birth certificate in minutes and even though a Colorado court had concluded that he was a U.S. citizen a year before it shipped him to Arizona.

A quandry for Verizon Wireless

Verizon Wireless has a foolish policy in which it charges for text messages sent and received. For my plan, it charges 15 cents per message – what a rip! And it is those 15 cent charges for receiving text message that will come back to haunt Verizon for years to come.

Text messages are essentially emails ([phone number]@vtext.com). It is no secret that spam is a scourge that effects regular email and the Internet in epidemic proportions. And it is only a matter of time before spammers all set their sites on sending text messages indiscriminately to any and all phone numbers a generator can spit out. It seems they already have started in sufficient quantity that my wife received one this evening.

New Text Msg

Message from Royce@dutlru.tudelft.nl

(hey) hey, i seen your profile wondering if ya wanted to chat on msn hit me up at realhotjane1@hotmail.com

1/24 10:13p

For that message I was charged 15 cents. To wipe out the charge, I was forced to call Verizon customer service and request it reverse the charge. In the end, that one text message cost Verizon $3, or whatever it costs to handle one call. I was told it now has an option to blacklist certain email addresses and turn off text messaging but I refuse to bother using either option since it really doesn’t resolve the problem or my issue. As such, each future spam message will cost Verizon another $3+, since I will call to complain then as well. When I called, the customer service rep told me I’m not the only person complaining about receiving spam and requesting a charge be reversed. Verizon needs to stop charging customers to receive text messages before spam becomes more costly than it already has.

Book closed

The book for the fall semester is now closed. It was brutal but I’m finally done with it.

I turned in my Mass Communications paper at 4:55 p.m. Thursday (Jan. 10), with five minutes to spare. I had intended to finish it a few days earlier but was knocked out with the flu last weekend. Who am I kidding? I would have still turned it in Thursday afternoon, regardless. 😉

My paper argues for Congress and federal regulators to scrap the current communications regulatory regime.

Traditionally, the federal government has taken a silo approach to communications regulation. In other words, each mode of communication is considered and regulated differently.

Think of grain silos rising above the plains like a row of overseers. Each silo holds and isolates a specific type of grain, protects it from the elements, and prevents mixing with the other grains. Similarly, traditional communications regulatory silos isolate individual forms of communication â?? as well as their respective sets of regulations â?? from each other. There are silos for broadcast television and radio, cable television, satellite television, cable Internet access, digital subscriber line (DSL) Internet access over a copper telephone line, telephone service over a copper line, and so forth.

As a result of the silo approach, each mode of communication is controlled by a separate set of regulations, even those that carry the same, exact content. For example, broadcast television and cable television both show audio/visual content on a television set, yet each is governed by different content regulations. Those content regulations in turn receive different standards of review by courts, which allow the government to continue its disparate treatment of the two. That’s why swearing is more allowable on cable television but not on broadcast television.

In the same way, the current regulatory approach also isolates and provides differential treatment of communications services using the same physical conduit. For example, one set of regulations govern cable television while a separate set of regulations govern cable Internet access, even though both media forms utilize the same physical cables.

In contrast to the silo approach to regulations, a layered regulatory framework would raze distinctions between the types of communication and instead focus on the functional portions of a communications network used to transfer content. Such a layered regulatory approach would treat similar content similarly, independent of source, service type, and destination. The model that works best contains four layers: content, application, logical, and physical. If you need a visual analogy, think of the layers stacked like pancakes.

By creating regulatory layers based on functions of a network, the regulatory process would better take into consideration the similarities and differences between the different modes of communication and the technology platforms that underlie each and thus eliminate the disparate â??siloâ? regulations that arbitrarily govern identical content differently.

The argument is very wonkish. If you’re geek enough and wish to read all 39 pages, including footnotes, please do. Razing the Silos: An Argument For A Layered Communications Regulatory Framework (PDF). It is just a term paper, but I intend to keep working on it over the next several years and eventually submit it to law journals for publication.

Digital Television Transition: Start Preparing Now

Read this if you want to guarantee that your television will still work after the 2009 Superbowl. Even more importantly, you will also need to make sure your mothers, grandmothers, or aunties know the following since they will need your help to sort through this mess and are less likely to know what’s going on.

The United States is currently undergoing a transition from regular analog television signals to a digital format (DTV). This is often referred to as the DTV transition. With traditional analog technology, pictures and sounds are converted into waveform electrical signals for transmission through the air. In contrast, digital technology converts these pictures and sounds into a stream of digits consisting of zeros and ones for transmission. In other words, the digital signal is in the same format as video on your computer (MPEG-2).

Analog format is how television has been broadcast since it first started in the 1930’s. All televisions since that time have been built to receive and decode those analog signals.

Digital television format is the future. Digital transmission of television signals provides several advantages compared to analog transmission, such as enabling better quality picture and sound reception as well as using the radio spectrum more efficiently than analog transmission. This increased efficiency makes multicastingâ??where several digital television signals are transmitted in the same amount of spectrum necessary for one analog television signalâ??and HDTV services possible. A primary goal of the DTV transition is for the federal government to reclaim spectrum that broadcasters currently use to provide analog television signals. It is auctioning off that spectrum (likely to mobile phone providers) in January 2008 so there’s no turning back.

Here’s the rub. A television must be built to receive and decode the digital signal. Televisions built before 1998 were ONLY built to receive analog signals. Since then, only some televisions have been built with a digital tuner to receive digital signals. Televisions sold after April 2007 must have a digital tuner, although anecdotal stories abound regarding stores not meeting those obligations. If you bought a television since then, you’ll need to verify it has a digital tuner.

Today, most television stations throughout the country provide a digital broadcast signal in addition to their analog signal. Within hours of the 2009 Super Bowl the analog signals will turn off for good. That means televisions built without a digital television tuner will not be able to receive over the air television.

The Federal Communications Commission (FCC) has a web site that provides more information regarding the DTV transition. http://www.dtv.gov/

It all depends on how you receive your television signal and your television set itself. There are three primary ways people receive television programming: over the air reception, cable, or satellite.

1) Over the air broadcasts: Don’t laugh because 19% of American households (20.8 million households) still rely on the rabbit ears. I’m part of this 19%.

This group will either need to buy a new television with a digital tuner or buy a digital to analog converter box. Estimated price of the converter box is $75.

The federal government is providing $40 coupons for these people to purchase the digital to analog converter box. Request a coupon: https://www.dtv2009.gov/ApplyCoupon.aspx According to the coupon request form, TV converter boxes are not expected to be available in retail stores until late February or early March. You should sign up now; however you will not receive your coupon until after converter boxes are available in stores. The Coupon will expire 90 days after the date it is issued.

The federal department responsible for the program has a web site that provides more information regarding the coupon program, such as rules and the coupon request form. https://www.dtv2009.gov/

2) Cable: No need to do anything. You’ll still receive your local and cable stations without fail. Just make sure you take care of those who are likely not to subscribe to cable (see above), such as your grandmother, aunties, and the neighborhood granny who looks after your home while you’re at work or school. A rallying cry should be “No grannies left behind.” 😉

Currently, federal law requires cable companies to carry broadcast stations when asked by the local broadcaster. Those must-carry provisions require cable companies to provide the broadcastersâ?? signals to their subscribers in substantially the same format as it was received from the broadcasters. That’s why cable subscribers should be unfazed by the DTV transition.

Note: If you don’t have digital cable, you will only receive your local stations, such as PBS, ABC, and NBC, in analog format.

3) Satellite: Satellite doesn’t have the same must-carry obligations as cable systems so you’re likely to continue receiving the same stations you did before the DTV transition.

Of course, if you bought a television that receives digital signals you can still receive over the air broadcasts. I’ve heard the HD picture quality from over the air broadcasts is actually better than is provided by digital cable. I haven’t tested it yet, but I wouldn’t be surprised since cable companies will want you to subscribe to their HD services.


  • January 2, 2008 – Digital to analog converter coupon program becomes available. * Coupons are now available.
  • February 17, 2009 – Last day for analog broadcasts.
  • February 18, 2009 – Analog broadcasts will be turned off. Televisions will need a digital tuner, digital-to-analog converter box, or cable/satellite subscription.

Huckabee wants a 23% Federal sales tax?

The more I hear about Mike Huckabee’s policy proposals, the more I think he’s a bad choice for running the country, let alone representing anyone in our Federal government.

Huckabee campaigning for 23% sales tax – Los Angeles Times

WASHINGTON — Mike Huckabee, one of the most conservative Republicans in the 2008 presidential race, has embraced one of the most radical ideas on the campaign trail: a plan to abolish all federal income and payroll taxes and replace them with a single 23% national sales tax.The idea — dubbed the “fair tax” by proponents — has been a political asset for Huckabee; its well-organized backers have helped catapult him from the back of the presidential pack to its top tier.

Proponents of a national sales tax say it would be an improvement over the current system because it would increase the incentive to save, by taxing money spent instead of money earned.

Also, the proposal would rid the tax code of its myriad loopholes and would free taxpayers and businesses from the time-consuming, often costly task of preparing annual tax returns.

“What we would do with the fair tax is to eliminate all the taxes on productivity, which means you could earn anything you want,” Huckabee said. “You wouldn’t be penalized for saving, earning, for having a capital gain, making an investment.”

Huckabee and Fairtax.org call for a 23% tax on virtually all purchases in place of federal income taxes, as well as payroll taxes to fund Social Security and Medicare.

To ease the effect on the poor, they propose a “prebate” — a monthly cash payment to every family — to cover sales taxes on spending up to the federal poverty level.

Is the “fair tax” fair? Maybe. But does it solve other problems in our tax system, or does it make them worse? I think it makes things worse. I don’t understand how this will be easier on regular people, save the government money, or cut down on bureaucracy.

First, this plan is missing one critical element. It doesn’t make the tax system easier on the regular, everyday person. We’ll have more money in our pockets but will pay a 30% (or higher) tax. Not only that, but we’ll need to deal with another bureaucratic mess to get whatever rebates the government sees fit to give out.

Secondly, the “prebate” program will be tasked with paying people rebates for everything they spent. This will invite huge amounts of fraud. I can easily see a black market developing to match poor people who don’t use up their entire rebate with rich people who easily used up their rebates. I can also see a “you scratch my back, I’ll scratch yours” barter system developing in place of regular commerce similar to how some lower wage persons work “under the table.” There is some incentive in today’s state-based sales tax programs, but those incentives will become much larger when 1/4 to 1/3 of a purchase price is added at the end as tax. For example, in California I’ll end up paying a 31.25% (23% + 8.25%) tax for every purchase I make.

Finally, a huge bureaucracy will need to be created in place of the IRS to manage the “prebate” program, develop eligibility criteria, investigate and manage fraud, and process all the paperwork submitted. All those folks freshly laid off from the IRS will be hired to staff this new tax agency.

Other issues that will need to be worked out including how to deal with people and companies who made financial plans based on expected taxes. Also, what about services and groceries? Some groceries are exempt in states that charge income tax. Would that continue under a federal system.

In the end, I believe the national sales tax is not a replacement or substitute for the Federal income tax system currently in place. If anything, it might make make feelings of an inherent sense of unfairness felt by poorer people, as well as create a less manageable system.

I am more amenable to a flat tax with no loop holes such as credits, deductions, or accounting trick rewards. A flat tax can be eased in over 25-30 years by making it optional for all those who have worked full-time more than two years consecutively and make it compulsory for those who haven’t. It can also be equalized in favor of poorer people by taxing only income over first 25,000 (or some other arbitrary number).

Turn off the Greenspan double-speak machine

Alan Greenspan has been hawking his book lately. The more I hear him, the more I’m convinced he doesn’t know what he’s talking about and never did. His doublespeak constantly reminds me of 1984. With that in mind, maybe his goal is to confuse people into inaction.

“We are beginning to get not stagflation, but the early symptoms of it,” Greenspan said.

So he’s saying is we’re seeing the early signs of stagnant inflation (stagflation) in the economy.

Greenspan sees early signs of U.S. stagflation: Financial News – Yahoo! Finance

In an interview on ABC’s “This Week with George Stephanopoulos,” Greenspan said low inflation was a major contributor to economic growth and prices must be held in check.”We are beginning to get not stagflation, but the early symptoms of it,” Greenspan said.

“Fundamentally, inflation must be suppressed,” he added. “It’s critically important that the Federal Reserve is allowed politically to do what it has to do to suppress the inflation rates that I see emerging, not immediately, but clearly over the intermediate and longer-term period.”

I think Greenspan shares a lot of the blame for this inflationary spike and impending stagflation, if it occurs. He led the Fed down a interest rate cutting path that created the cheap money high that resulted in the housing bubble as a knee-jerk reaction to a soft recession in the economy after the dot-com bloodbath/implosion and the 9/11/2001 terrorist attacks. Economies operate in cycles with highs and lows. The recession we had was a natural part of that cycle. Instead of letting the recession play out, the Fed intervened by slashing interest rates to almost nothing. Instead of giving time between each rate cut to see if the previous rate cut was working, the Fed kept slashing. That kept the U.S. economy out of recession but it created unsustainable inflation in the housing market, and it likely made this next recession a bloodier mess. It makes me think that the Fed was operating with the short-term vision Wall Street is famous for pushing on public companies. In contrast, the Fed needs to keep the long-term health of the economy in mind, even if it might hurt a little before then.

Speaking of the Fed, Congress needs to do its job to provide some oversight over the Fed to make sure it isn’t pandering to a particular lobby and isn’t cooking the books. It is after all a quasi-government organization that has been assigned the task of a central bank. Oh wait, Congress already panders to a particular lobby (the one with fistfuls of dollars, euros, and pounds) and doesn’t bother to keep the books. Nevermind.

Time to turn off the Greenspan double-speak machine and ignore anything it says.