Libya

I am ambiva­lent about the impo­si­tion of the no fly zone over Libya.

The big neg­a­tive I see here is if the rebel­lion fails to over­throw Gaddafi any­time soon. At what point would we be able to lift the no fly zone. I’m guess­ing nev­er. There is the addi­tion­al prob­lem of the world see­ing us stick our nose into issues that are not our con­cern. Right now, few see it that way, but over time.…

It strikes me that there were/​are no good choic­es here. And giv­en that, I think Oba­ma has done pret­ty good.

Tunisia and Egypt man­aged to have essen­tial­ly blood­less rev­o­lu­tions. Big props to the Egypt­ian mil­i­tary for refus­ing to fire on peace­ful demon­stra­tors. But Gaddafi’s remain­ing mil­i­tary is large­ly (all?) mer­ce­nary. They are ready to fire on who­ev­er Gaddafi tells them to fire upon.

If no inter­ven­tion had tak­en place, Gaddafi guns down untold num­bers of his people.

Notice the dif­fer­ence between Libya, where an active rev­o­lu­tion is in progress and Iraq, where no rev­o­lu­tion was in progress at the time we invaded.

If Gaddafi was allowed to gun down his own peo­ple and put the rev­o­lu­tion down, how would that have effect­ed Libya’s neigh­bors Tunisia and Egypt? If Gaddafi was allowed, how would that effect events in Yemen?

In Yemen, gov­ern­ment snipers shot down more than 50 peo­ple. A few hours lat­er, the no fly zone was put into place. Today, the sit­u­a­tion in Yemen still hangs in the bal­ance, but the gov­ern­ment has shown restraint. Coin­ci­dence? Maybe, maybe not.

I am appre­cia­tive of Oba­ma wait­ing until the inter­na­tion­al com­mu­ni­ty endorsed the no fly zone. If things stretch out, I am sure many will be crit­i­cal of what they once sup­port­ed, but at least the record of sup­port is there. I have already seen or heard some­thing about Italy begin­ning to make nois­es of pulling its sup­port (which means air bases).

It would have been nice if Oba­ma had got­ten some kind of approval from Con­gress in the days lead­ing up to the action. But I guess there was the pos­si­bil­i­ty that Con­gress would have refused to give it to him. Bet­ter to ask for­give­ness than per­mis­sion. Besides, at this point there is the long estab­lished his­to­ry of Pres­i­dents ignor­ing that bit of con­sti­tu­tion­al require­ment, so I find it dif­fi­cult to get too worked up over this.

Final­ly, there is the prob­lem of what hap­pens after Gaddafi is over­thrown. Will the Libyans move towards democ­ra­cy? Civ­il war? A new dic­ta­tor­ship? No guar­an­tees here.

Political Battles Never End

I was just read­ing Steve Benen’s blog at The Wash­ing­ton Month­ly. He has an entry com­plain­ing about those Repub­li­cans who are work­ing on how they might rein­state Don’t Ask, Don’t Tell. I dis­agree with his com­plaint on two counts.

First, his­to­ry, espe­cial­ly recent his­to­ry, teach­es us that polit­i­cal bat­tles nev­er end. Wis­con­sin has passed the law strip­ping pub­lic ser­vice work­ers of almost all their col­lec­tive bar­gain­ing rights, but the oppo­nents of that law are still work­ing hard to over­turn it. I do not believe I have seen any com­plaints from Steve about that.

Sec­ond, polls have shown that the major­i­ty of Amer­i­cans want­ed Don’t Ask, Don’t Tell repealed. So I say let the Repub­li­cans go on record as want­i­ng to repeal it. As Amer­i­cans want jobs, the Repub­li­cans con­tin­ue to pur­sue agen­das that either have no effect on jobs or would cost jobs. If the Democ­rats come up with any decent mes­sag­ing at all, they should storm back to large majori­ties in 2012.

The Pentagon Budget and the Cold War

Recent­ly, though I can­not remem­ber where, I came across an argu­ment for cut­ting the pen­ta­gon bud­get. The speak­er was aghast that, adjust­ed for infla­tion, the pen­ta­gon was spend­ing more mon­ey now than it did at the height of the cold war.

There actu­al­ly is a good rea­son for this.

If you think about it, the whole Mutu­al­ly Assured Destruc­tion con­cept is a bit on the nut­ty side, although it did get us through the cold war. Why would coun­tries “at war” invest in such a con­cept? Because it saved money!!

Main­tain­ing a nuclear deter­rent was sig­nif­i­cant­ly cheap­er than what it would have cost to main­tain enough non-nuclear mil­i­tary to deter the USSR. Now we are faced with secu­ri­ty chal­lenges that are spread out over many coun­tries instead of con­cen­trat­ed in one. It is going to cost more.

Add in the fact that for most of the cold war, we draft­ed most of our sol­diers. Now it is an all vol­un­teer army. I coiuld be wrong, but I’d wager that the pay for sol­dier is high­er today. It is true that there are few­er sol­diers, but that just means that many of the tasks that used to be done by sol­diers are now done by con­trac­tors at what I believe, I could be wrong here too, is a high­er cost.

Is there mon­ey to be saved in the Pen­ta­gon? I have to believe that there is. But giv­en the world we still live in, there is prob­a­bly not as much to save as one might think. Even with the mon­ey we have been spend­ing on defense, we were not able to wage two wars at the same time. We fought in Afghanistan, then we let up in Afghanistan so we could fight in Iraq, and we did not again get seri­ous in Afghanistan until we had let up in Iraq.

I wish I could say that the days of wag­ing two wars at once are past (or the days of wag­ing one war!!!), but I am not that naive.

Energy Lessons

Remem­ber 2010? When coal min­ers died and almost died? When the Gulf of Mex­i­co became dump­ing grounds for crude?

And the les­son learned? I’m sor­ry, the les­son that should have been learned? These activ­i­ties are com­plex and dan­ger­ous. Acci­dents will hap­pen. And greed increas­es the chances of accidents.

And now it is 2011. As I sit com­fort­ably in my home typ­ing this, engi­neers and sci­en­tists in Japan are scram­bling to try and con­tain the dam­age to a few nuclear reac­tors. Those reac­tors have become dam­aged through a sequence of events that would strain creduli­ty in a dis­as­ter movie. Impos­si­ble odds do come home.

I sup­pose there are areas that are not prone to earth­quakes. A map of faults shows France to be large­ly free of them. I do not know how much that means but it sounds like a good thing.

I won­der what the worst case sce­nario is for wind farms? Solar arrays? Tidal pow­er gen­er­a­tors? Conservation?

With any luck, Japan will not expe­ri­ence the worst case sce­nario. With any luck, we will see that there is a bet­ter road.

Why the Deficit Does and Does Not Matter

Sat­ur­day night I was at a char­i­ty casi­no night. Buy a tick­et, get an assort­ment of chips and try and increase them. I got my ini­tial chip allowance of “$30,000” and head­ed for the roulette wheel. At the end of the evening I had “$740,000” in chips.

This was not entire­ly luck. I used a sys­tem. One chip on odd. When I won, I bet one chip on odd again. When I lost, I dou­bled the bet. So two chips, then four, then eight, etc. Soon­er or lat­er the ball was going to land in an odd num­ber and I would win. (Try this with real mon­ey at your own risk). After a while, instead of start­ing the process with a “$1,000” chip, I start­ed with a “5,000” chip. I raised the ini­tial amount once I felt com­fort­able that I had enough mon­ey to sur­vive a like­ly (i.e. short) los­ing streak. Even­tu­al­ly, I was start­ing with a ““$15,000” bet.

I believe the clos­est I came to bust was when, start­ing with a “$15,000” bet, I did not win until I had bet “$120,000”. So I had lost three times in a row. If I had lost that fourth time, I would have been start­ing over. I did not have any­where near “$240,000” in chips left to dou­ble my bet with again.

What does this have to do with the deficit? As long as there are var­i­ous enti­ties ready and will­ing to buy bonds from the Unit­ed States, then the deficit is not a prob­lem. But when there is no more mon­ey to put back us.…

This years deficit is irrel­e­vant. It might be made rel­e­vant if the gov­ern­ment decid­ed to spend three or four more tril­lion this year (maybe a lit­tle less, maybe a lit­tle more), but giv­en the prob­a­ble deficit, even with no cuts from con­gress, the deficit is irrel­e­vant. Next year’s is too.

The peo­ple mak­ing the deci­sions on whether to buy or not buy our debt are ful­ly aware of the pro­ject­ed deficits. But even so, they still loan us mon­ey. This tells us that the mar­ket­place (where con­ser­v­a­tives usu­al­ly wor­ship) believes that our present deficits are not that much of an issue.

How­ev­er, it is rea­son­able to assume that at some point the total debt com­bined with the pro­ject­ed deficit will become too much for those deci­sion mak­ers and they will start putting their mon­ey else­where. Then we are screwed (just as I would have been screwed if the wheel came up even four times in a row). The mon­ey will no longer be there.

In the mean­time, the eco­nom­ic recov­ery con­tin­ues, slow­er than we would like, but con­tin­ues none the less. Some of the rea­son for this growth is a large fed­er­al gov­ern­ment spend­ing deficit. That deficit is stim­u­la­tive. Con­tin­u­ing eco­nom­ic growth is very impor­tant for the deficit/​debt issue as a strong econ­o­my will do much to ame­lio­rate the problem.

The Repub­li­cans want to slash cur­rent spend­ing which will have a depres­sive effect on the econ­o­my and cost jobs and will have a small effect on the cur­rent deficit and might eas­i­ly increase the deficit over the next cou­ple of years (due to the slowed econ­o­my). It is dif­fi­cult to under­stand exact­ly what the Repub­li­can objec­tive is oth­er than they want to hand­i­cap the eco­nom­ic recov­ery hop­ing for a dou­ble dip reces­sion and that the vot­ers blame Obama.

It is their only hope for win­ning the white house in 2012.

Spare the Cheaters, Screw the Lower Income Earners

One of the pro­vi­sions of the Afford­able Care Act is a require­ment that busi­ness­es more com­plete­ly report pay­ments made to oth­ers. This is done with form 1099. I believe cur­rent­ly the law requires a 1099 any­time pay­ments exceed­ing $600 with­in a year are made to an indi­vid­ual or a com­pa­ny that is not incor­po­rat­ed. I’m not sure how the ACA changed this, but I assume that the $600 thresh­old is low­er, maybe all the way to zero.

The inter­est­ing thing here is, this change rais­es rev­enue (and it is dou­bly inter­est­ing that nobody argues with that). The only way this could raise rev­enue is if it puts income on the radar of the IRS that would not oth­er­wise have been report­ed. In oth­er words, it catch­es tax cheats.

Of course, the busi­ness com­mu­ni­ty and Repub­li­cans do not talk about the tax cheats. They talk about the extra bur­den of the addi­tion­al 1099’s on business.

Extra bur­den? If your busi­ness is so small that the books are not on com­put­er, then you like­ly will not be mak­ing out very many 1099s, and doing so will not be that dif­fi­cult since you can prob­a­bly scan a years worth of checks for relevent pay­outs in a few min­utes. And if your books are on com­put­er, then the next soft­ware upgrade will accom­mo­date the new requirement.

I’m sor­ry, but the extra bur­den argu­ment is bogus. This is in defense of tax cheats. Remem­ber, every time you hear calls for the elim­i­na­tion of the IRS there is a good chance you are hear­ing “Tax cheats should be able to get away with it.”

So, to make sure that tax cheats can con­tin­ue with impuni­ty, Con­gress wants to remove the height­ened 1099 require­ment. Since it rais­es rev­enue, its removal must be bal­anced with oth­er rev­enue or costs must be cut. It seems the choice is to low­er the sub­sidy to low income people.

Oba­ma has said that he is will­ing to take the 1099 require­ment out of the Afford­able Care Act. We will see if he is hap­py with how it is paid for.

The class war continues.

Delegating Powers to the Vice President in the Mubarek Administration

OK, that does not roll off the tongue as nice­ly as rear­rang­ing deck chairs on the Titan­ic. But either metaphor serves in the case of our elect­ed fed­er­al offi­cials and the deficit.

Let us begin with an old chart from the Con­gres­sion­al Bud­get Office via our, ahem, good friend Ross Perot:

This chart is a bit dat­ed, but the curves have not changed much. Future deficits are the result of medicare/​medicaid and inter­est. The last being the same as say­ing future deficits are the result of future deficits. If future deficits can be brought under con­trol, then the inter­est pay­ments will take care of themselves.

Want some­thing more recent?

This is from Feb­ru­ary 25th, 2011. It assumes that the Bush tax cuts will expire and that the Oba­ma stim­u­lus tax cuts also expire. Note that the growth of health spend­ing goes from over eight per­cent of GDP to 12% of GDP while the total deficit at that point is 3.2 per­cent of GDP. So the entire pro­ject­ed deficit in 2021 could be attrib­uted to the growth of med­ical spending.

The Afford­able Care Act (Oba­macare) actu­al­ly includes sev­er­al mea­sures intend­ed to bring down med­ical costs. The CBO grades the Act as low­er­ing the deficit even though they did not take many of the cost sav­ing mea­sures into con­sid­er­a­tion on the grounds that the mea­sures had not yet shown they would work (they were not even law at the time…).

So the only seri­ous deficit reduc­tion effort in Wash­ing­ton today is the Democ­rats defense of health reform. Oba­ma freez­ing spend­ing and the Repub­li­cans talk of cut­ting spend­ing amounts to noth­ing more that del­e­gat­ing pow­ers to the vice pres­i­dent in the Mubarek administration.

Oh yes. If you want to clear up the short term deficits, this chart might prove useful:

For good or for ill, the spend­ing that the Repub­li­cans want to cut is there for a rea­son. Peo­ple like it. That spend­ing is pop­u­lar. War, the Bush tax cuts, and the reces­sion dri­ve the short term deficit.

Even if the wars end tomor­row, the sav­ings there will be min­i­mal. Some­thing else will come along. It always does.

Many of the cuts the Repub­li­cans pro­pose would actu­al­ly weak­en the eco­nom­ic recov­ery and so increase the deficit.

The Bush tax cuts should be allowed to expire. All of them.

Someone Needs a Geography Lesson

…or at least a les­son on how to use any of the inter­net maps.

The Dai­ly Mail has an arti­cle up on the arrest of some idiot who seems to have been stalk­ing Sarah Palin. The guy was arrest­ed in Anchor­age, Alas­ka “50 miles from [Pal­in’s] home town of Wasilla.”

This is the map that accom­pa­nies the article:

The read­er is invit­ed to check his or her pre­ferred inter­net source for maps and direc­tions to learn that 50 miles is a rea­son­able approx­i­ma­tion of the dis­tance between Anchor­age and Wasil­la. You will also learn that on a map of the scale shown above, the dis­tance between the two loca­tions is just about 1/​8 of an inch (at least on my monitor.…your mileage may vary).

The best part is that the map does show a scale of what length 200 kilo­me­ters is. By that scale, the map shows Anchor­age and Wasil­la to be about 170 miles apart (a very rough esti­mate on my part).

Alas­ka is over twice the size of Texas. 50 miles is next door.

Maybe Selling Pizza is Easier

Thomas S. Mon­aghan found­ed Domi­no’s Piz­za and made a boat­load of mon­ey from that enter­prise. He used his mon­ey to found a brand new con­ser­v­a­tive Roman Catholic Uni­ver­si­ty, Ave Maria University.

Recent­ly, Mon­aghan stepped down from the posi­tion of CEO and hired Jim Towey has the school’s pres­i­dent.

This is of inter­est to me because I was a Domi­no’s Piz­za fran­chisee for sev­en years.

The arti­cle seems to indi­cate that Mon­aghan has been in charge of the uni­ver­si­ty and has man­aged it to the point that it is

sell­ing to young peo­ple and their fam­i­lies [an] edu­ca­tion­al prod­uct that we do not have suf­fi­cient rea­son to believe can be delivered

I guess deliv­er­ing piz­zas was eas­i­er. How­ev­er, if mem­o­ry serves (and it may well not), I was always under the impres­sion that Mon­aghan had the idea of only sell­ing piz­za and one soft drink from a delivery/​pickup only loca­tion (no in house seat­ing), but that the busi­ness made mon­ey because he brought in peo­ple who knew how to make mon­ey at it.

As a fran­chisee, I once attend­ed a day of meet­ings in Chica­go. Mon­aghan was the first speak­er of the day. He stressed the impor­tance of qual­i­ty and ser­vice, low menu prices, and not to cheap­en the prod­uct by dis­trib­ut­ing coupons. The rest of the speak­ers, save one, talked about the impor­tance of get­ting coupons out to the cus­tomer and the best ways to do that. I left think­ing that Mon­aghan was not all that in touch with the com­pa­ny he was run­ning. This was when Domi­no’s was still the unchal­lenged leader in deliv­ered piz­za and had visions of over­tak­ing Piz­za Hut for over­all piz­za sales.

The above linked arti­cle notes that

Mean­while, there are signs that Monaghan’s foun­da­tion, which funds the law school and the uni­ver­si­ty, is on the verge of run­ning out of mon­ey, in part because Mon­aghan bet his for­tune — and the future of his non­prof­its — on the now-crum­bling Flori­da real estate market.

So Mon­aghan had all his eggs in one bas­ket? The fran­chise agree­ment pre­vent­ed the fran­chisee from hav­ing inter­ests in any oth­er busi­ness (oth­er than pub­licly trad­ed stocks). Domi­no’s want­ed us to put all our ener­gies in our stores. I’m not sure I (and my stores) would not have ben­e­fit­ed from being able to invest in oth­er busi­ness­es. This prob­a­bly means noth­ing, but I find it amusing.

Final­ly, I was nev­er sure just how gen­uine Mon­aghan’s Catholic devo­tion was. I guess it is quite gen­uine. Giv­en that, I find it odd that the fran­chise agree­ment pro­hib­it­ed a fran­chisee from clos­ing the stores on East­er Sun­day. I did that any­way. When the Domi­no’s rep called me on it, I told him to sue me. I also point­ed out that I would be mail­ing lots of press releas­es point­ing out that all of the PR paint­ed Mon­aghan as a devout Catholic, but here he was pre­vent­ing stores from clos­ing on the most impor­tant Catholic holy day. The rep said “OK, OK. Just close.” and dropped the subject.

Of course, it is pos­si­ble that Mon­aghan had no idea his com­pa­ny was pro­hibit­ing stores from clos­ing on Easter.

So Far So Good

I just want to take a moment here to point out that, to the best of my knowl­edge, today, Thurs­day March 5, is the first day that any­thing the new Con­gress has done that might influ­ence the econ­o­my takes effect.

Today is when the two week con­tin­u­ing fund­ing res­o­lu­tion takes effect with its four bil­lion dol­lars worth of cuts.

I also would point out that the eco­nom­ic news has been trend­ing increas­ing­ly pos­i­tive for some time now (oth­er than oil and food prices which seem to have more to do with demand in Chi­na and India and uncer­tain­ty in the Mid-east than with US gov­ern­ment policies).