Sunday, July 31, 2005

Economic Fuel

GDP Revised Down 2001-2004
Posted by John Irons at July 29, 2005 04:34 PM

Revisions to 2002-2004 estimates

The percent change from the preceding year in real GDP was revised down for all 3 years: From 1.9 percent to 1.6 percent for 2002, from 3.0 percent to 2.7 percent for 2003, and from 4.4 percent to 4.2 percent for 2004.

This startles very little, because revisions of original data is common as more precise measurements are added. The consistent reduction through the Years also can be somewhat standard, simply based on types of measurements and Readings used. None of the foregoing is of especial concern; at least, until you look at the size of the yearly numbers, compare the Dates with Bush and Republican fuel for the economy, and collate with the data. 2002 was at stall speed, 2003 are ridiculous numbers considering how much Cash Federal spending threw into the economy, and 2004 should be degraded far below 4.2% to get an actual growth rate minus the (supposedly) one-time War expenditures.

This Author has always been skeptical of Keynesian fueling of the economy. The monetarist theory of low Interest rates does not jibe with the economic growth data either, as the Economy has taken off under the Fed raising Interest rates. It also suffers from the fact of no American Savings, and a huge American government draft of World financial resources. It must, in fairness, be stated that American Savings are basically hidden by current Economic models--which have yet to evaluate increased American involvement in new Housing and Investments. The two elements are not technically Savings, but not truly Consumption either.

This Author is so old-fashioned economically that he has come full circle. His belief states the only genuine economic fuel for an Economy stands as balanced Government budgets, where Taxes absorb Inflation, Government spending is curbed, and Government debt is the dinosaur. lgl

Free Traders

Saturday, July 30, 2005
Economics, Politics, and Sausage

I’m surprised that we do not hear more conservatives asking our policymakers to "just say no". No to diversions from free trade cloaked in the language of trade agreements. No to the pork in the highway bill. And no to a give away to the shareholders of oil companies (which happens to include me in a wee way) financed by deferred tax bills on the kids

Might I plea with him and other conservative economists in joining pro-growth liberals in telling this White House and Congress to cease with such pork paid for by future taxes on the kids?

PGL (and the rest of the crew at Angry Bear) are some of the best econ bloggers; liberal, but with high quality of statistics, research, and thought. This to let the Reader know I am not picking on PGL or Angry Bear. The second element consists of the Author having heard the Ricardian argument for Trade dozens of times. This Author can now present his own view on Free Trade.

Trade can become disadvantageous to One or Both participants, and still serve the basic Ricardian argument. The competition for cheapest Production Costs inherent in the Ricardian argument must be based on actual geoeconomic advantage. A reduction to simple Wage competition reduces Trade Advantage to simple World Wage Averaging, a Concept which sounds great, but is as destructive as most other Income Redistribution schemes devised. The greatest incentive for growth comes from the knowledge that a better, more comfortable life can be attained. World Wage Averaging would actually destroy economic incentive.

Economics used to utilize a concept called prerequisite growth, an idea this Author has not heard of in a long time. The fundamental idea behind this concept states that Social structures can only be developed under a specific structure of economic development. Lack of this economic development will impact future development. Would the Social Security system have ever developed in this Country, without the development and pressure of Unionism? Conservative philosophy says there should never have been a Social Security system in the first place; this Author suggests they invest Time and energy in What If economic modeling, and determine how elimination of the entire Social Security system since 1935 would have affected Personal Income, total Household assets, and the current level of economic development in the United States. Free Trade, backed by extreme Corporate greed, remains the worst Destroyer of prerequisite growth which exists. lgl

Saturday, July 30, 2005

Guns and Refineries

A Foreign Affair
Contracting for U.S. Military and Law Enforcement Firearms

Senator Frist again invoking patriotism which does not exist to pay off political lobbys. How? He claims arms supply will go to foreign manufacturers if constraining gun liability litigation is not annulled. Answer of Article: foreign manufacturers already supply the majority of arms for the U.S. Army and American law enforcement. Reply of the Author: Gun liability litigation may already be part of the reason foreign manufacturers currently control the majority of arms supply sales. Fact states, though, that Gun liability litigation possesses no fear for Those who use the weaponry responsibly, or for the arms suppliers. The second element states that why should foreign manufacturers enjoy a greater advantage over domestic arms suppliers, when it comes to gun liability litigation (Secret: they don't possess any advantage in American Courts).

The good Senator should attempt to ease Oil Refinery liability litigation instead. Refinery explosions and Fires are overwhelmingly caused by Carelessness. Refinery Management and Labor are not stupid; they know the exact Cost of these Events, both in terms of Injuries and Deaths, but also in term of Production delays from Cleanup and resumption of Operations. There remains only one real Cause for these Events--excessive haste; the type of haste which comes from attempted Overuse of Plant capacity. Everyone tries to convince Americans they have a lack of Refining capacity, but Congress, State, County, and City will not allow the proper Permits to build new Refining capacity. It is time for Change! lgl

Friday, July 29, 2005

The Crippled Horse

E.P.A. Holds Back Report on Car Fuel Efficiency
Published: July 28, 2005

Jist of the Argument: the Bush administration is hiding the bad news until their pet Energy bill gets passed, nothing new in Washington. What is the bad news? Fuel efficiency of Vehicles, both American and foreign, is going Down rather than the desired Up in terms of miles per gallon. Great hidden Secret? Americans have been switching to heavier vehicles for years, and Some could ask Why? This Author has a Brother-in-Law who is one of safer Drivers he has known, who recently contacted with a Semi-Tractor at only medium speed. The heavy SUV prevented this Author having to spend what remaining Vacation time he has left on attending funerals. Just because you are paranoid, doesn't mean that they won't get you!

The Energy Bill before Congress, though, stands as a totally different vehicle of Corporate lobbying effort. Utilities are allowed to use higher-priced Energy generation (and set their Costumer unit charges from this Cost), get tax credits to defray the added Cost, and allowed ability to ignore any potential increase in pollution (remember that Bush allowed the dirty Coal plants to reopen, after years of Closure). Car companies are allowed to ignore both current mileage per gallon requirements, and coincidently, current Pollution standards. The addition of ethanol, heavily financed by Tax credits in the Bill, will reduce mpgs much further, as alcohol is much less efficient as fuel than Gasoline. Renewable energy is also underwritten, but only in creation of artificially-high Cost massive generation facilities, not the more productive and less pollutive environmentally-integrated energy generation of local initiative. lgl

Thursday, July 28, 2005

China Prospects

Chairman Jim Saxton (R-NJ),
Joint Economic Committee, United States Congress,July 2005

The Report is an excellent Read, but suffers from the Western economic viewpoint. The focus was on the nonperforming loans (NPLs) held by the Chinese banks. Roubini and Setser(2005) probably provides the best evaluation of the Cost of a bad loan problem resolution. China, or its Government, maintains the climate needed to prevent such a crisis resolution. How? Through prevention of alternate forms of investment other than investment. The lack of high levels of Corporate stock, annunities, insurance, and lack of genuine retirement benefits ensure a huge level of Savings--as self-insurance against adversity. This Savings, which is only slowly dissipated, covers the lost revenue of the NPLs.

Why won't the Government or the four major Banks change, and reduce the NPLs?

The answer is contained in the last of the Report:

However, Jinghai Zheng and Anagang Hu (2004) found that the growth in PRCÂ’s total factor productivity68 decelerated dramatically from 3.2 percent a year for 1978-1995 to 0.6 percent a year for 1995-2001.69 Total factor productivity measures the growth in output that is not attributable to increases in factor inputs such as labor and capital assets. Thus, total factor productivity represents the gains from efficiency improvements and technological innovation.

The combination of a high rate of labor productivity and a dropping rate of total factor productivity means that the marginal productivity of new capital assets is falling. This is further evidence that domestic firms are investing in too many capital assets or the wrong types of capital assets given the PRCÂ’s comparative advantage in plentiful, low-cost labor

The Report does not go into the fact that SOEs(State Owned) and SIEs (functionally State-controlled) enterprises employ about 99 million Workers(2004), produce 53.9% of Chinese GDP(2003), and accounts for 76.7% of total PRC capital investments (2003). This information was all in the Report. Also mentioned was the fact that Chinese affiliates of multinational business firms employed 10 million Workers(2004). Now comes that left unsaid:

The Chinese domestic economy has not been stagnant since 1982, but growing much slower than Export Production sectors. The Later provides a huge nominal production, but with relatively slight employment per total size of the Chinese economy. Some 35% of the SOEs were unprofitable in 2004, yet they employ a huge labor force. Elimination of the NPLs would demand shutter of SOEs employing a much larger labor force, than that employed in the Export Production sectors. China already suffers from intense rural migration to the Cities in search of employment. It cannot endure the loss of 30 million Jobs, even if they come from SOEs which are unprofitable.

The Report also implies China has benefited greatly from integration in the global economy. This Author is not so sure. Production for the Global economy is not sufficient; an economy must also assume a comparative consumption from the global economy. This does not necessarily mean consumption of Imports, but can mean a development of a domestic market for the Products currently being produced for Export; the growth actually impacting the domestic economic growth positively, not with the simple negative of domestic inflation. There is still no sign of a effectual domestic market for such technological progression. lgl

Wednesday, July 27, 2005

The E-Government Act of 2002

July 2005
Share-in-Savings Initiative Not Yet Tested

Federal agencies spend billions of dollars every year on information technology. Increasingly, agencies are using performance-based contracting methods where they specify desired outcomes and allow contractors to design the best solutions to achieve those outcomes. Share-in-savings contracting is one such method under which a contractor provides funding for a project, and the agency compensates the contractor from any savings derived as a result of contract performance.

The E-Government Act of 2002 authorized the use of share-in-savings contracting for information technology and required implementing regulations by mid-September 2003. The Office of Management and Budget (OMB) reported in December 2004 that no share-in-savings contracts had been awarded. The act’s authority expires in September 2005

A bad entitlement clearly recognized by the bureaucrats employed by the Federal agencies. Actual rationale for the lack of use: the speed of Information technology development, the actual low cost of said development, and the resultant speed of Displacement of technology. Quality of Development depends on the skills of Design labor. Bureaucrats know they could commit their Agency to paying Billions of Dollars for an Information package supplanted before its completion, by some College Student working on his PC; the total Copyrighted and selling for $99 plus Sales tax. Said bureaucrat begins to wonder if their Agency has an office in Guadacanal. Such people will not even bet on Who buys the coffee at Coffee Break. lgl

Tuesday, July 26, 2005

Energy Bill

Lawmakers Reach a Deal on New Energy Policies
Published: July 26, 2005

The article contains all the major elements about the Bill. The Bill stinks, and lawmakes of Yesteryear would have been ashamed to consider passage of such trash. A omnibus bill only hides the undesirable crap, underfunds or does not fund desirable elements, and gives away Taxpayer funds to the undeserved. An examination of the mechanizations could be helpful.

Lawmakers cut out two provisions to limit Consumption of fossil fuels because they were too restrictive, but they conveniently ignored nine other methodologies to effect the same curb without the undesirable aspects. They refused to give the President authority to initiate a proposed reduction of Oil consumption because it might make an impact for the President to mandate a program which would work, in the process cutting Oil company profits. The renewable portfolio standard was actually defeated some years ago, when the original provision called for a mandate on Utilities to use the cheapest source of energy generation, rather than an artificial structural goal of 10% renewable which is easily defeated.

The real interest comes in the waiver of royalties and taxes for the richest industry in the World, whose actual Share profits could not have done less than triple over the past two years. (Some Students might be misled, Share profits are Profits/Volume, not Corporate stock.) The interesting element here stands as the Oil industry's apparent disinterest in using those Profits to find new Oil, or increase the rate and amount of Drilling operations. lgl

Monday, July 25, 2005

Spread of Imagination

On the Contrary
The Green Machine That Could Be Detroit
Published: July 24, 2005

Akst asks an intriguing question, but then suffers from a basic Journalist funk, and limits his article to what is provable as possible implications. A good article suffers from a lack of genuine speculation because Journalists are Source-sensitive to maintain integrity. The trouble comes in the existence of many other advantages which cannot be immediately sourced for truth.

The future Auto industry should not pattern itself off its own earlier Role model. One of the great Business successes of Our time revolves around Bill Gate's refusal to sell a DOS system, insisting instead on the lease of this system. The 'Green' Car company will be the One which does not sell automobiles, does not simply lease them, but provides full Service for them to the point of providing the fuel used in them; all for one simple monthly rate dependent on mileage usage by Contract.

What are the Advantages?

The Consumer does not have to assume a large Consumer debt, which is the major detriment to purchases, and is even freed from worry about unexpected Service charges; this a major concern when setting Consumption sights higher than the basic formula cars. The Car company has a Production schedule set by the size of their Distribution and Service network, not current Consumer worries about the state of the economy. The Car company can still provide a spread of vehicles, from base model to extreme luxury; differentiated only by monthly rental charge. Business loves the system, even better than Program cars, as the upfront charges can be avoided. A real push could make such a "Green' Car company the major Provider of Taxis, Delivery vehicles, and Government transportation. Fuel efficiency could be maintained by a consistent Maintenance schedule. The route to the Green lies in Service, not cheap Parts. lgl

Sunday, July 24, 2005

Union Turmoil

AP: 4 Unions to Boycott AFL - CIO Meeting
Published: July 24, 2005

Strange fare for Economists, battling unions are (shades of Yoda). The article says a lot, but a lot it left unsaid. The Carpenters and Joiners are a large union who has already quit the AFL-CIO, and the fight is more Blue Collar against Office workers than Anyone wants to admit. The Later want the Status Quo and John Sweeney. The Former wants Workers out on the streets to stop the drain of Jobs from the American economy--the drain is there, but overwhelmingly limited to their sectors. The Office workers (mostly Civil Service) have little fear of Job loss, wanting only patterned packages of Raises and Benefits. The Split was bound to come!

The Blue Collar workers feel they are under-represented, with all Union officialdom functionally College-educated, and MBAs controlling both Sides of any union negotiations. They suspect union leadership does not spend on Organizing efforts out of a greater desire to improve their own Pay packages. NAFTA produces the approximate damage to the Unions' position as most members suspicioned it would. Rank-and-File membership see no organized attempt to forestall CAFTA. The Split will likely be permanent, and along Occupational lines.

The Impact will undoubtedly be great, and not truly a loss for Labor. The more-energized Blue Collar unions will combat Republican influence with the Grass Roots Voters, with Republican leadership finding they do not own the Local issues at all. A whole new crop of Democratic Legislators will likely show up in State Capitols, Ones who have already committed Votes on Bread and Butter legislation. Democratic and Republican national Office-Holders will face greater Voter knowledge of their Voting record, and their sources of Income. The Blue Collar Movement will do battle for the Republican-dominated Congress, and will likely win eventually. lgl

Friday, July 22, 2005

Employment News

What do we know about job loss in the United States?
Evidence from the Displaced Workers Survey, 1984–2004
Henry S. Farber

This Author is not near finishing the Work, but several elements glare. Government allocation of the term Temporary Employment should be altered, as Farber claims half of all New Jobs end within one year; this Author (without proof) believes this share of New Jobs has been increasing since the Spring of 2004, until it currently stands over 60%. Entry-level Wages evolve into the prime Characteristic of Employment under such Conditions, yet little Economic evaluation has been made of whether Entry-level Wages have been keeping pace with Inflation. It is probably the leading cause for the lack of Payroll growth.

A second fact lies in the Dropout Rate of Labor from the Employment rolls. The Dropout rate averages about 10% throughout the twenty years, basically unaffected by Expansion or Recession. Statement that Discouraged Workers have dropped from the Labor Force stands as a basic lie, simply a Government tactic to hide that the Unemployment Rate is about the same as the best nations of the EU. Statistics don't lie, and all that!

Farber finds less response to the cyclical pattern of Employment with higher education, but has not so far equated the rise of Temporary Help among the educated Labor; a circumstance, if included, might note a cyclical pattern shown of educated Labor simply being switched to temporary Employment--an employment in which the Worker must fund the Costs of interrupted Income and Employment search. Temporary Help traditionally loses Wages, Benefits, and Pension rights.

Some might have wondered why the Author has dropped from the Labor rolls. lgl

Army Transformation

Stretched Thin
Army Forces for Sustained Operations

Lynn E. Davis, J. Michael Polich, William M. Hix,
Michael D. Greenberg, Stephen D. Brady,
Ronald E. Sortor

A Must Read for Those interested in current Administration and Command policy; take the time to read at least the Summary.

Alternatively: What If High Overseas Rotation Requirements
Continue for Some Time?
To meet requirements levels in the upper
range that we have considered—14 to 20 brigades—the Army would
experience serious problems in AC unit readiness and the nation
would have few if any ready AC brigades to turn to in a crisis. Transforming
the Army into the planned structure of 43 active transformed
brigades will help, but transformation is largely in the future,

The Study examines many avenues, but finds few solutions. This Author will stipulate the three alternatives he finds the most advantageous to transform the Army into an effective Ready Force:

1) Reintroduce the Draft: This revitalizes the Force with Numbers, Youth, undiffused loyalty to the Unit (non-confused by commitments to family), and willingness to accept lower Payscales (no Colas for Draftees). The youthful integrity of the Unit can be enhanced by Mandatory Retirement at Age 32 (or the birth of a Child), unless a E-8 for Enlisted Personnel or Lt. Colonelcy is attained for Officers. The previous stipulation would allow curtailment of Retirement benefits for Military personnel to be reduced, while providing a more capable, Ready Force with youthful endurance and capacity to quickly adjust.

2) The second Option stands as transforming National Guard units into Our Main Force capacity. They would be trained in the basic full battle tactics on a steady basis for the defense of the Nation, while active Army Units would be trained in the basic Population-control measures, which is the main duty of deployed Units presently. The Author knows that the Army, especially High Command, loves this Option.

3) Forget the Brigade Combat Team crap. Forget the Nation-Building crap. Forget the 'Make the World safe for Democracy' crap. Forget the 'War on Terrorism by shooting an Afghani Sheepherder' crap. Build Five Carrier Strike Force Groups, each with rotating Regiment of Marines, it's own Seal Team along with an additional Marine LRRP battalion, and leave the Army at home to play soldier. lgl

Wrongway Carrigan?

Pentagon Proposes Rise in Age Limit for Recruits
Published: July 22, 2005

Draft, Stupid, not Old Folks Home. lgl

Thursday, July 21, 2005


Tax Panel Wants to End Alternative Minimum Tax
Published: July 21, 2005

Over the years, more and more middle-income Americans have become subject to the tax (AMT). Almost four million taxpayers will owe it this year. Unless the law is changed, 20.5 million will owe it in 2006, and 51.3 million, about 45 percent of all taxpayers, will owe it in 2015.

Mr. Mack set five goals for the panel's recommendations: tax filing should be easy and straightforward; the system should be fair and without gimmicks; inefficient tax breaks and loopholes designed for special interests should be scrapped; savings should be encouraged; and barriers to competitiveness in American business should be removed.

Surrounded by breaking News, the floating Yuan and a drop of 34,000 in Jobless claims, this Author chooses to pick on the Tax Panel instead; closely resembling the Panel itself, which never approaches the real issues. Why is the AMT hated by Everyone? Because it is practically the only thing still getting people to pay taxes. It is as the Panel said, they could not agree on how to come up with the $1.2 trillion worth of lost tax revenue(by the way, this should be yearly tax revenue lost by 2015).

Analysis of the News

1) The Chinese will manage the Yuan float to maximize sale of Chinese Goods to the U.S., while paying the least possible for expensive Oil (traded in Dollars).
2) The drop of Jobless claims means little without corresponding data of the average Entry-level Wage for new Hires, knowing We are still around 2.58 continuous claims.
3) The London bombs were obvious amateurs thinking to incite fear, not being aware of London history; from the Great London Fire to the Blitz, Londoners stood fast, and they will again. lgl

Wednesday, July 20, 2005

Hare-Brained Idea

This Author, like most Economists and Conservatives, finds Government intervention highly suspect, with high probability of eventual damage. The only trouble with such a mind-set comes in a paucity of legislation which could actually help, because We avoid Government regulation as We would the Plague. The current development of Hedge Funds may call for a change of attitude.

Hedge Funds need high Turnover profits in order to survive, in order to pay down the margin borrowing service they engage in. This means they plunge-invest, dumping huge amounts of funds into one stock issuance or commodity until the Market price has risen to sufficient level, that they can make the necessary Turnover profit upon Sale of shares to bandwagon Investors. Commodities are exactly the same as Stock, with $40/barrel Oil selling for $57.68/barrel. The injury of Hedge Funds is clear, but how to limit the excess?

Every avenue of regulation when studied has very ugly connotations for the Market system. It is one of those scenarios where the shortest distance between two points is not a straight line, because the destruction of the environment along the way drives the desired Point further and further away. What is the desired Point? The Answer is quite simple: Stabilized Equity(read as Value) in Stock and Commodities.

Corporate value today stands as overwritten with Stock and Bonds. Hedge Funds value are far too liquid (too flush with funds) because of Margin-borrowing capacity. Is there a fundamental way to stop either practice? Yes and No. What does that mean? We cannot effectively regulate either activity, but We can effectively regulate the Equity value produced.

A Law could be passed stating total Shares of Corporate stock can only be increased by sale to the open Market. Stock Options and Stock Grants can be made to Employees, but said Stock must be bought back by the Corporation anytime Corporate Stock price lowers to level where the initial Stock Option or Grant was made, with no Dividends paid, or Tax credits received by the Corporate entity, until such Buyback is made (in the form of an exact equal number of Shares). The secret of success here lies in automatic Corporate intervention to support their own Stock price.

Commodities must be approached from a different angle. This will become an impediment to Commodity listings. Commodities will be allowing listing, if and only if they are listed with their Production Cost Estimate, Asking Price, and Selling Price. The initial Producer must supply the Production Cost Estimate which must carry through until the Commodity goes to Retailer or Consumer.

Two such laws would help stabilize Corporate stocks and Commodities, one by effective underwriting of Equity price, the other by increasing Market awareness. lgl

Tuesday, July 19, 2005

Foreign View

Owen Harries: Costs of a needless war

A most important article for All to read! The wars of Iraq and Afghanistan extend far beyond destruction of Terrorist elements and/or al Qaida. The current administration wants to leave a historical legacy, while filling their own coffers with rich Government contracts for their Corporate friends. Many, or Most, of this author's readers disagree with the author's position of the current American military ventures. Foreign attitudes, though, are growing increasingly attuned to this author's views on the Wars. Excerpts:

It is still a fundamental strategic axiom that the availability of means should not determine ends, and there are very powerful reasons why the US, even as the "sole remaining superpower", should be very parsimonious in using its military force actively

Barry McCaffrey, a well-informed and, up to now, dedicated supporter of the war, has recently maintained: "The US Army and the marines are too under-manned and under-resourced to sustain this security policy beyond next [autumn]. They are starting to unravel."

Today we are witnessing in the US not only substantial increases in government expenditure, but a serious diminution of the rule of law in the form of a partial suspension of habeas corpus, a circumventing of the Geneva Convention, a justification of the use of torture, and greater secrecy.

(As I write, it is reported that the Bush administration is classifying documents at the rate of 125 a minute or, if my arithmetic is accurate, 180,000 a day!)

as a general approach to political action a commitment to hold undeviatingly to a line of action, regardless of circumstances or consequences, is foolish and dangerous.

As always in politics, circumstances are crucial. To ignore them and to insist that the mission must proceed regardless is to invite recourse to that old play on Kipling's lines: "If you can keep your head when all about you are losing theirs, you have probably misunderstood the situation."

Indeed, prominent US Republican senator Chuck Hagel virtually said as much last month: "The White House is completely disconnected from reality. It is like they are making it up as they go along. The reality is that we are losing in Iraq."

Owen Harries, a former editor of The National Interest in Washington, DC, is a visiting fellow at the Lowy Institute for International Policy in Sydney.
There are other paramount economic reasons for aborting the present Wars as quickly as possible. The Cost of rebuilding the U.S. military Main Force structure from the deterioration now endured is estimated by this author (and some Others) at $180 billion, with that figure growing by $3 bn per month of continued operations in Iraq and Afghanistan. Future Disability payments can be estimated as increasing (containing Survivor Benefits) by $8 million per year for every additional month spent in Operations in the two countries. Iraq, itself, can be estimated to have lost 2% of its Labor Force to Death or Disability payments since the start of the War.

Can the War in Iraq be won?

Islamic Fundamentalists worldwide will finance Terrorist activity in Iraq, as long as American military forces are on Iraqi soil and conducting military operations. American military presence in Afghanistan only incites support for the Taliban, as they learn to counter American tactics effectively, and are adequately financed from Opium sales. Neocon thinking is not going to cure this headache. lgl

Monday, July 18, 2005

Tax Foundation Case

No. 04-1704
Supreme Court of the United States

On Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Sixth Circuit

The Tax Foundation filed this BRIEF OF AMICUS CURIAE in a mistaken interpretation of the dormant Commerce Clause of the Constitution. This again is one of those times where Precedent serves only to confuse, using previous decisions to forestall discrimination against Out-of-State taxpayers as attack on In-State taxpayers, the Later attempting only to stop a positional discrimination against themselves and their property. Said Tax incentive in question would have unquestionably penalized them by maintaining the exact Tax burden upon themselves, while allowing new entrants to avoid taxation in total.

The dormant Commerce Clause does not grant apriori right to Tax competition, if such entails adverse, differing Tax applications against segments of the total polity taxed. The intent of the Commerce Clause defines simply that no government entity will by its action artificially diminish the role of interstate commerce. The existence of Tax incentives to lure business into a State discriminates against established Business to compete within and without the State. The Cuno decision should stand without writ of certiorari, as not to falsely restrict lower Court powers of determination. lgl

Sunday, July 17, 2005

The Children

Body Burden: The Pollution in Newborns
A benchmark investigation of industrial chemicals, pollutants and pesticides in umbilical cord blood
Environmental Working Group, July 14, 2005

In a study spearheaded by the Environmental Working Group (EWG) in collaboration with Commonweal, researchers at two major laboratories found an average of 200 industrial chemicals and pollutants in umbilical cord blood from 10 babies born in August and September of 2004 in U.S. hospitals. Tests revealed a total of 287 chemicals in the group. The umbilical cord blood of these 10 children, collected by Red Cross after the cord was cut, harbored pesticides, consumer product ingredients, and wastes from burning coal, gasoline, and garbage.

Three Scenarios:
1) Resistance Immunity Need: Newborns kept pristine pure will not possess the Survival factors necessary to function in a healthy manner (Everyone has to learn how to live on this world). Shielding the Newborns could provide exactly the injury which We desire to avoid.

2)Irreparable Injury: We are creating entire Generations of idiots, who will be incapable of replacing Us, bringing the downfall of Civilization as We know it.

3) The Consequences Have Already Been Endured: Now the Author knows why he always meets so many stupid people.

1) Sound implementation of Pollution Restraints are showing signs of lower Infant Mortality than the United States, even with less prenatal care. Expectant Mothers: Nix on the Drain Cleaner, just like the Shooters.

2) There is little ability to protect the Newborns from pollutants without protecting the Mothers, impossible without scrubbing the entire society of Pollution.

3) Study Recommendation
Grant the EPA clear and unencumbered authority to demand all studies needed to make finding of safety and to enforce clear deadlines for study completion.

Remove from the market chemicals for which tests demonstrating safety are not conducted.

Eliminate confidential business protection for all health, safety, and environmental information.

The first recommendation will be costly beyond belief--a probable $30 bn per year. The second recommendation would close down American industry, as well as much of the World. The third recommendation would be very handy to implement, if given teeth against Those who would hide genuine health risk.

We are seriously at risk, but cannot actively reduce this risk without major change of lifestyle. Vested Interests would not allow such harsh revision, nor would the general Consumer. Extensive study of the risk will not make people feel better, and will not accomplish any long-run reduction of the risk, at great expense better used for design and construction of safer Products. REAL THREAT LEVEL: No higher than some dozen other threats, and thirty times more expensive to correct than the War on Terrorism. lgl

Saturday, July 16, 2005

BRAC and Per Capita Income
by Jack Spencer
Backgrounder #1867
July 8, 2005

Good research, but One wonders how much significance to place on the information. It only shows that an active Economy will absorb unexploited resources. Please understand this Author is quite in favor of the BRAC mission. He would actually be more extensive in his own recommendations for Base closings. It is simply previous Base closings have been the easiest, with some Business interest in utilization of the Base facilities. Future Base closings will find less Business interest, less accessible and utilizable resources, with the Bases in less-developed economic locales. The focus in these circumstances cannot be enticing basic Retail or Information-provision industry, but must resort to involvement of Manufacturing and Distribution industries (likely foreign to the initial area) to the proposed closed Bases.

Here's a Social Security Plan That's Really Two Plans
Published: July 17, 2005

Altman makes a good Case for grouping Social Security beneficiaries by Birth year. He makes another Case for the conflict between Rich and Poor Retirees. He follows with a good argument for a Unit Benefit (one-size fits all). Where he fails is in stipulation of a Make up the Difference Unit Benefit, where the beneficiaries' actual Income is deducted from the paid Benefits (non-paid Benefits in the following payment year). Altman hazards with a statement that only a probable 20% of Retirees would need such Benefits upon retirement, as consistent information suggests the number of Retirees using the Benefits would be over 40%. Such a reality means the appliable Tax rate could not be reduced as much as he indicates. A Make up the Difference Unit Benefit could allow for a cut in Tax rate appliable, and mollify the resistance of the Poor, who would be assured of a constant Income. lgl

Friday, July 15, 2005


Wednesday, July 13, 2005
Transforming Government
to Meet Current and
Emerging Challenges
Statement of David M. Walker
Comptroller General of the United States

A clear statement of the fiscal problem created by Federal spending, a call for reexamination of Federal spending patterns, then a Game plan less than perfect. The basic component of this Plan is to turn the Federal Government into a high performance organization (Good Luck!). The Comptroller General even defined what a high performance should consist of or be able to do:

GAO forum broadly agreed on the key characteristics and capabilities of
high-performing organizations, which can be grouped into four themes:

• a clear, well-articulated, and compelling mission;
• focus on needs of clients and customers;
• strategic management of people; and
• strategic use of partnerships.

Are We talking bureaucracy or what?

This Author has an alternate Plan for high performance which he has seen work. One starts by calling in all management personnel, and go over a specific defined Plan:

1) Each Department will be assigned an X number of Labor elements, based upon needs of fiscal solvency.
2) Each Manager will set up his Schedule and operating procedures based upon this X number of labor elements.
3) If Public, Client, or Customer begins to scream, they will be screaming at each personal Manager, not the Program head.
4) If the Public, Client, or Customer begins to scream at the Program head, the individual Manager's Replacement will arrive within Days, if not hours.
5) In the context of any Cost Overrun in Operations, the individual Manager's Replacement will arrive shortly after the Accounting is accomplished.

The Comptroller plan would assure more Staff labor than Field Workers. The later plan of the Author provides some Worker incentives.

Thursday, July 14, 2005
Supply-side Economics and Recent Real GDP Growth
By PGL at Angry Bear

PGL has provided a good Post plus table on GDP growth rates under the Bush Tax Cuts.

Remember real GDP (figures in 2000$ on an annualized basis) in 2005Q1 ($11096.2 billion) versus where it was in 2000Q4 ($9695.2 billion), that is, 17 quarters ago.

as you study the table (when Growth rate is 0.80%--Potential GDP of $11,102.1 billion). lgl

Thursday, July 14, 2005

Economic Measures

Research Changes Ideas About Children and Work
Published: July 14, 2005

Child Labor is not about callous Parents, but poverty. Based on primary evidence not extended beyond Vietnam to any great degree. The concentration of Child labor in agriculture expresses only that tribal societies are based upon the household, not the individual.
From China, Some Relief on Oil Demand
Published: July 14, 2005

Wonder at the decline of Chinese consumption of Oil. The fact, not the article, is fully in line with the Author's estimate that the rapid Chinese expansion of past years did not possess the Profitability to sustain itself, due to Chinese failure to develop a domestic demand for produced Product.

Kash at Angry Bear imagines We could be seeing the US's inflation rate is on a distinct, if gradual, downward trajectory. This Author truly hopes so, but sees little to cheer for in Core Inflation, due to the fact real inflation stays firmly implanted in Food and Energy. The duration of high Oil prices means a shift to the Consumer--sooner or later. Kash and this Author both await the Producer Price Index. lgl

Wednesday, July 13, 2005

Hedge Funds and Markets

Bernard Ebbers received a 25-year sentence today for a practice which Hedge Fund managers are duplicating at this time: Continual borrowing on the Book value worth to pay both service on previous debt, and dividends to Investors. Similar circumstance has been used with ill effect since the created mess of the Great Depression, and Hedge Funds will eventually go the way of all the rest; likely inciting a Investor-protection program equally large as the S&L Bailout. The causation of such repetitious malfeasance lies in the payment of performance awards to Fund and Organization managers.

Hedge Funds hold particular danger, as they remain actually separated from Production and Markets. They are simply the pure, fraudulent practice applied wherever they care to invade. An underdrawn portrait states they get Investors to invest, borrow against the investments, and punge buy in the Markets for high expected Returns. They continue to borrow if those Returns do not materialize. Fund managers proclaim performance, and really award themselves huge Pay packages, at all times; even as did Bernard Ebbers.

The danger to Markets consists in they using their huge rolled-over Capitalization to generate unusually high Prices in the Market. The danger of Hedge Funds to Production is in their drain of investment funds from actual Production activities. The danger to Investor and Lender lies in the fact that the Bubble will burst eventually. lgl

Tuesday, July 12, 2005

Fiscal Year 2005 July 7, 2005
A Congressional Budget Office Analysis

The Report seems far too complacent to this Author, when reviewing the numbers. Outlays increase year over year at over 7%, almost equally distributed between Defense and nonDefense. The good Budget revenues rely on Corporate income tax payments, made under the Bush exemption, so Corporations could bring their money back into the Country at one-third the Tax rate--tax payments which will not be repeated. The nonWithheld Quarterly payments by Individuals increased by $8 bn, but such tax revenues depend on solid economic performance unaffected by increasing Energy pricing. Actual Withheld tax payments from Labor seem partially unclear, but this Author expects they are actually down with the Tax law alterations.

Agriculture, Education, and Homeland Security each increased outlays by 20% year over year. Net Interest on the Public debt was the greatest percentage outlay increase at 14.5%. Social Security payments grew at a rate of 5.4%, O.9% higher than in Y2004. Medicare payments rise at 10.1% this year, 1.6% higher than Y2004. Medicaid payments are about 8% higher year over year, eliminating temporary payments assumptions made by the Federal Government in Y2004.

CBO estimates that the government recorded a deficit of
$251 billion for the first three-quarters of fiscal year 2005.
Receipts were about $204 billion, or 14.6 percent, higher
than in the same nine months last year, and outlays were
about $128 billion, or 7.4 percent, higher.

Letting the Bush Tax Cuts lapse seems the only method to maintain current tax revenues throughout the next decade. Federal Spending is increasing at twice the projected rate of Inflation, in excess of the projected economic growth rate, and tax revenues are bound to go down without alteration of the Federal Tax Code. We need Tax revision, not Tax Cuts. lgl

Monday, July 11, 2005

The Housing Generator

Housing Markets Pricing Out Middle Class
Published: July 10, 2005

Real estate experts warn that housing prices in many markets are too quickly outpacing the incomes of most workers. The widening gap affects families across the country, from Washington D.C. and Rhode Island to Florida in the South and Nevada and California in the west.

Dangerous turf for the Economy considering Housing composes such a large percentage of Household wealth. A market of any type must have Buyers, or face a huge decline in the value of the Product. The situation could become analogous to Selling Short in the Stock Market except reversed: the Housing pricing will drop if there are no Buyers, and reevaluations will not alter mortgages other than flexible Rates, but will occasion the nonextension of Consumption and Production loans because of the loss of Property value.

What is the potential economic effect of such Property devaluation?

The Author has gathered no hard data on this area, but a probable half of Self-Employed utilize the value of their homes for collateral for Business loans. Many Households will lose premium Credit Card status where further purchases will be disallowed until their balances are reduced. Banks will find themselves with overextended mortgages with too much money lent on insufficient Property value--remember they must maintain Reserves on the total deposits, alongside the devolved inability to regain those funds. A loss of Property values will finally dictate Layoffs in the Construction industry, reductions in the Consumption patterns of affected Consumers entailing Retail Layoffs, and an overall drain of funds from Pension plans to pay off incurred debt. The dangers do not surface drastically, until Property values drop more than 10% overall, but they are existent!

Afghans Say Taliban Behead Six Police, 18 More Die
Published: July 10, 2005

At least 32 U.S. troops have been killed in action in Afghanistan so far this year, making it the bloodiest for U.S. forces in the country since they invaded and overthrew the Taliban in late 2001.

Why are We there?

Bomb Kills Baghdad Recruits, Memo Flags Troop Cuts
Published: July 10, 2005

Everyone knows Bush and Blair are trying 'to cut and run' because Iraq is turning unpopular. The pattern of Vietnam is being repeated. Insurgent incidents, in both Afghanistan and Iraq are increasing in number, with heightened Casualties for both Americans and native populations. The American-sponsored Governments lack support among the native populations, and American and British military presence simply guarantees guerilla activity. lgl

Sunday, July 10, 2005

Entitlements and States

JULY 2005

The States are doing far better than they were in 2003, but a lot of it may be illusionary. Spending growth has been close to the traditional average, but a lot of that growth was generated by One-Time Federal assistance which will not be repeated. Based on submitted Budgets by Governors for fiscal 2006, Spending growth will be 3.8%, almost half of the 6.5% average over 27 years. The trouble comes in the fact Spending reductions are needed because of Entitlement overruns, and Spending Cuts are often made in necessary apropriations to serve the cause of Entitlements.

Medicaid remains the worst culprit, with 20-24 States experiencing Medicaid shortfalls in 2004-05. The situation can only get worse, as Medicaid enrollments continue to increase (currently 53 million people--largest Medical program existent), and Federal Budgets are being passed reducing Federal underwriting of the Medicaid program. Total Medicaid shortfall for 2004-05 was estimated at $5.8 billion, with Federal reductions from the Medicaid program in excess of $25 billion over the next several years. Medicaid represents 22% of State Spending currently, and is increasing at 8.8% per year, while State revenues are currently increasing at about 2.1% per year.

According to the most recent edition of
NASBOÂ’s State Expenditure Report, estimated fiscal
2004 state spending from all sources is nearly $1.2
trillion, with the general fund representing 43.5 percent
of the total. The components of total state spending
are: elementary and secondary education, 21.5
percent; Medicaid, 21.9 percent; higher education,
10.5 percent; transportation, 7.9 percent; corrections,
3.4 percent; public assistance, 2.1 percent; and
all other expenditures, 32.6 percent.

Saturday, July 09, 2005

Definition of Insurance

Who Bears the Risks of Terror?
Published: July 10, 2005

The Terrorism Risk Insurance Act will expire at the end of the year unless extended. The fundamental question is whether a collected Pool (Insurance) should bear the risk, or Taxpayers. The answer to the Question requires examination of Insurance itself. Insurance serves as the facility to replace unacceptable losses. Premium-Payers band together through Insurance companies to assure they will possess the financial assets to pay for Replacement Costs if insured items are damaged or destroyed.

The entire rationale of Insurance is to bear those Replacement Costs. Legislation should be passed forbidding Sale of Insurance which does not bear the entirety of such Replacement Costs. Insurers like to chip away at the effective provision of the full value of such Costs, in order to raise the profitability of such Insurance supply. Congress should recognize the inherent nature of this practice, and stop it.

Insurers and Commercial Business would enjoy Taxpayers' assumption of the Risk, because Insurers could sell more Insurance with less overall Premium Cost, and Commercial Business could enjoy higher Profits paying lower Premiums to insure against a potential Risk. Taxpayers do not want the burden of such Risk (though Taxpayers compose a much larger Pool) due to the fact they have far less Risk of Terrorist Act. Insurers and Commercial Business, on the other hand, know they will have to pay far less in Replacement Cost taxation than they would in Risk-Coverage Premiums.

The Terrorism Risk Insurance Act should not be renewed. It should not have been enacted in the first place! Congress should insist Insurers simplify Contract Coverage, and demand Replacement Cost provision, or refuse to allow Insurers license to sell Insurance. The greater demanded Premiums will be a heightened Cost to Commercial business, but is indeed a legitimate Cost of doing Business. Let the Market bear the Risk. lgl

Friday, July 08, 2005


Preparing for the Next Pandemic
Michael T. OsterholmFrom Foreign Affairs, July/August 2005

Osterholm provides clarity to the dangers of a influenza pandemic. The threat is very real, and the consequences he outlined as equally as real. Here is where he and this Author part company. The only salvation from a influenza pandemic is development of a Control Vaccine, which could provide protection from any strain of influenza. Designer Vaccines to protect against any specific strain of influenza will never provide protection against a pandemic.

Infectious spread of a influenza strain far outstrips current Vaccine production capacity, and would outstrip any projected increase in Vaccine production capacity due to the speed of transmission. Massive stockpiling of antiviral drugs to provide limited protection from the influenza strain already ingested is equally foolhardy. The chemical composition of antiviral drugs degrade rapidly, and development of excess capacity will not provide profitability, even with Government funding (simply too many Chemists and Labs sitting around rusting).

We will endure an influenza pandemic sometime, quite possibly within Our lifetimes. The Outcome will undoubtedly be severe, not a complete Horror Story, but We may be talking about the loss of a half billion human lives. Can We plan for it? Not with Our current resources and technology. We simply take measures to bury the bodies, and continue life, as this World always has had to do; remembering that Death is a companion to which We all have to eventually submit. lgl

Thursday, July 07, 2005

London Bombs and Credit Cards

The four London blasts again totaled our serenity. There was a blip in the Markets before quick recovery, and the Politicians made the usual statements. Some comments should be made, though, about the context of the attacks. The explosives were placed in the London subway and on Buses. This says that the Working Poor were again the Target, because of their lack of fundamental protection. Airports get twenty times the Security personnel as Train stations, Subway stations, and Bus stops. The Rich only spend Security funds on a secure environment for the Rich. Does the Author sound leftist?

The second element to be discussed is the fact that the attacks were conducted by a small, Cell group of closeted individuals. Such groups are hard to track and trace, and incredibly difficult to interdict before their Terrorist conduct. The same cannot be said for their Support personnel. Laws need be passed making provision of funds, or sale of weaponry or explosives used in Terrorist attacks a Criminal offense punishable by Death or Lifetime imprisonment without parole. We must separate the Head of the Beast from its stomach!

The last comment states that uniformed Security do little on-site to stop Terrorist attack, although they are very helpful in cleanup efforts after an Terrorist attack. The real effort must be focused on Intelligence; most specifically, the arrest of these Cell units prior to their commission of Terrorist acts. The best method is the Reward system where We publicly proclaim all Informers providing information to identify and capture such Cells will receive $10k personally, without themselves being identified in any way to the Public. Some might doubt, but it always works.
Steering a new course in Iraq
By Jay Garner
Special to The Orlando Sentinel

General Garner is a good military mind, but as wrong as they come in this article. More American Troops on the ground in Iraq means more American Casualties. Use of Kurd peshmerga in the South guarantees Civil War. Getting Iraqis used to American Welfare transfers worsens, not betters, the existing situation.
Credit Cards Are Raising Minimum Payments
Published: July 7, 2005
Filed at 6:37 a.m. ET

Something which should have been done in 2001, before the huge Consumer Debt, and Housing bubble. Now it is going to discount about 20% of Consumers out of the Retail market. lgl

Wednesday, July 06, 2005

Are Deficits Immortal?

Can the U.S. Government Live Within Its Means?
Lessons From Abroad

Fine Study of the history of fiscal restraints, why they succeed when they do, and how they all fail eventually.

The rigid balance norm was superseded
after World War II by norms that allowed
budget aggregates to accommodate
cyclical changes in economic conditions.

Contemporary fiscal rules have branched
in two directions. One path assumes that
good budget outcomes depend on
preventing politicians from behaving in a
fiscally irresponsible manner; the other
assumes that favorable budget outcomes
depend on giving politicians incentives to
adopt responsible policies. The first ties
their hands, the second holds them politically
accountable for their actions.

The Later fiscal rules work about as well as One would expect, noting the tsunami nature of Government spending knowing Politicians are actually after more money--not Votes--and has to have the Government spend in order to get the Contributors to spend. Deficits cannot be cured with fiscal rules, and alteration of the political rules is the only way to reduce Government spending.

Things which can be realistically done to curb Government Spending and Deficits:

1) A Unitary Accounting system: Make Everyone play from the same Playbook, brings the ideal comparison network.
2) Forbid Politicians to raise Money (political contributions) during the actual Period of the Campaign. They have to make their Commitments prior to the Campaign to get the needed Funds, know they will be bound by those prior Commitments, and cannot gain any material support for any further Commitments.
3) Make the Politicians come up with a definable Budget. Pass a Constitutional amendment stating that at least half of the State Legislatures must approve any Budget before it goes into effect; otherwise, the existing Budget and budgeted amounts will stay in place through the following Budget Period. This approved Budget does not necessarily have to be passed by Congress, but simply provided by any major Political Party for three basic comparisons.
4) Establish a set size Extraordinary Expense Fund--the only source of Funds for Spendthrifts outside the Budget. When it is empty, so are the Politicians.
5) Tell the Federal Government and all State Governments We are tired of their acting like they are a Bank or Corporation. Treasuries and State bonds are forbotten! They are to get their funding from Commercial Bank paper like Everyone else. lgl

Tuesday, July 05, 2005

Medicare v. Hospice

High-Cost Medicare Beneficiaries
May 2005

Good CBO work showing the Concentration spread of Benefits going to enrolled beneficiaries. Important elements:

About 14 percent of beneficiaries with high Medicare
expenses in a given year die during that year (see
Figure 2). Within four years, that fraction accumulates to
40 percent.

Studies show that about
one-quarter of total Medicare payments are for the typically
expensive and intensive treatment received in a patient’s
last year of life, which often postpones death for
only a short time

The CBO are past Masters at not making a recommendation--lots of Practice! The Study actually says some percentage of Medicare Costs could be eliminated by identifying what are basically 'Lost Cause' Patients, and switching them to Hospice Care. This Author could not agree more, but is tired of People mumbling about it with a hand over their mouth. Such a switch upon Patients reaching a designated Age is medically beneficial to most Patients, as they do not have to undergone barbaric Saving medical practices where wear down both Patient and Staff. It could also probably cut Medicare Costs by 20% in any given Year, and a probable nearer 40% over a projected Retirement Age-to Death usage. lgl

Monday, July 04, 2005

Happy 4th

Scientists trying to blow up the place. Having a medium-Grade good effect. Preliminary observations indicate a comet entering an atmosphere would initially create a huge Plume cloud even before impact (Author estimate).

Ongoing Military operations are dangerous. Navy Seal unit lost and 16 killed in down helicoptor.

Have We won or lost ground since the 1950s?
Short reading list for Those who must spend Independence Day staring at a Computer (some Independence!). The middle article assures there is no safe military deployment. The first article shows how Scientists can spend money to find information with little economic value. The last article shows the Good Times may not have gone, but are far more expensive. lgl

Sunday, July 03, 2005

The Lessons of War,0,2430362.story?coll=chi-newsopinioncommentary-hed

When war theories collide
What the Vietnam War should have taught us
Victor Davis Hanson

The Al Qaedas and former Baathists anticipate another impending U.S. retreat, like the 1984 flight from Lebanon or the 1993 exit from Somalia after the horrific dragging of American bodies in the streets of Mogadishu. Both pullouts, now enshrined in Al Qaeda propaganda, contributed to the pre-Sept. 11, 2001, folklore that the United States lacked the stamina to defeat terrorists.

There are lessons here. When the United States has stayed on after fighting dictatorial enemies--admittedly for decades in Italy, Germany, Japan, Korea and the Balkans--progress toward democracy and prosperity ensued. Disengagement from unresolved messy problems--whether from Europe after World War I, Vietnam in 1973, Beirut after the Marine barracks bombings, Afghanistan after the Soviet defeat, or Iraq in 1991--only left murderous chaos or the "peace" of authoritarian dictators.

Those who now evoke Vietnam should think carefully of the entire lesson of that tragedy. We hear daily of how we once foolishly got into that chaos but rarely of the lessons on how we got out.
Hanson wrote an excellent, well thought-out Piece, well worth a double Read. Islamic Fundamentalism does estimate the United States can be foiled by intransigent, durative resistance to American aims. It is a Cornerstone to their Policy, and they possess the financial assets and physical numbers to sustain Terrorist activities for decades. Here is where Hanson and Bush policy fails: The American people simply will not endure a War of Attrition without perceptible gain. Reality states WE really should not have to!

The Author, in a prior published Book, recounted the folly of sustained American military deployments, Such allowing International Terrorists and Enemies to mount guerilla operations against the deployed elements. This is exactly what Bush policy initiatives has resulted in. It is Time for Change.

This Change does not mean unilateral Withdrawal, but utilization of modern technology combined with compelled Iraqi control. American military presence in Iraq should be reduced--both in Mission Statement and Activity. All American forces, except for Special Intelligence units, will cease patrolling. They will be confined to American military installations supplied by Air, and serve only as Reaction Force elements. All Ground-vehicle traffic will be conducted by native Iraqi elements. Iraq will become an American Air war, with Ground forces only moved by helicopter. Iraqi Patrol elements will be equipped with Radios similar to American Police units--they are Unit identification broadcasters with continuous Computer surveillance for special Sounds or Voice commands.

Insurgents must learn they cannot reach American military personnel easily, that American military Reaction Force is swift and overwhelming, and attack on native Iraqi security forces will generate an immediate American military response. We approach another American Independence Day, so it is time to learn how to Fight Smart and Fight Safe. American military command may state this will not crush the Insurgents, but Vietnam has taught All that dedicated Insurgency cannot be crushed. A military Victory cannot be attained, but an intelligent 'Hearts and Minds' campaign can suck the energy out of an Insurgency. lgl

Saturday, July 02, 2005

Graphs Don't Match His Contention

Statement of
David R. Malpass before the
Subcommittee on Taxation
Senate Finance Committee
June 30, 2005

Malpass attempts to extol the benefits of the Bush Tax Cuts, but he should learn to truncate his graphs. Most show the initial Bush Tax Cut unable to match any performance of the Clinton Years, or even the reign of his father. The 2003 Tax Cut barely matches the scenario of the 1995-97 graph. The lengthened Graphs could be used as Proof that neither Tax Cut or Tax Increase has much effect on economic performance, an item dependent upon overall economic conditions.

The Malpass graphing effort does outline extreme Equity inflation due to the Tax Cuts, as expressed by the huge increase in Equity value without corresponding amounts of Household Income Growth. His data estimate of the impact of the Tax Cuts is widely overstated using Quarter gain estimates of the three following Quarters--where Production had already been in progress and reflecting the economic recovery made prior to the Tax Cuts. This Author thinks the prime characteristic about the Bush Tax Cuts (both) lies in their inability to graphically portray a assumed acceleration in economic performance.

Other Testimony of Real Contribution:

Testimony of
Scott Harding
before the
Finance Subcommittee on Taxation and IRS Oversight
on the date of
June 30, 2005
on the subject of
Section 179 Expensing


JUNE 30, 2005

Friday, July 01, 2005

Snafu--Afghan Army and Police

Efforts to Establish
Army and Police Have
Made Progress, but
Future Plans Need to
Be Better Defined

Defeat built in: Afghanistan seems bound to again sink into anarchy. U.S. Military Command in Afghanistan has spent about $3.3 billion on an Afghan army, and $800 million building an Afghan Police force. 42% of the Army is trained as well as about half of the Police. Where has the money gone?

Having fully staffed
the Kabul central command with about 10,500 troops, OMC-A assigned the
remaining 7,800 troops to the four regional commands.The U.S. Army Corps of Engineers is constructing facilities at these locations. As of January 2005, funding provided to the Corps for this effort totaled $740 million.

Typical American largesse: These five facilities should not have cost more than $50 million apiece, and constructed to Shock and Awe Recruits who have never lived in such magnificent housing, never worked in such luxurious surroundings, and separates the Army from both their culture and their People. (afghan construction and living would have cost only $5 million per center). The Afghan Troops, on the other hand, as given wornout Equipment, inadequate Weapons and Transportation, and embedded American trainers who are Transfers' from other OMC-A TO without previous Troop-training experience.

The Afghan Army will most likely have to face the Afghan militias who are not disarmed (estimates of disarmament range from one-third to one-twentieth of the total number of militia troops), and said militia members unable to find employment outside the militias except from the Narcotics Growers and traffickers. The Later Group have produced a bumper Crop this Year, and can supply the militias with better Weapons, Equipment, and Transportation; also capable of supplying militia members with about four or five times the monthly salary of the Afghan Army recruit ($70 per month).

The United States and Germany spent most of the Funds directed to building the Police in development of Training facilities. Police recruits probably live in an environment envied by many poor Americans through the Training periods, after which they are transferred to Police Stations which have been destroyed--lacking Office equipment, Vehicles, Weapons, or Fuel for patrolling. They enter areas under the control of militia leadership, who insist they impose a Truck tax on vehicles traveling through the area paid to the militia. Recruits get to do all these fun things for $30 per month, an amount no afghan family can survive on.

Both Army and Police are outgunned by practically everything in Afghanistan, while lacking Transportation and Communications. OMC-A officials estimate that the Army will cost an additional $7 billion with $600 million per year Maintenance Cost for 62,000 Troops, while lacking 21,000 Support personnel. The Police Force will likely cost $2 billion, simply to supply them with Police stations, Vehicles, Fuel, and Radios. No One is suggesting a Weapons procurement capable of defending themselves--either Police or Army. lgl