Mike Kueber's Blog

March 31, 2011

Gabby Giffords – a political status report

Filed under: Issues,People,Politics — Mike Kueber @ 5:41 pm
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Because we haven’t heard much about Gabby Giffords lately, the New York Times decided to bring us up to speed – not on her recovery from the Tucson shooting, but on her positioning for a Senate race in 2012.  Although the rampant speculation in the article is decried as crass opportunism by many on-line commentators, it is completely in line with what the public thinks about the integrity of people associated with politics.

One of the on-line commentators, however, made a comment (tangentially related to Giffords’ recovery) that I have often uttered, but never written down.  To save me the effort, I will simply quote from Ekeizer4 from Oregon:

  • It disturbs me to hear people say things like, “if anyone can recover from this, Gabby Giffords can.” These people may mean well, but it suggests that victims of trauma and injury are entirely in control of their own recovery. It reminds me of those who insist that a positive attitude and a ‘kick butt’ mentality are the keys to recovering from cancer — implying that when one does not recover, or when the disease proves too daunting to overcome, that it is somehow the fault of the patient. I dearly hope that Ms. Giffords recovers completely, but if she does not, that in no way diminishes the effort, hard work and character that it has taken her to survive. We can only play the cards we are dealt, and perhaps the best way to support Ms. Giffords is to be happy with whatever makes her happy, whether or not that happiness includes politics. She has spent years in service of her country, and now perhaps her country should ask itself how it can best serve her.”

“Spare the rod,” says Big Brother

Corporal punishment of a child by a parent in the home has been under assault for many years.  The assault seems to be led by secular liberals, who are less prone to accept biblical teachings on the benefits of stern punishment and more prone to accept government interjecting itself into the lives of its citizens.

I have a friend who was recently arrested for “injury to a child.”  According to the news reports, she stuck her seven-year-old daughter with a belt after her daughter was sent home from school for “playing in a school bathroom and had talked back to a teacher.”  An affidavit indicates that the belt struck the girl on her face, stomach, and back and left bruises.

Coincidentally, I had spoken to this person a few weeks ago about an article in Time magazine that described a child-rearing concept called the Chinese tiger-mom method, and my friend admitted that she subscribed to that theory.  (Essentially, the method involves little play, never-ending work, and ultra-strict discipline.)

Obviously, this incident has huge implications for my friend.  She was arrested and had to post a $15,000 bond to get out of jail.  Her child has been taken away from her and she will have to deal with the criminal charge.  (“Injury to a child” is a felony in Texas.)  There have been are television reports, with interviews of neighbors, and an article in the city’s newspaper.  The newspaper article drew numerous on-line comments from readers and the most of them suggested that severe punishment was in order.  Although we don’t know all the facts yet, I disagree with those readers.

Corporal punishment is physical punishment that involves the deliberate infliction of pain to punish an offender or deter future offense.  It usually refers to methodically striking the offender with an implement.  Although most nations in Europe have outlawed intra-family corporal punishment of children, it is legal in all 50 states of the U.S.  The problem is deciding when corporal punishment of a child by a parent becomes so severe that a state is forced to intervene for the safety of the child. 

Child abuse v. parental discipline 

  • Under the Texas Penal Code (Section 22.04), “injury to a child” is defined as: “intentionally, knowingly, recklessly, or with criminal negligence, by act or intentionally, knowingly, or recklessly by omission, causes to a child, elderly individual, or disabled individual: (1) serious bodily injury; (2) serious mental deficiency, impairment, or injury; or (3) bodily injury.”  The Penal Code (Section1.07) defines bodily injury as “physical pain, illness, or any impairment of physical condition,” and serious bodily injury as “bodily injury that creates a substantial risk of death or that causes death, serious permanent disfigurement, or protracted loss or impairment of the function of any bodily member or organ.”
  • Under the Texas Family Code (Section 261.001), “child abuse” is defined as: “physical injury that results in substantial harm to the child, or the genuine threat of substantial harm from physical injury to the child, including an injury that is at variance with the history or explanation given and excluding an accident or reasonable discipline by a parent, guardian, or managing or possessory conservator that does not expose the child to a substantial risk of harm.”
  • The Texas Family Code (Section 151.001) also specifically declares that parents have “the duty of care, control, protection, and reasonable discipline of the child.”

These statutory definitions are problematic because what is reasonable discipline to one person might be child abuse to another person.  Personally, I believe it is possible, maybe even preferable, to raise a child without applying corporal punishment, but I don’t think government should outlaw it.  People who assume responsibility for parenting should be left a lot of latitude and shouldn’t be faced with government second-guessing unless there evidence of serious physical injury.  A frustrated, angered parent who strikes a child’s face with a belt deserves counseling; I don’t think she deserves to be arrested.  But based on the comments to the SA Express-News article, I’m not confident that most juries would agree.

Debit-card swipe fees and campaign contributions

I remember Nancy Pelosi famously saying that Congress needed to pass ObamaCare to find out what was in it.  That is often the case with 2,000 pages of legislation, and another good example of this is the Dodd-Frank financial regulation bill, which became law last summer.  One of the provisions in the Dodd-Frank bill directed the Federal Reserve Bank to set limits for debit-card “swipe fees” in April and put them into effect on July 21.

Historically, the debit-card swipe fee has been a percentage of a transaction, and in the past decade the fee has more than tripled to $.44.  In response to the Dodd-Frank directive, the Fed has tentatively determined that the fee should be no more than $.12, regardless of the amount of the transaction. 

Obviously the banks are not taking this reversal lying down.  According to Time magazine (paper edition only):

  • Faced with the prospect of losing swipe swag, the bankers started dialing their lobbyists, who started dialing their employees – oops, their Senators.  Soon enough, a letter from a group of solons fretted about ‘replacing a market-based system for debit-card acceptance with a government-controlled system.’
  • “The banks warn that swipe fees subsidize things like free checking and that you can kiss those things goodbye if the new flat fees take effect.”

The author of the Time article, Bill Saporito, concedes that this is not a David v. Goliath fight, but rather Goliath v. Goliath, with retailers like Wal-Mart on one side and big banks on the other.  Nevertheless, Saporito takes the side of the retailers and attempts to refute the banks’ arguments by suggesting that (1) the current system is not really “market-based,” but rather the duopolistic pricing of Visa and MasterCard operates more like a utility; thus, the tripling of the fee in the last decade; and (2) retailers should not be required to subsidize free checking account, but rather banks should charge whatever its retail-banking products are worth.  Saporito makes sense to me.   

The Fed handling of swipe fees has also been addressed by recent articles in USA Today and the New York Times.

The NY Times article on the Fed’s swiping fee was the least opinionated.  Instead of evaluating the merits of the new fee cap, the article simply reported that the nine senators (not 17, as reported by USA Today) who were proposing a two-year delay of the Fed cap faced long odds against success.  The provision had passed in the original bill by a vote of 64-33, and there was no evidence that Tester could pick up the necessary 18 votes. 

The article in USA Today focused on the intense lobbying being conducted by the banks to delay the implementation of the Fed-mandated fee.  It reported that a bipartisan group of 17 senators, led by John Tester (MT-D) have characterized the proposed cap as “price-fixing by Congress” and warn that consumers will be hit with the elimination of free checking and the increase of ATM fees.   

According to the USA Today article, “Tester, who serves on the Senate banking committee, counts the political action committees and employees of Wall Street firms among his top campaign contributors, according to a tally by the non-partisan Center for Responsive Politics.”

Tester denies that he is serving his Wall Street master, but instead says “he’s pushing to delay the new limits to protect community banks in rural states. ‘I’ve never been about the big guys on Wall Street. They are big enough to fend for themselves,’ Tester said. ‘This bill is about protecting consumers and protecting small businesses.’”

From my perspective, John Tester has no credibility on this issue.  Although he can make good arguments for either side of this issue, how can his constituents be confident that those buckets of money from Wall Street didn’t influence his decision?  That is why politicians shouldn’t accept large contributions from companies, especially those outside of their district.

March 30, 2011

The FDA strikes again

Last month I blogged about prescription ads with lengthy warnings of possible side-effects.  Although I discussed both print and TV ads, I focused on the TV ads because their long recitation of possible side effects is so jarring when you have to listen to it, even when it is speed-spoken.  Today while reading Time magazine, I was jarred not only by the number of prescription ads, but by amount of space wasted on small-font warnings that I’m sure no one reads.

This week’s edition of Time magazine contains 80 pages, and it included full-page prescription ads for the following:

  1. Cymbalta (chronic musculoskeletal pain) (two-page ad)
  2. Vimovo (arthritis pain reliever) (two-page ad)
  3. SeroquelXR (depression) (two-pages of legalese)
  4. Advair (asthma)
  5. Niaspan (anti-plaque in arteries)
  6. Abilify (depression)
  7. Zetia (cholesterol)

Thus, out of 80 pages in this issue:

  • Seventeen pages (more than 20% of the magazine) were devoted to marketing drugs, with nine page devoted to drug ads and eight pages devoted to FDA-required legalese). 
  • There were a total of 30 pages of ads in the issue, which means that drug companies consumed more than half of the ad space.

Lessons learned:

  • The FDA is forcing drug companies to waste large amounts of money for fine print that no one reads; and
  • There are huge amounts of money that can be made by persuading people to ask their doctor for certain drugs.

Love of money – the Bowl Championship Series (BCS)

I have a conservative friend who likes to say that the love of money is root of all kinds of evil (1 Timothy).  Coincidentally, many sports pundits have said for years that a college football playoff for D-1 football will not happen because of money – i.e., the current system of bowls generates too much money for colleges to walk away from.  An article in the NY Times today describes the extent that money is corrupting people associated with the bowls.   

The Times article describes an investigation of the Fiesta Bowl, which is the newest of the four bowls in the Bowl Championship Series.  The investigation reveals a hyper-political operation that spent money not only on personal expenses, but also on various politicians.  As a result of the investigation, the chief executive, the chief operating officer, and the vice president for marketing recently resigned, and the BCS says it is considering whether the Fiesta Bowl should remain a part of the BCS. 

I remember when I was in law school that the Cotton Bowl was considered one of the big-four bowls, along with the Sugar, Orange, and Rose Bowls.  Somehow the Fiesta Bowl pushed the Cotton Bowl aside just as the BCS was starting, and perhaps these shenanigans suggest how this displacement was pulled off.

You may recall that President Obama once said that he realized that virtually everyone in America wanted a playoff to replace the BCS, and that sort of common touch is one of the things that attracted me to him.  Obviously, he is too busy with other matters now, but I wish in his spare time he would help us get rid of the antiquated, corrupt, inefficient bowl system.  We don’t need 38 separate bowl committees spreading millions of dollars around to people who contribute nothing to the games.

March 28, 2011

Corporate taxation and “60 Minutes”

A couple of days ago I blogged about corporate taxation becoming a farce.  My posting was prompted by an article in the NY Times reporting on General Electric’s success in procuring and taking advantage of tax loopholes.    Last night CBS’s 60 Minutes entered the fray, and put a completely different spin on the problem. 

According to 60 Minutes, the problem is America’s confiscatory corporate tax rate – 35%.  Japan is preparing to lower its rate, and when that happens, America will have the highest corporate tax rate in the developed world.  This high rate in America naturally causes large businesses to move to a more favorable taxing jurisdiction if that is feasible.     

In the past, some American businesses have tried to hide their income in Bermuda or the Cayman Islands, where there was no corporate taxation.  Because of threatened legislation, however, many of those businesses have now shifted to Europe, especially Switzerland with a 15% rate and Ireland with a 12.5% rate.  Sometimes it is necessary to physically move a company’s research or manufacturing facilities; other times the move is mainly on paper, either by designating a foreign post office box as their national headquarters or:

  • An increasingly popular way, particularly pharmaceutical and hi-tech companies like Google avoid paying the 35 percent is to shift their patents, computer code, pill formulas, even logos from their U.S. bases to their outposts in low-tax countries.

Lloyd Doggett, a congressman from Austin, is trying to draft laws to capture some of this corporate revenue, which has dropped from 6.6% of federal revenue in 2009 compared to 30% in mid-50s.  But as he was drafting a law to require that senior executives actually work at their corporate headquarters, several Texas businesses actually moved their CEO and CFO to Geneva.  Doggett is not optimistic that he can write a law that lawyers will not find a way around.  Where there’s a will, there’s a way.

According to a tax expert who testified to Congress, various accounting maneuvers have helped lower Pfizer’s average tax rate in 2009 to 17 percent; Merck’s to 12.5 percent, and GE’s to just 3.6 percent. But according to the previously referenced NY Times article, GE is not required to pay anything until it returns its foreign-earned profits to America. 

The CEO of Cisco told 60 Minutes that they had $40 billion parked overseas and they would bring it back if there were a one-time charge of about 5%.  60 minutes reported that American multi-nationals had a total of $1.2 trillion trapped overseas. 

The Cisco CEO suggested that all of these financial shenanigans would go away if America’s corporate tax rare were reduced to 20%.  That makes sense.  The world is becoming flat, and American business cannot be competitive if America has the highest corporate tax rate in the world.  Let’s level the playing field.

Public on-line universities

An article in the Sunday edition of the San Antonio Express-News reported that financially challenged states like Texas are looking to enter the world of on-line university degrees.    Although I’ve always been a snob about on-line degrees, and even night schools, I think the concept is worth pursuing.

My prejudice against on-line degrees and night schools is based on a belief that college is a time to make the transition from being the high schooler you are to being the college person you want to be.  This transition happens best when you are given space from your family and you are allowed to interact with others going through the same process – all while being exposed to new ideas by extraordinary thinkers.

The popularity of on-line universities, however, reveals that my idyllic college experience is not for everyone.  Many people need the flexibility that on-line learning affords.  That flexibility includes not only the location of studies, but also the timing and pacing of those studies.  And from the perspective of cost, on-line studies reduce the need for bricks-and-mortar.  It’s like Amazon vs. Barnes & Noble.      

While government has been slow to recognize this need (no surprise), for-profit businesses have not.  The leading on-line University of Phoenix, founded in 1976, has grown to a half-million students. 

The Express-News article also reported on a leading non-profit on-line university called Western Governors University (WGU), which was founded by 19 governors more than a decade ago.  Its self-described mission “is to improve quality and expand access to post-secondary educational opportunities by providing a means for individuals to learn independent of time and place and to earn competency-based degrees and other credentials that are credible to both academic institutions and employers.”  WGU has been profiled in Time magazine, and among its corporate sponsors is the Bill & Melinda Gates Foundation. 

I subscribe to the conservative vision that people can decide for themselves what is best for them.  That suggests that government should afford people the opportunity for either a bricks & mortar experience or on-line education.  But I also believe that government shouldn’t do what is already being done effectively by private business.  Based on reports of the high dropout and loan-default rates associated with for-profit on-line universities, I think involvement in on-line education by the public sector is appropriate.

Currently, states are not looking at on-line education as an either/or proposition.  Rather, they are mixing the two ways of learning.  Although a bit of caution is reasonable, America needs to get moving towards its goal of a more educated populace, and on-line education is one of the most promising ideas to achieve our goal.

March 27, 2011

Sunday morning talk shows

Sundays are special to me partly because of Sunday morning talk shows.  It’s probably a sign of the times that my three favorite shows can be found on three relatively new channels:

  1. ESPN’s The Sports Reporters.  I have loved this show for at least 15 years.  I remember Tina Spencer and I often sitting in my office for too long on Monday afternoons in A Building, comparing notes about the show, which we watched religiously.  Dick Schaap was the host until September 2001, when he died unexpectedly from surgical complications, and he was replaced by John Saunders.  Although Schaap seemed the perfect host, Saunders has equaled him.  The rotating three-guest panel often includes newspaper reporters Mike Lupica (NYC), Bob Ryan (Boston), or Mitch Albom (Detroit).
  2. CNN’s Reliable Sources.  This show is exceptional not only because its host Howie Kurtz is such a smart, middle-of-the-road questioner, but also because of the subject matter – i.e., the media.  I am fascinated by the role of the media in modern politics, even though the media has a generally-accepted bias toward liberal positions.
  3. FOX’s FOX News Sunday.  I have only recently started watching FOX News Sunday (FNS).  As with the other three major Sunday Morning Shows – NBC’ s Meet the Press, CBS’s Face the Nation, and ABC’s This Week – they key to success is the host.  FNS’s host is Chris Wallace, and he has the same traits as Howie Kurtz – he is smart and middle-of-the-road.  (Although Wallace is the son of 60 Minutes’ Mike Wallace, he was raised by another newsman.)  

On this morning’s FNS, Wallace reported something disturbing.  He said that the Obama administration had made Secretaries Hillary Clinton and Bob Gates available to the talk shows on the other three networks, but not to FNS even though FNS often has higher ratings that two of the other three shows.  If that were true, that would indicate that the Obama administration was getting paranoid about FOX.  But I haven’t  been able to confirm that Wallace’s statement about the ratings was true.  According to the latest ratings that I could find from mid-February 2011, NBC, CBS, and ABC had ratings that were roughly comparable, while the ratings for FSN were about one-half of theirs.

Regardless of the ratings, Wallace’s show is better than his competitors’.  Some might suggest that Wallace is a conservative, but he reportedly has been a registered Democrat for many years.  I will attempt to learn whether he misspoke when he said his show was more popular than Face the Nation and This Week.

March 25, 2011

Corporate taxation is becoming a farce

Filed under: Business,Issues,Politics — Mike Kueber @ 11:50 pm
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According to a recent article in the NY Times, General Electric made more than $14 billion in 2010, and of that amount more than $5 billion was earned in the United States.  Yet GE paid no American taxes. 

America is reputed to have one of the highest corporate tax rates in the world – 35% – so how can GE pay nothing in taxes?  I wonder if the $20 million that GE spends annually for lobbying resulted in a few tax loopholes.  I wonder if the 975 employees who work in the GE tax department were able to find and take advantage of every loophole that the lobbyists created.

According to the NY Times article, lobbying and tax avoidance have become profit centers at GE.  That reminds me of the old adage from North Dakota back in the 70s – farmers no longer had to know how to farm the land; instead they just needed to know how to farm the government farm programs.  GE and much of corporate America, especially Wall Street, have expanded on that concept by controlling the development and implementation of government policy that they subsequently exploit. 

We all concede that businesses have every right to lobby for favorable legislation and regulations, and lawmakers need input from business to craft effective laws.  But lawmakers shouldn’t allow themselves to be compromised by campaign contributions.  Although federal campaign law prohibits direct contributions from corporations, the NY Times article revealed how GE used it financial clout in indirect ways to influence Harlem congressman Charles Rangel while he was chairman of the House Way & Means Committee.  As long as corrupt politicians like Rangel find their way into positions of leadership, this problem is not going away. 

Corporations like GE and Goldman Sachs are also able to buy influence by creating corporate PACs and then giving PAC money liberally to federal lawmakers.  This largesse creates an environment where legislation and regulations favorable to GE and Goldman Sachs are acceptable, even expected.  This environment will cease only when politicians wean themselves from the corporate teat.

Donald Trump – foreign-policy savant?

Filed under: Economics,Issues,People,Politics — Mike Kueber @ 6:45 pm
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Every morning I wake up to my bedside radio, which starts playing Y100 at 5am.  At 5:30, my favorite DJs on Y100 – Jesse and Shotgun – start interjecting their folksy wisdom.  Earlier this week, Shotgun declared that he was supporting Donald Trump for president.  His support was based on Trump’s astute observation that America was being taken advantage of again.  This time it was Arab League that was taking advantage of us by getting us to shoot million dollar rockets and missiles at Gadhafi.  Trump’s man-in-the-street, Perot-esque wisdom was that we should be charging the Arab League for the missiles, and Shotgun thought that was typically brilliant.

A couple of weeks ago I blogged negatively about a Trump candidacy, and yesterday I blogged that partisan politics should end “at the water’s edge.”   The belief in America that partisan politics should end at the water’s edge provides me with another reason to oppose Trump’s candidacy – i.e., he is a foreign-affairs (and monetary-policy) dilettante whose campaign would try to sell populist foreign-policy positions to American voters who know less about the subject than him.  As I said before, American voters might look to a person like Trump in desperate times; fortunately we are not there yet.

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