Mike Kueber's Blog

November 16, 2011

The Good Government Caucus

Filed under: Issues,Politics — Mike Kueber @ 2:05 pm
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When I use the term Good Government, I am referring to reforms that are intended to help a democratic government function more effectively.  Examples include eliminating gerrymandering for the redistricting process and establishing term limits for legislators.  Good Government reforms often have a difficult time gaining traction because there is a tendency to accept the status quo, but more significantly the reforms take away perquisites from the incumbents.  Many incumbents will give lip service to favoring a Good Government reform, but then silently resist its enactment.  Another example of this is the Balance Budget Amendment, which nearly 70 senators are on record as supporting, but yet it has never been able to get past the Senate.

Good Government reforms made the news twice this week.  The first occurred on Sunday with a 60 Minutes article on insider trading by congressmen.  Apparently, there is no law against a congressmen engaging in stock trading based on private information that they have obtained through their congressional work.  The article revealed a congressman who has been trying to outlaw the practice for years, but his bill, called the Stock Act, has met silent resistance.  When 60 Minutes asked various congressmen for their position on the bill, they uniformly said they would have no objection to the law, but they weren’t familiar with it.

Local politician Joaquin Castro, who is running for Congress in San Antonio, posted a comment and a link on his Facebook account about this 60 Minutes article, and made the simple argument that insider trading for congressmen must stop.  I post a comment suggesting that when he gets to Congress, he should consider establishing a Good Government caucus consisting of Republicans and Democrats who are interested in pushing for nonpartisan ideas that will help government function more effectively.  With the support of a Good Government caucus, the enactment of the Stock Act would be more achievable.

The second instance of Good Government in the news occurred on Tuesday when Rick Perry proposed major reforms.  According to an article in the NY Times, Perry’s proposal consisted of the following:

  • Cutting congressional pay in half
  • Shorten the time that Congress is in session
  • Ending lifetime tenure for federal judges

The Washington Post reports that Perry wants to cut congressional pay in half again in 2020 if the federal budget remains out of balance.  That proposed motivation sounds similar to an idea that I proposed several months ago – i.e., every two years, voters in  America should decide whether the performance of Congress justifies a 10% pay raise, a 10% pay cut, or no change.  More than any idea I have heard of, this would change the way Congress operates.

Not surprisingly, Perry’s proposals were received with scorn and condescension.  Senator Conrad of ND, who has been working for a congressional pay freeze for years, suggested that Perry’s 50% pay cut was “kind of a silly idea.”  A Florida law professor said, “… it’s kind of crazy and will likely only play well to the Republican base.”

But I am encouraged.  Although the best chance for permanent, broad reform is the development of a Good Government caucus, perhaps this reform can be jump-started via the bully pulpit of the presidency.  Perry is not likely to be the Republican nominee, but perhaps Romney will pick up on this issue as something that will give him a competitive advantage against Obama next fall.

Keep your fingers crossed.

November 7, 2011

Jack Abramoff and 60 Minutes

Filed under: Uncategorized — Mike Kueber @ 2:07 am
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Must-see TV – tonight’s segment on “60 Minutes” showing how easily Jack Abramoff was able to “buy” a Congressman.

Abramoff’s modus operandi? Offer to provide a high-paying lobbying job to a congressmen or his staffer at some future date when they decide to end their “public service.”  Apparently, the prospects of that job sometime down the road is enough to earn the favor of those Congressmen and staffers from that day forward.  At his prime, Abramoff claimed to have his foot in the door of over 100 congressional offices.

While listening to Abramoff describe this bribery scheme, Leslie Stahl said that his conduct infuriated her because it was corrupting our wonderful democracy.  I was irritated that Leslie failed to show similar outrage when she interviewed a congressman and his chief of staff who Abramoff had bought off to secure favorable gambling legislation for an Indian tribe.  America should be able to expect more from
our public servants than we can expect from lobbyists.

Abramoff’s prescription for this mess?  Instead of hyper-focusing on campaign contributions and gifts, Congress should prohibit its members and staffers from ever working for lobbyists.  Abramoff emphasized a point that I have previously made – i.e., “public service” should not be a temporary assignment on your personal road to wealth and affluence.  Eliminate the revolving door.  When you are done serving, go back home.  Otherwise, there is too much conflict of interest.

Right on, Jack.

May 31, 2011

Foreign policy – above my pay grade

This past Sunday, “60 Minutes” included a segment that described the tough slogging in Afghanistan.  Coincidentally, at a Saturday bar-b-q I met an Army infantryman who had recently returned from Afghanistan.  Both “60 Minutes” and the infantryman told stories that were remarkably similar – i.e., the fighting is intense and Americans are decisively winning every battle and nearly all engagements, yet the enemy Taliban keeps coming.  Sounds like Vietnam, except that the American public is not being fed body counts.

Back in Vietnam days, the military publicized the enemy body count to show that we were winning the war, and the media publicized our body count to show that we were paying an exorbitant cost for our win.  Although the military has never publicized enemy body counts in Iraq or Afghanistan, the media publicized American body counts while their enemy Bush was in office, but discontinued the practice when their hero Obama took over the wars.

I usually take the position that foreign-policy decisions are above my pay grade and have previously recommended that politics should “end at the water’s edge.”  The war in Afghanistan is a perfect example of that.  If President Obama concludes that America should withdraw from Afghanistan now that Osama bin Laden has been killed and al Qaeda has been decimated, I will accept his judgment.  If he decides that we need to further decimate the Taliban, I will accept that, too.  I don’t think these options should be argued with the American public in the upcoming presidential election.

Israel v. Palestine is an exception to my rule that foreign-policy issues should play a role in domestic politics.  Because Jewish Americans have a special interest in America’s relationship with Israel, they will naturally comprise a large voting block that politicians will be tempted to pander to, not unlike the ethanol pandering that politicians do for the Iowa presidential caucus.

The best protection against that pandering is for the vast majority of voters, who aren’t a part of the special interest (whether pro-ethanol or pro-Israel) to punish the politician to panders.

May 17, 2011

The gutsy call

Secretary of Defense Robert Gates is arguably the most respected American in public service, and he is preparing to resign next month after five years on the job of directing two wars.  Last night on “60 Minutes,” he had a quasi-exit interview by Katie Couric, the scourge of Sarah Palin.  Katie wasn’t as tough on SecDef Gates, whom she introduced by saying, “You are the ultimate soldier’s secretary.  

During the interview, Gates showed himself to be thoughtful and self-effacing, quite unlike his predecessor Donald Rumsfeld.  Everything Gates said made sense except his homage to President Obama for the assault on bin Laden.  In previous posts, I have suggested that the assault was a no-brainer, and blog readers responded that I was a rank partisan who refused to give credit where credit is due.  Add SecDef Gates to that camp of critics.

Gates, who has 30 years of public service and has worked for seven presidents, called the bin Laden mission one of the most courageous calls by a president.  He explained by noting that they weren’t even sure that bin Laden was in the compound – i.e., they had no direct evidence, only circumstantial evidence.  He also noted that there were consequences if the mission went badly.  And finally, there was the risk of lives.  Gates summed this up by saying, “It was a very gutsy call.”

If I had been Katie Couric, I would have followed up by asking, “If the call were so gutsy, so courageous, what alternative did you or anyone else suggest?  You have already said that, ‘Everybody agreed we needed to act and act pretty promptly.’  So if you needed to act, and the three options were to (1) send in SEAL Team Six, (2) bomb the hell out of the compound, and (3) get the Pakistanis to help with an assault, and you weren’t as gutsy and courageous as President Obama, which were you recommending?”

From the position of a Monday Morning Quarterback, it would be completely irresponsible to involve the Pakistanis, and bombing the hell out of the compound might risk those pilots and would leave an ambiguous inconclusive result.  The guts and courage belong to the SEALS.

May 9, 2011

Divided counsel

Last night, President Obama was on “60 Minutes,” and he provided viewers with his description of the killing of Osama bin Laden.  His interview, which was prerecorded earlier in the week, showed Obama at his best – knowledgeable and articulate, with good judgment and common sense.  Although his geopolitical views are distinctly neocolonial and his domestic political views are far left-of-center, he is unsurpassed in his ability to understand and connect with ordinary Americans.  Much of that ability, I suspect, is due to living his life outside of the Washington beltway.  Although he is a career politician, he has amazingly managed to avoid becoming co-opted by the D.C. establishment.  Of course, the values instilled in him by his mother and grandparents provided a solid foundation.   

Obama’s explanation in the “60 Minutes” interview of why he decided against releasing photos of a dead bin Laden provides an excellent example of Obama’s foundational values and common sense.  According to Obama on releasing the photos – “You know, that’s not who we are. You know, we don’t trot out this stuff as trophies.  You know, the fact of the matter is this was somebody who was deserving of the justice that he received. And I think Americans and people around the world are glad that he’s gone. But we don’t need to spike the football.”  This part of the interview had been released earlier in the week to resolve a roiling public debate.

The “60 Minutes” interview contained several new facts about President Obama’s perspective of the mission:

  1. The likelihood of Osama being in the compound was 55%-45%.  Other news reports placed the likelihood at 60-80%, with one outlier at 40%.
  2. The “vast majority” of President Obama’s senior advisors did not know about the mission, but he side-stepped a question about whether Michelle knew. 
  3. Some advisors had “voiced doubts” about the mission.  Despite these doubts, President Obama decided to send in the SEALs instead of air-mailing some bombs because he wanted (a) proof of the kill and (b) access to the information/intelligence in the compound.  Obama indicated a tertiary concern for the lives of the SEALs and the lives of innocent non-combatants (but in my opinion these tended to cancel each other out).

Although Obama said that some advisors had “voiced doubts” about the mission, his National Security Advisor Tom Donilon went further on several Sunday talk shows and said the president had received divided counsel ahead of the raid and had shown decisiveness under pressure.  “I wouldn’t call it dissension. I would call it a divided counsel — that people had, were in favor of, different options,” he said on ABC

Normally an organization likes to present a united front on important decisions.  Donilon’s interviews suggest, however, that the Obama administration has decided to spin its decision to attack bin Laden with Navy SEALs as questionable and controversial. 

From my selfish perspective, this spin refutes my argument that the decision was a no-brainer since there were apparently smart people in the White House who disagreed with the decision.

The Washington Post went even further with the administration spin by reporting:

  • President Barack Obama faced sharply divided counsel and, in his mind, barely better-than-even odds of success when he ordered the May 1 commando raid that killed al-Qaeda leader Osama bin Laden, the president said in an interview broadcast Sunday….  In doing so, he rejected the advice of a substantial number of his national security advisers, who worried that the plan to send ground troops deep into Pakistan was too risky, he said.”

The Post must have been listening to a different interview because I never heard anything about sharply divided counsel.  Of course, a cynic would say the administration is trumpeting about divided counsel because it spins the president’s leadership as sine qua non to elimination of bin Laden – i.e., although the intelligence and military performed their jobs admirably, the successful conclusion depended on a daring president who trusted.

My friend Robert from Austin recently suggested that a success has a thousand parents and a failure is an orphan.  That will probably prevent us from ever knowing the identity of all the Obama advisers who argued in favor of the bombing option.     

A question that I have not heard anyone ask is whether President Obama felt any pressure to act between the discovery of Osama bin Laden in September of 2010 and the actual kill mission in May of 2011.  During those eight months, the CIA continued to gather information that culminated in it concluding there was as much as an 80% probability that Osama was in the compound.  The advantage of waiting for this additional confirmation is clear, but what about the danger of Osama deserting the compound during this time or, more important, what about the danger that Osama would commit more mayhem while we were confirming his identity?  Wouldn’t there have been a huge benefit to cutting off the head of the snake months earlier?

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.

September 22, 2010

Statistics in sports

 There are three kinds of lies – lies, damned lies, and statistics.  Although attributed to Mark Twain, it was actually British politician Benjamin Disraeli who coined that expression.  I don’t think statistics in sports have reached that level of mendacity, but there are often misleading.

I’ve been a statistics aficionado every since I was a kid collecting hundreds of baseball cards.  (I could have retired from USAA earlier if I hadn’t misplaced those cards sometime along the way.)  One of my favorite games when I was a kid was to compare one baseball card against another to determine which player had the better year.  Because I gave each category of statistic on the card equal value (e.g., triples and RBIs), I remember certain non-star players with a large number of doubles, triples, stolen bases, and runs would stack up surprisingly well against slugging stars.  I also gave the same credit for winning a category by one or by 50.  Thus, having one more triple would be worth the same as 50 more RBIs.  These rules made the game fun and a bit unpredictable, but even then I realized that baseball-card statistics could be misleading.  

Statistician Bill James has done more than anyone to make sports statistics meaningful.  Starting in 1977, he self-published The Bill James Baseball Abstract, which contains his statistical analysis of baseball strategy, productivity, and effectiveness, and his influence in the baseball world has grown continually ever since.  James has developed countless statistics that reveal a player’s offensive and defensive effectiveness (e.g., runs created and range factor), and he has shown that certain time-honored managerial strategies are incorrect (e.g., when to hit-and-run or bunt).  In 2006, James was named by Time magazine as one of the hundred most influential people in the world (in the Thinking category).  He has also been the subject of a profile on “60 Minutes.”

The reliance on statistics in baseball is called sabermetrics, which refers to the acronym of the Society of American Baseball Research (SABR), of which Bill James is the most prominent member.  Another famous practitioner of sabermetrics is Oakland GM Billy Beane, about whom the book Moneyball was written in 2003.  According to Wikipedia:

  • The central premise of Moneyball is that the collected wisdom of baseball insiders (including players, managers, coaches, scouts, and the front office) over the past century is subjective and often flawed. Statistics such as stolen bases, runs batted in, and batting average, typically used to gauge players, are relics of a 19th century view of the game and the statistics that were available at the time. The book argues that the Oakland A’s’ front office took advantage of more empirical gauges of player performance to field a team that could compete successfully against richer competitors in Major League Baseball.   

Examples of sabermetrics include:

  • OPS – on-base plus slugging
  • LIPS – late-inning pressure situations
  • DIPS – defense independent pitching situations
  • WHIP – walks plus hits per inning pitched

As sabermetrics became generally accepted in baseball, it made gradual in-roads into other sports, too, like basketball and football.  In fact, I was prompted to write about this subject by a recent Happy Hour with Kevin Brown during which he complained about some misleading basketball statistics.  He thinks scoring, rebounds, and assists should be modified to reflect so many per minute.  (I think Kevin’s favorite player doesn’t play a lot of minutes, but generates a lot of numbers in those minutes.)  Kevin also complained that quarterback ratings in football should consider dropped passes and interceptions off of deflections.

I responded to Kevin that I had some pet-peeve statistics, too:

  • Basketball – points per possession consumed.  Whereas Kevin wants statistics to show points per minute, I want show points per possession consumed.  You might think that the number of shots taken would fully reflect this, but it doesn’t because it fails count possessions that end in free throws.  For example, Kobe Bryan may shoot 4 of 14 and score 14 points because he made 6 of 8 free throws.  According to my statistic, he scored 14 points out of 18 possessions (or 20 possessions if you count his two turnovers).  I would be interested in comparing Kobe, LeBron, and Durant with this statistic.  
  • Football – time-of-possession.  Virtually every commentator thinks that time-of-possession is a significant statistic, whereas I think it is easily inferior to the total number of plays.  I concede that a football team wants the offense on the field because they can score easier than a defense can and because defenses tend to get worn down, but it shouldn’t matter whether the clock is running (because of running plays and short passes over the middle) or is stopped (because of sideline passes or incompletions).  Furthermore, running the clock may be good if you are ahead, but it also reduces the number of possessions in a game, and only the weaker team wants to reduce the number of possessions.      
  • Baseball – errors.  A batter who gets on base because of an error is charged with an out for purposes of his batting average.  That always struck me as misleading (and unfair) because, as a relatively fast softball player, I felt that my ability to run would cause the infielder to make an error and this should be reflected in my batting average. 

Interestingly, football and basketball numbers crunchers use the term sabermetics even though, technically, the term is based on the term, “Society of American Baseball Research.” 

In my opinion, managerial hunches has been have been vastly overrated; not much more than an excuse for not doing the necessary study and thinking.  With all of the money involved in professional sports, statistical analysis should be a part of Management 101.

June 2, 2010

The ongoing mortgage mess

Filed under: Issues,Politics — Mike Kueber @ 6:20 am
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Yesterday in the NYTimes, I read the following article about the ongoing mortgage crisis – http://www.nytimes.com/2010/06/01/business/01nopay.html.

The theme of the article parallels a “60 Minutes” segment broadcast on May 9 titled, “Are Walkaway Mortgages Going Viral?” – http://www.cbsnews.com/video/watch/?id=6470176n&tag=cbsnewsMainColumnArea.8.  The major difference between the stories is that the NYTimes focused on examples in Florida, whereas “60 Minutes” focused on examples in Arizona.  I decided to write about this matter, not only because there appears to be important differences from state to state, but also because it raises issues that relate America’s long-term leadership in the world.

The NYTimes article noted the significance of various state laws, such as Florida’s, that allow a homeowner to play this game by delaying foreclosure for months and even years.  According to the article, the average time from delinquency to eviction has gone up from 251 days in January 2008 to 438 days now.  The delay is especially long in the 23 states, including Florida (518 days) and New York (561 days), that require foreclosures to go through the judicial system.  Exacerbating the situation in Florida is the defense bar, which is advertising that it will delay the foreclosure process to the maximum amount allowed by law.  One FL lawyer is charging a flat fee of $1,500 a year for this service.  Other states, including California and Texas, have more expedited extra-judicial process.         

The “60 Minutes” segment noted the significance of state laws in allowing homeowners to play this game without endangering their other assets.  In Arizona, homeowners can go months and years without paying their mortgage and instead pocket their mortgage or invest it in a business.  Then, after eviction, they get to keep their assets without even having to file bankruptcy.  This legal loophole is called a protection against deficiency judgments, and most states provide debtors with significant protection against deficiency judgments.  Although there are probably legitimate reasons for various limits on deficiency judgments, these limits were probably enacted without considering the possibility that debtors would be motivated to ignore their payment obligations for years while pocketing their mortgage payment.    

All of this brings us to the moral issue involved.  The American way of life and generally accepted morality encourages people to be responsible and productive.  The introduction to the “60 Minutes” segment warns about the danger of this immoral mortgage practice “going viral,” i.e., spreading because of disenchantment and disillusionment at seeing other people taking advantage of the system.   

As colonial observer of America Alexis de Tocqueville noted, America was great because Americans are good.  When Americans cease being good, American will cease being great. 

That reminds me of a previous employer, USAA.  I remember my first boss at USAA telling me more than 20 years ago that USAA operations performed exceptionally well because its customer base of military personnel included the best customers in the world, with incomparable honor and integrity.  My boss questioned how well USAA would perform if our customers were the same as other insurance companies.

I feel that way about America.  In my opinion, our country operates exceptionally well, not because of our constitution or our government or our businesses, but because Americans are conscientious, productive, honorable people.  If mortgage foreclosures cause a significant number of Americans to become irresponsible, dishonorable, and unaccountable, it will do serious damage to America’s ability to continue leading the world.