I Broke MuniDirect! January 16, 2002January 25, 2017 MUNI DIRECT Tom Wilder: ‘I noticed your comment Monday on MuniDirect.com. I’ve had an account for almost a year and have to say it’s great. Good luck with your account.’ Stephen Gilbert: ‘MuniDirect looks interesting: a Pomona, California 5% 2024 bond is listed there at 99.968. At Schwab, it’s 100.625. Buying at MuniDirect saves you over $650 on 100 bonds. But wait – it appears that Vanguard’s prices are actually a bit lower.’ William F. McKenzie: ‘I just opened an account with MuniDirect.’ William F. McKenzie a few minutes later: ‘So much for MuniDirect (at least for now).’ MuniDirect: ‘Due to financial difficulties at Municipal Trade, the company which recently acquired MuniDirect, the National Association of Securities Dealers (NASD) has directed Municipal Trade and its subsidiaries to cease all trading until the situation has been remedied. We are working diligently to have this service restored, and we will notify you via email as soon as that happens. At such time, we will process your new account application.’ ☞ Oh, no! It’s working fine for a year and then I write about it and hours later it breaks? CAR LOANS Ken Nemerovski: ‘I had to laugh at your example of the transmission falling out of the car. That really did happen to me three weeks ago. So, as I was making my year-end charitable contributions … right after the holiday gift expenses … I had to come up with $2,400. When the rainy day money is gone, the best solution and softest blow for those of us who hate debt is the home equity line. It gives me control over debt amount and repayment, a low interest rate, and a tax deduction. In my current situation, it’s a life saver!’ Karen Tiede: ‘It’s not that hard to come up with cash for a car if you just don’t stop making car payments when the loan’s paid off. Of course, this assumes you have a loan that could get paid off before the car dies. I drive trucks and have not been in a position to pay cash. Last time I priced them out, I spent $900 more, over the life of the loan, to get brand-spanking new, vs. a truck that already had 50,000 miles. Seemed worth it to me. But once that loan was paid off, I kept the automatic transfer going into my credit union. WAY bigger down payment the next time, meant a shorter term on the next loan. If I’m lucky about this truck holding up, I might even have enough cash on hand to skip the loan the next time.’ INDEXING Eduardo Gonzalez: ‘Does it make sense to put 401K funds in index funds if the plan offers them, or should you stick with the actively managed funds since it’s a tax deferred account?’ ☞ Index! The fees are a lot lower, which means that over the long run, you will almost always beat the actively managed funds. Mike Albersheim: ‘In today’s column you mention to invest in index funds as you have in previous columns. Can you suggest which index(s) to invest in? Does the answer depend on the amount of money to be invested? ☞ No, it depends on which index you think may represent the best value. Which is all but impossible to guess, so I’d normally go with the broadest index you can buy without incurring much more than the two-tenths-of-one-percent annual fee that’s available on many of these. FAMILIES Joel Williams: ‘The ‘pro-family’ people who say that gay relationships undermine the traditional family just do not make sense. Gay relationships can in no way undermine straight relationships, unless you believe that straight men would really, in their heart of hearts, rather be having sex with other men. I think, in fact, that is a hidden assumption among many of the ‘pro family’ types.’ Cyrus Ginwala: ‘Phil Brink misses the obvious cause-effect here. If, in fact, he’s correct that the longevity of your and Charles’ relationship is the exception rather than the rule, this could be BECAUSE society and its laws are so unsupportive of same-sex relationships. Perhaps what we need is GREATER (read ‘equal’) rights for same-sex couples, before trying to measure the relative stability of their relationships.’ David: ‘I would like to pass on some anecdotal information to Phil Brink in response to his comments from today’s column. My brother is gay and has been involved in a monogamous, committed, loving gay relationship for approximately 18 years. I am straight and during that same period, I have been married twice (divorced once) and have had several girlfriends. In my limited experience, at least, gay relationships last longer and are entered into by more committed people than are straight relationships. Discrimination on the basis of sexual orientation is wrong and diminishes our society.’ Muriel Horacek: ‘Long-term same-sex partners, like some of my dear friends, should receive the same benefits as marriage partners, but some companies feel that they then have to grant benefits to heterosexual partners even if they don’t get married. I feel that is wrong. Heterosexual partners can legally marry, so that should be a requirement for them to receive benefits. When (and I don’t concede there’s an “if”) same sex partners are allowed to have a legal union of some kind, then they should also be required to pursue that legal commitment in order to receive benefits.’ THE BOYCOTT BEGINS Bob Fyfe: ‘I drove past my usual Mobil station last night in favor of a Sunoco. But only after checking Sunoco’s website to ensure that I wasn’t jumping out of the pan and into the fire. I wasn’t; they explicitly call out sexual orientation in their non-discrimination policy. That’s $13.75 for fairness, $0.00 for Exxon/Mobil. Now, how about an e-mail address for Exxon/Mobil?’ David Posner: ‘To send e-mail to ExxonMobil, try this link.
Exxon’s Response January 15, 2002February 21, 2017 Mitchell: ‘In your recent discussion of XOM shares and socially responsible investing, in my view, you missed an important part of the moral argument. Owning stock in a company makes you a part owner, and like any other business you might be a part-owner in, you are associated with its activities and sharing in its profits. So my question to you is, is there no company, no business you simply cannot be associated with for moral reasons? Would you refuse to invest in a heroin producing facility or mob-controlled hazardous waste company, even if their financial statements indicated a 200 percent per year profit? How about legal companies that encourage nicotine addiction (and lie about it) or companies that buy off politicians so they can pollute (and lie about it), even if they seem to be a good investment? How about companies that have racist, sexist, homophobic policies? I’m not saying that all investments have to be 100% pure, but as someone once said to me, just because a hospital can’t be 100% germ-free doesn’t mean we shouldn’t encourage doctors to wash their hands. We may have different places we want to draw the line, but don’t you agree that to lay claim to any moral values beyond narrow self interest we have to draw the line somewhere? (As I see it, to a great extent, our moral/spiritual development as individuals and as a society is based on honest, open, discussions of where these lines are drawn and why.)’ ☞ Beautifully put. I would absolutely want to encourage doctors to wash their hands, which is why the stuff that helps, even if in a small way, on the margin, I favor. Boycotting Exxon, for example. Letters to the editor. Contributions to progressive advocacy groups. Active participation in the political process. My question on Exxon and Philip Morris stock would be: does my refusal to own 100 or 1,000 shares in any way encourage the doctors to wash their hands? To me, the impact is so infinitesimal as to be meaningless. I don’t happen to own those stocks, and wouldn’t buy them unless they were really compelling values. But if I felt that they were, I would – on the theory that my added profits could enable me to slightly-less-infinitessimally advance the cause of a more nearly germ-free hospital. I would never buy a new issue of stock or bonds from a tobacco company, because that might in some small way help raise the money needed to build a new cigarette factory. But the tobacco companies (to continue with this example) are awash in cash, so my buying their securities in the secondary market will in no practical way help them – while the considerable profit I once made speculating on R.J. Reynolds zero-coupon bonds, bought at a huge discount long after they had been issued, was a dandy source of funds to finance anti-tobacco activities. I also instinctively set the bar higher for investment in, say, a casino company or a liquor company – even though I think people should be largely free to drink and gamble – than I would in, say, a promising early-stage drug company or solar power company. The last thing we need is another casino. Windmills, we could use. And a little tilting at them never hurt, either. Paul Johns: ‘You might also note the success of Seattle’s Pride Foundation, among others, in using their ownership stakes to work with companies to change their policies for the better.’ Jeff: ‘I think Exxon has been the most intractable of the oil companies about admitting their role in global warming. I mean, all the oil companies are pretty bad, but Exxon/Mobil has been the worst (I think). Unfortunately, boycotts usually only work if they’re widespread. Are there large organizations prepared to publicize this and get a large following?’ ☞ Well, the Human Rights Campaign and others have been pushing this. And with the Internet, and some bumper stickers, it doesn’t take too much for word to spread. Bill: ‘I agree that it sucks. I don’t see any reason to boycott the company, however. I frankly don’t understand why anybody would do business with them. Their fuel prices are always more than their competitors on the other three corners of the intersection. Why do people patronize a place that offers the same product (it really is all the same), the same services (none in most), the same customer service (none in all)? I just don’t get it. Drive across the street and pay less. What a novel concept.’ Phil Brink: ‘Sorry, but I disagree strongly. I understand your concerns for right to visit in the hospital, etc., but I believe the non-discrimination policy is just one step for legitimizing gay marriages/unions. The traditional family is an important structure for stability in society and for raising kids. Please note that I am not for discrimination against a person for being gay. I think there is a mountain of support for the traditional family and its stability (despite the obvious trouble it is in in today’s society). You and Charles are an exception (if equate length with stability) – not typical. That is not reason enough to oppose your position, but I’d like to suggest George Gilder’s book Men and Marriage. Very interesting, and makes the case without simpleminded ‘The Bible says so.’ In fact, he doesn’t refer to the Bible at all, but makes the case based on observations of societies.’ ☞ If preventing Charles and me, and other committed couples, from having equal rights led to the breakdown of society, I might reluctantly see this as a cross we should be made to bear. But I think just the opposite is the result. Encouraging stable, committed relationships is good for society. You say that Charles and I aren’t typical. I think you would be amazed at the number and longevity of same-sex relationships out there. One friend of ours took 10 other couples on a trip to celebrate their 10th anniversary. Three straight couples, eight gay. At seven years, Charles and I were the babes in those woods. One of the straight couples led the pack at 38 years, but two gay professors were close behind at 34. And is it really better for children to grow up in an orphanage than with one or two adoring, adoption-agency-approved gay moms or dads? I haven’t read George’s book; and I like to think that in the 10 years since it was written he may even have changed his mind somewhat, as so many others have. Judging from the back cover and first chapter, he believes that the traditional nuclear family is ideal and should be celebrated. I have no problem with that. But now what do you do about the nice kids of traditional nuclear families who happen to be gay or lesbian? I would say: encourage them to have happy, stable, constructive lives. Would George discourage that in hopes it will somehow keep straight fathers from abandoning their children? I don’t see the connection. He laments silver-haired executives’ divorcing to pursue trophy wives. But how do gay unions encourage that? Joe Porter: ‘I like what Abe Lincoln had to say about treating people equally. When he was running for the Senate in 1858, he referred to the Declaration of Independence, and I paraphrase, ‘If the words aren’t true – that all men are created equal – we should take them out, if they are, we should stick to them” Dave Lazar went to ExxonMobil’s web site and gave them a piece of his mind. (Thanks, Dave.) Herewith, Exxon’s reply: We believe our policy on discrimination is clear and straightforward. ExxonMobil Corporation policy prohibits any form of discrimination or harassment, including sexual orientation, in any company workplace. In support of this position, we have established a comprehensive education, training and stewardship program to ensure this policy is implemented and followed throughout our worldwide operations. We have stated both verbally and in writing that ExxonMobil’s policies against harassment and discrimination apply to sexual orientation. In fact, in Exxon’s 1999 and 2000 Proxy Statements and ExxonMobil’s 2001 Proxy Statement we specifically stated that these policies prohibit harassment or discrimination on the basis of sexual orientation. With regard to domestic partner benefits, ExxonMobil is guided by the laws in the 200 countries where we operate and we provide benefits coverage to spouses – whether heterosexual or homosexual – where a legally recognized spousal relationship exists. We do understand the interest many individuals have regarding this topic. However, we believe that basing employee benefits on legally recognized spousal relationships is the only way the program can be applied in a fair, rational and consistent approach for our 100,000 employees worldwide. As an example, ExxonMobil employees who have their relationships certified in Canada or the Netherlands, which,by law, recognizes same-sex relationships, are provided spousal benefits under the ExxonMobil program. Contrary to many new news media reports, when ExxonMobil was created, we did not take away any former Mobil employees’ domestic partner benefits. They and their partners still receive those spousal benefits. Lastly, please understand that our decision regarding domestic partner benefits is not intended as a political statement – we choose not to take sides on this political issue. It is simply a business decision designed to efficiently, fairly and effectively apply our benefit programs. Exxon Mobil Corporation ☞ This is certainly civil and better than nothing, but it does not tell the whole story. Yes, the Mobil employees who were getting domestic partnership benefits before the merger have not lost them. But any new employees, or any old Exxon employees in such relationships, or any existing ExxonMobil employees who should form committed relationships in the future, are barred from these benefits. So consider two otherwise-identical ExxonMobil employees sitting side by side. The one who was covered by Mobil before the merger is still covered. The one who wasn’t, isn’t. In the words of ExxonMobil, ‘It is simply a business decision designed to efficiently, fairly and effectively apply our benefit programs.’ If you buy that logic, buy their gas. Further, ExxonMobil specifically states in its non-discrimination policy for U.S. employees that it does not discriminate on the basis of race, sex, religion and the other categories specified in federal law. This clearly articulated list does not mention sexual orientation – in contrast to the policies of 299 other corporations on the Fortune 500 that specifically do. It would be easy to add those two words, but ExxonMobil has clearly given this a fair amount of thought – not least because of the proxy resolutions on this topic introduced the last three years – and decided against it. ExxonMobil is not ready to buy the policies Mobil had before the merger. So I am not going to buy their gas.
New Year’s Review January 14, 2002January 25, 2017 Let’s review: You have gotten out of credit card debt (or will, ASAP), and plan to buy your next car for cash – even if that means it has to have been “previously owned.” You are contributing the max to your employer’s 401K, at least up to the amount, if any, your employer matches with contributions of his own. (But you are NOT putting more than 20%, max, into your employer’s stock, and probably not even that much, unless he gives you a special incentive to do so.) Unless your adjusted gross income is too high to qualify ($95,000 filing singly, $150,000 filing jointly), you and your spouse or significant other have each opened Roth IRAs at Vanguard or some such place and will each be putting $3,000 into it this year as soon as you can. (If you’re over 50, you can each do $3,500.) You plan to add the max to it each year, and know that your retirement fund will not only grow tax-free, the withdrawals will all be tax-free. And with more flexibility and less paperwork than with a traditional IRA, to boot. If you have kids, you have set up Section 529 accounts for them, very possibly with the Utah or Missouri plans – which does not mean your kids will have to go to Brigham Young or Missouri State. Click here to choose a plan. Note that the money you invest will not only grow tax-free, it will all be withdrawn tax-free to pay for college or graduate school. Your stock market money – which must only be money you are setting aside for the long run, not money you would need if the transmission fell out of your car – should be invested periodically via index funds. If the market falls – good! You would keep making those periodic investments, adding new shares to your pile “on sale.” Maybe you’d play with a little on the side, through a deep discount broker – perhaps a $25,000 portfolio of five $5,000 speculations alongside $200,000 in index funds – both to keep you from going nuts with boredom and, more to the point, in order to generate a little tax twist. Namely, writing off the losers to lower your ordinary income tax, while riding that one big winner, if you’re lucky enough to have one, for a tax-deferred and ultimately lightly-taxed long-term gain. (Better still, if you’d be giving money to charity anyway, use that winner, once it goes long-term, to fund an account at the Vanguard Charitable Endowment Program if you can meet its $25,000 minimum, or at the Fidelity Gift Fund, if you cannot.) For bonds, forget mutual funds (and forget corporate bonds). Use Treasury Direct. And for tax-free bonds, consider a new service I haven’t tried, but plan to: munidirect.com. See? That wasn’t hard. Now back to the other stuff. (Tomorrow: Exxon’s response.)
But Don’t (Necessarily) Sell Your XOM January 11, 2002February 21, 2017 Finally, the estimable Less Antman (see the invaluable ‘Ask Less’ feature to my left) has a question for me. He writes: ‘First you tell people you’re shorting Yahoo! while I have clients with unvested options working for Yahoo!, and now all the clients I invested in Exxon/Mobil in buy-and-hold portfolios want an explanation. Fortunately, I switched to Chevron/Texaco for more recent clients. But seriously, are you now an advocate of socially responsible investing, or only socially responsible consuming? I remember you expressing skepticism about the concept of socially responsible investing in the past. Have your views changed?’ ☞ No. Selling your XOM shares for moral reasons will do absolutely nothing to capture Exxon’s attention or change its behavior. So if you think it’s a good value, hold on to it and use the dividends to fill your tank – at a competitor. Same with your Philip Morris stock. Hold onto it, and contribute the dividends to SmokeFree Educational Services. (Well, SmokeFree would actually prefer you just take action than send it money. But you doubtless have no shortage of good causes.) It would be different if Exxon or Philip Morris actually needed new capital. They are rolling in capital. And it might be different if you owned 20 million shares. (In that case, I’d say, don’t sell – at least not until you had called management and reasoned with them.) But a boycott is different. If 15% of drivers are either gay or lesbian or enthusiastically supportive of their equal rights (a majority of Americans are generally supportive, but I am talking about folks for whom this is high on the radar screen, like gays and lesbians themselves and their families) – it’s not inconceivable that Exxon/Mobil stations could see a 3% or 4% decline from a boycott. (It would never be close to 15% both because of the special effort Jerry Falwell, et al, would make to switch to Exxon, and because, let’s face it, boycotts are hard to pull off.) And it’s also not inconceivable that some gas station owners could be persuaded that it’s bad business to discriminate against any class of citizens. On the margin, a 3% or 4% drop in US sales is hardly going to bankrupt Exxon. But it could get noticed. Sooner or later, as I suggested yesterday, I’m quite sure the good people of Exxon (and I have no doubt they are almost all good people) will adopt the policies Mobil already had in place before the merger. If it happened tomorrow, that would bring up from 299 to 300 the number of Fortune 500 companies that include sexual orientation in their nondiscrimination policies. A boycott – which in this case requires so little behavior modification, when there is almost always a competitive gas station across the street – could just possibly make that day sooner rather than later.
Exxoff January 9, 2002February 21, 2017 Look at the time! I seem to be 893 minutes late posting this column. Oops! Well, I certainly hope you didn’t wait for me. Eat! Eat! BOYCOTT EXXON/MOBIL When Exxon and Mobil merged in 1999 they became the world’s largest corporation. For some, that might be reason enough to boycott Exxon/Mobil. For others, the sheer ungainliness of the name – Exxon/Mobil – could be a reason to steer clear. You say you’re “running down to Starbucks,” and it just trips off your tongue. To the A&P? To Kinkos. You’re out of Kleenex or you’re flying Delta or you just bought a Hewlett Packard printer . . . these just sound right. ‘I’m just running down to the Exxon/Mobil station’ doesn’t sound homey, doesn’t sound natural. The two shouldn’t go together. Which is apparently exactly what top Exxon executives think about Charles and me. We shouldn’t go together, either. So when Exxon and Mobil merged, they became not just the world’s largest company, but also the first U.S. employer ever to rescind a non-discrimination policy covering sexual orientation. Mobil had been one of what are now 299 of the Fortune 500 companies to have such a policy. Had Exxon acquired the policy along with Mobil, the number today would have been 300 of the 500. But Exxon does discriminate against gay and lesbian employees, and proudly so. (This was no oversight – they’ve resisted plenty of pressure to change their minds.) What’s more, open merging with Mobil, Exxon closed Mobil’s ‘domestic partnership benefits’ program to any additional employees Mobil employees, let alone any Exxon employees. So if you’ve been married for two weeks, your spouse is fully covered at Exxon/Mobil. But if you’ve merely been life partners for two decades – prevented from the legal benefits of civil unions because of your sexual orientation – Exxon thinks it’s fair to deny you the same spousal benefits your coworker gets. You know what? This sucks. It’s unfair, it’s unAmerican, and it’s something Exxon will doubtless change sooner or later. Let us never forget how Alabama Governor George Wallace – proud segregationist – eventually came around. With time, good people almost always do. Exxon will, too. But in the meantime, how hard is it to fill up at a competitor? It’s so easy! The Coalition to Promote Equality at ExxonMobil was formed in October of 2001, with the simple goal of getting Exxon/Mobil to rejoin the majority of America’s Fortune 500 companies – as I say, 299 of them at last count – that include sexual orientation in their nondiscrimination policies. And to rejoin the growing number of Fortune 500 companies – 157 at last count – that offer domestic partnership benefits. Handy phone numbers: To cancel your Exxon/Mobil credit card: 800-903-9966. To cancel your Speedpass: 877-696-6245.
Hip Hop January 8, 2002March 25, 2012 ‘I’m just gonna hop in the shower,’ a friend said, and I have often said the same myself. But think about it: why do people always HOP into the shower? Has any one of them – even one – ever actually hopped into the shower? (Or, for that matter, started hopping when they got really mad?) Hopping is just not something one does after early childhood, unless one has stepped on a tack, and then only long enough to get to a chair. ‘I’m just going to hop on down to the store and pick up some bagels.’ Oh, sure you are. I’d love to see it. Could the Early Man who came up with this word, hopping around his cave after stubbing his toe, ever have imagined showers or stores? Or that hopping down to the latter would mean walking over to a shiny 3,000-pound cave on wheels (wheels I think they invented right around the time they came up with the word ‘hop’), stick a small shiv into a slit, turn a wrist, and summon 160 horses? This is hopping? To hop has come simply to mean, ‘to go, impulsively, casually.’ One never hops to do something important – unless one ‘hops to it!,’ which is almost the opposite of doing it casually – and you and I, being native English speakers (well, most of you), just know all this stuff intuitively. Imagine having to learn English as a second language starting at 14, let alone 40. It would be all but hopless. This brings to mind four things. First, obviously, how fortunate we are (again, most of us) to know the Internet’s primary language with no effort at all. Second, how extraordinary are our friends (like the designer of this web site, among so many others) who have met the challenge of learning English as a second language. Third, how difficult it must be for the young man who has been assigned to translate the new edition of my book into Japanese. He sends me the nicest e-mails asking questions that make me realize how impossible this must be. Starting with the dedication page: ‘To my broker, even if he has, from time to time, made me just that.’ How do you translate a pun? (My recommendation: just delete it; my broker will never know.) (And why on earth does the Japanese publisher think anyone there will want to know why the Roth IRA is a better choice than the traditional IRA?) Fourth, what a smart idea it is to enroll the five and six-year-old children of immigrant parents into ‘English immersion’ programs when they start school, while they are still young enough to pick up the language with ease. The ‘bilingual’ classes many school districts have spent so much money on turn out to be – though well intentioned – basically school-in-Spanish. Which is fine if you’re a kid in Mexico or Chile, but a real disservice if you’re a kid in Los Angeles or Boston. That last observation is controversial. Bilingual education is strongly supported by, among others, those employed in bilingual-education programs, many of whom work very hard trying to make the theory (which is a good one) reality (which after 30 years of trying seems rarely to happen). In California, virtually every politician in the state came out against a 1998 ballot initiative that would have ended most bilingual classes. Yet it passed overwhelmingly, and was even heavily supported by the Latino community until shortly before the vote, when massive opposition advertising flooded the Spanish-language media. (It was only after the election that the funder of the opposition was revealed: the owner of the Spanish-language Univision television network. Univision has a natural economic interest in having kids not learn English.) Three years later, the California results are in, and they are good. Arizona has passed a similar initiative. Massachusetts is currently debating one. It is a much larger topic than I have the space or competence to cover, but if you’re interested, hop over to englishforthechildren.org.
Over My QUIVERING Dead Body January 7, 2002February 21, 2017 Tomorrow, a lighter topic. But if you missed Paul Krugman in Friday’s New York Times, click here. A tidbit to whet your interest: ‘Adjusting for inflation, the income of families in the middle of the U.S. income distribution rose from $41,400 in 1979 to $45,100 in 1997, a 9 percent increase. Meanwhile the income of families in the top 1 percent rose from $420,200 to $1.016 million, a 140 percent increase. Or to put it another way, the income of families in the top 1 percent was 10 times that of typical families in 1979, and 23 times and rising in 1997.’ Armed with this knowledge, and surveying the panoply of challenges we face, the Republican response is to shift the playing field further toward the 1%. Not enough money for schools or prescription drugs or Social Security or alternative-energy research? Well, that’s too bad – first things first. Another tidbit from the Krugman column: ‘The Republicans have moved so far to the right that ordinary voters have trouble taking it in; as I pointed out in an earlier column, focus groups literally refused to believe accurate descriptions of the stimulus bill that House Republican leaders passed on a party-line vote back in October.’ So, while I am not authorized in any sense to speak on behalf of the Democratic Party, I am moved to make a pronouncement anyway. My pronouncement is inspired by our President’s recent pronouncement – ‘Not over my dead body will I let them raise your taxes.’ He said this to what C-SPAN described as a ‘largely blue collar’ audience, and I suspect he’s been saying it, and will be saying it, to audiences wherever he goes. Read his lips. Well, on behalf of the Democratic Party (unauthorized, but still) I say: ‘That’s nothing! You could torture us and threaten to kill our nearest of kin; you could condemn us to eternal damnation and take away our MTV and STILL we would not raise your taxes! And that applies not just to you in the audience, but to the 2% of you at the very top of the income and wealth pyramid, too! We will not raise YOUR taxes, either! But we will freeze further tax cuts for you fortunate few until we can afford them. The goodies that applied to you for 2002 will still phase in right on schedule; the additional tax cuts for the top 1% or 2% that were slated to phase in in future years (because we had massive budget surpluses as far as the eye could see) we’ll just hold off on. Because it would be really stupid to throw fiscal prudence to the wind and rack up more gigantic budget deficits and triple the national debt again, as we did the last time we enacted massive tax cuts for the top 1%. We’ve been down that road.’ It just strikes me as so dishonest for the President to be telling a crowd of cheering middle-income people that HE won’t raise their taxes when, in fact, NO ONE is proposing that they be raised. It’s all part of the strategy to gain popular support for preserving massive tax cuts for those at the very top . . . such as, for example, reducing the top estate-tax bracket for billion-dollar estates from the current 55% to zero. So if you missed Paul Krugman Friday, I say again: click here.
Piping Up for Bush January 4, 2002February 21, 2017 Herewith, two columns for your weekend reading. The first, by Daniel Pipes, gives President Bush appropriately high marks for the war on terrorism. The second, by Matt Miller, gives him appropriately bad marks (in my view) for domestic policy. First the good news: SURPRISE! IT REALLY IS A WORLD WAR ON TERROR by Daniel Pipes New York Post December 31, 2001 The prospect of war between India and Pakistan shows how profoundly things have changed since Sept. 11. “From this day forward,” President Bush announced just days after the attack, “any nation that continues to harbor or support terrorism will be regarded by the United States as a hostile regime.” Washington, he signaled, would henceforth see international politics through the prism of its war on terrorism. Many observers, including this one, doubted his us-and-them approach. This unrealistic bifurcation, I wrote in the Oct. 15 Post, “will not work in the real world of messy and competing interests.” Well, I was wrong – the president meant what he said. Since Sept. 11, the war on terror has overhauled U.S. foreign policy. Nearly all American relations with the outside world are developed with this issue in mind. This seriousness of purpose – so unlike the Clinton years – has vast implications. Here are two. First, many states have adopted the war on terror to their own circumstances. Some of them (Zimbabwe, Syria, Nepal) do so opportunistically, with no al Qaeda problem in sight. Others that really do have a problem with militant Islam – Russia, Uzbekistan, Tajikistan, Israel, India, China, the Philippines – restated their case in anti-terrorism terms to win American approval. We are witnessing a fledgling but unprecedented alliance of the world’s great powers against the forces of militant Islam. The cases of Israel and India stand out. After Sept. 11, suicide terrorism by militant Islam temporarily stopped, resuming only in December with parallel assaults on these two countries. Israel. Hamas and Islamic Jihad launched four terrorist attacks on Dec. 1-2, killing 26 Israelis and wounding many more. Prime Minister Ariel Sharon responded by announcing, “We will treat Palestinian terrorism exactly as you [Americans] treat bin Laden terrorism.” Emulating Bush’s policy toward the Taliban, Sharon held the Palestinian Authority “directly responsible” for the violence and sent Israeli troops into its areas to extirpate terrorism. India. If not for a mishap by the terrorists, the Dec. 13 assault by Jaish-e-Muhammad on India’s Parliament building would have assassinated much of the country’s political leadership and probably caused a national crisis. Also emulating U.S. policy, New Delhi held Pakistan responsible and demanded a crackdown on Jaish-e-Muhammad and Lashkar-e-Tayyaba, militant Islamic groups supported by Pakistan’s intelligence service, threatening dire consequences if its wishes were disregarded. The two sides spoke of war, recalled diplomats, cut transportation links, put troops on “very high alert,” evacuated villages, laid mines, deployed missiles, and exchanged artillery fire. The Bush administration correctly accepted these as legitimate variants of its war against terrorism. It newly sympathized with the Russian and Chinese efforts. It sent military advisors and nearly $100 million in aid to the Philippines. It abandoned the earlier calls for mutual restraint and instead shifted in favor of Israel and India, noting how these governments have “a legitimate right to self-defense.” Second, the Bush policy has governments around the world paying much more attention to U.S. wishes. The petty criticisms of last August about U.S. “unilateralism” is history; foreign states now jump when Washington speaks. In mid December, for example, Defense Department sources noted the al Qaeda infrastructures in Yemen and Somalia and fingered them as potential targets. Those states immediately stood up and saluted. On Dec. 18, the Yemeni authorities launched a military campaign in the east against al Qaeda and days later arrested foreign adventurers. On Dec. 24, long-feuding Somali factions hastily put together a transitional government and vowed to eradicate al Qaeda in their country. Stepping back from the details, we see here something very major indeed, perhaps even (to use the term made notorious by the first President Bush) a new world order. It is characterized by an assertive United States using its power to protect itself, stand by its friends, and intimidate its enemies. Yes, this involves dangers, as shown by the growing worry of a nuclear exchange between India and Pakistan. But the only way to defeat militant Islam is through a willingness to fight it; and the sooner it is confronted, the less bloody the fight will be. That the tragedy of Sept. 11 really has turned into an international wake up call is primarily a testimony to the leadership of George W. Bush. We are only beginning to see how focused, consistent, and determined he is. ☞ If we play our cards very, very carefully, the world really might unite against terrorism and yet move toward democracy, not away from it, in the process. Can anyone imagine these same actions, or anything vaguely resembling them, being taken on September 10? Sadly, without the image of the Towers imprinted in every brain on the planet, we surely could not have gone into Afghanistan, let alone wherever we go next, without phenomenal criticism and resistance. It may well be that the 4000 who lost their lives September 11 were the horrific price the world paid to avert something much worse. But as good a job as the administration is doing abroad, it’s been just awful on most issues at home. Some of the missteps have been inadvertent and excusable. (Surely, for example, the administration didn’t intend for its Treasury Secretary – in most respects an impressive fellow – to prove so inadequate for the job.) But much of it was completely deliberate, designed to shift the balance of wealth and power significantly further in favor of the wealthy and powerful. And in this regard, as Matt Miller suggests, September 11 works very much in the administration’s favor: ODDS FAVOR BUSH IN FRAMING ’02 DEBATE By Matthew Miller For release 1/2/2002 Sixty-eight percent of Americans believe the cost of the war on terror will ‘shortchange other needed programs,’ and most people think the anti-terror effort is worth the expense. Taken together, these findings from the latest Washington Post-ABC News poll have the Bush White House cheering. And they show how steep the climb will be for those who hoped the new year might offer a chance to make progress on domestic needs if the terror situation stabilizes. Washington is poised for a classic shouting match over who lost the budget surplus and how to cope with its disappearance. What the new poll suggests is that the public is predisposed to accept the false Republican argument that the war on terror has eaten the surplus – not the large Bush tax cut tilted toward the wealthy. When you combine this public predisposition with the presidency’s built-in advantages in shaping the terms of debate, you reach a depressing but unavoidable conclusion: The left will need to achieve unheard-of levels of political acuity and ‘message discipline’ for there to be any hope of fresh action for the uninsured, the working poor or disadvantaged kids. The shame is that the conservative argument on the long-term surplus is a hoax. According to the Center on Budget and Policy Priorities (a poverty-oriented research group in Washington whose numbers are respected across the political spectrum), only about 20 percent of the decline in the projected 10-year surplus comes from increased defense spending and homeland security measures, all of which the Center prudently assumes will be continued indefinitely. About half the decline in the 10-year surplus comes from the tax cut (the final 30 percent is swallowed by the recession and assorted technical re-estimates). This proportion surges over time as the tax relief phases in. Seventy percent of the surplus previously forecast for 2010, for example, has been devoured by the tax cut. To be fair to Republicans, the recession and new security costs will account for about three-fourths of the surplus’ decline this year. The GOP strategy is therefore to act as if the short-term explanation for the lost surplus is the same as the long-term explanation. This is dishonest, of course, but that’s politics. How can Democrats make the facts prevail in the coming debate? It won’t be easy. For one thing, the Bush tax cut is a fait accompli – so Democrats who make these points will be charged with wanting ‘to raise taxes in a recession,’ an obvious no-no. This charge is untrue – Democrats would simply stop future scheduled tax cuts for wealthier Americans from taking effect – but an untrue charge is not the same thing as an ineffective charge. At the same time, Democrats have handed Bush an underappreciated coup by joining with him to pass a largely hollow education reform. When trumpeted by Bush during his coming ‘State of the Union’ address and via every other megaphone at his disposal, this ‘accomplishment’ will certify in the public mind the president’s centrist, ‘compassionate’ credentials. (It also gives Bush several years – at least through his re-election campaign – in which to deflect any criticism on schools by saying, ‘We have to give these bipartisan reforms a chance to work.’) All this comes even as Bush’s new budget will drive federal spending toward its lowest levels as a percentage of the economy in 40 years. No matter: The education bill ‘halo’ will make it next to impossible to paint Bush, accurately, as a president epically stingy with those left behind. A Rose Garden picture with Ted Kennedy will trump a thousand liberal editorials. In short, it’s hard to exaggerate the domestic political box Bush has put Democrats in even as he’s risen to the occasion of wartime leadership. To make any headway toward progressive goals – or even to stop severe backsliding with regard to the federal cash available for such purposes – the left will need to mount a successful campaign to teach the public that the cost of the tax cut dwarfs the costs of terror, and that their smiling president has plans to sharply shrink government unrelated to our security. Anything is possible, I suppose. But a betting man would say conservatives are in the catbird seat. Did someone say ‘happy new year’? © 2002 MATTHEW MILLER ☞ To which I would add: Don’t count us out. With hard work, progressive Democrats will continue to win elections this coming November just as we did this past November. (Democrats won both governors’ races, Virginia and New Jersey, and 39 of 42 targeted mayoral races, including Houston, where our friends in the other party pulled out all the stops. Our big loss, New York, was to Mike Bloomberg, a Democrat in all but name – he maxed out to Bill Bradley, Al Gore, Chuck Schumer, Barbara Mikulski, John Corzine, Chris Dodd, Bob Torricelli, Tom Harkin and Jerry Nadler – who switched party labels to get on the ballot.) The question, I guess: would it be too much to ask to have an administration that was, again, rather good both abroad and at home?
More New Year Mishmash January 3, 2002February 21, 2017 GAJ Barry Basden: ‘Click here to find basic info on many preferred stocks, including: GAJ – Great Atlanta & Pac Tea Co, 9.38%, 8/11/04 [call date], $25.00 [call price], Rated BA1/BBB-. Had I more than a double in it, I would sell, too.’ ☞ See what a little homework will do? Thanks! (And, yes, a $25 call price in 2004 does limit the upside when the stock is trading at $24.35..) SAVE! Allan Tanner: ‘I’ve found really good deals on printer cartridges and cell phone batteries through stores on eBay. For example, I found a place on eBay that sold me black ink cartridges for my Canon Bubblejet BJC-4400 printer for $2.19 each. I had paid about $4.00 for generic cartridges at Priceless-inkjet.com, which is a good non-eBay merchant, and about $7.50 for Canon brand cartridges at Best Buy. My daughter Naomi’s Nokia 8290 cell phone needed a battery. By searching for “8290 battery” on eBay, I found a place called eForce Trading Co. that sold me a lithium battery for $15.00 delivered, rather than for the $59.95 that Amazon.com wanted, or the $79.95 that Best Buy wanted.’ FRANCO George Fescos: ‘Is Franco really gone? When I was in Spain a few years ago I was surprised to find that the bust of Franco was still on the coins. No new Franco coins have been minted for years, but the old ones lingered on. The obverse side had a bust of Franco along with the Spanish phrase, FRANCISCO FRANCO LEADER OF SPAIN FOR THE GLORY OF GOD (oddly there was not enough room for the whole phrase so the word glory was contracted to the letter G). The converse side had the symbol of the king of Spain, a military eagle, and the symbol of fascism, a bundle of arrows held together by a ribbon (the Latin word for bundle, fascis, is the root word fascism came from). The coming of the euro, and the end of the peseta, will put Franco nearer the grave.’ OSAMA From The Borowitz Report: January 2, 2002 *Breaking News* U.S. ATTEMPTS TO LURE OSAMA WITH AD IN PERSONALS Evildoer Has Not Had a Date in Months, CIA Believes . . . MUSSOLINI Kartic Mants: ‘You know, I agree with you. So what if Clinton is a sociopath? People bitch to this day about another probable sociopath: Mussolini. But, as has been said of Mussolini’s reign: THE TRAINS RAN ON TIME. It’s no small thing such benefits as the trains running on time, as those are what affect people’s daily lives. So what if Mussolini had a mistress, and harassed those who opposed him, Clinton-style? THE TRAINS RAN ON TIME. I’m glad to read of your indirect but whole-hearted support of Mussolini.’ ☞ President Clinton, however distressing you may find his private infidelities, and whatever paroxysms of sarcasm and illogic they may drive you to, worked tirelessly and with enormous success to improve people’s lives. Can you really say that of Mussolini?
Happy New Year! January 2, 2002January 25, 2017 A New Year‘s Mishmash: SELL! It may well be a good buy here – it still yields 9.5% – but I am selling the Great Atlantic & Pacific Company preferred J shares (symbol GAJ) suggested in this space 364 days ago at $11.75. It has a little more than doubled since then – it closed at $24.35 Friday – and has paid $2.34 in dividends along the way. That works out to a total return of 127%. Needless to say, that was pretty good for a year like 2001. (Even more needless to say, my life is not usually like this.) The reasoning behind my selling is barely reasoning at all. It includes the following: (1) I haven’t done the homework to make an educated guess as to whether that preferred dividend is safe. It probably is, but I really don’t know. If it is safe, then even at $24.35, this is a great buy – where else can you get 9.5% these days? But (2) I know myself. I would feel less bad not receiving that fat dividend than I would if GAJ got into trouble again and the stock went back down. It’s a relief sometimes to quit while you’re ahead. (3) My local Food Emporium is closing this month. (Food Emporium is one of A&P’s several chains.) Of course, this could actually be good news. It could be a sign of prudent management ready to cut losses rather than let them bleed. It could be the result of some irresistible offer they got to give up their lease. And it could certainly make the next closest Food Emporium even more profitable, as many of the closing-store’s customers happily walk the extra few blocks. But I’m just not willing to do the homework to try to find out what it means; and even if I were, that’s no guarantee I’d draw the right conclusion. Finally, (4) although the dividend yield is great, any further price appreciation is likely to be very modest. I’m too lazy even to find out whether these preferred shares can be called in at their par value of $25. But if they can be, and the company were to secure cheaper financing, the upside from $24.35 would be very slight. Anyway, I’m outta here, and didn’t want to leave without letting you know. PRAY! Joel Williams: You write: ‘My own view is that religion works best when it stops short of complete, unquestioning faith. You find it comforting, and you sort of believe – especially when there’s engine trouble at 37,000 feet or you’ve run off a deserted road into a snowdrift and are pinned inside the car. But you don’t fully, really, absolutely, literally believe.’ My wife worked with a fundamentalist Christian. He was fairly high up in the company, and drove a Cadillac. He took another employee on a business trip in the summer from Houston to New Orleans. They went in the Cadillac. Well, about half way there, the air conditioning died and the power windows would not work either. Some kind of electrical problem. The solution? He stopped on the road (I-10), went down on his knees and prayed that God would heal the car. Made his companion do the same. Did not work, of course. The moral is apparent.’ ☞ Yes: pray harder. MAYBE THEY SHOULD HAVE SUMMONED A GENIE Thanks to Ralph Sierra for this interesting op-ed from Friday’s Washington Post. It is by a Muslim with harsh things to say about Muslims – and harsh words for us as well. I don’t think the author is fair to Israel, or our support of Israel, but he is clearly worth a listen.