Year: 2009

DOW 6,500

From time to time I’ve noted the irony that 6,500 on the Dow – the Great Giddiness a dozen years ago that prompted Alan Greenspan’s famous “irrational exuberance” comment – might wind up being our bottom. After a lot of growth and a little inflation, and an even Greater Giddiness that took the Dow up to 14,164, maybe we’ve grown into 6,500.

I hope it’s the bottom, because I love irony – and because, more to the point, it’s here (the Dow dipped below 6,500 before rebounding a little Friday) and as a patriotic, shareholding American, I don’t want to see it fall any further.

But markets are frequently irrational in both directions; and there’s nothing irrational (that I can see) about Dow components like Citigroup and GM selling for a buck or two. Sadly, their common shareholders are likely to get wiped out altogether. Likewise, I’m not sure the other 28 Dow stocks are irrationally low here either, given the current state of affairs, or that some of them may not have to go through some form of reorganization, too. (Not that I have the skills to know – but then again, neither does anyone else.*)

So even if 6,500 were, ironically, fair value for the Dow here, there’s nothing to keep it from going to 3,500.

Even at today’s prices, the stock market is no place for money you may actually need in the next five years.** It never is.

*They’ll just be wrong for more sophisticated reasons.
**If you’re anywhere near retirement, you wouldn’t want all your money in stocks even if you did have abundant resources for the next five years.

BRIGHTER DAYS

It never fails to surprise me: the days are getting longer. It’s thrilling!

And if you can afford a broadband connection, there are endless free ways to amuse yourself, from web boggle and chess to hulu clips and movies, to long walks in the fresh air (this one requires no broadband connection), to roaming the ocean floor, to occasional moments worth pausing for . . . like this one:

FOUR MINUTES OF GRACE

Click here.

NOT SOAKING THE RICH

Amazingly, a lot of people are wailing that Obama is promoting class warfare or attempting to soak the rich – because he proposes not to interfere with the Bush-signed, Republican-Congress-enacted “sunset” provisions of their tax-breaks for the rich.

Which means that someone making $15 million in 2011 would be taxes at a 39.6% marginal rate, up from 36% (but still have about $9 million left to pay the bills) . . . or, if her income had been from long-term capital gains, at 20% up from 15% (leaving $12 million).

Nor is it only the rich who will be clipped. As this Slate piece details, the tax rate on the next $100,000 or so above the first $250,000 a family earns would go back up from the current 33% to 36%.

But what can I say? Times are tough. This is not class warfare, and this is not socialism, or “confiscatory.” And this is no more likely to deter a bright young entrepreneur from starting the next Apple Computer than the then-prevailing 70% top tax bracket stopped Jobs and Wozniak from starting the first one.

As Frank Rich noted yesterday:

The simplest explanation for why America’s reality got so distorted is the economic imbalance that Barack Obama now wants to remedy with policies that his critics deride as “socialist” (“fascist” can’t be far behind): the obscene widening of income inequality between the very rich and everyone else since the 1970s. “There is something wrong when we allow the playing field to be tilted so far in the favor of so few,” the president said in his budget message. He was calling for fundamental fairness, not class warfare. America hasn’t seen such gaping inequality since the Gilded Age and 1920s boom that preceded the Great Depression.

But first . . .

GREAT GRADUATION PRESENT

It’s never too early to start saving up to buy your child or grandchild the only investment guide he or she will ever need – but that’s actually not what I have in mind.

I have in mind a kid in high school – whether a fancy prep school or tough inner city school – who faces peer pressure to use drugs and alcohol.

Not least because this summer their circle may have more trouble than usual finding gainful employment . . . and you know what they say about “idle hands.”

This is a job that calls for VISION WARRIOR! Faster than a speeding bullet (or he was, when I first met him a dozen years ago; time takes its toll), more powerful than any other high school presenter your kid has ever seen (see below), able to leap onto the auditorium stage in a single bound (I’ve seen him do it).

If you – perhaps in concert with fellow parents – can come up with his ridiculously modest $2,000 fee, I’ll pick up his airfare and together we can . . .

ROCK YOUR KID’S WORLD

Here is a letter Scot Robinson (aka Vision Warrior) got last month from the counselor at Washington’s Sidwell Friends school.

Feb 20th 2009

Dear Scot,

I cannot thank you enough for the profound impact you have had on the Upper School community at the Sidwell Friends School. You spoke here several months ago and I want you to know that the students still reference things you said and vividly remember your performance.

Rarely do students come up to me after an assembly to thank me for a particular speaker but you are an exception. One after another, students flooded my office or approached me in the hall, thanking me for bringing you to Sidwell. I also had several faculty members approach me to tell me that never in the history of their ten, twenty or thirty year tenure at Sidwell had they seen such a compelling speaker. Both students and adults continued to talk about you for days afterwards.

You were phenomenal! You spoke from the heart. By giving such an extraordinarily gripping and raw performance, you provided the students with a rare but poignant and personal glimpse into an insidious life of alcohol and drugs. Teenagers are especially perceptive and they were moved by how honest and vulnerable you were, struck by how much they could relate to your story and uplifted by your inspiring tale of recovery. And, in the midst of telling an incredibly moving and painful story, you brought humor to it in a way that was appropriate and grabbed the audience right from the start.

Apart from your story, though, your message to the students about having the courage to be who they are and about the importance of self-discipline, self-respect, and self-esteem as a means to fight negative choices and behaviors was especially effective. An upperclassman told me that a group of students had made the conscious decision to not drink before attending the next school dance as a result of your assembly. What an incredibly positive influence you have had.

One of the most valuable gifts you also gave our students was the opportunity to speak with them by grade without adults present. Feedback from the students was overwhelmingly positive as they had a chance to process your powerful performance with the freedom to ask relevant questions.

As I told you, the parent program you held in the evening was one of the best attended we’ve ever had. We have never been at standing-room-only capacity before. Apparently, students went home and told their parents that they HAD to attend. Parents shared experiences of their children talking non-stop all the way home from school about their day with you… a ride that is usually full of silence or music blasting from the headphones of their Ipods. They expressed sincere appreciation for the exceptional and inspiring experience you provided their children.

On behalf of Sidwell Friends, I would like to express my sincere gratitude for the incredible impact you have had on our community. Many thanks… we look forward to bringing you back to the Sidwell community soon as I strongly believe that every student who passes through our Upper School should be given the opportunity to experience Vision Warrior.

Gabriela Grebski
US Counselor

ASSUME THE BEST

From John Podesta’s Center for American Progress last month. I offer it both because it is specifically interesting, but also as an example of how relentlessly the loyal opposition – who are on record hoping Obama’s policies fail (could you be any more loyal?) – distorts and misleads. Anyway, herewith the post:

Misinformation On Health Information Technology

Late last month, the House passed an economic recovery package containing $20 billion for health information technology, which would require the Department of Health and Human Services to develop standards by 2010 for a nationwide system to exchange health data electronically. The version of the recovery package passed by the Senate yesterday contains slightly less funding for health information technology (“health IT”). But as Congress moves to reconcile the two stimulus packages, conservatives have begun attacking the health IT provisions, falsely claiming that they would lead to the government “telling the doctors what they can and cannot treat, and on whom they can and cannot treat.” The conservative misinformation campaign began on Monday with a Bloomberg “commentary” by Hudson Institute fellow Betsy McCaughey, which claimed that the legislation will have the government “monitor treatments” in order to “‘guide’ your doctor’s decisions.” McCaughey’s imaginative misreading was quickly trumpeted by Rush Limbaugh and the Drudge Report, eventually ending up on Fox News, where McCaughey’s opinion column was described as “a report.” In one of the many Fox segments focused on the column, hosts Megyn Kelly and Bill Hemmer blindsided Sens. Arlen Specter (R-PA) and Jon Tester (D-MT) with McCaughey’s false interpretation, causing them to promise that they would “get this provision clarified.” On his radio show yesterday, Limbaugh credited himself for injecting the false story into the stimulus debate . . .

McCAUGHEY GETS THE FACTS WRONG: In her commentary, McCaughey writes, “One new bureaucracy, the National Coordinator of Health Information Technology, will monitor treatments to make sure your doctor is doing what the federal government deems appropriate and cost effective.” But the fact is, this isn’t a new bureaucracy. The National Coordinator of Health Information Technology already exists. Established by President Bush in 2004, the office “provides counsel to the Secretary of HHS and Departmental leadership for the development and nationwide implementation” of “health information technology.” Far from empowering the Office to “monitor doctors” or requiring private physicians to abide by treatment protocols, the new language tasks the National Coordinator with “providing appropriate information” so that doctors can make better informed decisions. As Media Matters noted, the language in the House bill, on which McCaughey based her column, does not establish authority to “monitor treatments” or restrict what “your doctor is doing” with regard to patient care. Instead, it addresses establishing an electronic records system so that doctors can have complete, accurate information about their patients. The Wonk Room’s Igor Volsky pointed out that “this provision is intended to move the country towards adopting money-saving health technology (like electronic medical records), reduce costly duplicate services and medical errors, and create jobs.”

HEALTH I.T. BELONGS IN RECOVERY PACKAGE: Projected to create over 200,000 jobs, the funding for health information technology in the recovery package is both an important stimulus and a down-payment on broader health care reform. Speaking in Ft. Myers, FL, yesterday, President Obama said that investment in health IT was “an example of using a crisis and converting it into an opportunity.” “We are going to computerize our health care system, institute health IT,” said Obama. “That creates jobs right now for people to convert from a paper system to a computer system, but it also pays a long-term dividend by making the health care system more efficient.” Currently, fewer than 25 percent of hospitals, and fewer than 20 percent of doctor’s offices, employ health information technology systems. Researchers have found that implementing health IT would result in a mean annual savings of $40 billion over a 15-year period by improving health outcomes through care management, increasing efficiency, and reducing medical errors. Investing in health would also help primary care physicians — who often bear the burnt of tech implementation without seeing immediate benefits — afford the infrastructure for expansion. The Congressional Budget Office has estimated that one-third of $2 trillion spent annually on health care in America may be unnecessary due to inefficiencies in the system such as excessive paperwork. Investments in infrastructure like health IT will help improve the quality of America’s health care.

MCCAUGHEY’S POISONING HEALTH REFORM AGAIN: Responding to her Bloomberg commentary, the New Republic’s health care writer Jonathan Cohn noted that “Elizabeth McCaughey is up to her old tricks again.” “Not content to have poisoned one major health care debate, she seems determined to poison this one, too,” wrote Cohn. In 1994, McCaughey published a “viciously inaccurate” article on the Clinton health care plan in the New Republic, which is credited with having “completely distorted the debate on the biggest public policy issue of 1994.” McCaughey’s article claimed that there would be “no exit” from the Clinton plan, and individuals would be prevented from “going outside the system to buy basic health coverage” that they preferred. But, as the Atlantic’s James Fallows pointed out after the Clinton plan was defeated, McCaughey ignored “the first provision of the bill,” which clearly said: “Nothing in this Act shall be construed as prohibiting the following: (1) An individual from purchasing any health care services.” Just like in 1994, McCaughey’s latest Bloomberg commentary provides page numbers from the legislation to give her claims the aura of credibility. But just as in 1994, McCaughey’s assertions are not supported by the language of the bill she cites.

☞ My “take-away” is that when the Administration proposes something, we should start from the assumption that it is the work product of thoughtful, honest people trying very hard to do sensible things that will make for better times.

I.e., who ya gonna believe: Rush Limbaugh, Tom Delay, Fox News, and Joe the Plumber – or Barack Obama?

George Bush,* Dick Cheney,** and Sarah Palin*** – or Barack Obama?

He’d be the first to say he’ll make mistakes. But I think we will all do better if we assume the best of his Administration and hope it succeeds.

*“By far the vast majority of [my] tax cuts will go to people at the bottom of the economic ladder.”
** We face an imminent threat from Iraq.
***Obama “pals around with terrorists.”

JON STEWART EVISCERATES CNBC

Now this is fun. Have a great weekend.

GE

Joey: ‘If GE goes bankrupt, will it be the first AAA-rated company to go bankrupt while rated AAA?’

☞ And when will the ratings agencies go bankrupt for their system-threatening dereliction? Not with GE, necessarily – but with all those mortgage-backed securities they rated investment grade? Did they ever check the quality of the mortgages backing them?

RUSH

Conservative David Frum sizes it up thus:

On the one side, the president of the United States: soft-spoken and conciliatory, never angry, always invoking the recession and its victims. This president invokes the language of ‘responsibility,’ and in his own life seems to epitomize that ideal: He is physically honed and disciplined, his worst vice an occasional cigarette. He is at the same time an apparently devoted husband and father. Unsurprisingly, women voters trust and admire him.

And for the leader of the Republicans? A man who is aggressive and bombastic, cutting and sarcastic, who dismisses the concerned citizens in network news focus groups as ‘losers.’ With his private plane and his cigars, his history of drug dependency and his personal bulk, not to mention his tangled marital history, Rush is a walking stereotype of self-indulgence – exactly the image that Barack Obama most wants to affix to our philosophy and our party. And we’re cooperating! Those images of crowds of CPACers cheering Rush’s every rancorous word – we’ll be seeing them rebroadcast for a long time.

☞ Not all Republicans, but quite a few – and certainly Rush Limbaugh’s millIons of proud ‘dittoheads’ – join him in hoping for the failure of President Obama’s initiatives.

Our job is to treat them with civility but see to it they don’t prevent necessary, positive steps from being taken.

Because remember: these are in effect the same people, 75 years later, who opposed creating FDIC insurance and the Tennessee Valley Authority and the Securities and Exchange Commission in 1933 . . . the Social Security System and unemployment insurance in 1935 . . . the minimum wage in 1938 . . . the Interstate Highway Act in 1956 . . . and all the rest. This country could have really amounted to something, they believe, if it not been for those terrible government initiatives. They are entitled to their views, especially when founded on fact, not misinformation.* But my money’s on Obama.

* See tomorrow’s post.

SUZE ORMAN II

Following up on yesterday’s quick clip . . . according to a forthcoming Center for American Progress study, the average same-sex couple ‘will be denied over $8,000 a year in Social Security survivor benefits upon the death of the higher-earning spouse after retirement.’

‘Most Republicans seem reluctant to support LGBT equality,’ reports the Center. ‘RNC Chairman Michael Steele for instance, who [has] promised that the party would ‘reach out to new communities,’ recently rejected the idea of civil unions. ‘No, no no [he responded]. What would we do that for? What are you, crazy?’‘

LEDs

Gary Diehl: ‘I have to agree with Fred Davis. I have actually bought an LED based bulb that was suitable as a full on light bulb replacement. While I am still happy with it and it works for its intended purpose, LEDs are enormously expensive and not as efficient as most people think. LEDs tie with much cheaper CFLs as the fourth most efficient lighting available, lagging behind low pressure sodium, metal halides, and standard tube fluorescents. They are all better than common incandescents – which rank slightly above fire – but where LED bulbs really ‘shine’ is their (hopefully) really long life span. I own one because the location of one of my stairway light sockets is so difficult and dangerous to reach that I’m willing to pay a hefty premium to avoid changing it.’

LETTER TO THE BANK (thanks, Roger, who thanks Bob)

Dear Sirs:

One of my checks was returned marked ‘insufficient funds.” Does that refer to me or you?

☞ Have a great day.

MONEY

Are we getting to the point where any mention of the word “stocks” makes you want to throw up? An aversion so strong no ordinary person would go near them for the rest of his natural life? We’re not there yet, I fear – but that will be the bottom.

In the meantime, the President is doing the right things. Out of the crisis could come the well-reasoned adjustments we should have made long ago. “And these new priorities,” Paul Krugman writes in the New York Times, “are laid out in a document whose clarity and plausibility seem almost incredible to those of us who grew accustomed to reading Bush-era budgets, which insulted our intelligence on every page. This is budgeting we can believe in.”

Even so, there will be a lot of painful “dislocations” along the way. It’s one thing to say we need fewer car salesman and more solar-panel installers; another thing to lose your job selling Pontiacs and try to get one bolting panels to roofs. For which you would need an entirely different skill set and wardrobe.

There are no easy answers. If you studied less hard or now work less hard than your competition in China, say, it’s no longer a sure thing that you will live ten times as well as he or she, even though by rights (isn’t it our right?) you should.

Ideally, this gap will be narrowed as our competitors’ standard of living rises, not as ours declines. And with the astonishing forward momentum of technological progress – much of it made in the U.S.A. – that may in fact be what happens. Our houses and cars may stop growing in size, or even shrink; but this may be compensated for in other less energy- and materials-intensive ways.

PAC MONEY

This lets you see what proportion of any Senator’s or Congressperson’s funding came from Political Action Groups. Sort it any way you like. It’s dramatic.

Obama took no PAC money, but a great many in Congress get more than half their funding from PACs.

Not to say that the corporations, industry associations, and non-profit groups that form PACs are all evil by any means. Far from it. But is this really the best way to finance elections? Clean Elections are gaining traction in many states, and there is interest in applying the public-financing concept at the Federal level as well (click here).

COOL PREVIEW

Sally Holmes Holtze: “Have you thought of keeping your page open when the user clicks on a link? The way it’s set up now, it disappears.”

☞ You can fix this. Switch to the Firefox browser, as I now have with happy results, and use the CoolPreview add-on touted yesterday. Works nicely.

THATCHERISM

As recounted to, and then by, Peggy Noonan:

Margaret Thatcher held a meeting with her aides and staff, all of whom were dominated by her, even awed. When it was over she invited her cabinet chiefs to join her at dinner in a nearby restaurant. They went, arrayed themselves around the table, jockeyed for her attention. A young waiter came and asked if they’d like to hear the specials. Mrs. Thatcher said, “I will have the beef.”

Yes, said the waiter. “And the vegetables?”

“They will have beef too.”

CFL’s versus LED’s (versus INCANDESCENTS)

Click here. The LED lasts six times as long as a CFL and uses even less energy, generates less heat. But it costs way more (“and to my nephews, Brendan, Timothy, Darius, Mackenzie, Edward, Christopher, and Patrick, I leave my seven LED light bulbs”), so they provide the best return on investment in areas of high electric rates. And down south, where you never really want heat from light bulbs, even in the winter.

(Does anyone know how much energy and environmental destruction goes into making an expensive LED bulb versus a CFL?)

TEPID FILTH – II

Pieter Bach: “[You were unenthusiastic about the Japanese practice of washing their clothes in old bath water.] I’m sure you’ll hear from many others [I did! I did!], but have you forgotten that in Japan it’s expected that you will scrub (yes, scrub) yourself vigorously and thoroughly in the shower at least once before you even think about sinking into the bliss of the furo? Re-using the bath water has been traditional in Japan for centuries. In addition to laundry, it’s also used to dust and polish furniture and to wash the few areas of solid wood flooring in traditional houses.”

SIMPLY PUT

Our friend Don George in Atlanta had the lead letter in Saturday’s New York Times – and totally nailed it:

Many Republicans claim that Franklin D. Roosevelt’s New Deal did not succeed in bringing us out of the Great Depression, but rather that the huge government spending related to fighting World War II did.

Let’s assume that’s true. I say, then, let’s spend as if we were in World War II and our very survival depended on it. President Obama’s budget appears to do exactly that.

A READER QUESTION

Steve Baker: “I saw Obama’s speech to the nation and the reply I have a question for you: Have the republicans ever confronted a problem in the last eight years that they think cannot be solved by a tax cut? From foreign wars which have at all other times been financed by tax increases or surcharges to anything else, all of which greatly increased the national debt to unsustainable levels at a time when, during prosperity, they should have been paying it down?”

BOBBY JINDAL DIDN’T TELL YOU THE TRUTH LAST WEEK

“The central anecdote of the GOP’s prime-time response to President Obama’s speech . . .. turns out to have been made up.” Read the full story here. And note this anecdote wasn’t offered off the cuff, in answer to a reporter’s question or at a small cocktail party* – this was Governor Jindal’s first ever televised address to the entire nation.

Surely he gave it some thought? Wrote it out? Rehearsed it?

*Or in the heat of a Presidential debate, as when Al Gore said he went to tour a disaster with FEMA head James Lee Witt and it turned out he toured 17 other disasters with Witt but toured this one with Witt’s regional director. The Republicans blasted that entirely inconsequential, unintentional slip as further proof that Gore should not be President.

NATIONAL HEALTH CARE

Dan Flikkema: “National Health care would encourage new entrepreneurs. You are correct that no serious person with a good business idea ever decided not to start up because the top tax rate was too high. But I’d bet a fair number decide not to because, in addition to all the inherent risks and complications, they don’t want to or can’t afford to lose health care benefits.”

SOLAR

Jim Kozma: “Scientific American had this article about ‘A Solar Grand Plan’ several months ago. It seemed pretty farfetched at the time. For one thing, they estimated it would take more than $400 billion investment from the government.”

☞ Over 40 years (as per the article), that’s barely $10 billion a year. Let’s do it faster.

. . . at least 250,000 square miles of land in the Southwest alone are suitable for constructing solar power plants, and that land receives more than 4,500 quadrillion British thermal units (Btu) of solar radiation a year. Converting only 2.5 percent of that radiation into electricity would match the nation’s total energy consumption in 2006.

☞ Not to mention the panels we could put on many a sun-drenched roof, allowing quite a few homes to go largely or entirely “off-grid” – and to plug their automobile in at home each night rather than have to buy gas.

FIREFOX TIP

Gary Diehl: “The CoolPreview add on puts a small ‘preview icon’ at the end of any link you hover over. If you then hover over the icon, it opens the linked page in a small window so you can preview it without actually going to it. You can go into this hovering window and scroll it, make it larger, and read whatever is in it. When you click your pointer outside of this window it fades away. I think people miss the power of this little add on, particularly those that read a lot of blogs and newspapers online. For example when I am reading a site like Huffington Post, any given article may contain many linked words or phrases that refer to other articles. Now I could click those links if I want to know more about the linked article but that gets messy. It will take me away from the article I’m reading or I will have to open it in another tab and bounce back and forth. But with CoolPreview all I have to do is hover over the preview icon, the page appears, I read it if I want and then click it away. I haven’t had to leave the original article at all. I do this on your column and many other sites as well. It’s a great time saver and once you get used to it you’ll find it indispensable. At least I do.”

GLDD

Our little dredging company has posted 2008 results, including some encouraging news on the size of its backlog, here.

(“Great Lakes Dredge & Dock Corporation is the largest provider of dredging services in the United States and the only U.S. dredging company with significant international operations, averaging 30% of its dredging revenues over the last three years. The Company is also one of the largest U.S. providers of commercial and industrial demolition services primarily in the Northeast. Additionally, the Company owns a 50% interest in a marine sand mining operation in New Jersey which supplies sand and aggregate used for road and building construction. Great Lakes has a 118-year history of never failing to complete a marine project and owns the largest and most diverse fleet in the industry, comprised of over 180 specialized vessels.”)

The world may end (clogged up with silt), but I bought more at $2.33 last week.

SIMPLY PUT:

“There are times where you can afford to redecorate your house, and there are times when you need to focus on rebuilding its foundation. Today, we have to focus on foundations.” – Barack Obama, Thursday, February 26, 2009.

That’s really it. And why tax cuts to help people redecorate their houses cannot be our top priority right now. (“No tax cut built a road, no tax cut puts a cop on the street, no tax cut educates a child.” – House Finance Committee Chair Barney Frank)

This was the line of argument I tried to pursue yesterday in response to Governor Jindal’s call for more tax cuts.

Here, now, the 12 measures Newt Gingrich is putting forth to solve our problems (look for a full page Wall Street Journal ad coming soon to tout them):

1. Payroll Tax Stimulus. With a temporary new tax credit to offset 50% of the payroll tax, every small business would have more money, and all Americans would take home more of what they earn.

• ☞ Yes? So? This would require tremendous borrowing from our children, and to what end? See yesterday’s five questions. How would Newt answer them? And if cutting the payroll tax in half is good, why not eliminate it altogether? And eliminate the income tax, too? Oh wait . . .

2. Real Middle-Income Tax Relief. Reduce the marginal tax rate of 25% down to 15%, in effect establishing a flat-rate tax of 15% for close to 9 out of 10 American workers.

• ☞ So not eliminate it, but slash it. But again, why just down to 15%? Why not to 5%? True, this is the kind of peculiarly Republican patriotic sacrifice it’s easy to ask people to make – “please, take these tax cuts: we need you to do it so we can create jobs” – but how would it create jobs? How would Newt answer yesterday’s five questions?

3. Reduce the Business Tax Rate. Match Ireland’s rate of 12.5% to keep more jobs in America.

• ☞ Somehow, American innovation and job creation did just fine for decades when the corporate rates were higher than they are today. And, of course, the effective rate most companies pay is much lower – many corporations pay zero federal tax even in years when they actually have profits to pay them on. Is this really the way to rebuild America’s infrastructure? Would American companies really not want to bid on the work that needs doing because profits are taxed? I know a dredging company just itching for a chance to unclog our nations waterways that would be eager to hire new people to take on the added work and make more profits, even though the profit is subject to tax. Rebuilding America’s infrastructure is not, by the way, something that can easily be outsourced to Ireland.

4. Homeowner’s Assistance. Provide tax credit incentives to responsible home buyers so they can keep their homes.

• ☞ Outstanding – you’ve heard much the same thing from President Obama. A point of potential common ground.

5. Control Spending So We Can Move to a Balanced Budget. This begins with eliminating Congressional earmarks and wasteful pork-barrel spending.

• ☞ Outstanding – you’ve heard much the same thing from President Obama. A point of potential common ground. It was shameful how earmarks exploded when the Republicans controlled Congress; shameful how they got rid of “pay-as-you-go” budgeting. Terrific to have Newt’s considerable influence on the right side of this issue.

6. No State Aid Without Protection From Fraud. Require state governments to adopt anti-fraud and anti-theft policies before giving them more money.

• ☞ If Newt knows effective ways to deter theft and fraud that the states don’t – or that they do know but for some reason don’t care to implement – my only quibble is that he waited until now to sound the alarm. (If his method is simply to eliminate programs that experience any fraud, cutting off the 95% or 99% of honest, deserving recipients, then you can see how reasonable people would disagree about where to draw the line.)

7. More American Energy Now. Explore for more American oil and gas and invest in affordable energy for the future, including clean coal, ethanol, nuclear power and renewable fuels.

• ☞ Another point of exciting common ground . . . if not necessarily on all the specifics. (See for example, COAL, below).

8. Abolish Taxes on Capital Gains. Match China, Singapore and many other competitors. More investment in America means more jobs in America.

• ☞ Somehow, there were huge pools of venture capital available when the capital gains rate was higher than it is today. Google, Apple, IBM, Cisco, Intel, FedEx, Starbucks, Amazon – all these and thousands more were started when the rate was higher. Is there even one lone entrepreneur anywhere in America burning to start a great new business – or one potential investor looking to score big – who fails to move forward because, if he succeeded, he’d have to pay 15% or 20% in taxes on his eventual $10 million or $100 million or $1 billion bonanza? Name one such person, Newt. Seriously! Name one!

9. Protect the Rights of American Workers. We must protect a worker’s right to decide by secret ballot whether to join a union, and the worker’s right to freely negotiate. Forced unionism will kill jobs in America at a time when we can’t afford to lose them.

• ☞ Agreed (at least by me). But for this not to be disingenuous, Newt needs to go along with provisions that would truly allow UNforced unionism. There is a compromise to be made here, and the status quo is not it.

10. Replace Sarbanes-Oxley. This failed law is crippling entrepreneurial startups. Replace it with affordable rules that help create jobs, not destroy them.

• ☞ No question: unnecessary regulation should be dropped. Just what fits that definition is a little harder to agree on. But I’ll bet there will be a lot of receptivity to reexamining this.

11. Abolish the Death Tax. Americans should work for their families, not for Washington.

• ☞ Newt is just so way too smart for this pap. (Americans should work for their families, not for Washington? So who should pay, say, for our military – Peruvians? Who should pay for our National Institutes of Health – Austrians? Who should pay for our disaster relief or the interest on our National Debt – Egyptians?)

• First off, something like 98% or 99% of Americans already are effectively exempt from any estate tax. And way back in the last century, President Clinton let it be known he’d happily adjust the tax – going immediately to a $3.5 million exemption (which is effectively $7 million with a by-past trust) and then indexing it to inflation. Those may not be the exact numbers, but it was that general range (which, with inflation, by now would have been more like $5 million and $10 million). So fewer than one in 100 estates would be affected.

• But what Newt is saying is that if you work hard and leave a $5 billion estate – or even just a $40 million estate – you shouldn’t have to throw any of your chips back into the game, we should raise the needed revenue some other way, from people less fortunate than you. And maybe he’s right, though a lot of smart wealthy people (Warren Buffett, among them) argue strenuously that he’s not.

• But job creation? A short-term stimulus to solve today’s crisis? How does he figure? The two things are completely unrelated. The only certain long-term effects would be, first, a terrible blow to charities (as it would become much less advantageous for rich people to give); second, even more concentration of wealth (someday, we could be one of those countries with just six really wealthy, powerful families, owning and controlling everything; oh, boy, I can’t wait); and, third, the aforementioned need to replace this tax revenue by taxing less wealthy, living people.

12. Invest in Energy and Transportation Infrastructure. This includes a new, expanded electric power grid and a 21st century air traffic control system that will reduce delays in air travel and save passengers, employees and airlines billions of dollars per year.

• ☞ Outstanding! We’re with you all the way.

SIGNS OF PROGRESS

Thorsten Kril: “The stimulus projects are already starting here in Santa Clara county, to which $25 million has been allocated. (The first project: metering lights for highway on-ramps. It will be a big help for traffic around here.) We will have a lot of construction to make our infrastructure more efficient. And then there is $8 billion for the new high-speed rail system from LA to SFO. Some good news for a change! It’s lifting morale around here before the projects even begin. Our President’s plan makes sense, so does his vision for our country, and equally important is the rapid and relentless execution of this vision, including the new budget. You can see it all coming together.”

COAL

I have never been given even a lump, so I claim no expertise; but this 30-second spot – directed by the Coen Brothers, who gave us everything from Fargo (Best Pic ’96) to No Country for Old Men (Best Pic ’07) – will make you think twice about “clean coal.”

SOLAR

“I’d put my money on the sun and solar energy. What a source of power! I hope that we don’t have to wait ’til oil and coal run out before we tackle that.” – Thomas A. Edison (1847-1931)

“Florida Power & Light broke ground today on a 25-megawatt solar power plant, the Sunshine State’s first commercial-scale photovoltaic array.” – Environment and Energy Daily, February 26, 2009

All part of The Great Transition.

HONG KONG LIGHTS UP

Stephen Willey: “You might like this picture of downtown Hong Kong. If you place your cursor at the top of the photo, you’ll notice it shows 6:10 a.m. As you bring it down slowly over the photo, the pictures slowly darkens and the city lights come on. At 7:40 p.m. it’s dark. Photo technology at its best!”

Have a great weekend.

Be honest:

• Is the reason you’re not investing in stocks these days (a) the prospect of having to pay 15% capital gains tax?  Or (b) the fear of further losses?  (Well, or – c – that you don’t have any money?)

• Is the reason you don’t start a new business that (a) if it made you a lot of money you’d have to pay a lot of taxes? Or that (b) you can’t get anyone to risk the funds you need to finance it?

• Is the reason you don’t hire new workers that (a) you’re paying so much in taxes?  Or that (b) with business down so much, you don’t need them?

• Is the reason you’re not spending money as freely as you used to that (a) your taxes are too high?  Or that (b) you’re afraid of losing your job?  (Well, or – c – that you’ve lost half your net worth and suddenly realize you’d better get serious about saving for a decent retirement?)

• Is the reason you’re unemployed that (a) taxes are too high to make you want a job?  Or that (b) you’ve sent out 400 resumes and called every connection you have, but no one’s hiring.

If the answer to all – or any – of these questions is (a), then Louisiana Govenor Bobby Jindal and his fellow Republicans may have a point in trashing the President’s strategy and pushing tax cuts to get us out of this mess.

Otherwise, can we please stop with that?

Indeed, you have to wonder how Governor Jindal would answer these questions.

My guess:  He’d side-step them entirely and talk instead about how “the Kennedy and
Reagan tax cuts worked.”  But Kennedy cut the top bracket from 90% to 70% and Reagan, to 28% – so sure they worked (although Reagan’s cut proved a cut too far, because that’s when we really began to pile on the deficits and balloon the National Debt). But when tax rates are already low? And in our current paralysis? I refer you back to those five questions. Would cutting taxes help?

Or else he’d ask a question of his own:  “Do you really think the government can spend your money better than you can?”

And the answer is yes. At least for now, in this circumstance.

You, if you got a tax break, would either use it to pay down debt or increase savings – neither of which would create new jobs or break the vicious economic cycle – or you would spend it.  What would you spend it on?

Would you spend it to keep cops on the street at a time of rising crime – or on Chinese-made clothes?

Upgrading our electric grid or another Korean-made TV?

Repairing our bridges or remodeling your kitchen?

Obviously, some of your spending – “greening” your home to be more energy efficient, for example – would be great.  And obviously, some government spending, for all the scrutiny it will get (see, for example, recovery.gov), will be disappointing.

But as a general matter, the balance has shifted too far toward consumer spending and away from investment in national infrastructure.

Listen to Van Jones, profiled in the New Yorker last month:

“You have construction workers who are idle, and they’re going to be idle for twelve months, twenty-four months, thirty-six months,” he said.  “They’re not going to be able to build anything.  Let them rebuild everything.  We have people coming home from wars, coming home from prisons, coming out of high school with no job prospects whatsoever.  Let us connect the people who most need work with the work that most needs to be done.”

Another proposal involved upgrading the nation’s electrical grid, to allow power generated, for example, by wind turbines in the Midwest to be transmitted to population centers in the Northeast.

“You say, We can’t do it,” he observed. “And I’m going to say, Au contraire, mon frère, and I’ll prove my case. We used to have a country, allegedly, but you couldn’t drive across it, because all we had was a bunch of old dirt roads.  Somebody, in the name of national security, said, ‘Hold on a sec.  What if we get invaded on the West Coast, how can we get troops from the East Coast?’ So we created an interstate-highway system that connected the country to itself.”

He lowered his voice to a grumble: “ ‘Oh, we can’t afford to do it! This is insane!’ We couldn’t afford not to do it.  Because the minute you did that the economy went through the roof. It was such a good idea that we did it again.  In the name of national security, people in the Pentagon said, ‘If we have one big communications tower, and somebody knocks it out, then we’re blind, deaf, and dumb. We’ve got to figure out a way to distribute our information system.’ So they came up with the idea of the information superhighway—for you young people, that’s what we call the Internet.  ‘We can’t afford to do this!’ We couldn’t afford not to do it.  The minute we connected the country to itself, the economy went through the roof.  All we’re saying is, let’s do it again.  But this time, instead of connecting the country to itself to move bodies and vehicles or data around, let’s connect the country to itself so we can move clean-energy electrons around.  Then you’ve got the strongest economy in the world.”

☞  And incidentally, Governor Jindal, it’s not “spending” if the money stays here and goes for things that will pay off – it’s investing.  It can’t possibly be true that it’s better for us to borrow to  pay people unemployment benefits when we could be borrowing to employ them doing work – greening America – that cries out to be done.

AND ONE LAST, RELATED THING

From politicalirony.com: “One of the interesting ironies about the economic stimulus bill that just passed is that by most any measure it is the largest tax cut in US history.  It includes $282 billion in tax cuts over two years. In comparison, Bush’s largest tax cuts (in 2004/2005) totaled $231 billion.  So why did the Republicans just vote overwhelmingly against the largest tax cut in history?  Obama’s tax cuts are aimed mostly at the middle class, families and people who work. While Bush’s tax cuts primarily benefited the rich.”

YES, WE CAN

Read or watch the President’s address to Congress.

(And here is the Republican response.)

THE GREAT . . . WHAT? REINVENTION?

As the problems mount and our President confronts them squarely (did you see his speech yesterday, and the remarkable q&a?), it becomes increasingly clear that we face an opportunity, like a heart-attack patient who just might quit smoking, start eating right, and biking to work; thereby setting himself on a truly healthy path.

If we get our act together, embrace the need for shared sacrifice (not just tax cuts) and choose to work together (see Governor Schwarzenegger’s comments yesterday), the Great Depression II many fear could in fact prove to be something quite different. A Great Reinvention, some have called it. ‘The Great Transition,’ my law student pal John Dicks calls it.

Many of the broad strokes are not all that complicated, starting with the President’s refrain that we should ‘put Americans to work doing the work America needs done.’ Like building a modern electric grid; greening our economy to save the environment and become energy independent; wringing waste from our homes, offices, highways, and factories. With efficiency comes prosperity (just as with weight loss comes health).

We need great teachers and great cops and great nurses. Great engineers, great entrepreneurs, great construction workers.

We might be able to get by with fewer car salesmen, real estate agents, and health insurance clerks. Outstanding citizens, all; but we may be overstaffed.

Social Security? Easily solved. Health care? Harder – but isn’t a consensus growing that we need to do it? Tort reform (not draconian reform; thoughtful, Prop 200-201-202-like tort reform) – likewise.

Not to mention the gasoline tax (or, now, carbon tax) we should have begun scaling in, 10 cents a gallon per year, in 1974 – with every penny earmarked to cut the taxes on work and investment. Had we done that, gas today would cost $5 a gallon, but our cars – the envy of the world, with Detroit still #1 – would get 60 miles to the gallon, so it would be cheaper to drive a mile than it is now, with gas temporarily down at $1.90 – and our trade deficit would be so much smaller, our prosperity and security so much greater . . . but it was politically impossible (or so we were repeatedly told). Now, maybe not.

I’m not saying this will all get done. But it’s at times like this we often do make great strides, having dithered to the brink of disaster.

Andy Bernstein: ‘From Sunday’s New York Times: ‘The economic malaise that plagued Japan from the 1990s until the early 2000s brought stunted wages and depressed stock prices, turning free-spending consumers into misers and making them dead weight on Japan’s economy. Today, years after the recovery, even well-off Japanese households use old bath water to do laundry, a popular way to save on utility bills. Sales of whiskey, the favorite drink among moneyed Tokyoites in the booming ’80s, have fallen to a fifth of their peak. And the nation is losing interest in cars; sales have fallen by half since 1990.’ Why is it BAD to recycle water, spend less on liquor, and drive the same car for as long as it continues to run. Over-spending and waste are good?’

☞ I’m not sure I’m ready to wash my clothes in a tepid pool of my own filth (or Kramer’s) – but . . . exactly.

For a while at least, we will need to go light on energy and resources (so, smaller cars; smaller homes; smaller, healthier portions; more chicken, less beef; less elaborate packaging), even as in other ways we continue to live ever richer lives (cars that never get lost and park themselves; homes that respond to voice commands; a vaccine for the flu, a cure for the common cold, a computer program that sharpens your mental acuity even as you age).

One day, energy will become ‘almost free,’ as phone calls have. And maybe that will allow amazing materials breakthroughs as well. (If energy is all but free, how much can it cost to make aluminum? Or to fashion composites?)

But for now – by which I mean maybe 20 years, anyway – we’re going to have to find ways to live well with less energy and less bulky stuff.