View 691 Friday, September 09, 2011

I watched the President’s address to a Joint Session of Congress yesterday. It was a great speech complete with urgent appeals to the Congress to pass the American Jobs Act immediately. They can’t act too fast. The crisis is real. But when I went to examine the American Jobs Act of 2011, I couldn’t find it. I called a friend in Congress. He’s more into defense and space than economic wonkery, but he hasn’t seen it and doesn’t believe the Speaker has either. A Google search directs me to the Daily KOS, which seems quite enthusiastic about the Act, but doesn’t have the text, and refers me to the White House. At the White House I get to see the President’s speech repeated, but I don’t see the text of the Act.

In economic wonkery the devil is always in the details. The American Jobs Act is long on promises of spending cuts to take place Real Soon Now, but short on specifics of what will be cut. The White House Summary is enthusiastic about the effects this will have on the economy, but it does not indicate what is in the Act that could not have been proposed months or even years ago.

It’s pretty hard to analyze a Bill before it has been written, but perhaps that is the intention. More when we know more. The President has promised us that this Bill, which will be paid for eventually but will require borrowing more money now, will be our salvation and will get this country moving again. This is the Bill we have been waiting for. He did not explain why we had to wait this long to hear about it, or how long we will have to wait until we know what is in the Bill.

Washington (CNN) — Facing low approval ratings and constant Republican criticism as his re-election campaign starts up, President Barack Obama challenged Congress on Thursday night to put the good of the nation over political benefit and pass a huge jobs plan he proposed.

In a speech to a joint session of Congress, Obama told the legislators to "stop the political circus and actually do something to help the economy" by quickly approving the $447 billion package of measures so he can sign it into law.

"The people of this country work hard to meet their responsibilities. The question tonight is whether we’ll meet ours," Obama said to applause. "The question is whether, in the face of an ongoing national crisis, we can stop the political circus and actually do something to help the economy. The question is whether we can restore some of the fairness and security that has defined this nation since our beginning."

Obama also told legislators that they should quickly pass his plan, called the American Jobs Act.

http://www.cnn.com/2011/POLITICS/09/08/obama.jobs.plan/index.html

Other analysts have not been so enthusiastic. No one seems to have found anything new in the proposals, although without the specifics of the Act that is hard to discern. Some have said it’s just a new version of the stimulus, complete with paying people to remain unemployed, but again, it is difficult to know since we don’t have the details of the legislation.

The original American Recovery and Reinvestment Act of 2009 included approximately $82Bn worth of spending on social welfare programs. This was targeted to favor the recently unemployed. The new American Jobs Act extends the welfare expansion for yet another year. The motives here are decent and noble, but these continued extensions have turned the necessary societal safety net into a hammock for the ne’er-do-wells. The the real-world results are a disincentive for low-skilled individuals to seek gainful employment. Decent intentions do not insure a successful policy outcome and this also will fail.

The 2009 American Recovery and Reinvestment Act attempted to put spending money in the pockets of consumers by reducing the rate of payroll tax collections. It also included targeted tax breaks for education, home purchases and some remodeling and incentives to buy new cars. This was supposed to goose aggregate demand and convince people drowning in personal debt to buy more big-ticket items on credit. The American Jobs Act will extend these tax breaks.

Thus, the American Jobs Act is remarkably similar to the failed 2009 American Reinvestment and Recovery Act. All our President seems to have in his toolkit is a hammer. He will use it to pound away at the current Phillips’ Head Screw and wonder why he can’t drive it through the board with significant success. It’s the sequel to a Hollywood Movie that bombed in its original run. We could call it Stimulus – Smaller, Shorter and Regrettably Un-Cut!

http://www.redstate.com/repair_man_jack/2011/09/09/the-american-jobs-act-of-2011-lather-rinse-repeat-and-fail/

President Obama is telling us of the wonders of the Act. Congress members are asking how it will be paid for. The President has replied that next week he will make a speech that will tell us how to reduce the deficit. We’ll have to wait to find out how that will be done.

Given past proposals from President Obama, we can expect that one key to his vision of recovery will be the expansion of green jobs.

The F.B.I. on Thursday raided the office of a California solar company that borrowed $528 million from the federal government before filing for bankruptcy, as House Republicans announced that they would call two top Obama administration officials to testify about the case next week.

The federal agents, acting in a joint investigation with the inspector general of the Department of Energy, served search warrants on Solyndra, which announced last week that it was filing for bankruptcy protection. The search was part of an investigation into the loans Solyndra received from the Treasury Department that were guaranteed by the Department of Energy under a highly promoted federal stimulus program. http://www.nytimes.com/2011/09/09/business/solar-company-is-searched-by-fbi.html?_r=1

Michael Stern Hart, RIP

Michael Stern Hart, a burly rebel whose vision of a literate society led him to pioneer the electronic book decades before the spread of the Internet, has died. He was 64.
The founder of the online library Project Gutenberg, Hart had been in poor health and was found Tuesday at his Urbana, Ill., home, said Project Gutenberg Chief Executive Gregory B. Newby. An autopsy is underway to determine the cause of death. http://www.latimes.com/news/obituaries/la-me-michael-hart-20110909,0,7536729.story

Management Question for Your Amusement

The UK Government is getting on the case of UK universities about inefficiency. http://www.bbc.co.uk/news/education-14836196 They may have a point…

Student fees in the UK: £8500/year ($13600/year)

Student fees at Cal: £9000/year ($15000/year)

Number of teaching weeks in the UK: 24/year

Number of teaching weeks at Cal: 30/year

Formal staff contact hours in the UK: about 10/week (excluding labs and discussion sections)

Formal staff contact hours at Cal: about 15/week (excluding labs and discussion sections)

Contact hours/year in the UK: about 240

Contact hours/year at Cal: about 450

Contact hours for a degree in the UK: about 720 (costing the students £25500)

Contact hours for a degree at Cal: about 1800 (costing the students £36000)

Additional hours during the second year of A-levels that might be added to the contact hours for a degree in the UK: 300 hours. The corresponding hours for AP classes in high school should then be credited to the degree at Cal.

As far as we can tell, the difference is that the UK uses academics (at $64000/year) for such things as grading assignments, leading discussion and lab sessions, and a couple of days of administrative work per week. Also we have fewer adjuncts, and the average lecture section is 24 students.

How do US colleges and universities manage to keep body and soul together and still deliver twice the hours?

—

"We do not understand how a country,… can produce people who seem to be acting without thinking, let alone making serious efforts to investigate the consequences of their actions." (Mary Evans in the Times Higher Education)

Harry Erwin

I fear I have no answer to that question.

I have been asked where I am getting numbers for the exhaustion of Social Security without some kind of restructuring. I confess I have not spent much time looking into the details, taking as fairly well given the general conclusions that float about the analysis world; but here is the formal report from the Trustees of the SSA.

Social Security

Social Security expenditures exceeded the program’s non-interest income in 2010 for the first time since 1983. The $49 billion deficit last year (excluding interest income) and $46 billion projected deficit in 2011 are in large part due to the weakened economy and to downward income adjustments that correct for excess payroll tax revenue credited to the trust funds in earlier years. This deficit is expected to shrink to about $20 billion for years 2012-2014 as the economy strengthens. After 2014, cash deficits are expected to grow rapidly as the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers. Through 2022, the annual cash deficits will be made up by redeeming trust fund assets from the General Fund of the Treasury. Because these redemptions will be less than interest earnings, trust fund balances will continue to grow. After 2022, trust fund assets will be redeemed in amounts that exceed interest earnings until trust fund reserves are exhausted in 2036, one year earlier than was projected last year. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2085.

Under current projections, the annual cost of Social Security benefits expressed as a share of workers’ taxable wages will grow rapidly from 11-1/2 percent in 2007, the last pre-recession year, to roughly 17 percent in 2035, and will then dip slightly before commencing a slow upward march after 2050. Costs display a slightly different pattern when expressed as a share of GDP. Program costs equaled roughly 4.2 percent of GDP in 2007, and are projected to increase gradually to 6.2 percent of GDP in 2035 and then decline to about 6.0 percent of GDP by 2050 and remain at about that level.

The projected 75-year actuarial deficit for the combined Old-Age and Survivors Insurance and Disability Insurance (OASDI) Trust Funds is 2.22 percent of taxable payroll, up from 1.92 percent projected in last year’s report. This deficit amounts to 17 percent of tax receipts, and 14 percent of program outlays.

The 0.30 percentage point increase in the OASDI actuarial deficit and the one-year advance in the exhaustion date for the combined trust funds primarily reflects lower estimates for death rates at advanced ages, a slower economic recovery than was assumed last year, and the one-year advance of the valuation period from 2010-2084 to 2011-2085.

While the combined OASDI program continues to fail the long-range test of close actuarial balance, it does satisfy the conditions for short-range financial adequacy. Combined trust fund assets are projected to exceed one year’s projected benefit payments for more than ten years, through to 2035. However, the Disability Insurance (DI) program satisfies neither the long-range nor short-range tests for financial adequacy. DI costs have exceeded non-interest income since 2005 and trust fund exhaustion is projected for 2018; thus changes to improve the financial status of the DI program are needed soon. http://www.ssa.gov/oact/trsum/index.html

Couple this with the growing deficit in the US budget, and I think it fair to conclude, as I did, that those now receiving Social Security may be fairly confident that they will continue to get their benefits for life. There may be some question about the Disability Insurance program recipients, particularly those who never paid into the fund and began receiving payments at a relatively young age. Those just entering the work force can reasonably doubt that the system will be funded by the time they should expect to receive benefits.

The system can be adjusted. Ages of eligibility can gradually be raised. Eligibility for Disability can be restricted to those who actually have worked and paid into the system (i.e. making it a little more like real insurance rather than an out and out welfare entitlement). Social Security can be salvaged, but at the moment it remains a Ponzi Scheme; but unlike the usual Ponzi Scheme, this one has some ties to the US government and means of using the tax payers to bail it out when it runs out of money.

Note that I have not endorsed any particular scheme for changing or bailing out the SSA, and since I have no idea of what Governor Perry intends to do about Social Security I can’t comment on his plans; what I have said is that he should not be dismissed out of hand as a fool for saying that Social Security is and always was a Ponzi scheme rather than a genuine compulsory savings and investment program. It might have become a savings and investment program, but the SSA income was never invested: it was simply spent for current expenses. The “Trust Fund” was supposedly invested in US Treasury Bonds, but I note tht during the budget deficit controversies the President of the United States said that the Treasury would not have the funds to pay out its Social Security obligations unless the US Debt Limit was raised; this implies to me that the SSA Trust Fund isn’t like any other Trust Fund I know of, since it ought to have more than enough money to pay its obligations for some years to come. Ponzi schemes, of course, never have enough money to pay their obligations.

I will cheerfully admit that I have not done enough analysis to tell when Social Security will run out of money, but it seems clear to me that absent a good bit of fixing it most certainly will before those just joining the work force will be eligible for benefits.

View 691 Thursday, September 08, 2011

The fallout from the debate continues. We will see what Obama makes of it tonight.

The media continue to pound on Perry for saying that Social Security is a Ponzi Scheme. The problem is that Social Security is a Ponzi Scheme, and there is no possibility that it can continue as it goes. The nation can afford to pay those already on pension (including those on disability who never paid into the fund in the first place – a sizable portion of those now entitled to Social Security) – but those just entering the work force have no chance of getting anything at all from Social Security when they read retirement age, and if they plan to be disabled they ought to be quick about it, because the fund will run out of money for that in a couple of decades at most.

I am nearly 80, and I expect that my Social Security payments will continue through my life; but were I 55, I would think hard about what to do when I reached 75.

Madoff used his Ponzi money to buy mansions and yachts. The US government used the Social Security revenue to hire bunny inspectors. That is, there was this revenue, and it made the deficits smaller, so there wasn’t so much incentive to eliminate Bunny Inspectors, and those closing down Gibson Guitars, and those who closed the restaurant that didn’t have a front door ramp for the handicapped (you had to go in through the back – it was a Cliffside restaurant and the way into the front was appropriate for the location). And the inspectors who caused the owner of another restaurant to close it and retire because he was damned if he would pay a bribe to a man in a wheelchair who said the mirror in the bathroom was 4 inches too low to allow him to groom himself. That’s what the Social Security income went to, not into any trust fund; which is why those who paid into this Ponzi Scheme can’t get their money back.

But the media are pounding on Perry for daring to say what is obvious to anyone who cares to spend a few minutes thinking about it. When Social Security first happened, within days there were checks going to people who had just joined it. Clearly that was not from the money they had paid into it: it was from all those paying into it who weren’t retired yet. For the first decades there were a hundred people working for each one receiving. But over time the number receiving got larger and larger – they lived long enough – while the work force didn’t grow that fast. And then there were added to Social Security the young disabled who had never paid into the system in the first place. Go to your local Social Security office – I had to a couple of years ago – and you will be astonished at how many young people, recently unemployed, have become “disabled” although their disability is not obvious. Many are disabled from a psychological aversion to work or a desire to pursue hobbies while Social Security pays them. Others are genuinely disabled, some by work, some from birth. Social Security is obliged to pay them and give them other benefits. I am told that some even get extra money to pay for a housekeeper. In at least one case the post of housekeeper seems to have been used as a party favor. All that comes from Social Security.

Now Perry, we are told, is not fit to be President because he dares say the truth about this Ponzi Scheme. In fact it’s not really a Ponzi scheme. Ponzi was just a thief. Social Security is a money laundering scheme to let the government borrow more and more money to pay for Bunny Inspectors and other overpaid government employees and their pensions.

And no one dares say so.

As Cain said, the problem is not identifying what Social Security is: the problem is fixing it. We have a number of people who paid into Social Security and made no other provisions for their retirement. This was probably foolish of them, but they were encouraged by government. They can’t just be abandoned, and no one proposes to do so. There are others on Social Security who never paid into the system and ought not be there. Some, alas, have spent a good part of their lives there, and there’s no way out. All this must be dealt with when we fix Social Security.

Note that at its best, Social Security must be a combination of a compulsory savings and investment program, and a welfare grant. That raises the question of who is entitled to what, and why? If someone is entitled to something, someone else must be obligated to pay for it. With charities that is voluntary, but if government is involved, the obligation is quite real to the point of depriving the reluctant payer to poverty or jail. We do not seem to be agree on where that obligation comes from. Everyone is for rights, but the obligation to pay for those “rights” is not so often discussed.

When I was young we had slogans about Freedoms. In 1941 Roosevelt proposed four of them:

1. Freedom of speech and expression
2. Freedom of worship
3. Freedom from want
4. Freedom from fear

The first two were not controversial, but there was a firestorm of discussion about the 3^rd and 4^th: where in the Constitution did we get those? How were they freedoms? My freedom from want corresponds to your obligation to pay: where did you get that obligation?

Fixing Social Security will require that we address all those problems; but before we can fix Social Security we have to recognize that it is broken, and that it is not longer simply the retirement program enacted during the New Deal.

The global warming debates are heating up. Pun more or less intended. Now, it seems, Spencer’s paper on the misinterpretation of sensor data is both small potatoes and seriously flawed. I am not sure how it can be both.

From what I can discern, I can probably change the average temperature of the Earth by small manipulations in the weights assigned to the measures of the temperature of the sea at various depths. How you get an average sea temperature is itself a puzzle to me: it’s a dynamic process, with volcanoes, winds across the sea, rains, currents and circulation, all of them affecting temperatures at various depths – is even the notion of an average a sensible thing? And the measurements are in no way random: we take the measures we have, and we have no possibility of getting a random sample of temperatures at various depths and locations. How could we? It’s similar with atmospheric temperatures and altitudes. Does the very notion of an average make sense?

I don’t mean that there is no climate; but I keep noting that the charts all show what amounts to 0.1 degree measurements, and I don’t know how they arrive at those, since I do not think their original measurements are anything like that accurate. I have had people try to explain to me that enough random measures at 1.0 degree accuracy can give me a measure reliable to 0.1 degree accuracy. That would possibly be true given enough independent and unbiased random observations, but I don’t see much evidence that this is the case.

Meanwhile, Perry is being pounded because he rejects science. The evidence of this is that he says the science on global warming is not settled, certainly not sufficiently settled to be trillions of dollars on by adopting policies that harm the US economy and leave China and India free to siphon off the work that US regulations hamper. If it’s all true and the CO2 is dooming the planet, then a poor and bankrupt US will have impoverished itself for nothing: China and India will continue to build CO2 emitting power plants. A wealthy US might be able to save the Earth with some new process; a prostrate US will be able to do little or nothing.

Or am I being over dramatic? In any event I did not hear Perry reject science. I heard him reject the notion that the Science in AGW is fixed and settled. I have heard no refutation other of this other than the traditional proof by repeated assertion, coupled with a typical Al Gore speech. Of course we can trust Al Gore. Can’t we?

Eph Konigsberg, RIP

http://www.sierramadrenews.net/?p=4678

Eph was a very old friend. At one time he was a member of the Los Angeles Science Fantasy Society, but that was well before I knew him or about LASFS. I met him as part of a discussion group in the 1970’s when he was married to Josepha. We went to each others birthday parties, and I very much liked going to dinner with Eph at the Cal Tech Athenaeum of which he was a member. Eph owned and was chief scientist of an instrumentation company that did fabulous work on physiological instrumentation, including a pill that troops could swallow and thereafter broadcast their fundamental physiological data. He did all this in early days when Moore’s Law hadn’t made such work easier.

Eph was a very well read man, and our discussions ranged through human history. He was a scholar of Jewish early writing and history, and he liked to lecture even more than I do, but he was less inclined to inflict this on unwilling listeners. I was very much willing to listen to him.

He used to call me every couple of months to tell me of some development he thought I’d be interested in, and he was a long time reader of my work. We were long time friends, and although we didn’t meet as often as we used to, I was always glad to hear from him. After my cancer treatments I have tended to be an interrupt driven system, meaning that he called me more than I called him simply because my mind doesn’t range so far as it used to; I regret that because I meant I didn’t call Eph every couple of weeks as I had before the radiation.

A scholar, a local community activist, and a very good friend. I’ll miss him.

Jerry Pournelle

I have heard that Amazon is trying to make a deal with California on sales tax. I can hope this means they will restore the Associates Program, which paid me a modest but not insignificant sum. I know nothing more than having heard a news item on this. Perhaps I’ll learn more.

View 691 Wednesday, September 07, 2011

Sable went to the groomers for a bath and combing today. Huskies grow underfur when the days are getting shorter, and shed it when the weather is hot, so there was a lot of combing needed. My Explorer displays external temperature, and it was 102 F. It was also muggy. I don’t work very well in hot weather.

We wanted to watch the Republican debates, but we couldn’t find them live. MSNBC broadcast an “analysis” for an hour and a half. They did a repeat of the debate at 9 PM PDT, and I’ve just watched that. If there was an earlier broadcast I never saw it. And I certainly had no desire to watch an MSNBC analysis.

The Republican Presidential Candidate Debates

In my judgment, the clear winner, and by quite a lot, was Newt Gingrich. He was focused, decisive, on point, laconic, and very much on point . He was efficient with the time given him, and he wasted none attacking the other candidates. He reminded me of the Newt Gingrich I knew when he was Minority Whip and then Speaker.

The Washington Post makes him a loser, saying:

* Newt Gingrich: Bashing the media for trying to get Republicans to disagree with one another is a sure applause line in front of a GOP crowd. But, in a debate the whole point is for the candidates to, well, debate their positions on issues. Elections are about choices so the best way to inform people about their options is to probe the candidates on where they differ with one another. Right?

http://www.washingtonpost.com/blogs/the-fix/post/the-reagan-library-republican-debate-winners-and-losers/2011/09/07/gIQA2XfpAK_blog.html

Newt well understood the hostility of the two “moderators” (inquisitors would be a better word) and their objective which was to induce the Republican candidates to attack and damage each other. When he told them flat out that he understood what they were doing, the inquisitors were taken aback.

I was favorably impressed by Michelle Bachman. The last time I watched her in a debate she seemed shrill and more interested in fighting the other candidates, This time she displayed the gravitas of a leader, and showed some understanding of the magnitude of the problem. Once again the Washington Post has a different view, placing her among the losers:

* Michele Bachmann: The Minnesota Congresswoman was a total non-entity in the debate. At one point, she didn’t say a single word for more than 20 minutes. Bachmann supporters will almost certainly blame the moderators for freezing her out but she needed to find ways to inject herself into the various fights between the likes of Perry, Romney and Huntsman. Bachmann seemed to get the message towards the end of the debate but it was already too late. It felt like she was irrelevant to the conversation tonight — and that’s a bad place for her to be.

I thought she did well with the time they gave her. The inquisitors were condescending to her which was to be expected. She demonstrated the necessary gravitas, which was less obvious in earlier debates.

Continuing my record, I was not at all impressed with Perry’s first hour. I thought he spent too much time bickering with Romney. Of course the Post gave him a win for his first hour:

* First 45 minutes Rick Perry: With all eyes on him, the Texas governor started out strong — delivering a solid answer on jobs and showing a willingness to mix it up with Romney. He was confident without being brash and seemed well versed — or at least well rehearsed — on the issues of the day. If the debate ended after 45 minutes, we might be talking about how Perry had dispelled all doubts about his readiness for the national glare of a presidential race and all it entails.

On the other hand, I thought Perry came off very well toward the end. The Post again has a different view, putting him among the losers:

* Last Hour Rick Perry: After a strong start, Perry seemed to lose focus — meandering on his answer on Social Security and badly fumbling on climate change. Some of Perry’s struggles in the middle portion of the debate had to do with the fact that he was getting tough questions and having to weather a steady attack from his opponents — he joked at one point that he had become a “pinata” — but that’s what you get when you’re the frontrunner. Perry salvaged the second half of the debate with a very strong answer on the death penalty. But his uneven performance will likely keep the conversation about whether he is a clear frontrunner alive, which is not what the Perry forces wanted.

Of course what the Post dislikes is what Perry said about global warming: that the science isn’t settled and we have no business betting the US economy on the theory in its present state. What the Post likes is that Perry was willing to wound Romney. They would have swooned in ecstasy had one of the candidates physically attacked the other.

The Post doesn’t mention Cain, but I thought he came off extremely well. He had decisiveness, gravitas, and focus. As for example given a chance to speak on jobs:

CAIN: Let’s cut to the chase, this is what business people do and politicians don’t do. Here’s how I would fix this economy, first, eliminate the current tax code. It is a drain on entrepreneurs, it is the biggest barrier that’s holding this economy back, and what I would do is to propose a bold plan, which I have already released.

I call it my 9-9-9 economic growth plan. Throw out the current tax code, a 9 percent tax on corporate income, our 9 percent tax on personal income and a 9 percent national sales tax. If 10 percent is good enough for God, 9 percent ought to be good enough for the federal government. This will replace all federal income taxes. It’ll replace all federal income taxes.

It will also replace the payroll tax, so everybody gets some skin in the game. And it replaces the capital gains tax.

He made it clear that he would return a great portion of federal activities to the states. He looked very Presidential. Whoever wins this should keep him in mind for the Cabinet.

My general conclusion: as Newt said at one point, anyone on that platform would be a better President than the one we have; and like Newt I was angered by Brian Williams and the Politico hack. They didn’t even try to conceal their contempt for the participants, and they openly tried to set the candidates at each others’ throats. Of course the Washington Post listed among the Winners:

* NBC/Politico: In politics, it’s just as important to be lucky as it is to be good. NBC and Politico were both with a well-timed debate that gave America a chance to take an extended look at Perry, and a series of quality questions that forced the candidates to sometimes go beyond their talking points. The first 45 minutes of the debate were, without question, the highlight of the race so far. Kudos.

Not surprising, of course.

It’s late and bed time. And it’s a long way to the next but one November. I find it interesting that none of the candidates wanted to be seen as the “establishment Republican” candidate. Some worked a bit at looking “moderate” but not excessively so. No one wanted to wrap himself in a Bush legacy. In 1996 the Republicans ran the only man in America that Clinton could beat. After all, it was Bob Dole’s turn, and even though Newt Gingrich and the Contract with America had taken the House and Senate in 1994, the Republican establishment saw to it that the nomination went to Bob Dole. Dole was a genuine war hero, but that had been a long time before. This debate indicates that things will be different in 2012. I doubt any of these candidates will be appearing in advertisements for ameliorating their erectile dysfunction.