An Adventure in Birding

It was Saturday a week ago late in the afternoon. Sunny and warm with thunderstorms forecasted I decided to go out for my daily walk, which I take 3 or 4 times a week, around Clopper Lake in Seneca Creek State Park, a four mile trail. Not believing I would see many birds due to the lateness of the day I still decided to take along my binoculars and my field guide knowing I would at least get a look at the resident Great Blue Heron who hangs out at the far end of the lake.

Sure enough as I got toward the overpass at the end of the lake where one of the main feeds for the lake is, there he was, the Great Blue Heron, looking as if he was standing on top of the water, probably on some log or rock just beneath the water. When I got to the overpass, about 2 miles from where I parked my car, I noticed another bird nearby also “standing on top of the water.” He was practically motionless, just standing there so I could get a really good look at him and try to memorize his markings. Suddenly he dipped his beak into the water and came up with a fish in his beak. I couldn’t take my eyes off of the bird as he wrestled the fish so he could eat it. Fascinating!

About that time the sky turned cloudy and there were some ominous looking clouds approaching from the East. I decided that I had better get going back to my car. I started walking back to complete the round trip around the lake. Suddenly there was another bird, small and yellow, but not a goldfinch. As I raised my binoculars I heard a loud rumble of thunder so I decided to bypass getting a good look at the bird and started briskly to walk on.

It got darker and darker and the rumbles started turning into loud thunderclaps. When I was about 1 mile from my car the rain started and soon the wind was gusting at 30 to 50 miles per hour and the rain was coming down in sheets. I was getting soaked so I started to run. The last time I ran like that was this past April when I was in NYC going to visit Samantha and got caught in a rain storm about 6 blocks from where I was going to meet her. Before that the last time I ran must be some 10-15 years ago. Given the state of my knees I was surprised that I was able to do so then and again on Saturday.

I was 50 yards from my car and could see it in front of me when I slipped in the mud and landed face first with my brand new field guide in my hand and my binoculars around my neck. The field guide fell into a muddy puddle and the binoculars came between the ground and my chest. My right knee got badly scraped and bruised and I got a body full of mud.

Today is the first time I have been able to do my “daily walk” since my lovely day of birding a week ago Saturday.

So all of you who think birding is a nice safe hobby, maybe it is, but you need more sense or physical capability than I displayed that day. And oh yes, the bird was an immature Green Heron.

News Media Accused of Failure to Inform

What is or is not reported and how it is reported is a crucial matter in a Democracy. Our founding fathers though it was so important that they specifically mention "freedom ... of the press" in the FIRST amendment to the constitution:

"Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances."

This week there are two glaring examples of the media failing to meet their obligations vis-a-vis freedom of the press, highlighted by 2 separate sources.

Jon Stewart Eviscerates CNBC
First is the issue of how the media failed to report on the true condition of our economy. Specifically CNBC TV, the NBC financial cable outlet, one of the leading sources of financial information for the public was taken to task by, of all people, Jon Stewart on the Comedy Channel's "Daily Show" (Comedy Channel - Mon.-Thur. 11:00PM with repeats the next day at 1:30AM, 10:00AM, 2:00PM, 8:00PM.)

Starting Wednesday, March 4, 2009, using video clips of CNBC's coverage of the financial markets, Jon Stewart made a serious point using comedy as the punctuation mark. He eviscerated CNBC's coverage of the U.S. financial system. It turned into a media feud as Jim Cramer, CNBC 's host of "Bad Money" (CNBC Daily @ 6:00PM) responded on NBC's Today show and elsewhere and Jon Stewart replied, etc. etc. until Jim Cramer appeared as a guest on the Daily Show on Thur. 3/14/09. Frankly, if it wasn't for the damage the feud could have done to Jim Cramer's credibility it looked like a setup to me.

Jim Cramer was contrite, apologizing for his failure to present the dangers lurking in the financial markets and for hyping the stock market, which helped augment price inflation. Stewart maintained a non comedic demeanor making the point that it wasn't Cramer who was the object of his attack, but rather CNBC for not fulfilling its journalistic responsibility to investigate and report on the underlying weaknesses in the economy.

There are a number of video clips available on the Daily Show web site (thedailyshow.com). If you are going to watch any of these clips, the one to watch is the March 12 show where Cramer is the guest. It come in 2 versions; the full show and clips of individual segments of the show. Another one to watch is where Jon Stewart initiates his attack on CNBC (March 4th) following the incident where CNBC commentator Rick Santelli attacks the proposed bailout of homeowners who have lost their homes through foreclosure. In that attack he called the homeowners "losers".

Media Matters: The Media's Deliberate Stupidity
The second incident is addressed in this week's Media Matters newsletter. They discuss how the media handled the Republican attack on the "pork" in both the $787 billion Economic Recovery Act (The Stimulus) and the Omnibus funding bill for the balance of fiscal year 2009.

Using John McCain's attack on the "pork" in both bills, especially on the Omnibus funding bill where McCain ridiculed the spending item for honeybee research, the Media picked up McCain's arguments verbatim and repeated the charge ridiculing the expenditure. In the newsletter Media Matters complains that no one did even a simple research on the expenditure, which they claim could have been done by doing a simple Google search. Had they done so they would have found out the importance of the expenditure to our economy.

So here is an example of the media failing to perform its important function of making sure the public learns the truth rather than just accept the spin. To get the details supporting Media Matters complaint you should read the newsletter here. It is an eye opener to see how the Republicans are intent on attacking Obama and the Democrats without regard for the truth.

Alternative Minimum Tax Fix

In my post of 2/8/09, Less for the Same Price, I argued that the inclusion of $70 billion in the American Recovery and Reinvestment Act (ARRA, note that I misnamed the act in my previous posts) to fix the inflationary creep of the AMT was a mistake. It doesn't solve the problem for the long haul, makes the ARRA cost look larger than it actually is and then, to keep the cost down, is used as an excuse for reducing some of the needed spending on infrastructure and education improvements.

For the past several years the AMT has been fixed year by year as part of the normal budgetary process and undoubtedly would have been done so again this year. In addition, including it with the acceptance of the Republicans puts the lie to their arguments that items that should be part of the normal budgetary process should not be included in the Recovery and Reinvestment Act.

It is now 3 days since I wrote that. Until today I have neither seen nor heard anyone else mention the problem with the inclusion of the AMT patch in the stimulus plan. But this AM on C-SPAN's Morning Edition two of the guests mentioned the $70 billion AMT patch in their comments. Both Jodi Schneider, Senior Editor for Congressional Quarterly, and Martin Vaughn, reporter for Dow Jones News, stated that it is one reason why the other cuts in the plan were necessary to satisfy the Republicans.

Tonight the New York Times reported at 4:43PM that the House-Senate conference committee had reached an agreement on the contents of the bill. I quote here a paragraph from the story written by DAVID M. HERSZENHORN and CARL HULSE, Senators Announce Stimulus Agreement:

Despite intense lobbying by governors, the final deal slashed $35 billion from a proposed state fiscal stabilization fund, eliminated $16 billion in aid for school construction and sharply curtailed health care subsidies for the unemployed.

In driving down the total cost of the stimulus bill — from $838 billion approved by the Senate and $820 by the House — legislators also sharply reduced proposed tax incentives for buyers of homes and cars that held huge public appeal. Senator Collins said getting the final number to under $800 billion was more than symbolic; it meant “a fiscally responsible number,” she said.

But the final bill retained a $70 billion tax cut that would spare millions of middle-class Americans from paying the alternative minimum tax in 2009, which some Democrats decried as wasting a large chunk of the bill on something that would do little to lift the economy and that Congress would have approved regardless of the recession.

The final cost out of the House-Senate conference committee was reported as $789 Billion which is actually $719 billion not counting the AMT fix. Not nearly enough and way too much in tax cuts and not enough in infrastructure spending. If President Obama is to be successful in turning the economy around, he is way short of what it will take. The argument that he has to take what he can get may be true. However, not enough may be worse than getting nothing because we will have spent $700+ billion and end up in the same situation afterwards.

Republican Intransigence

Immediately following the passage of the Economic Recovery and Reinvestment Act (ERRA) in the US Senate the senate leaders of each party held a brief news briefing. Sen. Mitch McConnell (R-KY), Senate Minority Leader, representing the troglodyte wing of the Republican Party, attacked the ERRA on several different grounds.

One of his objections was a comparison of the proportion government spending is as a percentage of Gross Domestic Product. He argued that as a result of the spending, that percentage would rise to just under 30% from a recent average of 20%-24%. Thus he claimed that the ERRA was making our country look more like the socialist countries in Europe which he claimed run at a 40%+ rate.

What he failed to point out is that as a result of the Republican mismanagement of the economy, especially since the Ronald Reagen administration with its mantra that government spending is too large and must be reigned in by spending cuts and reduced taxes, the infrastructure of our nation has been left to deteriorate.

The American Society of Civil Engineers (ASCE) in its 2009 Report Card rates the state of our infrastructure as a "D" down from "D+" in 2005. Further they estimate that it will cost $2.2 trillion over the next 5 years to repair our infrastructure and bring us up to 21st century capability.

The ASCE figure does not include the costs to improve our nation-wide broadband deficit. Broadband Internet access is acknowledged as a major economic necessity for the future. Without that capability we will not be able to compete effectively in the global economy.

We are now ranked 22nd in the world in broadband capacity, or 15th amongst the 30 most industrialized nations. Yes, that means that 7 of the lesser industrial nations are ahead of us. One estimate is that catching up on broadband capability will require an investment of $46 billion over the next 3 years.

There are just some things that require an impetus from the government. As an example, in 1956 President Eisenhower, a conservative Republican, with the encouragement of the US automobile industry, recognized the need to upgrade our infrastructure in order to stay competitive and initiated the Interstate Highway System with federal government funding.

Rather than acknowledging this need, the troglodytes are still arguing against, not only necessary government intervention to help us recover from the deplorable state of our economy, but also against the need for government participation in providing for the common good by doing something that will not or could not be done by the free market economy without such participation.

Less for the Same Price

I remember back several years ago when a half gallon (64 Oz.) of ice cream cost $2.50 on sale and an 8 oz. (giant size) Hershey bar cost $1.00, also on sale. Today I still can buy ice cream on sale for $2.50 and a giant Hershey bar for $1.00. The difference is the ice cream now is 48 Oz. and the Hershey bar is 4.5 Oz. Funny thing is they both look like the same size as the older products. This is getting less for the same money disguised as getting the same thing.

So the economic recovery act comes out of the House of Representatives at a cost of $819 billion and comes out of the Senate at $827 billion dollars but only gives us $757 billion in value, 7.5% less for 10% more in cost.

There is one major item in the Senate bill that accomplishes this slight of hand. There are other things in the Senate bill that contribute to this phenomenon, but the one major contributor to it is the Senate provision to fix the Alternative Minimum Tax (AMT) problem which year after year now has been attempting to eat away at the middle class since the act passed, mostly due to inflation.

I say attempting to eat away at the middle class because every year the congress has taken action to forestall this by applying a temporary fix for the current year. Why has the congress not acted to put in a permanent fix? The answer is that a permanent fix would involve making the fix revenue neutral by accounting for the 10 year cost of the fix; a sum of $800 billion ($800,000,000,000) to $1 trillion ($1,000,000,000,000). The single year cost for the 2009 temporary fix is only $70 billion. Thus the permanent fix is never done, kicking the can down the road as it becomes more and more expensive to fix each year.¹

Putting the temporary one year cost of the AMT fix into the Economic Recovery Act, the $70 billion can be written off as part of the stimulus cost and not be accounted for in the annual budget to maintain revenue neutrality. But this is a cost that in the past several years has been included as part of the annual budget and should and would be included as part of the 2009 year budget if not included in the stimulus plan.

The over the top rhetoric by the Republicans about the evil of including other budgetary items in the stimulus that would normally normal have to be accounted for in the annual budget is shown for what it is; a sham just to attack the bill, the Democrats and the President.

The net result is that the $827 billion dollar cost of the Senate bill only delivers $757 billion in value. Hence, less for the same price.

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¹For a more detailed discussion of the AMT kabuki act going back to how it was used in justifying the 2001-2003 Bush tax cuts see:

Myths and Realities About the Alternative Minimum Tax

Immediate Action Needed

There are no positive words that I can apply to the current machinations of the US Congress, both the House of Representatives and the Senate. This applies to both the Democrats and the Republicans, albeit in my opinion the Republicans are more reprehensible than are the Democrats. I say this because while the Democrats loaded the American Recovery and Reinvestment Act with some partisan programs that were sure to raise the ire of the Republicans, the Republicans have used their objections to these few provisions amounting to maybe some $20 billion out of $900 billion to delay and eventually sink the entire package. And in so doing, they are attempting to damage President Obama's standing among the electorate and gain a political advantage.

Their is a real danger that our economic condition could spiral totally out of control into a prolonged recession, perhaps a depression. (While there is no standard definition of when a recession becomes a depression, SEE: Depression vs. Recession for one reasonable definition.) Many economists believe that it takes a deflationary spiral to make a recession into a depression.

A deflationary spiral comes about when the value of assets fall as well as wages and retail prices. When that happens it is difficult to stop. As values fall for assets that are being used as collateral for loans, the loan becomes unsustainable by the asset and the entire financial structure begins to unravel. This has already happened in the real estate market and is reflected in the stock market and the banking crisis. Therefor it is clear that we are either already in a depression or are very close to being in one, heading for a fall of 10%+ in the GDP.

What has been happening especially during the past 3 months, is that unemployment has been rising at an increased rate. During that period 1,655,000 jobs have been lost. That is, approximately 18,000 jobs lost per day (including Saturdays, Sundays, and Holidays.) Every day that goes by another 18,000 people and their families are finding themselves without a job, losing their health insurance and their ability to pay their rent or mortgage potentially leaving them homeless, bankrupt and hungry and adding to the surplus of unoccupied homes with the subsequent decrease in value.

The above outlines why the need for action is urgent. And the congress is busy playing politics with the future economic sustainability of our nation. Maybe they are out of touch with the hardships being endured by their constituents and the potential danger to our future. Just listen to the Republicans talk about the need to take our time to make sure that we have the right package. You can be sure that if they were living paycheck to paycheck, faced with the imminent possibility of becoming unemployed and having their home foreclosed upon, they would be more eager to compromise and come to a quick resolution instead of playing politics.

Surprise of surprises! While composing this posting Sen. Joseph Lieberman (I-CT) on the floor of the Senate is making the exact point I have made here.

In my last commentary I focused on the impact of the recession on ordinary Americans. I reserved making my comments on the what transpired to bring about our calamitous economic collapse and what is happening now re: objections to the current proposed stimulus package, H.R. 1 American Recovery and Reinvestment Act of 2009. No sooner did I begin to gather my thoughts and compose my message on this subject than did Paul Krugman published his article on the same: Bad Faith Economics, NYT 1/25/09 as did Bob Herbert: The Same Old Song, NYT 1/26/08. And why not? They are professionals who do this for a living. I am merely a hobbyist.

Dr. Krugman argues from the point of view that the Republicans are being disingenuous in their objections to the proposed plan. They have blown out of proportion the implications of some provisions of the plan and have just misrepresented the implications of some other provisions.

According to Krugman the motivation for doing so is:

"Conservatives really, really don’t want to see a second New Deal, and they certainly don’t want to see government activism vindicated. So they are reaching for any stick they can find with which to beat proposals for increased government spending."

Bob Herbert argues that the Republicans have no ground to stand on when they ask for more tax cuts and less government spending.

"Have they no sense that their policies have sent the country hurtling down the road to ruin? Are they so divorced from reality that in their delusionary state they honestly believe we need more of their tax cuts for the rich and their other forms of plutocratic irresponsibility, the very things that got us to this deplorable state?"

. . .

"When the G.O.P. talks, nobody should listen. Republicans have argued, with the collaboration of much of the media, that they could radically cut taxes while simultaneously balancing the federal budget, when, in fact, big income-tax cuts inevitably lead to big budget deficits. We listened to the G.O.P. and what do we have now? A trillion-dollar-plus deficit and an economy in shambles."

There is much to criticize about this plan. It does not focus enough on the type of spending that will have the greatest and most immediate impact. Considering the size of the US economy and the size of the problem, it just is not big enough. It appears that the Democrats see a perhaps one time opportunity to get through congress a redress of the Bush programs. As the Republicans pushed through much of their agenda by attaching it to legislation, like the defense budget, that the Democrats could not vote against, here are the Democrats doing the same thing.

In an earlier commentary, The Economy and Other Tragedies, I discussed what I considered the ill advised attempt to assuage the potential objections of the Republicans to the plan by including some tax cuts in the initial proposal. I argued that doing so only would change the position of the Republicans to start at that point and then ask for even more tax cuts. That is what has happened and as they argue for it they do so accusing the Democrats of not being bipartisan. Thus it turns out to be a lose-lose proposition for the Democrats.

The Republicans are not attacking Obama when they attack the plan. In fact they go out of their way to praise Obama for his bipartisanship and willingness to listen and include them in his considerations. No, it would be political suicide for the Republicans to attack Obama. And Obama is doing everything he can to follow through on his pledge of bipartisanship. His one slip was in an exchange with Rep. Eric Cantor (R-Va.) about the proposal. The president shot back: “I won,” according to aides briefed on the meeting. I guess even the coolest of cats can get testy when confronted by unremitting stubbornness. Working out of a mediation model of cooperation rather than negotiation requires both parties acceptance of the model.

The Republican strategy is to attack the Democratic congress. That is much safer than attacking Obama and they can still fake bipartisanship.

Tax cuts, even for the middle class, have less impact in reviving the economy than does government spending. The monthly decrease in withholding just will not spur the type of spending necessary to make much of a difference in the short term. They also argue that cutting taxes will yield an actual increase in tax revenues. If this were so, then the budget deficit would not have climbed so rapidly during the Reagen and G.W. Bush administrations. Further, during the Clinton administration, sandwiched between Reagen and Bush, taxes were substantially increased and an economic boom occurred with the budget realizing its first significant surplus since the Eisenhower administration (1957). (A slight budget surplus was reported in 1969 when Lyndon Johnson first integrated the Social Security surplus as part of the US general fund.)

Providing tax cuts to small business would make some sense to stimulate business spending if there was any demand to be satisfied. The major problem now is that there is no demand. The supply siders are spitting in the ocean if they think business will spend money if they can claim a tax break while they are losing money, laying people off, closing outlets, shutting down production lines, etc. etc. Also, where will this money come from with the banks unwilling to lend money?

Some analysts say that $1.00 in government spending yields more than $1.50 in GDP growth. With a marginal tax rate of say 33%, the return in taxes on that same $1.00 would be $0.50 and thus the true deficit from the $1.00 is actually $0.50. Then the equation for the calculating the yield in GDP for each dollar increase of government spending is actually a multiplier of 1.5/0.5 or 3 to 1. Moreover, spending on rebuilding infrastructure, developing alternate sources of energy, and etc. will provide future benefits for economic growth and national well being.

Don't get too excited about this. There are economists who argue that this return on government spending is false. They argue reductio ad absurdum that should the government increase spending by $10 trillion it would raise our GDP by $15 trillion at the true cost to the government of only $5 trillion. This argument is ridiculous on its face because spending hundreds of billions of dollars over the short term and then slowly returning to a policy of fiscal responsibility is just not the same as spending $10 trillion dollars.

That doesn't mean that spending money at the rate necessary to get the nation's economy restarted is not a problem. The question is what will happen if we do not spend the money? The thinking of most economists, both conservative and liberal, is that if we do nothing the economy is likely to slip further faster.

Rebates for the middle class, like the 2008 rebate program, are likely to have a mixed effect on the GDP, less than government spending will have. Analysis of the 2008 tax rebate program showed that most of the rebate money was not spent. Rather it was either saved or used to reduce current consumer debt. That which was spent was spent by those on the low end of the economic spectrum; low income and/or low (or no) net worth. The increased spending occurred in the first two months after the rebates were issued and then returned to pre-rebate levels. Aside from this, much of the increased spending probably was on foreign made goods which means that it mostly supported retail outlets like Walmart while it increased our trade deficit.

These are the items for which money should be spent by the the new stimulus package that I believe would be the best for an economic recovery and to help those hurt the most by the economic downturn.

1. The bulk of the money should go to investment in infrastructure. That will provide jobs and produce a valuable end product. The acquisition of the materials, supplies, and equipment necessary for infrastructure will provide a multiplier to the money so spent. These projects should be funded even if the expenditure stretches out for 2 or 3 years. However, the bulk of the money should be spent as soon as possible for the needed immediate economic stimulus.
2. Investment in development be it alternative energy or other scientific advancement that can yield future economic benefits.
3. Investment in education, primary and secondary, so that we have a future workforce capable of doing scientific development and handling the work requirements of the future.
   
4. Subsidies to the states whose incomes have fallen to a level where they are going to be forced to lay off thousands of employees including those performing necessary services. The loss of these jobs would have a serious negative impact on economic recovery.
   
5. Extension and increase of unemployment benefits to help those hurt by the economic downturn. These benefits should also be provided to those who during the past 2 years used up their benefits and are still unemployed.
   
6. Provision of replacement medical coverage for those who lost theirs as a result of losing their job and can't afford the costs of COBRA (Consolidated Omnibus Budget Reconciliation Act - the extension of their coverage for 18 months as an individual without the corporate payment of the premium.)
   
7. Extension and increase of the earned income tax benefits to those on the lowest end of the economic spectrum. These people will be most likely to spend the money rather than save it. Besides, it is a matter of compassion to take care of the least fortunate. (Definitely a liberal viewpoint.)

There is no time to waste. The crisis deepens daily. Immediate action is required now. The relief of the mortgage crisis is not included here and should be handled by the remaining $350 billion of the TARP (Troubled ASSET Relief Program) or by another program designed to do so. The TARP when passed last year was supposed to do that and Secretary of the Treasury Paulson and George Bush diverted the funds to rescue the banks with handouts without even getting an ownership stake in most cases; something I objected to from the outset.

Postscript:
This inadequate stimulus plan just passed the House of Representatives (242-189) without a single Republican voting for it. First they worked to eliminate some of their pet peeves such as money for contraceptives and money to upgrade the National Mall in DC. Then they unanimously reject the plan. This is of course the height of hypocrisy, claiming to want to be bipartisan and then acting in a strictly partisan way.

But that is OK. What will now happen is the Senate will take up the measure and hopefully there it will be fixed to be more in line with what is truly needed. However I do not think it will come anywhere close to what is actually needed. Don't let the good be the victim of the best. Better this than nothing.

The Recession

I am beginning to feel like Alvy Singer, the Woody Allen role in his movie Annie Hall, whose favorite movies were about the Nazis and the Holocaust. He was compelled to see these movies even though they made him feel depressed.

I seem to be compelled to watch TV, and read news and books about the sorry state of the economy amongst our other political catastrophes. I either get angry or depressed (which some describe as anger turned inward.)

I take my daily walks every day at the local enclosed mall during these cold winter days. To "amuse" myself during these walks, remember that I am drawn toward things that are depressive, I count the number of closed retail outlets. The number has risen now to 7 closed and 2 with signs that they are having final store closing sales.

We all hear stories about the economic downturn. Most of us know that the current official unemployment rate is 7.2%. Most of us know that job losses are increasing at the rate of some 500,000 per month. The estimated underemployment rate, the rate at which people are either working fewer than 40 hours per week or are working at jobs beneath their capability or educational level, is also soaring. Businesses of all types are failing at an increasing rate.

How often do we connect with the human suffering connected with these statistics? Many of us probably connect to the economy when we think about our retirement funds or housing values that have drastically shrunk over the past couple of years and the possible consequences to our lifestyles. But what of the millions of Americans and others throughout the country and the world who have suffered job loss with subsequent house foreclosure and loss of medical insurance and possible loss of purchasing power to buy daily necessities such as food for themselves and their families? How many of us are in touch with the realities of life that are behind the statistics?

So there I was in front of my computer watching my Sunday evening source of depression, 60 Minutes, the CBS news magazine TV program. The lead story for last night was about Wilmington, Ohio, a city that is suffering the worst from the current economic downturn. Watching this story is what moved me to write this commentary. It was a powerful piece that touched me deeply.

I wont at this time digress into political condemnation of the causes and objections to the plans to alter the course of our current recession. Right now I just want to reflect on the pain and misery caused by those who have had a role in perpetrating this travesty. If you are not in touch with your feelings about these conditions then you are like most of our politicians; legislators and administrators alike.

For those who are interested in the 60 Minutes story and who would like to connect with your feelings, I provide the following link where the video of the show is available:

60 Minutes - Wilmington, Ohio