Category Archives: The Economy

It’s a boring job, but somebody’s got to do it.

Don’t raise the retirement age

I am retired and will soon be — well, over 65. So in some ways, I don’t have a dog in this fight. However, I know that we should not raise the retirement age to 70. We should lower the age at which a person becomes eligible for full Social Security to 62 and lower the Medicare eligibility age to 62 as well. The raises that have been made already in Social Security eligibility age are part of the problem with jobs and the economy. There are at least three considerations:

  1. Older people must work longer because they can’t afford medical insurance, so jobs don’t open up for young people at the entry level.
  2. People who work longer because they can’t afford medical insurance add to business payroll obligations due to more longevity raises that they receive, so businesses pay more for older workers. In some cases the higher pay is justified because a seasoned experienced worker is worth more than one with less experience. However, depending upon the job and the changes that occur over time in necessary skills and abilities, the reverse may be true. When this happens, a business is caught with either letting a loyal employee go near retirement, which is cruel, or holding on to the employee when a change would be better for business. The employee in such a situation almost always senses the problem, feels like it is time to go, and would choose to retire if he or she could do so and still have an income and medical insurance. This choice is now precluded until the worker is 67.
  3. People save for retirement and then spend their retirement money when they retire. They spend money on travel, retirement homes, new cars, etc. They support community activities, show up at theatre matinees, volunteer, and help out with the work of their church. They sometimes babysit their grandchildren so their children can go on vacation or to dinner and a show. All of these activities put resources into the economy.

So it would be counterproductive to raise the retirement age, just as it has been in the past. History is a great teacher, and we should listen better in history class.

Why a voter needs to think about the details

It is purely not enough to kick out the corrupt politicians and put in new people who promise to do better. You need to know what each person you are considering for office thinks about particular issues. For example, on the matter of a just way to collect taxes and pay for essential services for people, first you need to understand what taxes are and then you need to think about who should pay them and why.

Taxes can be one of three patterns:

  1. regressive (the lower income person pays a higher percentage);
  2. flat (everyone pays the same percentage);or
  3. progressive (the higher income person pays a higher percentage).

Sales tax is always regressive even when people pay the same rate, since you are taxed on what you spend, and the person who spends all of his/her money gets taxed on 100% of their money. A poor or middle class person spends all or most of their money, and if they use a credit card, they can actually pay sales tax on more than 100% of income. A wealthy person not only has unspent money not subject to sales tax, but is able to invest leftover money and earn interest, so taxes are offset by interest earnings. Most people with incomes over $200,000 a year, when their taxes are offset by the interest and dividends they earn on investments, currently pays no tax at all.

Here in Virginia, all taxes taken together — property, sales, and income tax — the poorest quartile of the population pays about 8.5% in state taxes, and the wealthiest quartile pays about 5.2%. This does not take into consideration the matter of interest and dividend earnings that are available to wealthy people to offset taxes.

At the national level, a progressive income tax has been in place in the U.S. for a long time, with the rich paying substantially more as a percentage. Tax shelters have served both the wealthy and middle income people, with middle income tax shelters largely limited to “before tax” retirement and medical savings accounts. A wide variety of tax shelters are available if you have enough money to use them, but most of us do not. The average wage in the U.S., even with rock stars and athletes calculated in, is somewhere around $40,000 to $45,000.

The Bush tax cuts, which all of the Republicans and Tea Party candidates want to continue and make permanent, were a windfall for wealthy people. The intent of the tax cuts was to enrich the wealthy so that they would be inspired to invest and hire more people to work for them. Instead, they have simply taken the money out of the market into their pockets, and it rests there doing nothing for the economy. Large financial magazines and newspapers have commented on this failure to invest as expected, and if you want to read about it, you can Google “tax cuts for the wealthy not invested in jobs” and “businesses sitting on large cash reserves.” There is nothing else that we can give the wealthy to inspire them to invest. In order to get the money back into the economy, we need to roll back the tax cuts for the very wealthy the way that the Democrats want to do.

It is fair for wealthy people to pay a larger percentage in taxes because they make more money, i.e., take more money out of the economy. This is a simplistic statement of why a progressive (rich pay a higher percentage) income tax is reasonable, and if you want to read further on the issue, check out “Why the rich should pay more” over on

Understanding the information above, which anyone can verify easily with nothing more sophisticated than a Google search, indicates a clear choice for Democrats, who support a progressive income tax and the expiration of the Bush tax cuts for the wealthy.

Attorney General Cuccinelli’s Town Hall Rally

Virginia Attorney General Cuccinelli arrived early for the Town Hall in Abingdon on Thursday, Sept. 2nd, and he circulated among the gathering crowd in a very personable manner, followed along at a discrete distance by Morgan Griffith, Virginia State Representative from the 8th District, who is running against Congressman Rich Boucher for the Ninth District seat in the U.S. Congress. The topic of the town hall was of course Cap and Trade, the issue that Griffith has defined as the vulnerable point for Boucher in the Ninth.

Knowing the issue well and being familiar with the rhetoric surrounding it as well as the stark reality of the human and environmental cost of coal and oil production, I heard little new in Mr. Cuccinelli’s presentation. He did, however, reference a study by the Heritage Foundation showing Virginia utility rates doubling by 2035 due to Cap and Trade. He also predicted that Virginia would lose 50,000 associated jobs. He said that many studies had been made, but this was the “most credible study.”

I was unable to find the study that Mr. Cuccinelli cited on the Heritage Foundation web page, and I went to Mr. Cuccinelli’s web page to see if he had posted a link to the study, but I could not find it there either. I went back today for another search. The site has no search function, and I went through many menus, finally locating the figures that were quoted in a “paper,” not a study.

So I can stop wondering how the “credible” study was constructed, whether it took into account the projected development of clean energy production, or whether it considered jobs created in clean energy in the job loss prediction. It does not matter what it considers, because it is a paper and not a study. The predictions in the paper have the same weight as the claim that I remember did so much damage to the fight for an Equal Rights Amendment for women, the one that said if we had an equal rights amendment women would all have to grow chest hair. But a paper is not a study. I digress.

The predictions of the paper were given more credibility by inclusion as a slide in Mr. Cuccinelli’s PowerPoint presentation.

The lone speaker at the Town Hall for environmental issues was repeatedly interrupted with shouts of “Sit down!” and “Shut up!” Mr. Cuccinelli interrupted him to ask “Do you have a question?” This was surprising, since he had explained earlier that some of the best ideas put forward by legislators in Richmond come from constituents, and told folks he was here to hear questions, comments, and suggestions.

The USA may be the last place in the world to have clean energy because our elected officials are deeply invested in and indebted to dirty energy at both state and federal levels. They actively deny opportunity in research and development, or we would already be burning coal cleaner than we do. Mr. Cuccinelli pointed out one such denial, Virginia’s refusal to consider even a portion of the $10,000,000 cost of carbon sequestration research in a rate hike request by a Dominion Power. This denial was also in his PowerPoint. He was taking credit for making sure that the power company did not pass along the cost of this R&D effort to the consumer.

The actual difference between the position of Rick Boucher and the position of Morgan Griffith in the matter of Cap and Trade is minimal, and the difference in what actually comes about will never be known. We will elect one or the other and never be able to compare them. Of course the loser in the contest always gets political sniping rights, so whomever we elect, the other one will be able to say he could have done better. That is the way politics works.

I hope that people in the Ninth recognize the ability that Congressman Boucher has to represent them in Washington, that they will think of the clean water, jobs, broadband, roads, and other infrastructure that he has brought to the Ninth District. Surely they can see his commitment to coal if they are looking. I can see it very clearly, and I wish he had a little less commitment to coal. But coal production is one of those complex issues that would get better for everyone if we could look straight at it and work on creating better processes.

I hope also that Ninth District voters in November will remember Congressman Boucher’s many services to individuals in the district, both Democrat and Republican. If a person lives in the Ninth and cannot personally name four or five people who have been assisted over the years by Congressman Boucher, that person has not been paying attention.

What bears repeating

If there were critical fact-based comment, people would notice that under the “small government” conservatives, government grew by leaps and bounds. Also, they would see that the surplus that “tax-and-spend” liberals handed to cost-conscious conservatives was rendered — by conservatives — into a staggering deficit.

“How American Democracy Isn’t Working,” from way back on March 4th.

Open letter to Virginia legislators

This letter has been sent on e-mail to my Senator, William Wampler,  and my Delegate, Joseph P. Johnson:

Dear (Virginia legislators)

I am writing to encourage you to vote against amendments to the budget bill that cut services in health, support of families and children, and education. I know that these are rough financial times. Rough financial times require us to hold our breath and trust one another, to share our resources so that everyone can come out okay in recovery. This is not the Democrat way or the Republican way. It is not the Christian way. It is not the way of the right or the left. It is in fact the only way to recovery. Nothing else works for hard times.

As a student of history, which I know you are as well, I know that governments are instituted to serve people, to make a good life a possible goal, and to even out the good times and the bad times. Virginia has done well with that, and has maintained a good environment for business and workers. If we cut health, family support, and education now because of hard times, we won’t all come out okay in the recovery. We will in fact all come out worse, because we will downgrade the educational level of our workforce, lower the standard of health for the Commonwealth, and leave families — upon whom society rests — to fend for themselves.

I don’t think people are as mean and greedy as they have been represented in the press, and I don’t think they would be as angry if our leaders, like yourself, would stand up and give them the truth instead of letting them receive their news and views from FOX. Most of us wouldn’t mind a small tax increase if it meant that we could go to bed each night knowing that Virginia’s mothers and children were not hungry or cold or ill and unable to afford medicine. Every Virginian is either a mother or a child of a mother, so every Virginian knows what I am talking about on a very personal level.

I know that you can’t spend money you don’t have, but I also know that people of a democracy or a commonwealth count on government to create and run programs and projects for the benefit of citizens. When a government loses or gives up the ability to raise revenues for essential programs, it can no longer serve its purpose. It changes from being a servant and conservator of the Commonwealth to being an expensive parasite, absorbing resources for its own existence when it can do us no good.

Please vote “no” on additional cuts, and give us a budget that will let us sleep better in the Commonwealth. There will be a great health benefit to that good night’s sleep we get after making sure we have done all we can for the people we serve.

where the disconnect is

The news is full of people telling us how the downturn is going to be worse and the Obama recovery plan is not going to work. They are saying there is a disconnect between the plan and the reality.
The disconnect exists because the top tier of the economy, people who collected the big bonuses and extravagant salary and benefit packages of large corporations, have become accustomed to government handouts while making sure that there are no handouts to anyone who actually needs one. When the government gives to banks and corporations, it is supporting the market economy. When it gives to working people, the middle class, or to the poor that is Socialism.
Here is how the bailout has worked so far: every dime that the Government has given to banks and corporations to spur the economy is still in the pocket it went into. Owners and CEO’s and people in a position to control this windfall are accustomed to entitlement, and they are not going to let go of any of it to restart lending or create jobs or invest in recovery. They are going to put it in their treasure room as a hedge against harder times. This is their reality. This is what caused hard times in the first place, people who had legitimate or fraudulent (or that new hybrid) access to our invested retirement and savings and home equity pulling it out of circulation and socking it away, freezing it for themselves as their security in the coming apocalypse. We all know that greed is a sin, so they will surely be Left Behind, protected by their money when a few of us have been taken in the rapture and the rest have been swept away by turbulence.
That is why, to get lending and investment flowing again, we will have to raise taxes on the wealthy owners and operators of banks and corporations. They will never re-invest the wealth they have bled off, and there will never be any more wealth to bleed off unless we force re-investment by taxing and government spending.

Our money at the pump and on the hill

Did you know that Congress gives Big Oil $6 billion in tax subsidies a year?