The Sovereign Mind

Free thought on politics and real life

Archive for February 2009

Obama’s Inheritance

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When speaking to the nation about his budget, President Obama made sure we all remembered that he inherited the deficit. It was not of his own making. Of course this is true, except for the almost trillion dollar spending package, but even that can be argued was the necessary result of previous policies. So I don’t blame Obama for not wanting to take blame for the massive deficit we find ourselves in.

For a few years, the financial policies of the Bush administration seemed to be working. But the seeds of recession, planted long ago, were quietly being cultivated. Then, the weeds sprung up all at once. Now it’s up to Obama to clean it up, and he’s right to remind us that it was not his mess.

But fast forward to today, when President announced his plan to withdrawal troops from Iraq:

The situation in Iraq is the opposite of the situation with our economy. There is no doubt that the Bush administration made mistakes in Iraq. But then we changed course. Bush replaced the leadership and came up with a new plan, and had the audacity to urge us to have more patience with him, our troops, and the Iraqi people. Amid the apparent chaos in Iraq was being sown the seeds of freedom and peace that started to emerge as Bush’s time faded. While I wouldn’t go so far so say that the rose has bloomed, President Obama inherited that bud just as much as he inherited the thorns in the economy.

But did Obama go out of his way to thank President Bush for this inheritance? Did he thank him for sticking up for the plan he knew was best for the nation–the plan that Obama opposed? If he did, wouldn’t that have been a refreshing change from the politics of the past?

He didn’t, but I will. Thank you, President Bush, for giving our troops and the Iraqi people a chance. You left us with plenty of problems to deal with, but I’ll give credit where credit is due.

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Written by Mike

February 27, 2009 at 8:29 pm

Rare Disease Day 2009

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Saturday, February 28th, is Rare Disease Day 2009. Some might wonder why we need a day to recognize rare diseases. I would have wondered the same thing myself about two years ago. But as a parent of a child with Eosinophilic Esophagitis, I now understand that patients with rare diseases face a unique challenge. For more common diseases, research and investment dollars are much easier to come by. This is for good reason, because each dollar carries more bang for the buck because of the economy of scale. If you could help save 1000 kids for the same amount of money as it would take to save 1, which would you choose?

Last year American Express hosted a competition, of sorts, between charitable initiatives. The idea was to have people present ideas that needed funding, and then narrow it down to 25, based partially on public voting. The project named “EE – Save Sick Children”, aimed to raise money for APFED, finished second in the overall vote count. However, American Express decided to exclude the project from the final 25 projects. Am I angry about that? No. I don’t really blame them. I don’t know that the project was really more deserving than other projects. Still, this illustrates the difficulty those with rare diseases have in getting the research attention needed to help them.

It’s important that our society does not forget about those of us who have the double-challenge of not only having a chronic disease, but one that is not well known, understood, or researched. That is why I’m grateful that organizations like The National Organization for Rare Disorders have fought for people like me long before I knew I would care. Please watch this video and take a moment this Saturday to think how you can help those who are sick for no fault of their own, especially those struggling not only with their disease, but fighting a lonely battle:

Thanks to The Moderate Voice for bring this day to my attention.

Cross posted to DaddEE

Written by Mike

February 25, 2009 at 10:32 pm

Unilateral Bipartisanship

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David Axerlrod on Meet the Press (my emphasis added):

MR. GREGORY: All right, so how was [the Republican party’s] influence felt [in the stimulus bill]?

MR. AXELROD: Well, I think in tax–in terms of tax cuts. I think the tax cuts reflect some of their, their thinking. I mean, we agreed with them in terms of tax cuts to help small businesses get through this. They–their–the AMT is now added. The AMT fix is now added to this. The, the, the Web site recovery.gov was suggested by Representative Cantor, the leader of the opposition in the House.

Maybe I’m reading too much into this, but I don’t think so. Notice the words he struggles with. He wants to portray the tax cuts as concessions to Republicans, but at the same time does not way to give away the credit for their inclusion from the Democrats. The worst thing Democrats could do right now is concede the point that Republicans have been making for a long time: that Democrats are against tax cuts. But at the same time they want to be able to point to the tax cuts as evidence of concessions to the Republicans. They’re walking a fine line and getting away with it for the most part.

My impression of the Democratic view of bipartisanship: “We welcome ideas from across the isle, as long as they are also our ideas.”

I don’t blame Democrats for wanting to limit the Republican influence on this bill. Let’s face it: they won that right in November. But don’t try to portray it as bipartisan because a Republican suggested a website. Because, you know, clearly the success or failure of the stimulus package hinges on recovery.gov.

Written by Mike

February 17, 2009 at 7:35 pm

The Economic Surge

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“History doesn’t repeat itself, but it does rhyme.” — Mark Twain

Rewind to a few years ago, and the buzzword was “surge”. The president was pushing for a surge in troops to stabilize Iraq. The Democrats, including the then-senator Obama, opposed opposed it feverishly. Republicans were saying that they were voting for defeat in Iraq. Fast-forward to a few months ago, after things had improved in Iraq, when Obama said this:

Katie, I have no idea what would have happened had we applied my approach, which was to put more pressure on the Iraqis to arrive at a political reconciliation. So this is all hypotheticals. What I can say is that there’s no doubt that our U.S. troops have contributed to a reduction of violence in Iraq. I said that– not just today, not just yesterday, but I’ve said that– previously. What that doesn’t change is that we’ve got to have a different strategic approach if we’re going to make America as safe as possible.

So, basically, the surge worked, but things might have been even better had they tried Obama’s approach. It’s a tough political tight-rope, but Obama overcame it because the war in Iraq in general was unpopular, so some people gave him the benefit of the doubt.

Today, Obama wants to execute an economic “surge” by injecting almost a trillion dollars into our economy (put on credit). Almost all Republicans oppose it, but it will be signed by the President shortly. Democrats say that Republicans are voting for America to fail (sound familiar?). Many pundits say that the Republicans have put themselves in a risky position. There are only two possibilities, they say:

1) The economy recovers, and the Republicans appear to have been trying to stop the economic recovery, and being against the American people.

2) The economy gets worse, and the Republicans are vindicated to opposing a bill that they correctly predicted would not help, and the “we have to do something” line is proven to be a nonsensical political argument.

But they ignore another possibility. I believe the economy will recover, but as any logician will tell you, just because Y follows X does not mean that X caused Y. It will be difficult to tell whether the stimulus package really helped or not, although Democrats will insist that it did. Republicans will find themselves in the position that Democrats did just a few months ago: defending the opposition to a policy that appeared to have succeeded. I can see them saying something like this:

“Yes, the stimulus might have helped, but think of how much it cost us. We didn’t get a chance to try our plan, which would have been less costly and helped get us out of the recession more quickly.”

Even if technically true, that is a difficult political argument to make. But, it worked for Obama on the Iraq surge, so will it work for Republicans?

No. The difference is: the people will not give the Republicans the benefit of the doubt as they gave Obama, since the Republicans are seen (rightly or not) as having caused the mess in the first place.

The bottom line: it’s tough to be a Republican these days. You lose when you win and lose when you lose.

(Note: Very rarely do I consider raw political analysis like this to be very worthwhile, but given the similarities of this situation and the Iraq surge situation, I found it interesting.)

Written by Mike

February 14, 2009 at 7:36 am

Old People Are Stupid

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… or so our society thinks.

When John McCain was running for president, he was criticized for not knowing how to use a computer. Al Gore was recently caught on tape telling a group of youth, “There are some things about our world that you know that older people don’t know.” And then there is this cartoon. The political viewpoints expressed here are not important to me for this subject, but what is important is that clearly old people are considered second class citizens in our society.

But isn’t that just the way society goes? One generation passes the baton to the next, and only the younger generation has the ability to look at problems with fresh perspectives and solve our problems. One might argue that this view is not intended to demean older people, only to reflect a shifting of responsibility from one generation to another. But before we jump to the conclusion that young people are always the answer to our problems, let us examine this question: Are young people always right?

In many cases, they are. One can point to the example of the equal rights movement in the United States, which is the favorite example of those who assume young people are right. However, there are also counter examples: Socialism and Nazism were movements led primarily by the younger generation. There is also the hippie movement, which arguably was a bad thing, or at the very least produced some very negative consequences.

Let’s contrast the view our society with the Hindu tradition of respect for the elderly. I don’t advocate we adopt the Hindu customs, but neither should we be so arrogant that we refuse to learn from other cultures. It may be just a dream, but there is definitely something attractive to me about the idea that our goal in life, when we are young, is to learn as much as we can about the world, and then, when we are old, we can impart that knowledge to the younger generation. There are obvious benefits to that situation, as opposed to the reverse. While of course I don’t think that is a plausible goal, it’s certainly worth thinking about.

We learned in kindergarten that there’s a reason we have ears and eyes in twos, but only one mouth. Maybe it’s not a coincidence that older people tend to lose their hearing and sight. Perhaps we should remember that, including me.

Starting… now…

Written by Mike

February 9, 2009 at 10:24 pm

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The Housing Crisis: Rethinking Rent vs. Buy

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A few years ago, when my wife and I were looking to buy our first home, we had a conversation with a seller’s realtor that went something like this:

Realtor: “Well you know, when your considering how much you can afford for your home, you should take into account that your mortgage interest will be tax deductible.”

Me: “Yeah, that’s true. But this home still seems like it might be out of our price range.”

Realtor: “Really? Well, that tax deduction will save you a couple hundred dollars on a house like this.”

Me: “Actually, I’ve looked at the numbers, and that assumes that we are currently itemizing. Since we’re not, a lot of that tax deduction will just go to getting us over the line where taking the itemized deduction is better than taking the standard deduction on our tax returns. In our case, I think it will only save us about a hundred dollars.”

Realtor: “Oh… well, you should really talk to a financial advisor about that… so, let’s take a look at the basement…”

During our home buying experience we were bombarded by anecdotes about how much money people make from their home. People would tell me that they sold their home for $50,000 more after 5 years, but completely ignored the fact that they paid almost that much in mortgage interest and property tax over that same amount of time.

We did end up buying a house (not from that realtor), but I didn’t think of it as an investment primarily. What we wanted was difficult to find in a rental, and we wanted our own space. We bought in a location that was not part of the bubble for the most part, we got a fixed rate loan, and made sure we could afford the payments. I can’t say we were completely responsible: we did get a zero down payment loan.

My personal story aside, let’s re-think the rent vs. buy assumptions:

Most of the angst regarding the current housing crisis is related to this common theme:

Why should the little guy suffer because banks and real-estate investors made bad decisions?

That seems like a reasonable question. If the real estate market tanks, it makes sense that the investors and banks should lose money. They are the ones that had the money to invest and were making the decisions. But I have bad news: If you own a home, you are a real-estate investor, and a pretty badly diversified and leveraged one at that. And you’re not only invested in the real estate market, but also in all of the financial system that decides how it is managed. So that’s why the little guy (or at least the little real-estate investor) suffers because of the housing crisis.

So how did that happen? You wouldn’t take out a loan at 7% to borrow $200,000 to invest in the stock market, would you? That would be very risky because even if the stock market drops 1%, you are now short $2,000, or more considering your interest is still added in good times and bad. Of course you wouldn’t do that unless you have money to burn, but that’s what you are doing when you buy a home. Some thought the real-estate market was a safe investment (it’s not as volatile as a stock), but that was foolish thinking. If it can go up fast (which it did in many markets), it can come down fast. That is a basic principle of investment: The more reward, the more risk.

Not only that, but home ownership also makes you less mobile, making it more difficult to find new jobs in new places during economic trouble.

This lesson comes too late for the 10% of home owners that find themselves upside down in their loans, and there’s no doubt that mortgage brokers who sold them on false hopes have their (big) share of blame as well. But what about the future? What should be done to prevent this from happening again?

I think the answer is simple:

The concept of home ownership should no longer be part of the American dream.

Apparently I’m not alone. Even Barney Frank, who has been one of the biggest proponent of the home ownership for all (otherwise known as the “everyone should be a highly-leveraged and badly diversified real-estate investor” policy), is now saying that perhaps home ownership for all was not the right policy to pursue:

One of the problems that we got into was we did way too much home ownership and way too little rental housing. And [we need to start] getting the federal government back in the business of rental housing. And passing legislation to restrict bad subprime loans will be high on our priority list.

I’m not sure I agree with his knee-jerk reaction that the government needs to provide said rental housing, but I agree that “we did way too much home ownership” as both a government and a society.

For years people have been saying that renting is “throwing your money away” and promoting home ownership as the basic status symbol of economic prosperity. Who has been saying this? Well, the same Barney Frank for one. His own website touts the benefits of the “Expanding American Homeownership Act of 2007”, some of which include lower down payments and more mortgages to higher risk borrowers.

But politics aside, I hope we will learn this lesson from this crisis: The American Dream cannot be purchased with a credit card. The American Dream is not about what you own; it is not about short-cuts or get rich quick schemes; it’s about what you do; it is about freedom: freedom to work, be smart, innovate, struggle, and succeed.

Written by Mike

February 6, 2009 at 9:19 pm

Obama: “I Screwed Up”

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Robert Gibbs, Obama’s press secretary, says this about the withdrawl of Tom Daschle as the nominee for secretary of health and human services after it was revealed that he failed to pay hundreds of thousands in taxes:

Obama’s response, to his credit: “I screwed up”.

My inconvenient question: If Daschle’s nomination was a screw up, why wasn’t also the nomination of Timothy Geithner, who also had to pay back taxes, as treasury secretary? He was recently confirmed. If Obama thinks the Daschle pick was a screw up, does he think that of the Geithner pick as well? I can only assume so, considering if any nominee deserved scrutiny for tax issues, it should be the guy who will head up the IRS. So what is he going to do about it?

Written by Mike

February 3, 2009 at 10:08 pm