Wednesday, July 30, 2014

What is a Hoosier?

What is a" Hoosier"?

Credit: Indiana Historical Association

I know that is what you call someone from Indiana. However, what was a "Hoosier" before Indiana became the Hoosier state?

I live 30 minutes from the Indiana state line. I once lived in Indiana. I drove across a good part of Indiana yesterday driving back from Chicago. However, I never knew what a "Hoosier" really was.

It seems that there is no definitive answer to what is a "Hoosier". There is a lot of speculation of where the term came from. Jeffrey Graf of the Reference Desk of the Indiana University Library provided the best summary I could find of the possible theories. These include:

  •  "Who's here?" as a question to unknown visitors or to the inhabitants of a country cabin;
  •  Hussar, from the fiery European mounted troops; "Huzzah!" proclaimed after victory in a fight; 
  • Husher, a brawny man, capable of stilling opponents;
  • Hoosa, an Indian word for corn;
  •  Hoose, an English term for a disease of cattle which gives the animals a wild sort of look; and the evergreen
  •  "Who's ear?" asked while toeing a torn-off ear lying on the bar room floor the morning after a brawl. 

However, Graf believes that a "Hoosier" was most likely used to describe a hick or a hillbilly.
The best evidence, however, suggests that "Hoosier" was a term of contempt and opprobrium common in the upland South and used to denote a rustic, a bumpkin, a countryman, a roughneck, a hick or an awkward, uncouth or unskilled fellow. Although the word's derogatory meaning has faded, it can still be heard in its original sense, albeit less frequently than its cousins "Cracker" and "Redneck."
From the South "Hoosier" moved north and westward with the people into the Ohio Valley, where it was applied at first to the presumably unsophisticated inhabitants of Southern Indiana. Later it expanded to include all residents of the state and gradually lost its original, potent connotation of coarseness in manners, appearance and intellect.
I am not sure any of these is correct based on a recent article I saw in Claims magazine (July, 2014) on the "10 Best and Worst States for Teen Drivers".

After reading that article, I would conclude that "Hoosier" meant bad teenage driver.

Consider these troubling facts if you travel the roads of Indiana:

  • Indiana has the most teen driver fatalities per licensed teen drivers in the U.S.

  • Indiana has the the second highest number (behind New Mexico) of teen "Under the Influence" traffic violations per licensed teen drivers.

On the hand, Indiana has fewer teens with driver's licenses than in any other state and they have some of the most restrictive laws in place for their teen drivers.

  • Indiana has the lowest percent of the teen population with driver's licenses.

  • Indiana is one of only 11 states that has at least five of seven optimal "Graduated Driver License Program Laws (GDL) which are designed to make teenagers better drivers. These include a minimum age of 16 for a learner's permit, 6-month holding period, 30 to 50 hours of supervised driving, nighttime driving restrictions, passenger restrictions, cell phone restrictions, and age 18 for an unrestricted license.

Go figure that one out.

What is a "Hoosier"?

I remain confused.

Tuesday, July 22, 2014

The Redistribution of Ohio

For the first 175 years of our country's history, it was generally accepted that the principal roles of government were to establish and maintain justice, insure that people were safe in their homes and on the streets, provide for a national defense and build and maintain public works such as roads, bridges, schools and libraries for the common good.

The focus was almost entirely on the collective and common good and the general welfare. In effect, doing those things that no one individual or small group could effectively do for themselves.

For example, in 1945 payments to individuals made up less than 3% of federal spending.  In 1970, it was only 30%. As late as 1990 it was still below 50%.

The majority of tax dollars were expended for the benefit of all.

The federal government will spend about $3.7 trillion this year. However, 68% of it will be in direct payments to individuals on spending for Social Security, Medicare, Medicaid and other entitlement programs.

What we would generally consider the traditional functions of government do not make up even one-third of our expenditures at the federal level today.

In effect, the federal government has become nothing more than a giant redistribution system in which money comes in at one end from one group of people and it goes out the other end to another group of people with a lot of bureaucracy and built-in bias in between. After all, you need a lot of both to decide who gets and who gives when you are picking and choosing winners and losers. I call it "The Redistribution of America".

The government we have today is far different than what our Founding Fathers thought they were establishing in 1787.  It is also far removed from the government construct for the American people that stood the test of time rather remarkably well for almost 200 years.

It is no different with state government.

I recently took a detailed look at the state budget of my home state of Ohio. I knew the same forces were in play at the state level, however, I was shocked at how far the role of state government has strayed from where most people expect their tax dollars are being allocated and spent.

When I ask most people what they believe the three most important functions of state government are, I usually get these responses.

Roads and Transportation
General Public Services & Safety (Parks, Water, Sewage Treatment, Public Safety)

Accordingly, I think that most people would believe that the three highest priorities for their tax dollars would be in these three areas.

They would be correct if they lived in Ohio in 1970.

In that year, 60% of the Ohio state budget was allocated to these priorities, all of which are expenditures for the common good. Public schools and universities that are for the benefit of everyone. Roads and rail lines that everyone can take advantage of. Parks, libraries, state police, prisons, water supply and sewage and other public services that serve the entire population.

Welfare spending, health care and pensions, all of which take the form of direct payments to individuals, made up 36% of the budget in 1970.

The remaining 4% of the budget was for general government and interest payments.

What does the picture look like in Ohio in 2014?

Education, roads and transportation, general public services and safety now make up just 19% of total spending in Ohio.

On the other hand, welfare, health care spending (the majority of it going to Medicaid) and pensions consume 79% of the state budget!

Let me do the math for you.

Spending on welfare, health care and pensions has gone from 36% of the budget to 79% of the budget since 1970.

This spending has effectively crowded out all spending on education, roads, public services and safety. Spending on these priorities in state spending have declined from 60% of the budget to a mere 19%.

We used to believe that the principal role of government was to provide public services. Today it is really about the provision of personal services in payments for individuals with pensions, nursing home and medical costs topping the list.

We are not talking about small amounts of dollars either.

In 1970, Ohio's total state budget was $2.6 billion.

In 2014, the state of Ohio will spend $58.1 billion.

That is a compound average increase in total spending of 7.3% per year.  Inflation over the same period has averaged a little over 4% per year.

To put that in perspective, if state spending in Ohio had merely stayed even with inflation, the state budget would be $16 billion today. Therefore, spending in Ohio today has increased by $42 billion over the rate of inflation in real terms since 1970.

The chart below shows the growth in spending of each of the major categories of state spending in Ohio in relation to inflation since 1970.  The blue column shows spending in 1970. The red column shows what that spending would be today if spending merely increased with inflation. The green column depicts what actual spending is in each category in 2014.

Since 1970, $1 adjusted for inflation, would be $6.14. Therefore, a 6.1x increase in spending would be expected to just keep up with inflation.  Spending in excess of that amount are increases in real spending.

Inflation                                      6.1x
Overall Spending                      22.3x
Education                                  14.5x
Transportation                            6.1x
Gen'l Public Svcs & Safety          5.4x
Welfare                                      13.5x
Health Care                               66.7x
Pensions                                    76.0x
General Government                 17.0x
Interest                                       12.0x

It is truly astounding to take a step back and see what has occurred in Ohio and the United States in my lifetime.

Now you know why I also refer to it as "The Redistribution of Ohio".

We have given up the public interest for the sake of personal interests.

We are taking from the private sector and giving the public sector wage and benefits packages that were long ago deemed unaffordable to those paying the taxes that fund those benefits.

Most importantly, we have massively tilted spending towards the older generation and away from the young in state education funding.

I am sure it is not much different in your state.

If you want to find the budget numbers for your state you can go to which has historical data for all states and the federal government.

Sunday, July 20, 2014

Rockets and Response

Thousands in Europe rally for Palestinians

Peaceful protest held in London while demonstrators in Paris defy ban on protests and clash with riot police

This was an Aljazeera headline to the story that began this way.

Thousands of pro-Palestinian protesters have marched across Europe, calling on their governments to condemn Israel's military bombardment of Gaza.

Of course, there was no mention in the story that the Israel's military action against Hamas in Gaza was in response to a continual barrage of rocket attacks from that territory.

How many rocket attacks have there been against Israel from the Gaza Strip over the last 13 years?

Over 16,000!

This is a graphic from the Israel Defense Forces of the number of rocket attacks on Israel from the Gaza Strip since 2001. Bear in mind that the 2014 number is the volume of attacks before Israel took any action.

Ask yourself what other country in the world would allow this many rocket attacks and do nothing?

Since Israel responded, Hamas has launched an additional 1,000 rockets at Israel.

The protests in Europe against Israel should not surprise anyone when you consider the fact that there are nearly 44 million Muslims in Europe today compared to 1.1 million Jews. 

In the United States, there are 6.5 million Jews and 5.1 million Muslims. There are actually more Jews in the United States than in Israel. In fact, 88% of all Jews in the world live in the United States (46%) or Israel (42%).

This is a major factor in the animus towards the United States in the Muslim world and why it is so difficult to engage Europe in an even handed approach in discussions about Israel and the Middle East.

It is not likely to get any better in the future. In fact, it is likely to get much, much worse. Although the overall fertility rate is low in Europe, the Muslim birth rate in Europe is three times higher than the non-Muslim rate. This will feed additional cultural and political divisions across Europe going forward.

With all that is going on between Israel and the Palestinians right now, I thought it was a good time to revisit a post I wrote almost three years ago for some perspective and context on the subject.

Palestine and Israel (first published in BeeLine 9/22/11)

We often hear of the plight of the Palestinians and we see the utter hatred of Israel and the Jewish people by Muslims.  Sitting here in the United States it is hard for the average person to figure out what is going on.  I came across three recent stories that provide a little context.

The first is "Debunking the Palestinian Lie" that I found on PowerLine.  We often hear about how Israel has pushed the Palestinian people from their rightful country.  The fact is that they never have had their own country. Their statehood was never even recognized when the Palestinians were part of the Turk's Ottoman Empire.  They were given plenty of opportunities to have their own country over the last 90 years.  They simply refuse to allow the Jews to be anywhere near them and have their statehood as well. They have made it perfectly clear they have no interest if they cannot also obliterate Israel.

View the short video linked in the Powerline story if you are not aware of the history and the multiple times that the Palestinians have been offered their own state.

You might also want to read this story, "A Century of Palestinian Rejectionism" by Fred Siegel, for some historical context.

The third story is a column by Diana West where she writes that "The Jihad is Against the Bible".  Ms. West says make no mistake, it is Israel in which the axis of Islamic Jihad turns.  Why Israel?  West quotes Bat Ye'or's new book "Europe, Globalization and the Coming Universal Caliphate".

Why Israel? Ye'or asks. "Given the immense territories conquered and Islamized over thirteen centuries of expansion and war," she writes, "why would Muslim countries keep plotting to destroy Israel?" And further: "Why does the immense oil wealth of Muslim nations nourish a flood of hatred that poisons the heart of humanity against such a small nation? Why is Israel considered so alarming?"
The well-read global citizen might regurgitate something about land, modern Zionism and the post-1948 "plight of the Palestinians," but these are stock narratives overwriting the age-old reason. "What Israel possesses," Ye'or explains, "is the Bible."
To appreciate the depth and breadth of this perhaps obvious but seldom pondered explanation, it's essential to realize that Jewish and Christian Bible characters, from Abraham to Moses to Jesus, pop up in the Koran as Muslim prophets who actually preach Islam, not Judaism or Christianity. This is the time-wrinkling, religion-morphing way in which Islam repudiates what it regards as falsifications in both the first (old) and second (new) testaments. Given that the Jewish and Christian religious books long predate the Islamic religious book, it's not surprising that in their Koranic guises the biblical characters "wander," as Bat Ye'or writes, "in uncertain space with no geographical or temporal references." Still, Muslims claim that these same "Muslim" characters lived in "Palestine," Bat Ye'or writes, on the basis of the "Jewish and Christian scriptures that they reject."
The land of Israel itself -- whose "every region, town and village is mentioned in the Bible with historical and chronological precision" -- is thus "sacrilegious" to Muslims, she explains. "They observe with destructive rage this unfolding return of history that they claim as their own. ... Any confirmation of the veracity of the Bible is seen as an attack on the Islamic authenticity of the Koranic figures taken from the Bible."
So much for those slivers of real estate as being the driver of war on Israel. It is, in fact, a jihad, a religious war against Judaism and the land of the Bible, root of Christianity. As Ye'or puts it, "Israel, in the land of its history, towns and villages, resuscitates the Bible, the book the Koran must supplant."
The bottom line according to West is that the war on Israel is also a jihad against the Bible and Christianity.  The real story is that Muslims believe that Christians have gone astray by placing themselves in the lineage of the Hebrew Bible when their real origin is Islam.

Getting rid of Israel and the sustaining Jewish roots is seen as necessary to facilitate the Islamization of Christians which is the final goal.

Thursday, July 17, 2014

The Reckoning

Border Chaos. Benghazi. Bergdahl/Taliban Swap. Ukraine. ISIS. IRS Scandal.VA Scandal.

In normal times any one  of these stories could stoke a media fire that could burn for months with the Washington media. Especially with a Republican in the White House.

All of these headlines are burning at once but there is only so much oxygen in the room and so much room on the front page. The Border Chaos story is burning the brightest right now (although the shooting down of the Malaysian jetliner has pushed that off the headlines today) but there are a lot of fires burning at once in the background.

In my lifetime I have never seen anything like it. It just keeps coming week after week. Scandals. Incompetence. Insouciance. It borders on the surreal as to how one man could create so much havoc.

Of course, with all of this going on it has been easy to forget about Obamacare. However, it is still there even though it has been knocked off the front page for now. It remains the biggest man-caused disaster of them all.

I thought it would be worthwhile to take a look at the expectations that were established for Obamacare when it was being lobbied for by the President and the Democrats in Congress and what it has actually delivered in results. You might call it a reckoning. How has Obamacare performed compared to how it was supposed to perform?

When Obamacare was being voted on in the Congress in early 2010 the Congressional Budget Office(CBO) projected that is would reduce the number of uninsured by 19 million in 2014.

After the U.S. Supreme Court ruled that portions of the Medicaid expansion provisions in the law were coercive to the states, the CBO adjusted that number down to 14 million.

In February, 2014, after the disastrous launch of the Obamacare exchanges, the CBO revised the number gaining healthcare coverage down to 13 million.

In April of this year, the CBO took the number down again---to 12 million.

The actual number who have been taken off the rolls of the uninsured, according to studies by the Urban Institute and Gallup---8 million!

All of the data above from this article in The Weekly Standard by Jeffrey H. Anderson.

If you are keeping score, that is about 40% of what we were told was the expectation when the law was passed.

What about the cost?

We were told that we could cover 19 million more people for a ten-year cost of $938 billion.

By 2012, CBO was estimating that it would cost $1.677 trillion to cover 14 million (their revised number of the number of uninsured who would be covered under the law).

The most recent CBO estimate is now $1.383 billion.

However, the fact is that the enrollments are 40% below expectations and the costs are over 40% above projections.

I guess all you can say is "it's good enough for government work".

When you put the two together you get this chart on the cost of providing government-provided healthcare coverage to each of those taken off of the rolls of the uninsured so far.

When the law was passed, CBO projections indicated that the cost to provide health coverage for each uninsured would be $49,368 (over 10 years). The cost has now ballooned to $172,875 per uninsured gaining coverage.

Why are costs so much higher than projected?  Start with the fact that individual-market premiums increased an average of 49% under Obamacare according to a study by the Manhattan Institute. Then consider the fact that an estimated 83% of the people signing up for Obamacare in the health care exchanges are eligible for a subsidy. Finally, understand that the average subsidy offsets 76% of total cost of the coverage.

Therefore, Obamacare had the result of dramatically increasing costs in the individual market and then provided federal subsidies using tax revenues to cover the additional costs in addition to the costs that were already not being covered.

So, by and large, all Obamacare has done is dramatically increase (rather than decrease) health care insurance costs in the individual market while at the same time providing subsidies (using tax dollars) to cover the newly inflated costs to create more people who are dependent on government for their needs.

At the same time, they have made the individual health insurance even more unaffordable for anyone who does not qualify for subsidies. That is the reason that all of the waivers and exclusions to the law have been provided by the Obama administration. That keeps the real facts from the people and out of the headlines until after the next election when those rules will be enforced under the law.

It is just too inconvenient for Democrats for President Obama to enforce the law that he advocated for and signed right before an election right now.

There will be a bigger day of reckoning on Obamacare . When will that be?

Is it going to be when everyone finally realizes what Obamacare is really all about after all the Presidential deferrals, deferments and delays are over?

However, if people are paying attention it should be in this November's election and those that will be subject to the reckoning are the Democrats who created this monstrosity. If not, the hard-working people who have to pay the bills in this country will lose again.

The people's power is absolute in our system.  Unfortunately, too many people don't believe it. Laws that do not have public backing do not survive over the long term. Lawmakers who make laws that people do not support do not stay in office.

Politicians have no power unless the people provide it. It is that simple.

We can complain about Barack Obama, Harry Reid or Nancy Pelosi. Throw in John Boehner or Mitch McConnell as well if you want to. The voters gave them the power they have. Throw out Eric Cantor. The people took away his power. It can and does happen when the people exercise their power.

Are the American people ready to reckon? It is in their power to do so.

Tuesday, July 15, 2014

Songs and Goldfish

"A picture is worth a thousand words."

"Music makes the world go 'round."

You have heard both of these quotes.

Google now puts the two together with an amazing interactive data visualization tool that shows the popularity of different musical genres since 1950.

This is how the music timeline is described by Google Operating System which is a blog about unofficial news and tips about Google.

Google found a great way to use the data from the people who uploaded songs to Google Play Music. Google Music Timeline "shows genres of music waxing and waning, based on how many Google Play Music users have an artist or album in their music library, and other data (such as album release dates). Each stripe on the graph represents a genre; the thickness of the stripe tells you roughly the popularity of music released in a given year in that genre."

You can visit the interactive timeline here. 

Using the interactive feature in the timeline you can see the ebb and flow of each musical style.

For example, here is the timeline of rock music which shows the emergence of rock music in the 1950's followed by its dramatic rise in popularity in the early 1960's followed by its fragmentation into surf rock (big in the mid-1960's) classic rock, hard rock and other smaller rock categories. over the years.

On the other hand, here is the timeline of jazz music which dominated the 1940's with Big Band and Bop and gave way to the emergence of Rock music in the 1960's.

The early 1980's brought two distinctly different musical genres to popularity--HipHop/Rap and Christian. It is interesting that they both emerged at the same time when their message and lyrics could not be much further apart. This is the timeline for HipHop/Rap.

The Christian/Gospel timeline looks like this. The late 1950's saw some popularity for what was called Country or Southern gospel music but in the 1990's Contemporary Christian music took hold and carried this genre to a lot of popularity. This is the music I am most likely to be listening to today. Mercy Me, Casting Crowns, Third Day, Chris Tomlin, Francesca Battistelli, Mandisa and Matt Redman are all artists that I like.

Country music has probably displayed the most consistency in popularity since 1950.  It had its hey-day in the late 1950's but it has stood the test of time better than most genres.

What is most interesting in looking at where we are today is the broad diversity and variety of music that is popular. No single genre captures more than 20% of the total and there are more music styles than ever before. The music world is as different and diverse as what we find in our own world today. There have been a lot of changes in the world in the last 60 years and music shows how that rhythm has changed through the years.

Speaking of music, I came across another interesting data visualization graph that showed the changes in the length of songs over time.

Before the 1970's songs generally were less than 3 minutes in length. Since the mid-1980's song length has averaged about one minute longer. Why it that?

Technology might be part of the answer. Songs are meant to be heard and until the early 1970's the best way to do that was to listen to it on the radio.  Disc jockeys at radio stations spun 78rpm or 45rpm records that only could hold about a 3 minute song.

DJ Alan Freed in the 1950's
Credit:The Pop History

Songs seemed to get longer with the increased use of cassette tapes in the 1970's that replaced records at radio stations and in homes. And the introduction of 8-track tapes in automobiles let people customize their song lists. Songs got even longer as digital CD's started being introduced in the mid to late 1980's and reached their greatest length in the mid-1990's.

8-track tapes

In the digital age we live in today there is no technological limit to the length of a song. However, over the last 20 years the average song length has slowly declined. This trend seemingly can also be traced back to technology. With the proliferation of digital devices, social media and the like, attention spans have gotten shorter and shorter. People will obviously only listen to a song for so long before they want to move on. Songwriters get it and song lengths have gotten shorter.

If you don't think attention spans are short today, consider this little factoid.

According to the National Center for Biotechnology Information, at the U.S. National Library of Medicine, the average attention span of a human being has dropped from 12 seconds in 2000 to 8 seconds in 2013. This is one second less than the attention span of a goldfish. That’s right, goldfish have an attention span of 9 seconds – 1 second more than you and I.

Wednesday, July 9, 2014

By The Book

If you are going to run for President its seems that you have to write a book before you start campaigning.

George W. Bush-A Charge to Keep (1999)

Barack Obama-The Audacity of Hope (2006)

John McCain-Hard Call (2007)

Mitt Romney-No Apology (2010)

Hillary Clinton has followed the same formula as she seems to be preparing for her campaign for the Democrat nomination for President in 2016.

However, Hard Choices has turned out to be a hard sell. It also it must be hard to read. Finally, Hillary has had a hard time of it as she has done interviews promoting the book.

The Washington Post reports just how bad sales have been for Hard Choices.

If you haven't been paying attention, national sales of Clinton's book in hardcover in the first week were well below sales of her biography, Living History (though they exceeded first week sales of other political works). In week two, according to Nielsen BookScan, sales dropped 44 percent. In week three, another 46 percent. And by week four, according to numbers from the Times' Amy Chozick, down another 36 percent, selling only about 17,000 copies.
It also appears that even when people are buying the book they are not reading it.

How would anyone know?  The wonders of modern technology tells us through e-readers.  For example, every time people highlight something in a e-book on a Kindle, Amazon has a record of that.

Jordan Ellenberg, a professor of mathematics a the University of Wisconsin, has developed what he calls a "Hawking Index" which takes that data and correlates them to a page number to estimate when someone stopped reading the book.

The Washington Post took that methodology and applied it to Hard Choices and compared it to other political books.

How far are readers getting when they pick up Hard Choices?  How about page 33?  Of 656 pages. I wonder how good it is as a doorstop?

The worst part of the book for Hillary have been her interviews while promoting the books. She has made a number of comments that indicate a level of detachment and tone-deafness that is amazing.

Here are a few.

In an interview on ABC, multi-millionaire Hillary Clinton complained about being too poor to afford her multiple houses after leaving the White House.“We came out of the White House not only dead-broke, but in debt. We had no money when we got there and we struggled to piece together the resources for mortgages, for houses, for Chelsea's education. It was not easy.”
Hillary Clinton, June 9, 2014 

Despite reportedly having $100 million in personal wealth, Hillary Clinton claimed she wasn't truly well off.“But they don't see me as part of the problem because we pay ordinary income tax, unlike a lot of people who are truly well off, not to name names; and we've done it through dint of hard work.”
Hillary Clinton, June 22, 2014 

Defending her nearly quarter million dollar college speaking fees, Hillary Clinton claimed she was redistributing the money to charity.
“All of the fees have been donated to the Clinton Foundation for it to continue its life-changing and life-saving work. So it goes from a foundation at a university to another foundation.”
Hillary Clinton, July 4, 2014 

However, my favorite is the one that I saw today from an interview that she had with Der Spiegel in Germany where Hillary Clinton claimed that she and Bill Clinton were so poor after leaving the White House that they could not get a mortgage.

We are very grateful for where we are today. But if you were to go back and look at the amount of money that we owed, we couldn't even get a mortgage on a house by ourselves. In our system he had to make double what he needed in order just to pay off the debt, and then to finance a house and continue to pay for our daughter's education.” (my emphasis)
Hillary Clinton, July 8, 2014 

Did you notice what Hillary said there?

They had to make double the amount they actually needed to pay down debt, save for a downpayment on a house and save for college.

Why would they need to do that?


You know, that money that federal, state and local governments want to take from you to redistribute to others.  The same taxes that she and her fellow liberal Democrats consistently tell us are not high enough already.

I also like the way she refers to it as if this a unique element of the United States "system" that is completely foreign to the Germans and other Europeans.  As if they are not familiar with high taxes of their own.

She acts as if the Clintons have been singled out in this nefarious system that has two elements-pre-tax and after-tax- that no one else is aware of.

I doubt any hard working Americans are sympathetic.  They have to make hard choices with what is left after taxes every day.

There is one other footnote to this story that played out this week that I found interesting.

The lackluster sales of Hillary's book is well-documented as detailed above.  At the same time, Dinesh D'Souza wrote a book titled "America" that was released a week before Hard Choices.  A movie of the same title hit theaters last Friday.

Therefore, I was surprised to hear Costco announce that they were pulling America from their bookhelves for "slow sales" but keeping Hard Choices in their inventory.

I love shopping at Costco.  I know that the founders are hard-core liberals and big Obama supporters but I always thought they were smart business people as well.  I have written about Costco and their contradictions before.

As soon as I saw the report I went to Amazon to see where each book was on the Amazon Top 100 List.

Here is what I found.

Hard Choices #90

America #3

Costco took a barrage of criticism after the story broke and I am happy to report that they have rescinded their order to remove America from their shelves in the wake of what looked like a politically-motivated decision (which Costco totally denies).

As of this writing, Hard Choices is now #95 on the Amazon list. America is  #1.

Thank you, Costco!

As for Hillary, it may be time to start her vacation in the Hamptons a little earlier this year than she planned.  I heard on tv that the place that she is renting on Amagansett will cost about $250,000 for the stay.

That means she has to earn over $500,000 pre-tax to pay for it!  So unfair of our "system".

More hard work will be required. About 4 speeches should do it.

Or a small fraction of a very big book advance (a reported $14 million for Hard Choices).

Tuesday, July 8, 2014

It's About The Children

In politics it always pays for it to be "about the children."

No one wants to see a child without food, shelter, healthcare, education or anything else.  You never can be wrong if it is "about the children" in politics.

Just consider a few of the federal programs that have been passed in the name of "the children".

Aid to Families of Dependent Children

No Child Left Behind

Supplemental Security Income (SSI) for Children

School Lunch Program (and School Breakfast Program)

States Children's Health Insurance Program (CHIP)

Maternal and Child Health Services Block Grant

Head Start

Child Abuse and Neglect Program

Special Supplemental Food Program for Women, Infants and Children (WIC)

Child Care Block Grant

Child and Adult Care Food Program

Special Milk Program

Student Loan Program

I am sure I have barely scratched the surface.

Most of these programs are administered somewhere within the Department of Health and Human Services (HHS).

I find all of this very interesting as we observe the massive influx of "children" who seem to have made the dangerous and arduous trip from Central America across our  "secure" Southwest Border with the belief that our President is going to provide them free access and amnesty in our country.


President Obama made a request today for almost $4 billion to address the problem as reported in Politico.

President Barack Obama asked Congress Tuesday for $3.73 billion in emergency appropriations to address the influx of child migrants crossing the Southwest border and Rio Grande from Central America.
More than 52,000 unaccompanied minors, as well as 39,000 adults with children, have been apprehended trying to illegally cross the U.S.-Mexico border during this fiscal year, according to the administration.

Of course, "apprehended" must be read here pretty loosely in that a great number of these illegal aliens walked up to Border Security Agents when they crossed the border.  I figure that their first words must have been "take me to your leader".

 $1.8 billion of the Obama request is specifically stated to be for HHS to "house and care for the migrant children".

When it comes to government spending, a billion here and there does not seem to be much money. Let me put that amount of spending in perspective.

  • $1.8 billion spent on 52,000 children works out to about $35,000 per child.  Is the plan to send all of them to a private school? 

  • $1.8 billion is enough to pay for all the tuition, fees, room and board for the coming year for all incoming freshman at all the Ivy League schools and still have $1 billion left over.

  • $1.8 billion is enough to pay for all the costs for every undergraduate student at Harvard, Yale, Princeton and Dartmouth this year.

  • $1.8 billion is enough to pay for 30,000 children to attend Harvard for the 2014-2015 school year.

  • $1.8 billion is enough to pay for 180,000 children to attend South Texas Community College in McAllen, Texas.

  • $1.8 billion is enough to provide a cash payment of almost $500 for every child that will be born in the United States this year. 

On the other hand, $1.8 billion can also pay for a one-way airline ticket (from Dallas to Mexico ($358 on either American Airlines and AeroMexico) for over 5 million passengers.

$1.8 billion can also pay for over 10 million passengers to be transported from El Paso to Mexico City on Greyhound.

When doing all of these calculations also remember that the U.S. Department of Agriculture estimates that it costs $241,080 to raise a child in the United States from birth to age 18.  Where does all of this money come from to care for these children in the future when that $1.8 billion and Barack Obama are long gone from the scene?

Remember, it is "about the children."

However, it's also about much more. Children born here whose parents are struggling in this economy to house and care for them. A federal budget in which we are living on borrowed time and borrowed money. The rule of law.  

And what about the money for the next 50,000 who cross our borders who wanted to be housed and cared for? And the next 50,000? And the next 50,000? And the next 50,000.? Where does that money come from?

It is understandable to feel compassion for these migrant children.  However, our first duty and obligation is to our own children and our own citizens.

How would you choose to spend $1.8 billion?

Sunday, July 6, 2014

Interest In Immigration

Immigration is in the news with thousands of people (many young children) pouring over what we have been told by our President is a "secure" border.

We strengthened security at the borders so that we could finally stem the tide of illegal immigrants. We put more boots on the ground on the southern border than at any time in our history. And today, illegal crossings are down nearly 80 percent from their peak in 2000.” 
President Obama, January 29, 2013

There is little question that Barack Obama is the primary reason that an immigration reform bill will not pass Congress this year. He simply cannot be trusted to enforce any law that might be passed as he has consistently shown that he is unwilling to enforce laws that are already on the books.

In addition, if the mere rumor or mention of some sort of amnesty for illegal immigrants has produced the current flood of migrants over our southern border can you imagine what it would be like if some type of amnesty was passed into law?

Against this backdrop we also hear a constant refrain from Democrats and those on the left that we have to be more humane and let more people into this country who suffer from oppression, violence or poverty in their home countries.  However, under this standard, 90% of the people in the world would qualify for entry.

Where do you draw the line?  And where does the United States compare to other countries in providing opportunities for immigrants?  The recent news has increased interest in the immigration topic by many.  But how many know some of the facts behind immigration?

This led me to research exactly how the United States stacks up on immigration compared to other countries in the world.

  • Although the United States has less than 5% of the world's population, 20% of all international migrants reside in the United States.
  • 45 million immigrants currently live in the United States. This is 4 times as many who live in any other country in the world.
  • Approximately 1 million immigrants are granted legal permanent residency status in the United States per year. 10.7 million were granted permanent status over the last 10 ten years.
  • In 2012, 15 million people applied for a green card for just 50,000 spots from so-called underrepresented countries in what is called the Diversity Visa Lottery. Generally, these are people from countries that have not sent at least 50,000 immigrants to the U.S. in the previous five years.  The Bahamas, Bangladesh, Brazil, Canada, China (mainland-born), Colombia, Dominican Republic, Ecuador, El Salvador, Haiti, India, Jamaica, Mexico, Nigeria, Pakistan, Peru, Philippines, South Korea, UNITED KINGDOM (except Northern Ireland) and its dependent territories, Vietnam are all not eligible for the Diversity Visa Lottery.
  • Immigrants working in the United States of working age (16-65) increased by 5.7 million between 2000 and 2014. However, total employment by working age native-born Americans actually decreased by 157,000 over the same period according to an analysis by the Center for Immigration Studies that was released last month.

If you look at this data you quickly come to the conclusion that the United States has done (and continues to do) more for immigrants than any country on the face of the earth.

What is truly mind boggling in the data above is the fact that all net jobs over the last 14 years in this country have gone to immigrants. It is astounding to think that there are fewer native-born working age Americans in the workforce today than there were 14 years ago.  In all, there are 17 million more working age natives not working today as compared to what there were in 2000.

Of course, if that stat is thrown around in front of a liberal Democrat or Wall Street Republican you will quickly hear the familiar refrain that these are jobs that native-born Americans simply do not want to do.  There is truth to that statement.  When tax-free government assistance for a citizen exceeds the pre-tax wage for working you will clearly get many who will choose welfare over work.  People will do what is in their best interest. I don't blame them as I also don't blame people who want to come to this country by hook or crook.

What I do blame is our inconsistent, incongruous and inane policies government policies that lead to these results.  You begin to see what I am talking about when you look at other numbers in the Center of Immigration Studies analysis.

This is a breakout of the potential labor supply of native-born Americans by educational attainment.

  • 8.7 million college graduates are not working
  • 17 million with some college are not working
  • 25.3 million high school graduates (with no further education) are not working

You have to wonder what is the economic logic of bringing so many immigrants into the country when we have this much labor supply laying idle? And to also think that a significant portion of this labor supply receives government payments to do so.

Perhaps there is a silver lining in all of this bad news? For example, the headline employment numbers from last week looked positive. This is the headline from Forbes.

Jobs Report: U.S. Economy Added 288K Jobs In June, Unemployment Dropped To 6.1%

However, a closer look at the numbers show that it was not what it was cracked up to be.  In fact, full time jobs plunged by 523,000 for the month. The entire net increase is jobs were part-time positions as shown in this chart prepared by Zero Hedge.

Credit:Zero Hedge

What can we take from all of this?

Immigration is not so much an economic issue as it is a political issue. Democrats need the votes. That is all they seem to care about. Corporate interests want to keep wage costs down. The labor unions should be anti-immigration but are more concerned with the success of the Democrat party than their own members. Republicans in Congress are caught between the monied interests who want the cheap labor supply and their rank and file voters who fervently oppose illegal immigration. It is all about political interests and very little to do with the best interests of this country.

I have written before that I am in favor of immigration reform.  However, I firmly believe that it would have been a gigantic mistake for House Republicans to consider any bill in 2014.

Why have an immigration policy at all? The only logical reason is to improve your country by importing human talent that will provide a benefit to the nation.  This is the thinking that drove our immigration policy for most of our history.  Immigrants with illness or who could not support themselves and their families were turned away.  Often this was at Ellis Island after they had already faced an arduous journey here by ship. Those who were willing to work and contribute to our country were welcomed. Others were sent home. Why should it be any different today?

Why don't we just let everyone in that wants in? What would this ultimately do to employment and pay levels of American citizens?  This is why we need to carefully monitor unemployment rates by industry as part of any ongoing immigration policy to insure that immigrants are not taking the jobs of American citizens or are unduly holding down wage costs.  What about public health and pressures on our infrastructure and institutions?  We can't be a refuge for everyone in the world.

Let's hope at some point the interests of the American people can be balanced with the interests of people who want to come here for the best interests of The United States of America. That would be an interesting development.

Monday, June 30, 2014

Inspiration and Incentives Required

Inspiration and incentives.

If you want to look at the direction of any organization, institution, corporation or nation you can most likely determine where it is going by looking at these two factors.

It starts at the top. What is the inspiration from the leadership?  Where are they trying to take the group? What tone is set?  How is it communicated?

The reality is that most people follow rather than lead.  They look for leadership and they also look to others around them for approval of their actions.  Most people want to conform.  They don't want to be an outlier. They want to fit in.  They don't want to rock the boat.

That is why leadership is so important.  The tone at the top quickly cascades through an organization and one voice can quickly become a chorus.

The incentives in the system are also critically important. Human beings will do what is in their best interest. Period.

Incentives drive the world. If the incentives for people are properly aligned, you will get the result you want.  If the incentives are not properly aligned, you will get poor results.  Whenever you get a poor result it is likely that you will find that the underlying incentives were not aligned properly.

We see this all the time in public policy.  If you pay people not to work, they will not work.  If you give aid to single mothers with dependent children, you will end up with more children who are dependent. If you penalize corporations by taxing repatriated earnings, they will not bring money back to the United States they earned (and were taxed on) overseas. If employers get a tax advantage for providing health care to their employees, you end up with an employer-based health system rather than an individual-based market. If you provide low-cost federal student loans, kids will go to college and colleges will be able to keep increasing tuition.

The Veterans Administration mess is a perfect example of the wrong inspiration at the top and misaligned incentives throughout the organization.

What did the VA managers see as their inspiration from the top with Barack Obama as President? What did they believe they should be focusing on at the VA? Improved health outcomes? World class healthcare technology? Better coordination of care? Where did they think they should be spending tax dollars on to improve the VA and the patient experience?

The answer. Solar and wind power.

This included spending $20 million on a solar carport in Phoenix where the VA scandal first became news. 

This report from provides the details.

Veterans Administration hospitals have spent at least $420 million on solar panels and windmills while vets wait months — or even lay dying — to see a doctor.
A whistleblower revealed Tuesday that seven of the patients listed on the Phoenix VA hospitals waiting list are already dead. That same Phoenix facility spent $20 million to build the nation’s largest solar carport. Phase one of the project was completed in 2011. The hospital also had an $11.4 million shortfall that year, an Inspector General’s report stated.
Where did anyone get the idea that pursuing solar and wind energy projects at the VA was more important than focusing on the patients? Do you think that those VA administrators just might have taken the cue from their leader on what was really important?  There is little doubt that they heard a lot more from the President the last few years on solar energy than they ever did about improving the patient experience at the VA.  

As for incentives at the VA, what happened with those? Did they get the desired result?

On its face, reducing wait times would seem to be a logical patient-centered goal that you would want to incentivize with the VA.  However, with a government-controlled enterprise you don't have the checks and balances you have in the private sector.  As a result, it allowed the human beings running the VA to game the system to their advantage.  They simply ran two sets of books.  The waiting list to determine their bonus showed they were meeting all goals.  Of course, the real set of books showed many, many patients waiting months for an appointment.

In the private sector, the enterprise would see a loss of volume and revenue as disgruntled customers went elsewhere as they had to wait longer and longer for appointments.  Of course, with the VA, most of these customers had no other choice.  They had no where else to go.  The VA was the only game in town and the patients were the ones being gamed along with the taxpayers who paid the bills.

Why has it been found that the same problem was endemic throughout the VA system?  It goes to my earlier points. The culture of leadership (or lack thereof) at the top and the fact that "everyone was doing it" practically guaranteed that these problems were not isolated to one or two hospitals.  

'Why should I be the only one in the VA to not get a bonus?" had to be going through every administrator's mind in the organization.

Inspiration and incentives.  Totally lacking and sadly misaligned at the VA.

Here is hoping that my fellow Cincinnatian, Bob McDonald, can bring the needed inspiration that is needed at the top of the VA and he can also properly align the incentives to turn the VA around.

Bob McDonald, Photo Credit: P&G

Our veterans deserve it. Our nation depends on it. Our reputation with those who might serve our country in the future demands it.

Friday, June 27, 2014

California Dreamin'

I just got back today from five days in the San Diego, California area.

LaJolla, California

I love to visit California. It has spectacular weather, stunning views and splendid places to see. I just could not live or work there due to its current tax, business and political climate. Ironically, if it were not for its other climate factors-sun, surf and Silicon Valley- I am not sure where California would be right now. I can assure you it would not be good.

I can predict with reasonable certainty that California is facing very dire financial problems at some point in the future. It has built a governmental edifice on a foundation of tax policies that is weaker than the San Andreas fault. It is just a matter of time before it breaks.

Today it is hard to believe that California was where the modern tax revolt began in this country over 35 years ago with the passage of Proposition 13 that limited increases in property taxes in the state. Proposition 13 was enacted through initiative in California and it also marked the beginning of increased voter activism through the initiative process.

Prop 13 was the defining moment when citizens stopped trusting their elected officials to represent them and recognized that most of the time politicians were only taking care of themselves and their special interests.  Politicians are not naturally disposed to want to limit taxes.  After all, tax revenues are their lifeblood. Without tax dollars to pass out and redistribute, politicians have no power.

The problem with Prop 13 in California was that it was limited to property taxes. It did not place any direct limits on income, sales or other taxes (although it does require a 2/3 vote to increase taxes via the legislature). You see the results in California today.

The top individual income tax in California is now 13.3%.  The tax brackets are extremely progressive (matching the political environment).  Income tax rates are 1% for the first $7,582 of income but a single filer is taxed at 9.3% of adjusted gross income on anything above $49,774. This means that most working households are paying almost 10% in marginal income tax rates.

Compare that to Ohio were I live where the top marginal rate is now 5.92%. The rate is 4.11% for a single filer with $50,000 of income.  Sales tax in the county where I live is 6.75%.

I paid 8% in sales tax on several purchases while I was in the San Diego area (anything I can do to help out).  However, in some cities in California the total sales tax is as high as 9.5%.  Therefore, middle class households in California are shelling out almost 20% of their marginal income just for state income and sales taxes!  That is about twice as much as the middle class household in Ohio.

Combine that with sky-high housing costs in California and you can readily see the exorbitant cost of living with all that sun, surf and some Silicon Valley millionaires close by.

Speaking of millionaires it was amazing to drive down along the coast through Carlsbad, Del Mar, LaJolla, Pacific Beach and Coronado and see the construction and remodeling work being done. If you want to see trickle down economics it was there to see.  People want to complain about the rich but I saw scores of plumbers and carpenters on those sites working and I also saw tons of people at bars and restaurants redistributing money through the private sector while I was there.

A major problem for California is that it has become increasingly reliant on that progressive income tax system and a dwindling number of rich taxpayers to foot the bill for most of the state's services.  For example, nearly 50% of income tax collections are for those in the top 1% of income earners and 67% of all of the state's tax revenues are coming from the personal income tax.

For those who want to argue that they are "rich" so it is only fair that they pay more, consider the following chart that shows that the top 1% in California consistently have paid double their share of income in taxes. In other words, the top 1% are earning about 20-25% of total income but are paying 40-50% of total income taxes in any given year.

California Legislative Analyst's Office

How many people is that?  Less than 150,000 taxpayers.  The population of California? 38 million. That is a very big burden placed on a relatively small number of income earners.

Personal income taxes in California have also become the most significant revenue source in the state over the years. They now represent about 2/3 of all revenues to the state-almost triple their share compared to 1970.

California Legislative Analyst's Office

California State Controller's Office

California has also become dangerously dependent on those top income earners pulling in large capital gains and income from stock options.  You can see that in the spike in incomes of the top 1% in 2000 and the 2005-2007 period.  The reality in California is that the share of income of the top 1% is very volatile in that it is so dependent on stock options, the stock market, real estate investments and capital gains.

You can also see it in the recent trend in income tax collections compared to sales tax and corporate income taxes.  It is very telling that sales tax collections in California were essentially the same in 2013 as they were in 2003 but income tax collections more than doubled.

California State Controller's Office

Thank you Google, Facebook, Amazon and many others who made it happen.  Thank you Ben Bernanke and Janet Yellen and low interest rates.

However, can California keep the people in the state who made these ideas a success?  Can they attract new talent and capital to the state over the long term with the tax, regulatory and political climate they currently have in place?

And what happens to California if interest rates climb and tech stocks fall?

As the Mama's and Papa's put it in their song, California Dreamin', it will be a winter's day but I doubt you will be safe and warm in L.A.

All the leaves are brown 
And the sky is grey 
I went for a walk 
On a winter's day 
I'd be safe and warm 
If I was in L.A. 
California dreamin' 
On such a winter's day 

At that time it might also be time to stop in the church and do something more than pretend to pray.

I stopped into a church (stopped into a church) 
I passed along the way (passed along the way) 
You know, I got down on my knees (got down on my knees) 
And I pretend to pray (I pretend to pray) 
Oh, the preacher likes the cold (preacher likes the cold) 
He knows I'm gonna stay (knows I'm gonna stay) 
Oh, California dreamin' (California dreamin') 
On such a winter's day 

Wednesday, June 18, 2014

So Wrong About So Much At The Expense Of So Many

I have not written as many BeeLine posts this year as I have in the past. I have tried to determine exactly why that is. Three possible reasons come to mind. By coincidence or not, all of my reasons begin with the letter "D". I guess that letter is on my mind because I am just hoping we can get to a "D" grade level in Presidential leadership right now.

Discouragement- Quite frankly, the news every day is not encouraging. I find it harder to write and comment on the issues of the day when everything seems to be unraveling. It is especially discouraging knowing that a lot of this was avoidable. The American people had a choice two years ago about our leadership and our future and made the wrong one.

I wrote this the day after the 2012 Presidential election.

The results of yesterday's election clearly show that we are in The Fourth Turning. History is not made by events but by the reaction of human beings to events.  We saw clear evidence of that yesterday. We are hurtling down the road for a rendezvous with history of our own making.  Two clearly marked paths were there for choosing.  The American people made their choice.   We all will have to deal with where it leads.
Choices have consequences.  We will learn what they are together.  For better or worse. Our only hope now is that the President we elected yesterday is not the same leader we had for the last four years.

The sad truth is that we are all finding out that the President we have is actually much, much worse than was even evident in his first four years. No wonder I am discouraged.

Disinterest- I care a lot about our country, my fellow Americans and our future. I have spent hours pondering the issues of the day and hours more crafting and formulating perspectives and prescriptions for solutions to some of our problems in these pages. However, when the President of the United States seems more interested in playing golf, attending political fundraisers and playing endless political games than dealing with the issues in front of him, it is easy for everyone else (including me) to put my time and attention elsewhere.

If the President can play golf over the weekend while Iraq implodes and we still don't know what he was doing the night of the attack on the Benghazi consulate than more important than four American lives (including an American ambassador), I don't feel so bad in not cranking out two or three BeeLine posts per week.

I am reminded of this quote by Harry S. Truman that seems apt today.
Men make history and not the other way around. In periods where there is no leadership, society stands still. Progress occurs when courageous, skillful leaders seize the opportunity to change things for the better."
Courage? Skill? Seizing opportunity? Using this definition, Barack Obama is the antithesis of a leader. Our society is not standing still, it is in retreat.

Deja Vu- I also can't shake the feeling that I have seen and experienced all of this before. It seems like I am living it all over again.  After all, I was around when Nixon and Carter were Presidents. I saw the corruption of the Nixon administration and the incompetence of Carter. ( I am also happy to report that I did not vote for either one).  It is hard to believe but the Obama administration seems to have combined the worst aspects of both of these failed Presidencies and combined it into a colossal conglomeration of corruption, chicanery, circumvention of the Constitution and clear-cut incompetence.

I like how former Vice President Dick Cheney and his daughter, Liz, put it in an op-ed in The Wall Street Journal today.

Rarely has a U.S. president been so wrong about so much at the expense of so many. 

Am I being too critical?

Consider the following that have come from the headlines in just the last few days.

White House Honors 10 Young Illegal Immigrants
If this is not bad enough, President Obama does it at the same time there is a flood of young, illegal immigrants overwhelming our border authorities.  Of course, all this will do is incentive more illegal immigrants to do the same. The operative word here is "illegal". What happened to the rule of law? What happened to faithfully executing the laws of the United States of America in accordance with the Constitution?

Obama Administration Suggests U.S. May Join with Iran to stop ISIS in Iraq 
Does anyone remember that Iran is probably directly responsible for at least 1/3 of our combat deaths in Iraq?

Obama's Unbelievable Lost IRS Emails For Lois Lerner and Six Others
Richard Nixon was impeached and ultimately resigned due to an 18.5 minute tape erasure on a key piece of evidence about the Watergate coverup and for using the IRS for political purposes.  What more can be said?

I have said it before and I will say it again, I believe than in the fullness of time the history books will judge President Barack Obama very harshly. Future generations will likely wonder how the American people could have let themselves be bamboozled by someone who when, viewed in retrospect, was not much different than a 19th century snake oil salesman.  Articulate and personable with a nice smile who was great on the stump.  However, in the end, that was all there was.

So wrong about so much at the expense of so many.  It is a long way from hope and change.

And do you understand why it has become so much harder to write this blog?

Thursday, June 12, 2014

Boom and Bust?

10,000 baby boomers retired yesterday. Another 10,000 retired today and an additional 10,000 will retire tomorrow.

We are in the early stages of what will be a massive number of people leaving the workforce and beginning "life without a paycheck".


The retirement trend will continue for another decade before it begins to level off but the effects of this age wave will continue for years to come.

By 2050 it is projected that there will twice as many Americans over the age of 65 as there are today. We are talking about 90 million people or 20% of the nation's population.  To put that in context, the U.S. population was only 150 million in total in 1950.  It will be as if the entire United States resembles Florida's demographic makeup today (actually Florida's age 65 and over population is only 18% today.)

If you don't think this is a tidal wave consider the fact that Cerulli Associates predicts that the 401(k) system will become cash-flow negative beginning in 2016.  Simply stated, there will be more money being withdrawn from 401(k) plans from people retiring than there is money being put into 401(k) plans by those still working. Cerulli projects that $366 billion will be withdrawn in 2016 compared to $364 billion in inflows.

How well are all of these seniors prepared for retirement? Few outside of the public sector has a pension plan to rely on. What lies ahead in the future?  Social Security and Medicare programs will undoubtedly face severe financial strains.   Where will the money being withdrawn from 401(k)'s be invested? What will that mean to the equity and bond markets? Can seniors really rely on the "promise" of Social Security and Medicare?

There are many clouds on the horizon for those people retiring right now. Where can they earn a "safe" yield in a low interest rate environment? What about inflation? What about health care and the effects of Obamacare on the system?  1 out of 3 practicing physicians are over the age of 55 themselves. One survey I saw predicts a shortage of 120,000 doctors by 2025-that is a mere nine years away. What about the long-term value of the dollar?

I am getting a headache, get me a doctor! There are gray skies on the horizon everywhere you look.

As troubling as the questions are today, a secure retirement has always been an elusive goal for most Americans.

Despite what you often hear about the demise of defined benefit plans, the fact is that even in their hey-day in the 1970's, less than 50% of American private sector workers were covered by a retirement plan.

Nevin Adams of the Employee Benefit Research Institute calls out other retirement myths and reminds us that the "good old days" were really not that good for retirees if you consider the facts.  Here are a few facts that dispel the "myths" and explains that the present 401(k) retirement system has a number of advantages over the pension system.

  • There are actually more private sector workers participating in a workplace retirement plan today than there were in 1979. A pension plan did you no good if your employer did not offer it.
  • Median job tenure has hovered around 5 years since the 1950's.  It actually is 5.4 today-slightly higher than the long-term average.  Short tenure and job hopping quickly kills the typical defined benefit plan for a worker. In fact, with the old cliff vesting rules in place before the early 1980's, you might have to work years before becoming eligible for any benefit.  For example, my father did not become vested until he worked 20 years with his employer.  If he left at 19 years, he was entitled to zilch.
  • Between 1987 and 2012, fewer than 1 in 5 private sector employees spent 25 years or more with one employer.  Therefore, few workers would have received a "full" pension under most pension calculation rules even if they were in place.

You will notice that all of the facts above cite private sector retirement arrangements. The fact remains that most public sector employees are still covered by a pension plan while less than 15% of private sector workers are.  However, public sector employees have their own worries heading into retirement. Will they collect all that they expect?  They won't in Detroit.  And I suspect there should be significant worries as well for public sector employees in Illinois and a few other states.

We can only hope that all those boomers aren't busted before it is over. 

My advice? Have a big number set aside before thinking about retiring. I have done a lot of financial modeling for retirement for various people and I think most people need investable assets of about 10 times their final income to be reasonably confident that their nest egg at age 65 is big enough to sustain them through their lifetime in retirement (assuming no pension but considering full social security). 

Those with lower incomes can get by with a little less as social security payments will replace more income.  Those with higher incomes may need a higher multiple as social security provides a smaller income replacement ratio. The same goes for your retirement age. If you retire before age 65 you will need more than 10x. The longer you defer retirement after age 65, the multiple needed gets progressively lower with each year of added work and pay.