Thursday, August 30, 2012

Degrees in Debt

College classes are beginning and my concern with the issue of student loan debt is beginning to rival my worries about the federal debt.

Student loan debt now exceeds $1 trillion.  Here is a debt clock that shows the appoximate amount outstanding on student loans up to the minute.

What is most troubling is the continuing growth in student loan debt despite the somber economic environment.  All other major forms of private debt obligations have decreased over the last four years as people have gotten more fiscally conservative with their money.  In fact, overall consumer debt has been reduced by over $1.2 trillion since the Fall of 2008.  However, student loan debt has increased by over $400 billion.  This is 72% higher than it was four years ago!

Student loan debt is now greater than auto loans as well as credit card debt.

Source:  New York Federal Reserve and
What is more troubling is that payments currently are only being made on just 38 percent of student loans according to Education Department data.  Five years ago, 46 percent of these loans were being paid down.  The balances are unpaid either because the students are still in school, the borrowers have deferred payments of they have simply stopped making payments.

This statistic should not be surprising as we look at unemployment rates of recent college graduates.  54% of recent college graduates are either unemployed or underemployed according to this AP story
About 1.5 million, or 53.6 percent, of bachelor's degree-holders under the age of 25 last year were jobless or underemployed, the highest share in at least 11 years.
Out of the 1.5 million who languished in the job market, about half were underemployed, an increase from the previous year.

Broken down by occupation, young college graduates were heavily represented in jobs that require a high school diploma or less.

In the last year, they were more likely to be employed as waiters, waitresses, bartenders and food-service helpers than as engineers, physicists, chemists and mathematicians combined (100,000 versus 90,000). There were more working in office-related jobs such as receptionist or payroll clerk than in all computer professional jobs (163,000 versus 100,000). More also were employed as cashiers, retail clerks and customer representatives than engineers (125,000 versus 80,000).
Underlying all of this is the fact that there is no segment of the U.S. economy that has seen costs grow at a faster pace than tuition and fees for higher education.  Health care increases look modest when compared to the increase in the cost of a college education over the last three decades.  College costs have increased at more than twice the rate of health care over that period. 

In the last ten years, tuition and fees at 4-year public colleges and universities for in-state students have increased an average of 8% per year as state budgets have been squeezed by Medicaid costs and public sector retirement costs.  Increases at private colleges and out-of state tuition as public schools have been a little more modest but, in each of the last three decades, college costs have far exceeded the rate of general inflation irrespective of the type of school. 

What has driven these increases?  Three main factors appear to be at play.

First, colleges have shown little interest in controlling the costs to their students as this quote from one of the leading college administrators in the United States in The New York Times reveals. 
“I readily admit it,” said E. Gordon Gee, the president of Ohio State University, who has also served as president of Vanderbilt and Brown, among others. “I didn’t think a lot about costs. I do not think we have given significant thought to the impact of college costs on families.”
Second, colleges have embarked on a massive facilities binge in the competition to attract students that is reminiscent of the old-fashioned defense arms race between the U.S and the U.S.S.R.  Dorms that resemble the Taj Mahal, recreation centers that look like they could be an Olympics venue and dining halls that are fit to serve meals straight from The Food Channel.  It all costs money and tuition and fees need to go up to pay for the luxuries.  Bucking the trend is also career suicide to the college adminstrators should they fail to enroll the necessary numbers to fill their incoming classes.  Nobody wants to lose a good student and the tuition money that comes with her because they did not have a rock climbing wall in the rec center.  As a result, costs go up and up and fewer and fewer student and parents can afford the tab.   A student loan seems to be the only option.

Third, and probably most important, is that college costs could not go up without a supply of money to pay for it.  Just as is the case with health care costs, college costs have become heavily dependent on the flow of federal money.  Health care costs generally tracked overall inflation in the economy until Medicare and Medicaid were introduced and normal market forces were disrupted beginning in the mid-1960's.  The same has been true with student loan money.  As more student loan funds became available the easier it became for colleges to raise tuition costs.  Ironically, a program that was designed to assist students to afford college seems to be making it more unaffordable with each passing year.

The Obama campaign has attacked Mitt Romney for his recent advice to a student "to shop around" when asked what he would do to make college more affordable for him.  I can't think of any better advice.  That is the best way to bring costs back into line.  Liberals seem to think that every problem can be solved if we just had more money to throw at it.  Experience shows that doesn't work.  In fact, it might actually make matters worse.

One of the key issues in this year's election is whether the under-age 30 voters are going to wake up and smell the coffee.  Not the scents from sitting around Starbucks using the Wi-Fi connection looking for a job.  I am talking about coming to the realization that their destiny right now is to spend a lifetime paying a mountain of debt with very little hope to do much more with their life.  Paying off their education loans.  Paying interest on $16 trillion in federal debt that grows by $3 billion every day.  Paying for the Social Security and Medicare for their parents with little hope that it will be there for them. Paying the retirement and health care for millions of retired public sector union employees.

The under-30 demographic still provides President Obama with his highest approval ratings.  This makes no sense when you look at the facts.  There is nobody in America that will bear the brunt of a continuation of the policies of the last four years more than these younger voters.

I thought Paul Ryan's best line last night really hit the nail on the head.

College graduates should not have to live out their 20s in their childhood bedrooms, staring up at fading Obama posters and wondering when they can move out and get going with life.

This ad by Crossroads Gen tells the story very effectively.

I have often remarked to my wife over the years when looking at young people who seem to lack direction, purpose or motivation that "everybody eventually has to wake up and smell the coffee".  It happens for some earlier than others.  All you can hope is that they wake up while they can still do something about it.  Before they have done irreparable harm to their career prospects or life.  For those under age-30, this election might be the last one where they can hope to do something about it.  2016 and beyond might be too late for them.   

My advice to young voters is the same as Mitt Romney.  You need to shop around.  You cannot afford to fail to do your research this time.  The costs to them of making a mistake is simply too big.

Tuesday, August 28, 2012

What Is There To Dislike?

We often hear in the media that Mitt Romney suffers from not being "likable" or that he doesn't "relate well" to common people. I have a hard time understanding these comments. To me, it sounds like schoolyard talk from the kids who envied the Captain of the cheerleading squad or football team that also had straight A's, didn't have wild parties when their parents were out of town and volunteered at the local soup kitchen on Saturday nights.

This list showed up in my email box on why Mitt is unlikable and it seems to conform to my thinking on the subject. I wish I could give credit to the authors but they were anonymous.


Top Ten Reasons To Dislike Mitt Romney: 

1. Drop-dead, collar-ad handsome with gracious, statesmanlike aura. Looks
like every central casting's #1 choice for Commander-in-Chief.

2. Been married to ONE woman his entire life, and has been faithful to her,
including through her bouts with breast cancer and MS.

3. No scandals or skeletons in his closet. (How boring is that?)

4. Twice served in high profile public roles (Head of the 2002 Salt Lake City Olympics for 3 years and Governor of Massachusetts for 4 years) for which he did not take one cent as compensation for his service. This is the true definition of a Public Servant.

5. Highly intelligent. Graduated cum laude from both Harvard Law School and Harvard Business School...and by the way, his academic records are NOT sealed.

6. Doesn't smoke or drink alcohol, and has never done drugs, not even in the
counter-culture age when he went to college. He spent over two years of his life as a missionary for his church when many of his contemporaries were partying in college. Too square for today's America?

7. Represents an America of "yesterday", where people believed in God, went
to Church, didn't screw around, worked hard, and became a SUCCESS!

8. Has a family of five great sons....and none of them have police records
or are in drug rehab. But of course, they were raised by a stay-at-home mom,
and that "choice" deserves America's scorn.

9. Oh yes.....he's a MORMON. We need to be very afraid of that very strange
religion that teaches its members to be clean-living, patriotic, fiscally
conservative, charitable, self-reliant, and honest.

10. And one more point.....pundits say because of his wealth, he can't
relate to ordinary Americans. I guess that's because he made that money opposed to marrying it or inheriting it from Dad. Apparently,
he didn't understand that actually working at a job and earning your own
money made you unrelatable to Americans.


What is there not to like about these traits in a leader?

If people can't relate perhaps that speaks volumes of how far we have gotten off of the right path in this country?

If anyone wants to take a measure of the man I suggest that they begin by looking at the personal narratives of Mitt Romney and Barack Obama.  Paul Mirengoff of Powerline does it and concludes that Obama could be a case of someone who loves "humanity but doesn't care all that much for humans". His point is that Obama has tried to help people by organizing them in furtherance of political goals: Romney's acts for humanity were free of political content.  He has shown real heart and compassion over his life.

Rich Lowry of the National Review fills in some of the blank spaces you might not know about Mitt Romney, the good neighbor.  If you don't know the back story about Mitt Romney, you should.   If a man like this is made out to be a monster in a political campaign, what hope is left for our future?  We are unlikely to see another one like him for a long, long time.

Sunday, August 26, 2012

Save Your Hyphens

I have always believed that married couples who hyphenate their names might be thinking a little too much about today and a little too little about tomorrow in their desire to create their own indentity.

Hyphenated names seem to suggest that these couples are the center of the universe and have given little thought to logic, or their lineage or legacy for that matter.

Hyphenated names may work for them.  However, what would happen if everyone did the same?   Jessica Jones-Smith marries Jason Hewitt-Johnson.  Let's all welcome their first born...Ethan Jones-Simpson-Hewitt-Johnson.  I am not even sure where to put all the hyphens.  Just wait for the next generation after that.  They won't even be able to tweet their last name because it will exceed 140 characters!

One time when you do not want to hyphenate your name

If you are a female and don't want to assume your husband's name, I understand.  Keep your maiden name and give your child a break and choose one or the other of your two last names for her.  Forget the hyphens.  However, this Wall Street Journal story indicates that more college-educated women are adopting their husband's surname compared to the last three decades.

NPR has a story on all of this "When Hyphen Boy Meets Hyphen Girl, Names Pile Up" that outlines the problems.
Hyphenating has waned since its peak in the '80s and '90s, in part, experts say, because it's become less of a feminist statement and more of a bureaucratic nightmare. 
But also — as most "hyphens" will now tell you — it wasn't really sustainable anyway. Hyphenating was destined to hit a wall after one generation. 
Over the centuries, societies have figured out what works and what doesn't.  I always find it interesting how, despite all the previous years of societal experience, there are those that think they have found a better way. Hyphenated names is a small issue but it seems that it has taken just one short generation to show that it does not work.

Again, a reading of The Fourth Turning indicates that all of this is somewhat predictable.  If you have not read my previous posts on the book, The Fourth Turning, you can find out more here and here.

Third Turning periods such as the period in the 1980's and 1990's generally are characterized by weak families, a cynical culture, minimal gaps between gender roles and maximum individualism.  This is exactly the environment that the hyphenated name phenomenon grew from.  Fourth Turning's typically see strengthening families, a widening gap between gender roles, a practical culture and a rising attention to community over individualism as a social priority.

There is another issue in the news today that also does not work beyond the current generation.  That is not a small issue.  It will be interesting to see how the issue of gay marriage fares in The Fourth Turning. There is also the issue of the enormous amount of debt that has been accumulated within the last generation.  That is also unsustainable and we are destined to hit a wall very soon. 

All of this should be a lesson to us all to be a little bit more humble and realize that we are but passing stewards in this world we have been blessed with.  In the end, it is not just about us.

There have been millions of Americans in the past that put their lives on the line for future generations. The sacrifices that were made on the battlefields of Trenton, Gettysburg, Belleau Wood, Normandy and Iwo Jima were not done so much for that generation as it was done for future generations.  Have we become a nation that is just concerned about today and has totally forgotten about tomorrow?  Is it all about ME and not about US?  I certainly hope not.  However, the headlines everyday suggests otherwise. 

It is time we all practiced more humility as to what we have and what we owe future generations.  Let's start with the hyphenated names and work from there.

Friday, August 24, 2012

Perfect Game Baby

There have only been 23 perfect games pitched in the history of major league baseball.

13-month Bode Dockal has only been to two major leagues baseball game in his entire life.

Both games he attended were perfect games!

This incredible story is at, "What are the odds of seeing a perfecto in both of your first two major league games?

There have been only 23 perfect games thrown in nearly a century and a half of Major League history. Two of them were the first two games Bode Dockal ever attended in person. Paul (his father) said that, in a way, he wishes his son would never attend another game – nothing could top what he’s already seen. But he knows Bode will have to relive the magic of Humber and Felix through photos and stories rather than actual recollections. Plus, someday decades from now, Bode might walk through the gates of a stadium with a son of his own.

And on that day, perfection just might strike a third time.
0 0 0 0 0 0 0 0 0 0                0 0 0

Another example of why reality is always stranger than fiction and also why you should never say never.

For complete records on all the perfect games pitched in the major leagues go to The Baseball Almanac

Wednesday, August 22, 2012

Paul Ryan Brings Us To The Fourth Turning

Paul Ryan recently joked that President Obama was lost because "he only knows left turns".

It was a nice line but the practical problem with anyone just making left turns when they are lost is they end up in the same place at some point.

The same can also be said about someone only making right turns.

The problems that we have today require much better navigational and leadership skills than we have gotten from President Obama.   We need a leader who can work through left turns, right turns, curves and a lot of uphill driving.

Most importantly, they have to deal with the fact that we are in "The Fourth Turning."

I have written before about The Fourth Turning, the excellent book by Neil Howe and William Strauss, which refers to the patterns of history and how that cycle affects our culture, civic order and history.  The book was written in 1997 and they predicted that "sometime around the year 2005, perhaps a few years before or after, America will enter The Fourth Turning."  With The Fourth Turning comes a period of upheaval that the nation has experienced every 80 years or so just as it has in other societies over time.  It is a time of Crisis in which the very survival of society will eventually seem to be at risk.

Think about our history beginning with the Revolutionary War in 1776.

1856-1865  Slavery issue leads to The Civil War

1929-1945  The Depression and World War II

2001, 2005 or 2008  World Trade Center, Katrina or the Financial Meltdown are all possible indicators that The Fourth Turning is in motion.  We will not know for sure when The Fourth Turning actually began until we view things in the fullness of time, but there seems to be little doubt we have made the turn.

This is what I wrote about The Fourth Turning just over a year ago.
What does it all mean?  We need to change our approach.  We need leaders that will lead.  We need to be decisive in confronting our problems.  We need to put the public interest ahead of special interests.  There will need to be political upheaval and public sacrifice.  There will need to be more personal responsibility and personal accountability.  We need to de-fund time-encrusted government bureaucracies.  We need to promote traditional virtues.

We also need to focus on reversing the decline of the middle class and focus more on children and less on senior programs.   We need less class warfare and find better ways to build bridges between the classes.  We need to understand it is about our country and not about us.

We need to understand there is a role for government to help us navigate the rough waters ahead of us.  There are many things that only government can do.  To get through this period government will have to be the force that can galvanize and unite us to meet the challenge.  We cannot survive the crisis if we are all going our separate ways.  To meet the big challenges of the previous Fourth Turnings like the Revolution, the Civil War and World War II it took a strong government to lead and to galvanize the people to meet the crisis and create a new sustainable civic order. 
I am not talking about the type of government we have now. 
Our Constitution specifically states that the key duties of our government are to provide for the common defense and promote the general welfare. It was not designed to pick winners and losers. Its role was seen to protect both and to see that both had a level playing field. It is supposed to be about the public interest rather than special interests.  It is about what is best for the United States rather than US as individuals.  This is the type of government that helped us survive previous Fourth Turnings.

We do not yet have the leadership or government in place yet to do what needs to be done.  However, I see the glimmer of true hope and change starting to emerge. 
The selection of Paul Ryan by Mitt Romney is a sure sign that the glimmer I saw a year ago for hope in confronting the crisis is taking form.  Mitt Romney and Paul Ryan are positioning this election as a clear choice.  This is a debt we owe Paul Ryan.  He almost single-handedly changed the debate in Washington about our budget problems.  He talked about confronting our problems and he led with ideas to do something about it.  Paul Ryan has brought us to what has to be done to meet the challenges of The Fourth Turning.

The decision whether to meet that challenge now will be up to the American people.  However, there is no choice if we want to continue to exist with anything close to the society we are used to.  We will have to decide to meet the challenge or else.  The stakes are that big.

Strauss and Howe do not suggest that we have to be fatalistic in responding to The Fourth Turning.  If the cycles of history were seasons, we have entered the Winter months.  That does not mean that you cannot prepare and survive the season.  It is a choice about how you go about it.  You can understand the environment and prepare and do what has to be done in that season.  In addition, the earlier you accept what you are facing and confront the crisis, the better you will be.
If you wish to get more out of life (or nature), you have the power to do that, but it takes work.  You and your society have the power to influence history, but that takes work too-and always, your efforts must be appropriate for the time.  
The choice is there for the American people this November but it remains in doubt whether there are enough who understand the gravity of our current situation.  However, the stakes are huge for both parties according to Howe and Strauss.
Soon after the catalyst, a national election will produce a sweeping political alignment, as one faction or coalition capitalizes on a new public demand for decisive action.  Republicans, Democrats, or perhaps a new party will decisively win the long partisan tug-of-war, ending the era of split government that had lasted through four decades.  The winners will now have the power to pursue the more potent, less incrementalist agenda which their adversaries had darkly warned.  This new regime will enthrone itself for the duration of the Crisis.  Regardless of its ideology, that new leadership will assert public authority and demand private sacrifice.  Where leaders had once been inclined to alleviate societal pressures, they will now aggravate them to command the nation's attention.
In the 2008 election I thought Barack Obama and the Democrats had this sweeping political alignment in their grasp.  However, the agenda that they pursued did not align with the public's demand for decisive action on the economy, jobs, dealing with special interests and seeing Washington work together.  The people voted for hope and change and they got Obamacare and not much else.  The 2010 mid-term elections put the political alignment back in play and Paul Ryan finally got the platform he needed to change the debate in Washington and bring us face to face with The Fourth Turning.

This is our rendezvous with history.  Everyone needs to ask if they are ready.  If not now, when?  If not us, who?  Paul Ryan answered these a while ago.  Mitt Romney's answer is also in.  Where are you?

Tuesday, August 21, 2012

Mitt Romney is Rich. So What?

To hear all of the talk about Mitt Romney's tax returns and wealth you would think being rich should make someone constitutionally ineligible to serve as President.

If that was the case, our country would have been much poorer for lack of leadership over the years.

Consider this list of the 10 Richest U.S. Presidents complied by 24/7 Wall Street.  Forbes magazine also compiled a list that is similar but replaces Zachary Taylor with Bill Clinton in its Top 10. This does seem to make more sense since most of Clinton's wealth was created post-Presidency.

All net worth figures were adjusted to 2010 dollars for an apples to apples comparison.

Who was the wealthiest President to have served?

He was first in war, first in peace, and first in the hearts of his countrymen.  He is also first in terms of the wealth of all our Presidents... George Washington.  There is a reason his image is on the dollar bill.

Washington was worth an estimated $525 million.  He was one of the largest landowners in the country.  Mount Vernon had over 8,000 acres of prime farmland.  Most of his wealth came from inheritance from his father and from his marriage to Martha who also had inherited significant property interests.  Interestingly, leadership must have been highly valued for a start-up nation.  Washington's salary as President in 1789 was 2% of the federal budget.  That would be about $75 billion today based on the size of our current budget.

Thomas Jefferson is considered to have been the second richest President at $212 million.  Monticello, his home near Charlottesville, VA, consisted of 5,000 acres.  A good part of his wealth came from inheritance from his father and his pay in political positions over the years.  Unfortunately, Jefferson did not do well after he left office and he was mired in debt when he died due to financial problems related to his plantation.

Teddy Roosevelt had an estimated net worth of $125 million.  He came from a prominent and wealthy family and he received a sizable trust fund and is considered the third wealthiest President.  He spent most of his life in public service.

Andrew Jackson is considered #4 on the list of the richest Presidents.  He married into his money and also made money in the military.  His home, The Hermitage, in Tennessee included over 1,000 acres of prime real estate.  He also had financial reversals later in life.  Jackson's image is on the $20 bill.

Rounding out the top 5 wealthiest Presidents is James Madison, the father of the U.S. Constitution.  Madison was the largest landowner in Orange County, Virginia.  His holdings exceeded 5,000 acres  that were mostly inherited, including his Montpelier plantation.  He also ended his life with far less money than he had as President due to financial reversals.  How different this is from today where former Presidents grow wealthy from books and speeches after they leave office.

What is striking about these five wealthy Presidents is that all of them gained their wealth principally by inheritance, marriage or in service to their country.  They were all great leaders despite being rich.

The rest of the Top 10 richest Presidents...Lyndon Johnson, Herbert Hoover, FDR, Clinton and JFK.

If Mitt Romney is elected President he would probably be second on this list.

Mitt Romney did not gain his wealth by inheritance, marriage or in service to his country.  If he is elected President he will be unlike Washington, Jefferson, Roosevelt, Jackson and Madison in one important respect.  He will have earned his wealth on his own without help from family, wife or taxpayers.

He clearly had the advantage of a great education and support from his parents growing up but he did not inherit any of his father's money.  Those assets went to charity.  His wife Ann did not bring assets to the marriage when she married Romney at age 19.  Romney has had only two significant stints of public service-his role as CEO of the 2002 Winter Olympics for three years and his four year term as Governor of Massachusetts.  In both cases he did not take a salary.  He worked for no pay.

Mitt Romney is rich.  So what?  He earned it through his own individual effort which is more than can be said for the others at the top of the list.  However, all of them turned out to be pretty good leaders despite being rich and how they got their wealth.  Washington, Jefferson and Roosevelt all ended up on Mt. Rushmore.

Mitt Romney is rich. So what?  If he is elected and can get us out of the mess we are in no one is going to be concerned about his wealth.  These guys appear to be looking for a real leader.

Sunday, August 19, 2012

How Many Dollars To Say We Are Sorry?

As human beings I think we all have a natural tendency to want to help those less fortunate.  To extend a hand when someone needs some help getting back on their feet.  To share good fortune with someone who is less fortunate.  To help someone that received a bad break  in life.  To provide encouragement when someone is down.

No country in the history of mankind has been more generous in helping those in need than the people of the United States of America.  Both at home and abroad.  We are a compassionate people.  Of course, all that aid, assistance and altruism would not be possible if we were not the richest country on earth.  You can have the biggest heart in the world but unless you also have a big pocketbook there are finite limits on material support.

The simple truth is that more can be done for those that have less when you have more. A country that is prospering can do more than a country in decline.  Therefore, the first priority of anyone who wants to help those less fortunate is to promote greater prosperity for the country.  "A rising tide really does lift all boats" as President Kennedy once said.

A second truth is that whatever amount is dedicated to helping the poor and disadvantaged is never going to be enough.  More is always going to be needed and wanted.  However, we live in a world of limits.  How much is enough?  Do you even know how much is being spent right now to help the poor?  How much do you think it is?  I will give you a point of reference.  We are spending about $700 billion on our total Defense budget and $500 billion on Medicare in 2012.

Free coffee and doughnuts during the Depression
With this as context let's consider how much of the federal budget is actually being spent on programs to help the needy, disabled and less fortunate of our nation.  Is it enough?  Is it fair?  If not, how much more would be needed to satisfy those that say it is not enough and it is not fair.

The answer:  The federal government spent just short of $1 trillion ($983 billion) on payments for individuals in 2011 for Medicaid, unemployment benefits, disability benefits, welfare, housing assistance, food stamps and student assistance.  In other words, we are spending 40% more on helping the poor than we are spending on the entire Defense budget. 

Bear in mind that the $1 trillion in spending for public assistance does not include any payments for Social Security old age and survivors payments, Medicare, Federal employee or military retirement benefits or Veteran's Benefits.  These amount to an additional $1.4 trillion in payments to individuals in the federal budget.  Thus, $2.4 trillion, or about 2/3 of the federal budget, is dedicated solely for payments for individuals.  

I suggest that very few people, and most certainly almost no liberals, know how much we are already spending on the poor and less fortunate in our society.  We hear a lot about how we should dismantle our Defense budget to help the poor.  These facts suggest that it may have already been done.

A good question to ask someone who is arguing for more spending on the poor is to ask them how much is already being spent.  Alternatively, ask them compared to what we spend on Defense today, what would be a "fair" amount to allocate to these programs?  I doubt few would have the courage to suggest more than 100%.  Of course, the reality is that we are already spending 140% of the Defense budget to help the disadvantaged and disabled.

How much is $1 trillion?

Let's consider the arithmetic of public assistance:

There are about 117 million households in the United States.  This amount of money could provide an $8,500 stipend for every one of them.

There are approximately 43 million men, women and children who live below the povery level.  This is equal to a $23,250 payment to each of them if it was distributed in this way.

There are 55.5 million children in U.S schools from kindergarten to 12th grade.  If $1 trillion was solely allocated to education it would be equivalent to almost $18,000 per student.

Individual income tax receipts for 2011 per the 2012 federal budget were $956 billion.  That's right, we actually spent more last year on public assistance for the poor than we collected in total individual income taxes!

Consider what this means for the overall federal budget. Bear in mind that we have had budget deficits of over $1 trillion for the last four years. Let's assume for this purpose that Social Security and Medicare are self-supporting from payroll taxes and the costs and revenues are off-budget.  Unfortunately, this is not the case right now but let's be generous with the facts.

For the remainder of the federal budget you have two ways of looking at the situation we are in.
  1. All of the federal individual income tax receipts are being used to pay for public assistance programs and we are borrowing everything else to run the rest of government (Defense, Highways, Prisons, National Parks, CIA, EPA, FDA, FBI, and all other government operations etc.)  or
  2. All of the federal individual income tax is being used to fund all federal government functions and we are borrowing every cent we spend on our public assistance programs.
What more can be said?  What more can be done?  What more can we afford?
The chart below shows how the $1 trillion of public assistance was spent in the 2011 federal budget.     

One trillion ways to say we are sorry.  Is it enough?  Is it more than we can afford?  That is for you to decide.

Thursday, August 16, 2012

Paul Ryan: The Real Deal

I attended the Paul Ryan campaign rally event at Miami University in Oxford, Ohio yesterday.  Both Ryan and BeeLine graduated from Miami.  It was a very large crowd considering that the students were not scheduled to move in until today.  The crowd was estimated at 6,000 in this report.  I was told that they originally planned the event with projected attendance of 1,500.  There was a line that I would estimate was about 1,000 yards long at its peak to get through the metal detectors.  As a result, Ryan took the stage about 45 minutes later than scheduled to allow for people to get into the event.

Here is a picture I took of Congressman Ryan as he spoke.  He was joined on the podium by this former Economics Professor, Richard Hart, (dark sport coat), U.S. Senator Rob Portman (R-OH) (red shirt) and Governor John Kasich (R-OH) who you can barely see behind Hart.

Ryan spoke for about 20 minutes and his remarks closely matched the reports I have seen from his other appearances.  He spoke with no teleprompter and I only saw him look at  notes 4 or 5 times.  He was very effective in his delivery.  In fact, I thought he did a much better job of connecting with the audience than either Kasich and Portman who have more experience in the political arena.

Politics is an art and it does require real skill and experience on the stump to really shine.  Like anything, the more you do it the better you become.  There was no better evidence of that than in comparing the State Rep and State Senator who warmed up the crowd before Kasich, Portman and Ryan took the stage.  It was the difference between going to a minor league and big league game.  Kasich, Portman and Ryan are all big leaguers.  Paul Ryan is also the real deal and seems destined to get even better as a result of this Vice Presidential campaign experience.

Democrats should be very concerned.  Who do the Democrats have of similar age that can make a case for something other than the status quo?  Nobody comes to mind?  I couldn't think of anyone either.

Kirsten Powers, a Gen-X'er like Ryan and a Clinton Democrat, is smart enough to see the danger that Ryan presents for Democrats in her article, "Why the Screwed Generation is Turning to Paul Ryan".  A few excerpts from the Powers article.

We’ve finally been vindicated: Members of Generation X have a representative who is anything but a slacker.
GOP Congressman Paul Ryan—the tireless, wonky, 42-year-old workout freak—has made history by becoming the first member of our generation to join a presidential ticket. It should come as a surprise to no one that his calling card is reforming entitlements.
Generation X chronicler Jeff Gordiner, has written that Gen-Xers suffer from “athazagoraphobia”—“an abnormal and persistent fear of being forgotten or ignored.” Except it’s not really a phobia; it’s been reality for a long time. Maybe that is about to change.

Enter Ryan. While Democrats attack his Medicare plan as “radical” and portray him as pushing granny off the cliff, young people don’t seem to be buying this caricature. Or maybe “radical” is what they want.

A Zogby/JZ Analytics poll Tuesday showed increased support among voters 18-29 for the Romney ticket, which pollster John Zogby attributed to the Ryan pick.  President Obama received just 49 percent of the youth vote, versus Romney’s 41 percent. (Obama took home 66 percent of the youth vote against McCain in 2008.)

For those who think those numbers are an anomaly, take a look at Pew’s 2011 polling that found that among 18-29 year olds, 46 percent supported Ryan’s proposed Medicare changes with only 28 percent opposing (the rest had no opinion). Among 30-49 year olds it was 38 percent approving and 36 percent opposed. The strongest opposition to Ryan’s plan comes from those over 65, who ironically won’t even be affected by his plan since it would only apply to those 55 and under. Pew found that age, not party identification was the biggest predictor of how a person would feel about his plan.

Still, the attacks by Democrats on Ryan and his plans for entitlement reform are scaring Boomers—who don’t want to lose the good deal they have and don’t realize Ryan’s plans wouldn’t impact anyone collecting Medicare now or who will start in the next 10 years—and could indeed cost Romney in November.

But Ryan is young and is poised to be the intellectual leader of the conservative movement for the next generation. He will be a force to be reckoned with. Name-calling and distortions of his plan by Democrats is not an effective long-term strategy, nor is it good for the country.
Paul Ryan: The Real Deal.  The Democrats: Still Trying to Relive the New Deal 80 Years Ago.

Sunday, August 12, 2012

A View From the Bunker on the Ryan Pick

Via Powerline from Robert Stacy McClain with a view from the bunker on the Ryan pick.  I don't know who puts these types of things together but it is another reason why I would not give up the internet for $1 million.  Humor is the best medicine.  Enjoy.

Hitler Finds Out Paul Ryan is the VP Pick

The Hitler film clip is from the 2004 German film Der Untergang (Downfall) that revisits the last ten days of Adolf Hitler's life.  There have been hundreds of parodies on different topics created based on this clip in the movie.  For the complete story on these video memes and to view the clip from the original movie go here.

While you are viewing videos you might want to look at a few Paul Ryan clips.

Paul Ryan's Greatest Hits.

Paul Ryan dismantling the economics of Obamacare.

Saturday, August 11, 2012

The Dream Team

In 1992, basketball's Dream Team went to the Barcelona Olympics and won the gold medal.

Twenty years later Mitt Romney has picked Congressman Paul Ryan and we may have another Dream Team in place.  There is no gold medal on the line, however, the stakes are much higher.  Our country's future is at stake and these may be the two best guys in the country that can fix what ails us right now.

I believe Paul Ryan is the most consequential person I have seen on the political scene in the last 30 years.  We have not had anyone since Ronald Reagan who has had more influence on the direction of the debate in Washington.  Ryan almost single-handedly put the budget debate and entitlement reform on the front page.  Many have said that you could not broach the subject of entitlement reform in Washington and survive.  Ryan did and he has only not survived, it has gotten him to a place where he and Mitt Romney might actually be able to save the country from its fiscal delinquency.

I have written about Ryan several times in these pages.  The first was a year and a half ago in The Punter and The Quarterback.  I described how I saw Paul Ryan compared to Barack Obama.
To use a football analogy you've got a punter and a quarterback.  The punter runs on the field, kicks the ball quickly and hopes that his teammates make the tackle on the return so he doesn't have to get his uniform dirty.  The quarterback is determined to take his team to victory.  He is not afraid to put everything on the line to do it.   If he has to scramble, he won't be sliding to avoid getting tackled.  He is all in to win. 
The punter-President Barack Obama.  The quarterback-House Budget Chairman Paul Ryan.
Barack Obama was elected as President of the United States because he said he was going to change Washington.  He was going to cut the deficit in half.  He was going to be a leader like none we had ever seen before.  All he has done is punt, punt punt.

Paul Ryan was just a young Congressman from Wisconsin when he came to Washington.  However, he has done nothing but lead, lead, lead.  He not only has shown a mastery of the difficult budget issues of our country but he crafted a concrete plan and path to deal with it.  He not only took on the tough issue of entitlement reform in that proposal but he has been able to get the entire Republican caucus in the House and Senate to support his approach.

He has persevered even when he has been viciously and unfairly attacked by Democrats.  They have run ads showing him throwing grandma over the cliff.  They have called him every name in the book.   You will hear it all over the next few days.  He's radical.  He's heartless.  Of course, the Democrats have no plan of their own other than to take the country over the cliff.  President Obama's budget has not even been able to get one Democrat vote in the Senate in the last two years.  The Democratic-controlled Senate has not produced a budget for over 3 years.  On the other hand, Ryan's budgets have passed the House in each of the last 2 years.

I said this about Ryan in April, 2011 after he released his 2012 Budget proposal.
Paul Ryan has put a proposal forward that will require the American people to decide what path they want to be on.  A path that can provide a way out of the fiscal mess we are in and the potential to put us on a "path to prosperity" as Ryan calls it.  Or the current road to ruin that we are currently on.  The American people have to decide the future they want.  The 2012 election just got much more interesting due to Paul Ryan. That is when we will also find out whether Ryan is the man for the times or simply is a man ahead of the times.  No matter which way it goes, I know one thing.  Paul Ryan is A MAN!  We have not seem many like him in Washington in a long time.
Why am I so encouraged by Governor Romney's selection of Ryan and why do I refer to them as the Dream Team?

I am a firm believer in having elections of substance and clear choices for voters.  It is only out of these elections that you can get the political power for real change.  The choice of Ryan tells me that Romney fully understands what is at stake.  To govern effectively you must win decisively.  I am not talking about the margin of victory.  I am talking about the clarity of the agenda and the contrast in policy with your opponent.

For example, Ronald Reagan ran on clear differences compared to Jimmy Carter.  Vastly lower tax rates.  Much higher defense spending.  He won and was able to change Washington even though he was dealing with a Democratic Congress in his first term and a very small Republican Senate majority.

Barack Obama's failure as President can be traced to the fact that he ran for the office without clearly stating his agenda.  In fact, he hid his real agenda.  He talked in terms of big themes  It was all about hope and change.  He did not want to risk saying what he really wanted to do on health care and many other big issues.  He took the country places that were a surprise to many- particularly independent voters.  This has led to the many political challenges that have hurt him.  If you want to really do something in Washington you cannot succeed in the end by hiding it up front.  You need to put it out there and get people to vote on it.  They are either with you or against you.

The same was true with President Bush's second term election.  You knew where he stood on the War on Terror and Iraq.  The people voted in 2004 and he won re-election.  He never could have moved forward with his surge strategy in Iraq without that previous voter support even though many in his own party and administration doubted him.

The biggest threat to our country today is our budget deficit.  The biggest problem in our budget is unsustainable entitlement spending.  Everyone knows this but we have seen very few willing to confront it.  Our President is the most prominent example.   Romney clearly knows what has to be done and he has picked the best person to help him get the job done.  This is a dream come true from my perspective.

The other reason I like Ryan is he is equal parts substance and sizzle.  He understands policy but also has an engaging personality and charisma.  On the other hand, Marco Rubio is more sizzle than substance at this stage of his career and Rob Portman is more substance than sizzle.  I think Romney got both in Ryan.

Ryan also has other advantages.  At age 42 he should be an attractive candidate for younger voters and has proven that he has been able to draw votes in his blue collar Congressional District in Wisconsin.  Ryan's demeanor is such that I think he will also appeal to Independent and women voters.  He makes his points in a very earnest, non-confrontational style that I think will surprise a lot of people who don't really know him.  They may have heard stories about this horrible Conservative but that narrative will not be consistent with what they see with their own eyes.

There will be a real choice this November.  The national nightmare we have been living or the chance to resurrect the American Dream.  Who better to carry that message than the Dream Team of 2012?

Thursday, August 9, 2012

Reid, Romney and Reform

I have found the unsubstantiated attacks by Harry Reid on Mitt Romney very interesting.

Reid has stated that "a very credible source" told him that Mitt Romney did not pay any federal income taxes for ten years.  Supposedy the source called his Senate office offered this tidibt.  It is like a little birdie told him.  How low can you go?

Source: Bruce Plante, Tulsa World

Reid not only made the charge but he also repeated it on the floor of the United States Senate and challenged Romney to prove him wrong by releasing all his tax returns for the last 10 years.  In Harry's book I guess you are guilty until proven innocent.

Let's look at what we do know.

The Washington Post gave this statement "Four Pinnochios", their top award for the most outlandish of falsehoods perpetrated by a politician. 

Harry Reid has not released his own tax returns.

Harry Reid reported that his net worth was about $1.8 million when he first was elected to the U.S. Senate in 1986.  He is now worth approximately $10 million.  Not bad for someone on the government payroll.

Harry Reid lives in the Ritz Carlton Hotel in Washington, DC.  No apartment or sleeping in his office and taking showers in the Senate gym for Harry.   

Harry Reid states that he does not have to release his tax returns even though he wants Mitt Romney to do so because,

"I’m a member of Congress now, I don’t make too much money,”

As Senate Majority Leader Reid makes $193,000 per year.

According to his Financial Disclosure Report, he had another $97,000 to $315,000 in unearned income in 2011.

Mitt Romney has released his 2010 tax return that show that he paid over $3 million in federal income taxes for the year.  He also paid almost $900,000 in state and local taxes.  In addition, he had charitable contributions of almost $3 million.

Mitt Romney released a draft of his 2011 tax return ( the final return is on extension and not required to be filed until October) that shows an estimated federal tax liability of $3.2 million.  He paid an additional $1.5 million in state and local taxes.  He also made over $4 million in charitable contributions.

Let's put this in perspective.

Where does Senator Reid think that the money comes from that pays his salary?  Mitt Romey paid enough in federal income taxes just in 2010 to pay for Senator Reid's salary in the U.S. Senate for the last 10 years.  You can view Romney's tax returns here

I  understand Mitt Romney's refusal to release any more tax return information beyond 2010 and 2011.  His 2010 tax return was 203 pages long.  Why give Democrats another 2,000 pages of tax information when they already have 400 pages to nitpick about? 

The undertone of all of this seems to be that Mitt Romney did something nefarious to not pay his "fair share" somewhere along the line.  The implication is that he used tax shelters or tax havens or tax dodges to avoid paying taxes. Of course, all of those would be tax breaks that Congress passed, but that is besides the point. It does not matter what he releases, it will never be enough. He will never be considered to have paid his "fair share" not matter what he has paid.

How does all of this get us from Reid to Romney to Tax Reform?

Looking at this play out, my advice to Governor Romney would be that he has been too cautious on his tax reform proposals.  He is perfectly positioned to totally obliterate the Internal Revenue Code if he would take it on.  He could also take every trumped up charge the Democrats want to throw at him about his taxes and use it to argue why the Code should be completely overhauled.  What better person is there to do it?

A big problem with the current system is that everyone thinks someone else is getting some type of special tax benefit or preference in the Code.  That has to change.

A bigger problem is that a main source of  federal governmental power is through picking winners and losers through various provisions in the Code.  That has to change.

With one fell swoop, Romney could make the case to truly change the way the game is played in Washington.  Here's how it could be done.

1. Make all corporations pay tax on their reported book income. Do away with all provisions in the Tax Code where there is a book/tax difference-accelerated depreciation, r&d credits etc. and reduce marginal tax rates correspondingly.

2. Adopt a territorial tax system like the rest of the world. The U.S. taxes all income from whatever source derived and then has to provide a foreign tax credit to prevent taxing the same income twice. This adds a lot of complexity and is a big reason why corporate taxation is so confusing and why we hear that GE or Exxon or Microsoft is not paying their "fair share".

3. Do the same thing for individual taxation. Eliminate all itemized deductions and credits and go to a flat tax with an exemption equal to the poverty limit guideline or some other index that would make sense. This would maintain the progressivity that we are used to but it would not require 203 pages to get there. For 2012 that is about $11,000 for a single individual and 24,000 for a family or 4.  That is not high enough?  Negotiate that amount with Congress but don't compromise on the basic principle that the federal government is no longer going to favor one group over another (ex. homeowners vs. renters).  Henceforth, the tax system would be used to raise revenue and not be an instrument of social policy.

We would put a few tax lawyers and accountants out of work but we would greatly simplify and, more importantly, add significant credibility to the system.


What chance is there that this would occur?  Probably close to zero for two big reasons.

First, there are just too many voters that are worried about losing their "advantage".   On home mortgage interest it is just not homeowners, it is also real estate agents, mortgage lenders and home builders.  That is why I think the only way to go down the path of tax reform is to leave no stone unturned and make sure that everyone's ox is gored.  It would have to be clear that no one would be left with an "advantage" so there is no reason to fight for their preference.  Of course, there are few (if any) politicians who would be willing to put themselves out there on that one.

Second, the reality of the current tax system is that it does not benefit the rich, it primarly benefits the poor and middle class.  I wrote about this in The Middle and the Rich.  Therefore, any attempts to broaden the base and lower tax rates are always going to be met with arguments that it is an attack on the middle class.  Therefore, the irony is that the current tax system is villified by liberals as giving huge tax breaks to the rich but any reform to get rid of the tax breaks is villified by the same liberals as a middle class tax increase.  Such is the dirty world of politics.

Due to this fact, I would argue that Romney or someone else would have a better chance of going ALL IN on tax reform rather than the half loaf that is normally peddled when tax reform is discussed.  This normally means that home mortgage interest and charitable contributions are untouchable tax breaks.  It is just much harder to argue that a tax system that does not provide any breaks to anyone is "unfair" than any other approach to tax reform.  If I was defending this reform proposal from these attacks I would just keeping saying, "You are saying it is unfair because we are not providing any tax breaks other than to those with lower incomes?  Is that correct?"

The ALL OUT approach also has one other attribute that makes it extraordinarily attractive despite its obvious political risks.  It is SIMPLE.  People crave simple solutions.  There is too much complexity in today's world.   There is real power in telling people that they could file their tax return on a post card or through an app on their smart phone.  Taking hassles out of people's lives (and dealing with tax returns ranks high on the list of hassles for most) is a real value-add for a politician.  We saw this potential in the signficant traction that Herman Cain got from his 9-9-9 Plan during the Republican primary contest.

That is how you could go from Reid to Romney to Reform.  It is also a way forward for a man named Rand and other Tea Party legislators if they really want to change Washington.

Wednesday, August 8, 2012

States of Decline

I camce across three interesting factoids on state goverment finances over the last week. Of course, they all come from big liberal tax and spend states. In my view, we are going to increasingly see the neglect of traditional state and local services like education, public safety and highways in a numbe of states under the crush of welfare state spending. 

Will the voters in these states wake up? Or have these states all reached the tipping point where there are just more takers than makers?

For voters in other states, look at what is happening in Massachusetts, Illinois and California and learn from them.  It doesn't have to be this way.  


The Wall Street Journal reports that Massachusetts expects to spend 54% of its state budget on health care in 2012!  What about education, roads and public safety? They are being squeezed and they will continue to be squeezed. Remember, this is the state that covers more of the uninsured than any other state. Covering more people and limiting uncompensated care was supposed to limit costs. Health care costs in Massachusetts are the highest in the United States-27% higher than the national average.

Health costs—Medicaid, RomneyCare's subsidies, public-employee compensation—will consume some 54% of the state budget in 2012, up from about 24% in 2001. Over the same period state health spending in real terms has jumped by 59%, while education has fallen 15%, police and firemen by 11% and roads and bridges by 23%.

Expect this trend to continue.  The appetite for health and welfare spending is close to insatiable.  Many more states will start to look like this and Obamacare will accelerate the trend.

Fox Business News reports that Illinois is on track to spend more on state pensions than it will on education by 2016. Its five public pension funds are underfunded by $83 billion! Illinois already increased its personal flat income tax rate by 67% (from 3% to 5%) across the board last year. They also already have the third highest state corporate tax rate in the country at 9.5%.

Illinois faces severe underfunding in its pension system. It reported a funded ratio of 43.4%, way below the 80% considered healthy. Based on fiscal 2010 data, Illinois had the lowest funded ratio of any state, according to a June 2012 report by the Pew Center on the States.
There is not a better example of mortgaging the future of the next generation for the sins of the past than this.  Unless public sector pensions are brought under control more states will also look like this in the future.


California is facing a $16 billion budget deficit.

On November 16, 2011, the Office of Legislative Analyst released a report forecasting a budget deficit of $3 billion at the end of 2011-12 and an operating shortfall of $9.8 billion by 2012-13.Today, California's actual budget deficit is now a $16 billion headache (up from $9 billion in January).
Instead of tackling debt, California lawmakers approved a $68 billion project to build a high-speed train connecting Los Angeles and San Francisco. (A flight from L.A. to S.F. takes about one hour and costs around $100 one way vs. a 10 hour drive.) Interestingly, the approval allowed the state to collect $3.2 billion in federal funding that would've otherwise been rescinded. The federal government rewarded California for needless spending projects, leaving U.S. taxpayers on the hook.

California was counting on profits from the sale of Facebook stock to fill as much as $2 billion of their budget hole. That does not look like a good assumption right now.

California is also looking to generate another $7-$9 billion if Proposition 30 is approved by voters in November which would raise the state sales tax from 7.25% to 7.5% and raise the top personal income tax rate to 12.3%.

Of course, against this backdrop is the fact that three California cities-Mammoth Lakes, Stockton and San Bernardino-have filed for bankruptcy protection since June.

California has shown that you can have every natural advantage as a state (climate, talented people, natural resources,etc) and you can run it into the ground with poor public policy decisons.  I do not see how they can avoid a financial catastrophe over the next few years.  This is our Greece.

I have written before that one significant issue that will not be on the ballot in November is whether the federal government will bail out California and Illinois when the inevitable occurs on the Left Coast.

We have seen Wall Street bailouts. We have seen European bailouts. We are sure to hear calls for a California and Illinois bailout (I think Massachusetts will survive). This may be the most significant unspoken issue that will be before us in the next four years. You will not hear about it in the Presidential race.  However, who is sitting in The White House and in Congress will make an enormous difference when the time comes. Are you ready to send your hard earned tax dollars to these states of decline? Vote with that in mind in November.

Monday, August 6, 2012

Cheeseburger In Paradise

Cheeseburger in paradise (paradise)
Makin' the best of every virtue and vice (paradise)
Worth every damn bit of sacrifice (paradise)
To get a cheeseburger in paradise
To be a cheeseburger in paradise
I'm just a cheeseburger in paradise

Jimmy Buffett immortalized these lyrics, however, this story in The Washington Examiner would seem to indicate that the real Cheesburger in Paradise is consumed aboard an Amtrak train.

Taxpayers lost $833 million over the last decade on the food and beverages supplied by Amtrak, which managed to spend $1.70 for every dollar that received in revenue.

“Over the last ten years, these losses have amounted to a staggering $833.8 million,” said Rep.John Mica, R-Fla., in a statement previewing a House hearing today.  “It costs passengers $9.50 to buy a cheeseburger on Amtrak, but the cost to taxpayers is $16.15.  Riders pay $2.00 for a Pepsi, but each of these sodas costs the U.S. Treasury $3.40.”

" is currently selling 24-packs of 12 ounce Pepsi cans for $8.94 -- which
averages to about 75 cents per can."

If anyone, (I mean ANYONE) believes that government has any business getting into more business than they already are doing, they need to reconsider after reading this story. If you can't make money selling food and drink to captive passengers on a train, I think it is time to rethink the business model.

I thought it was also interesting to note that Amtrak has 1,234 employees in its food and beverage operation which lost $84 million last year. A business normally adds an employee when that employee can add profit to the bottom line. Adding value is what it is all about. In the case of Amtrak, the loss on the food and beverage operation actually resulted in a loss of $68,374 per employee.

I thought it was startling to begin with that Amtrak has 1,234 employees in its food and beverage operation. I could not find any information on comparable number of employees in the food and beverage operations of the airlines. Anyone have any information on this?

The Atlantic Wire also has a story on Amtrak's woes and cites a a govenment auditor's report that points the finger directly at bloated bureaucracy, lack of oversight, waste and theft.
Amtrak has been trying to figure out how to break even on food since Congress required it to do so in 1981, and it's never been able to, The New York Times' Ron Nixon reports. That's because two different Amtrak departments oversee food service, and they haven't coordinated with one another to stop losses, largely from employee theft, Amtrak inspector general Ted Alves told the hearing of the House Transportation and Infrastructure Committee. Some 87 percent of that theft happens on long-haul routes, Alves said. In a report last year, he outlined some of the schemes, including shorting cash register sales, inflating first-class meal checks, selling non-Amtrak items, and plain old stealing. Amtrak has some plans in place to counter that theft and waste, including a loss-prevention unit, more cashless purchases, and a better inventory-tracking system. But so far, Amtrak's food service program still costs it, and by extension us, a fortune.

I think it also interesting to look at a comparison of Amtrak compared to Southwest Airlines when looking at the relative efficiencies of transporting people from place to place. I used Southwest as its route structure is tilted to shorter flight distances than some of the other national air carriers and is more comparable to Amtrak's shorter train runs.
Amtrak employees                         20,000
Passengers                                     30.2 million
Profit/Loss                                     ($1.24 billion) loss
Revenue Passenger Miles(RPM)*   6 billion         
Passengers/Employees                    1,510/1
RPM Per Employee                         300,000                      
Loss Per Passenger                         ($41.06)
*estimate for 2011 based on this report

Southwest employees                     46,000
Passengers                                     128 million
Profit/Loss                                      $330 million profit before special items
Revenue Passenger Miles                98 billion
Passengers/Employees                    2,782/1
RPM per Employee                        2,130,435
Profit Per Passenger                        $3.17

Southwest is transporting almost double the passengers per employee that Amtrak is.  Looked at from the perspective of passenger miles, Southwest is transporting each passenger over 2 million miles for each employee compared to mere 300,000 for Amtrak. 

Southwest Airlines also details the yearly consumption of soda, juices and other refreshments in the "Fun Facts" section of their website.  Bear in mind that they are providing most of these items at no additional cost to passsengers and Amtrak is getting some payment.

In 2011 Southwest served 64.1 million cans of soda, juice, and water, 14.5 million alcoholic beverages, 22.6 million bags of pretzels, 92.1 million bags of peanuts, 22.2 million Select-A-Snacks, and 11.5 million other snacks.

No mention of cheeseburgers for Southwest.  Beyond Jimmy Buffett, cheeseburgers only find true paradise aboard an Amtrak train where both the passengers and the taxpayers are taken for a ride.

Saturday, August 4, 2012

Where Is The Bias?

What percentage of the United States population is homosexual?

What would you guess?

Most people I ask this question of tend to give me a number like 15%, 17%, 20% or 25%.

A Gallup poll last year found that U.S. adults, on average, estimated that 25 percent of Americans are gay or lesbian.

How many adults are gay in America?

There does not seem to be any definitive number.  However, it is a long, long, long way from 25%.

This source on a range of U.S. demographic groups, which cites a number of studies, puts the percentage at 1.51%.

This story in The Atlantic says that the percentage is less than 2 percent.

This report by ABC News, citing a think-tank devoted to LBGT research at UCLA, puts the number at 4%.  However, to get this higher number you have to include bisexuals.

I could not find any reliable source that put the number at higher than 5%.

How can people be so far off in their guess?

I think it derives from the heavy influence of Hollywood and the news.  Consider the number of movies and television shows that have gay characters and the disproportionate number of news stories that focus on gay rights, gay marriage or other gay issues.  It is truly a situation where the loudest single person in a room of 50 gets all the attention.  You never even get to hear from the other 49.

It also derives from the inability of most people to use the analytical portion of their brain.  I call it the reflective side of the brain.  On this and many other issues the reflexive side of the brain simply overwhelms logic.  For example, if you really stop and think, do you really think that 1 in every 4 or 5 people you see in a day are gay?  The people you work with?  Your family members?  Your friends? Walk down the street.  1 in every 5?  No way.

People reach the conclusion they do because of what is called "availability" bias.  In simple terms, we estimate frequencies or numbers based on the ease with which instances come to mind.  If retrieval from the brain is easy and straightforward we tend to judge the numbers in the category to be large.  People see and hear a lot of stories about gays and gay rights, therefore, when asked to guess a percentage it is high.

It is interesting that the same demographic survey referenced above that found that only 1.51% of American adults are gay also found that 44% of Americans identified themselves as "born again"or "evangelical".

Let's put this in perspective.  The number of gays in this country is 4.3 million.  The number who consider themselves evangelical or born again is 125.3 million.

Why don't we hear more news stories about these deeply religious people when they outnumber gays by almost 30 to 1?  Where are the tv shows and movies about these people?

These numbers should also provide a little insight as to why over a million showed up at Chick-fil-A's across the country on Wednesday to show their appreciation for both the freedom of religion and speech in this country but apparently only handfuls showed up for the gay and lesbian kiss-in on Friday.  The Chick-fil-A closest to my house was swamped on Wednesday for the appreciation day but they reported they had not had one protestor at the store as of late Friday afternoon.

Most of the major media outlets barely mentioned the Chick-fil-A story on Wednesday.  However, according to, two major news networks were covering one protestor at a Chick-fil-A store on Friday.  Is this fair and balanced journalism?  Any question on where availability bias comes from?  The next poll might get the gay community to 50%.  Where is the real bias in this country?