Tuesday, November 16, 2010

Jobs, Jobs, Jobs



“Jobs, jobs, jobs.” That was the mantra of every politician from both parties in the recent election. With real unemployment in the US at around 16% (at least) and a subject very much on the mind of every rational voter, that was unsurprising. When you think about it though, nearly all of these politicians have never created a job. And, in many cases, never actually had a real one, having spent their whole career in politics or entombed in the vacuum of academia. What do these guys know about creating a job?

Then too, for all the talk about a “wave election”, when you get right down to the numbers, 86% of the incumbents got re-elected. In other words, 86% of the idiots who got us into this mess are still there. True, that’s down from the usual 98% but still insufficient to effect real change in policy. I mean, why should the incumbents who got re-elected suddenly change policy? There’s no upside. For them, what they’re doing now is working fine.

To get an idea on how to create jobs it might be useful to look at why and how we lose them. I gave that a try in the recent piece “The Buffaloization of America”. Buffalo and all the other “rust belt” cities lost their manufacturing industries by a series of policies that made it difficult or impossible for companies to compete and make a profit. Aggressive and demanding unions, stifling regulations, predatory lawyers and excessive taxation drove companies to either move to more favorable climates (literally and figuratively) in the south or over seas … or die.

Corporations are not charitable organizations. They have to show a reasonable profit for their activities or their stockholders, many of whom are union retirement funds or the IRAs or 401Ks of average citizens, will demand the head of the CEO. If they can’t make a profit in Buffalo or California on their production of widgets they will simply move to where they can.

Then there is the matter of competition. If your company that manufactures in the US or Canada and is competing with a company making a competitive product manufactured in say, China you are going to be at a serious disadvantage in your cost of goods. The cost of any product is a function of the materials, labor, overhead and profit. The usual suspect in any discussion of “jobs going overseas” is labor. And it’s true as far as it goes. In the past much lower labor costs in Third World manufacturing was mitigated by improved productivity i.e. automation of the process. Of course, the foreign manufacturers eventually got the same sophisticated machinery and caught up.

Union work rules represent a bigger problem than the wage differential. These often conflict and cause work stoppages and productivity declines. Strikes are even more destructive.

Then there are labor laws and the employees and lawyers who game the system. In one of my businesses we had an employee who made a career out of getting fired. She would make everyone around her miserable until she finally got fired. She then sued for “unfair termination” or some such and won a big settlement every time. To my knowledge she has done this at least three times. We were the second company to hire this bit… er, pro. The company that got stung before us could not warn us because they would get sued again for saying something negative about her. Nor could we warn the next company in line. We were instructed by our lawyers to answer when asked for a reference on this crook to only say, “She worked here from X date to X date” and nothing more.

We had another employee at a different company who we fired for stealing from the company. She filed a sexual harassment complaint with the EEOC… not against me, thank God, but against some of our other employees. Of course, the charges were totally bogus. One of them was that she was out drinking one night after work with a bunch of her young fellow employees and someone said something offensive. Imagine that. The leap here is that my company is responsible for the speech of my employees when they are on their own time drinking in a bar? Yep, apparently so. It cost us a lot of money.

And let’s not forget product liability. I once dropped in on a friend that was baby-sitting her grand daughter who was a year old or so. It was a hot day and they had a “swimming pool” set up for the tyke. It had to be less than 4 feet in diameter and maybe 3 or 4 inches deep. Emblazoned on the tube was the following warning: “No Diving!!” Ya think?

If you make something some idiot will figure out a way to injure himself with it and sue you. The annual cost of torts on businesses in the US is something like $300 to $400 billion, depending on which study you prefer to believe. Clearly, that direct cost does not even consider the cost of defensive measures and both add to the cost of producing that widget making it less competitive with the foreign produced product. Congress has been passing these laws for years giving lawyers hunting licenses to sue companies. These lawsuits drive up costs and drive business owners absolutely nuts.

The loss of manufacturing jobs has been going on for years and is not going to be reversed overnight, if ever, in the US and other “developed” countries. However, there are some things that the new US Congress could do immediately that would help the situation in the near term.

1). Ratify the free trade agreements with Columbia, S. Korea and Malaysia that were negotiated during the Bush Administration. The Democrats have been sitting on these agreements for two years as payback to the labor unions that object because… well, they object and the environmentalists object because that’s what they do. The US Chamber of Commerce estimates that the S. Korea agreement alone is second only in importance to NAFTA and could create 345,000 jobs.

2). Extend the tax rates due to expire on January 1st for everyone. Keep the rates where they are for everyone and forget the class warfare shit. Not increasing capital gains and dividend taxes alone will be beneficial, not to mention eliminating uncertainty.

3). US international corporations are sitting on some $400 billion in cash in their foreign subsidiaries. If they bring it back to the US they get whacked for 35%, so in the past they have been reinvesting that in further foreign expansion. The Democrats want to tax that cash whether they bring it back or not. Instead, I suggest that they offer a limited time window for them to repatriate that money at a very low rate… say 5%. That would encourage a flood of new capital back into the US.

4). They should immediately lift the defacto moratorium on deep water drilling imposed by the Obama Administration. The have ostensibly lifted the ban but in fact have issued no new permits. If they would start issuing permits again they could put a lot of people back to work immediately on the Gulf Coast.

None of the above addresses the long-term reforms that need to be accomplished to really restore an economic boom and create the eight million jobs that have been lost. That would include: serious tort reform; deep sixing Obamacare; reducing the corporate tax rate to 25%; taking a brutally sharp knife to spending and letting oil and coal start again on US soil. None of the long-term reforms can possibly happen until after 2012 and unless a conservative President gets elected along with more, many more, conservatives to Congress.

Thursday, November 4, 2010

Major Ebb

After the tsunami sweeps ashore all that water has to eventually go back where it came from, taking with it all manner of flotsam and the carcasses of critters drowned in the flood. The election tsunami on Tuesday swept away a lot of Democrats with some 60 House seats swinging over to the GOP and with a half dozen or so races still counting chads. (Hennepin County where Minneapolis is located was trying to figure out how they had 880,000 votes to count and only 708,000 registered voters. I wonder if that’s how Al Franken made it to the Senate?) The Republicans also picked up five governorships and five Senate seats with Alaska and Washington as yet undecided.

The wave washed away three Democrat committee chairmen, seven Dems with more than 20 years of experience and most of the freshman representatives that came in two years ago on Obama’s coattails. James Oberstar, MN (18 terms), John Spratt, SC (14 terms) and Ike Skelton, MO (17 terms) were among the notables who now need to go find a real job. Actually, I suppose if you have spent 34 or 36 years in the House of Representatives you likely stole enough that working is no longer a necessity.

In one of the more satisfying purges, Alan Grayson of Florida, perhaps the most obnoxious politician in the US, got his ass handed to him. Good riddance.

Of course, this being US politics where incumbency means almost certain re-election, many Democrats more than worthy of being sent off to new careers, survived. Barney Frank, MA and 30 year veteran of the House prevailed over his first opponent even given a fleeting chance at beating him. Barney, who’s only real job was pumping gas at age 18 and the individual most responsible for the housing crisis, showed that in some liberal enclaves you can get away with almost anything and get re-elected. Pete Stark of CA is another example. He’s a very cranky 78 years old and 18 termer. Viral videos of him insulting his constituents at town hall meetings didn’t hurt him any. He got 72% of the vote. Yes, it is California.

Harry Reid survived. Although most polls showed him tied with Angle or slightly behind, he won easily. Pundits said he “had a good ground game” which means that the labor unions hired a fleet of buses, catered lunches and dragged people to the polls. Boxer thumped Forina and Brown showed Whitman what the California Democrat machine could do when threatened. McMahon in CT also got whacked.

To me the three highly successful businesswomen that entered politics for the first time in this election; Forina, Whitman and McMahon represent the biggest surprise.

All were enormously successful CEOs and rose to the top of male dominated industries. All three are smart, articulate and honest and all dumped millions of their own money into the effort. Yet they all got their asses handed to them. Why?

OK, they chose to run in notoriously liberal states but it’s got to be more than that. Is it possible that powerful women threaten men or is it that women are turned off by these assertive gals? Both? One would think that the feminist groups would be pounding the pavement for these accomplished women. But no, these are conservative, capitalist women not enthusiastic about abortion. The feminists wouldn’t go near them.

Whitman dumped $140 million of her own money in the campaign to try to get the job of Governor of California that, to me, is one of the least desirable jobs on the planet. Maybe she did want to save CA, but I can think of other things to do with $140 million. The “fruits and nuts” elected Jerry Brown. Good luck. If you’ve got any California bonds, this would be a good time to unload them.

So what can we learn from this and what can we expect for the next couple of years? A lot of the political wags say that Obama will now try to pull a Clinton and govern more from the center and find practical solutions with the new Republican majority in the House and new balance of power in the Senate. I’m not so sure about that. He is buggering off on an absurdly expensive trip to India and Indonesia tomorrow without meeting with the new leaders in the House. Not sure if that’s symbolic. Compromise and finding middle ground has never been his style and doesn’t fit his Chicago politics/ Saul Alinsky philosophy. He once said he didn’t mind if he’s a one-term president. Maybe he means it. If he and Harry Reid obstruct GOP efforts to preserve the Bush tax cuts and refuse to cut spending, then he will certainly get his wish. Maybe the Dems will even nominate someone else.

Another interesting thing to watch will be what happens to the Tea Party movement. Will the grass roots movement fade away? Will the enthusiasm die or will it persist? The Tea Party enjoyed some successes in this Tuesday with the election of Marco Rubio and Rand Paul. They also experienced some failures, most notably the selection of Christine O’Donnell and Sharon Angle. Both were elected in the primaries by the Tea Party folks based on their ideological purity and both got hammered in the general election. In both instances there were other Republicans in those states that would have had a better chance. Will the Tea Party folks be a little more pragmatic next time around?

Then there is the Sarah Palin question. What’s she gonna do for the next couple of years? Personally I think that her ego is going to get the best of her better judgment and she will run for President. Mistake. While I personally like her, I don’t think she’s right for the Oval Office. Most polls I’ve seen agree with me on that one.

Well, as the Chinese say, “May you live in interesting times.” No problem there.

Saturday, October 23, 2010

Paradigm Shifts and Flying Mud

Thomas Kuhn defined a paradigm shift in his 1962 book, “The Structure of Scientific Revolutions” as “… when one conceptual world view is replaced by another.” Swiss Watch International Men's Limited Edition Automatic Chronograph Stainless SteelOne of the classic examples is the Swiss watch industry. Until the mid ‘70s the Swiss dominated the world market for watches. The Japanese approached the Swiss with a new concept in watches, digital vs. analog devices, in plastic cases and with few moving parts. They were extremely low cost, unrepairable and basically throw away watches. The Swiss demurred. The Japanese returned to Japan and introduced the “Swatch” and many follow on digital models. The Swiss watch industry was nearly wiped out.

Of course, there are countless examples that have occurred throughout history. Makers of buggy whips and manure shovels never thought much of the future of the new noisy, gasoline burning vehicles, much to their surprise and dismay. And, no one can deny that the PC and the Internet have changed the world forever.

With the elections in the US less than two weeks away we are left to ponder whether a paradigm shift in American politics is about to take place. For decades now the US has drifted toward a more socialist/statist government, culminating in the election of Obama and the dominance of the left wing of the Democrat Party in Congress. As the Democrats rushed forward with their agenda of pushing the US further toward a socialist economy with the pork laden stimulus bill, the take over of the auto industry, the unpopular health care law, take over of the student loan business and cap and trade legislation, voters reacted with alarm and anger.

Rick Santelli, CNBC business commentator, is widely given credit for striking the match that ignited the Tea Party Movement. As thousands of Tea Party groups sprang up around the country, many professional politicians of both parties ignored the movement and the liberal mainstream media sneered. Later, as the movement gained momentum, some Democrats, fearing disaster, retired and some complacent, “moderate” Republicans got booted by the Tea Party candidate in the primaries. Entrenched lifetime GOP politicians Lisa Murkowsk of Alaska and Charlie Crist of Florida refused to go quietly and are running against the Tea Party candidates that won the Republican primaries.

Many of these TP candidates are new to politics and come with military experience and business backgrounds and are, thankfully, not lawyers. Some are weak candidates and easy targets. In another surprise, boatloads of money flowed into these campaigns from motivated citizens around the country.

As the polls started to suggest a rout for the Republicans on November 2nd, the alarmed Democrats and their left wing allies have swung into action. Incumbent Democrats found themselves unable to tout their votes for wildly unpopular legislation and instead have resorted to personal mud slinging attacks on their GOP opponents. Of course, American politics has always been a brutal blood sport but I suspect, that this election will be remembered as one of the nastiest. That’s saying a mouthful.

Those of my vintage may remember the “Daisy” commercial run by Lyndon Johnson’s campaign against Goldwater. It featured a little girl in the foreground picking daisies while an atomic blast occurred behind her. The implication being that Goldwater was such a right wing nut job that he would use the bomb if elected. He was not. More recently, you might recall the James Bryd ad run by the NAACP against G. W. Bush suggesting that Bush condoned dragging blacks to death.

The list for this election cycle so far is long and if you are curious you can consult the blog site, The Daily Beast, and their “Hall of Shame”. Two stand out for me:

Meg Whitman California is an economic basket case with a $19 billion dollar deficit (probably more since they have pushed some debt into the next fiscal year) and some $50 to $100 billion in unfunded pension liabilities. The state is hemorrhaging jobs as businesses flee anti-business taxes and regulations. A company in a similar situation would call in a “turnaround CEO” to straighten things out. Enter Meg Whitman, the highly successful former CEO, who grew eBay from startup to mega company. She’s running against Democrat Jerry Brown, a 40-year career politician and former governor, who was dubbed “Governor Moonbeam” (for obvious reasons) by Mike Royko, Chicago’s famous columnist. (RIP)

Whitman, a Republican in a notoriously “blue” state, was doing pretty well against Brown so the Democrats trot out her former maid in the company of Gloria Allred, a publicity hound liberal lawyer. Allred’s claim? Whitman had knowingly hired an illegal alien and worse, mistreated her. It turns out the maid, Nicky Diaz, had been hired through an agency and Diaz had used a phony social security card and drivers license. The poor girl had “only” been paid $23/ hour for cleaning Whitman’s house… pretty good pay for menial labor. The whole thing was a sham to drum up sympathy in the large CA Hispanic community. Of course, there is much more in the way of negative ads against Whitman and now she looks like a long shot. California will likely get Brown II and continue its decline into the toilet.

Without question the prize for the most offensive and despicable ad came from Florida Democrat Congressman Allen Grayson. His ad against his opponent, Dan Webster, called him “Taliban Dan” and selectively edited his statements to make it look like he was saying something he never said. Should we be surprised? Not. Grayson is the same guy who stood up in front of the House and declared that the Republican plan for health care was to let old people die. If there is any justice in this world the liberal bomb thrower Grayson will be sent packing.

Once the voting starts and the counting begins the mud slinging will end and the corruption will begin. If history is any guide, we can expect lots of “irregularities” in this phase of the struggle. Remember the governor’s election in Washington State between Rossi and Gregoire? (The first one.) Rossi won on the original count and the recount but the King County (Seattle) election officials kept digging for votes, finding some in a closet and some in a car trunk and voila, Gregoire, the Democrat, finally won [in a hand-recount, no less]. Whew! The Democrat lawyers pulled the same stunt recently in Minnesota putting clown Al Franken in the Senate. And, let us not forget the vote counting fiasco in Florida in the Bush/Gore Presidential election of 2000. The Democrats have lawyers standing by to fly to any close election to contest every vote. They do. You could look this up. The dirty tricks have already started. In Illinois some counties failed to send out their military ballots on time as required by law. They say these votes may now not arrive on time to be counted. The military votes traditionally favor the Republicans. Coincidence? Hardly.

While I still have doubts that the GOP will win enough senate seats to take control there, it seems more than likely that the personal attacks will not sway enough voters to prevent the take over of the House by the Republicans. However, they will be on a short leash. If they betray the Tea Party they will incur their wrath in two years. A paradigm shift is coming and those that fail to recognize it are going to be swept away.

Thursday, September 30, 2010

The Buffaloisation of America

Note: Sometime back I decided to stop writing this blog. I figured only a handful of people were reading it and I was unlikely to change any minds. I figured that I would be able to devote writing time to finishing my languishing novel and a couple of short stories that needed some work. Fact is I did not work on the novel or short stories. I did a lot of reading and little writing. Then I chanced to hear from friend I have not communicated with much in recent years. He reported that he enjoyed several of my blog pieces, a surprise because I did not think he even knew the blog existed. Long story short: I decided to give it a couple more tries. If you actually read this, let me know so I can be assured that I am not talking to myself.


The news out the other day: The US census reported that the poverty rate in the US hit the highest level in history. 3.7 million Americans joined the ranks of the poor in 2009. Unsurprisingly, single parents head 70% of poor families. Marriage, it turns out, is the number one weapon against poverty. If fathers married the mothers of their children, 2/3 would be lifted out of poverty. However, welfare discourages this solution by virtue of the welfare rules. In 1964 when LBJ launched his “War on Poverty” 6.8% of births were to single moms. Now it’s 40%. For Hispanics it’s 50% and for blacks it is now 70%. BTW, the US spends one trillion dollars annually fighting a losing battle against poverty.


Of course, with a nasty recession going on and some 15 million Americans out of work, you should expect poverty to be on the increase. But, this has been going on for a long, long time.


You may well ask what has this got to do with Buffalo. Patience. I’m getting there. I returned to my hometown of Buffalo after many years of absence and was amazed that it had not changed all that much. The biggest difference was that all the major factories were shuttered, stores boarded up and the place reminded me of Warsaw right after the Soviet Union fell apart… run down and desolate. I later learned that 50% of Buffalo’s population had fled since I left high school in 1959. I stayed downtown in the Hyatt situated in a four square block of renovated buildings filled with shops and restaurants. As I ventured out after dinner for a little cigar stroll, one of the several private security guys I ran into to warned me not to venture out past the “green zone”. On the same trip I drove by the waterfront where the once mighty Bethlehem Steel plant still stands, although now silent and empty, like a neutron bomb had gone off. All along the waterfront other industrial buildings all stood empty, silent monuments to failure.


I guess Detroit is worse but all across the “rust belt” of the NE and Midwest the story is pretty much the same. Industry has fled to more welcome climates, some to the south and many to overseas. “Greed” say my liberal friends. Really? I think not. Corporations have an obligation to their stockholders to make a profit and if high taxes, stifling regulations and intransigent unions prevent a business from making a profit, they will relocate and move to a more favorable environment. California is experiencing this outward migration of industry now as the granite headed Democrats that control things in Sacramento pile on taxes and regulations.


Now comes the Obama Administration with its collection of egghead academics with zero business experience and anti-business Marxists to finish the job on American industry. The policies already inflicted on business so far are breathtaking. From the auto bailout/takeover, financial regulation, increased taxes to the drilling moratorium and the new health care mess, businesses in the US are pulling in their horns and trying to ride out the storm. Obama and the Democrats seem determined to turn all of the US into Buffalo.


Americans are scared and rightly so. The rise of the Tea Party movement reflects this fear and represents a grass roots ground swell that has caught entrenched Democrats and complacent Republicans by surprise. Many are still in denial.


Reality for many will set in on November 2nd. Most pundits believe that the Republicans will take over the House and some believe the Senate too. I suspect that the Senate will wind up evenly divided insuring gridlock and an inability to overcome an Obama veto. It will be a long time before Obama is voted out of office and he replaces Carter as the most clueless president in history. He can still do a lot of damage even with a Republican Congress.


The US was once the industrial giant of the World. No more. Go into any store and look for something made in the US. Good luck. The good paying jobs for middle class Americans in factories across the US are gone as a result of decades of stifling government actions. And, they are not coming back unless some serious changes are made. Here are a few recommendations, made with the understanding that few, if any, will be adopted.

  • First, the brakes must be put on the trial lawyers and the rules that give hunting licenses to them. Every corporation has hundreds of frivolous lawsuits going at any one time costing them millions to fight.
  • Second, the US levies the highest corporate tax in the industrialized world. Capital gains taxes should be cut to zero.
  • Unions are way too powerful, especially under this administration that curries political favor from them.
  • Regulations need to be cut at all levels of government.
  • And, the death grip that the teacher’s unions have on education needs to be broken. For all the money that’s thrown at education the end product only gets worse. It’s time to try something different.

The above is just a partial list but you get the idea. The loss of good paying industrial middle class jobs falls hardest on the poor and poorly educated. From there many social problems arise from the poverty inflicted on the lower classes. When people see no way out of poverty, crime, drugs, unwanted births and chronic welfare dependency result. If we do not reindustrialize America the whole country will be like Buffalo… or Detroit. Heaven forbid.


Don’t forget to vote.

Wednesday, August 4, 2010

Tax Suicide

After spending money like Michael Jackson, (deficit this year at $1.5 trillion) Obama and his Democrat pals are suddenly concerned about the “cost” to the government if they do not raise taxes at the end of the year. The so called “Bush tax cuts” enacted in 2001 and 2003 got past the Democrats at the time by having an expiration date and that time runs out on December 31st of this year. If Congress does nothing, taxes on everyone will go up… a bunch. The taxpayers in the bottom groups and the elderly will take a huge hit. You can figure out how much you will get nailed by going to the American Tax Foundation website and entering your numbers into their “tax calculator”.


First of all, I have a real problem with this “cost to the government” characterization of NOT RAISING TAXES. Chris Wallace raised this Democrat talking point last week on “Fox News Sunday”. I came out of my chair and slopped my coffee on myself. “What?!” I shouted at the TV. It’s absurd. If the government allows you to keep more of your hard earned money by NOT raising taxes, it’s a gift or a “cost” to the government? This assumes that all your money belongs to the government.

Second, this Administration has already raised taxes this year on corporations, tobacco and small businesses. And, let’s not forget the $500 billion in tax increases contained in ObamaCare. Despite Obama’s repeated promise not to raise taxes on anyone making less than $200,000, the above taxes already hit the lower and middle classes. If Congress does not act, these folks will be stunned by how much their taxes increase next year. The American Tax Foundation estimates that a married couple with two children earning $45,000 per year will pay $3000 more in taxes in 2011.

Other little changes that will whack the middle class and retirees include:
  • The child credit will drop to $500 from $1000 per child.
  • “Marriage Penalty” will return (CBO est. in ’96=$1400).
  • Small business will no longer be able to expense equipment purchases.
  • Retirees who rely on dividends and capital gains will see the rates go from 15% to a max of 39.5% on the former and from 15% to 20% on the latter.
  • The Alternative Minimum Tax will hit about 20 million more taxpayers.
  • Death taxes will go from 0% this year to 55% next with a reduced limit of $1 million for an estate. One million is not a lot these days for a farm or small business and the heirs will have to sell the farm at fire sale prices to pay the taxman.
My concern is that Congress has a lot on its plate right now (the SALT treaty with Russia and the Kagen confirmation among others) and not many weeks before they all head home to try and get re-elected. They just may not get an agreement to keep the taxes where they are and, BING, like the time running out on your parking meter, everyone gets a whopping tax increase on Jan 1st.

The White House has floated the idea of keeping rates where they are for all but the “rich”, those making $200,000 as individuals or $250,000 as a couple. This plays to Obama’s pledge and the Democrat demonization of the rich. Ample historical evidence exists to prove that raising taxes on this group is a lousy idea, especially as the US tries to struggle out of a deep recession.

Art Laffer’s excellent article in the WSJ (“Soak-The-Rich-Catch-22”, Aug 2, 2010) cites some interesting statistics. Since 1978 across the board rate cuts have resulted in the top 1% of taxpayers increasing their share of taxes from 1.5% of GDP in ’78 to 3.3% of GDP in 2007 (last available figures). Receipts from the bottom 95% fell over the same period from 5.4% to 3.2%. IOW, the rich paid a larger share with tax reductions. Conversely, increases in rates on the top 1% of taxpayers under Johnson, Nixon, Ford and Carter resulted in a reduced share of taxes for top earners from 1.9% to 1.5%.


The CBO estimates on how much money will be raised by increased taxes are consistently wrong. That’s because they use a “static” analysis that excludes any consideration of people’s behavior. Nice recent example: Sen. John Kerry’s $7 million yacht. He had it built in NZ rather than one of the many great shipyards on the East Coast. Then he docked it in RI to avoid the $500,000 tax and $70,000 annual registration in his home state of MA. The wealthy are much more able to manage their affairs to reduce their taxes. Like Charlie Rangle, for instance.


High rates on the wealthy results in less employment, output, sales, profits and capital gains and all that means lower tax receipts. This has been demonstrated time and again with the capital gains tax. When the rate is reduced, receipts go up, and down when rates are raised. Charles Gibson posed this historical observation to Obama in an enlightening interview on ABC during the campaign. BHO was stumped by the question of why he would raise rates if receipts would clearly go down. After stumbling around he finally came up with “It’s a question of fairness.” Fair to whom? The 80% of Americans who own stock?


A number of Democrats realize a tax increase on anybody at this time is a dumb idea. Even Christina Romer, White House Economic Advisor to Obama has broken ranks from the party line and wrote in the June issue of The American Economic Review, “Our estimates suggest that a tax increase of 1% of GDP reduces output by nearly 3%. The effect is highly significant.”


Obama, Pelosi and Reid would be well advised to listen to her and one of their former Democrat Presidents who said:



“Tax reduction thus sets off a process that can bring gains for everyone, gains won by marshalling resources that would otherwise stand idle- workers without jobs and farm and factory capacity without markets. Yet many taxpayers seemed prepared to deny the nation the fruits of tax reduction because they question the financial soundness of reducing taxes when the federal budget is already in deficit. Let me make clear why in today’s economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarged the federal deficit- why reducing taxes is the best way open to us to increase revenues.”

John F. Kennedy

Economic Report of the President

1963


President Hoover raised the top tax rate to 63%. Roosevelt raised it again to 79% plus increasing corporate and other taxes.


The economy went into a double dip depression. Why, if taxes are raised now, do we think that this time it will be different?

Monday, August 2, 2010

LAST RETRIEVE


with guest author, Mark Cudney



British Columbia and its lakes Minnie, Stoney and Corbett. The Douglas Lake Ranch and “world class fly fishing.” Where the deer and the free range cattle roam beyond the quintessential ranch gate that greeted us after driving miles of gravel road through a mountainous grassy landscape. We came from Whistler over the pass where there was snow on the peaks the first day of June and a mud slide blocking the road. There were five in our party: Dick Draper and I in one truck; Rob Pomroy, his young retriever Hurley, and John Alexander in another. Both trucks and the boat that Rob was towing were packed full of camping and fly fishing gear for our week long stay at the yurt on Minnie Lake.



This was the last leg of my journey which began driving the dirt road from my rural home in Western New York to a stop over at my son’s home near Buffalo. He and his family then drove me to Toronto, Ontario where I caught a non-stop to Vancouver and a rendezvous with Dick, John and Rob. It was a journey begun, oddly enough, by my vicarious sharing of a poignant moment with two men and a dog. A few degrees of separation with common ties to Western New York figured into my role in the event, as the artist commissioned to recapture that moment in paint. The dog was an aging Labrador Retriever called “Sedge” and Rob was his owner. The event took place while hunting ducks near Vancouver. It was a threesome that morning¾Rob and Sedge and Dick¾waiting in their blind for that special mallard to come within range. Sedge was in the twilight of his days; Rob and Dick’s purpose was to allow him an opportunity, one last time, to retrieve a fallen duck. The moment happened and what resulted so moved Dick that he contacted me the next day and I agreed to begin work on the painting paying homage to Rob and Sedge. (View the painting and read Dick’s full account of the event at www.MarkCudney.com under “Sedge’s Last Retrieve”).



Dick and I had not met but we had been corresponding via email, sharing a mutual interest in creative writing, fly fishing, and the out-of-doors experience in general. Our degrees of separation were founded in Dick’s friendship with my cousin Jim, going back to their days of being roommates at Cornell and in the fact that Dick had grown up near Hamburg, New York not very far from my boyhood home. Jim had sent Dick a gift of a print I had produced along with some of my writing samples and so, our correspondence began.



Once the painting was finished and received by Dick in Whistler, BC, he then arranged for me to join him, Rob and John at Minnie Lake. “We’ll send you your round trip tickets. All you need to do is get to Toronto and WestJet Airlines. Rob and I will see to the rest,” Dick told me in words to that affect. Now, I’m known among my family and friends as one who avoids travel as much as possible, that it takes some prodding to get me “off the hill.” Especially during the prime spring time fly fishing season on my home water. But this time I was easily persuaded. When the words “British Columbia, fly fishing for rainbow trout and camping in a yurt on the Douglas Lake Ranch” were used to convince me, the phrase "no-brainer" came to mind. So I set to the task of making a gear list and happily shopping, during the months beforehand, for those items necessary for my trek to BC.

Journal Entry: Arrived at the ranch around one p.m. Chilly. Intermittent rain. Unloaded gear at the yurt and went fishing. I learned quickly that with these guys, there’s no dawdling when you could be fishing. I was still absorbing the scenery¾the vast stretches of open range surrounding the yurt¾and trying to organize my gear. With haste, we readied the trolling motor powered boats as it began to rain. I joined Rob and Hurley while Dick and John manned one of the ranch’s skiffs. We were hardly underway when, trolling a sinking line, Rob had a fish on. ‘Already?’ I thought. ‘Wow! This looks good!’ It leapt forty feet or so in front of the boat and Hurley, inspired to retrieve, leapt off the bow. He swam toward the splashes while Rob did his best to maneuver the boat and control his line. Thanks to Rob’s angling and boating skills, a meeting of fly line, dog and trout was avoided. Rather than try to heft him over the gunwales, Rob made Hurley swim alongside the boat to shore where he was able to come aboard unassisted. We then set off again and trolled sections of the lake with Hurley on watch in the bow. Thereafter, he maintained his cool and stayed in the boat, although he needed to inspect every fish brought to net. All of them that day caught by Rob, I might add.


J.E.: I thought it odd to troll with a fly rod and found it awkward to cast, when it was necessary, a sink tip line sitting in a boat with a dog. Lots of fish jumping. I was having trouble finding my rhythm and felt clumsy. This was a whole new world of fly fishing, having spent my time wading the streams of New York and Pennsylvania dry fly fishing for brown trout with an attitude. I hadn’t fished, trolling from a boat, since my childhood. Rob was getting hits left and right and netted a few of those rainbow trout while Hurley and I sat in the bow, waiting for one with my name on it. After all, trout were jumping wherever you looked! Undiscouraged¾rather enjoying the catching and releasing by Rob, the leaping trout and just being there in British Columbia¾I remained ready for that first fish. Hurley, on the other hand, eventually became bored with the inaction up front, dismissed me with an air of disdain and went aft to be near Rob and further close encounters with fighting fish.


J.E.: Not off to a great start. Got my line entangled in the prop. Struck too quickly at trout hitting the fly. Unfortunately the former was to become repeated “burr-under-the-saddle” moments for me over the next couple of days, during the time we spent trolling. Rob actually had to disassemble the prop at one point to untangle my line. Now, Rob is an exceptional young man, an exuberant fisherman, a lover of dogs and the outdoors. Easy to know. You couldn’t ask for a better fishing guide and companion. He wanted me to do well. Throughout his experience with me in the boat, he exhibited the patience of a saint. However, there came a time when I believe that he may have wished me overboard and swimming to shore, so that he and Hurley could fish unencumbered. Maybe it was the latest prop incident or my missed strikes. May have been the time I managed to coax a trout close to the boat only to break it off before the net. More than likely it was the time, when using one of his favorite “hot” flies, I mis-played a beautiful rainbow and it broke off under the boat, taking that fly with it. No, it must have been the morning we were fishing Corbett Lake, near Merritt, BC.



It was our second to last day of the trip after we had left the Douglas Lake Ranch to drive to a cabin on Corbett Lake. There was the promise of some dry fly fishing to be had during afternoon hatches, not to mention some hot chironomid fishing. I was looking forward to not trolling. The pair-ups in the boats remained the same. I think Dick was happy to leave me to Rob since he too had experienced one of my prop mishaps the one time we fished together: a windy day on Minnie Lake with whitecaps, when we also lost motor power and had to row back to the yurt.



Rob and I had anchored near shore first thing in the morning and were setting-up our chironomid rigs. It was a nice morning and we were both looking forward to catching some trout. But when I went to cast, the fly I was holding and didn’t let go of became deeply embedded into my index finger. I looked at my finger in disbelief then glanced over at Rob who was involved with his rig and hadn’t noticed what I’d done. I took my hemostat and tried to work the hook free. It wasn’t working. The last thing I wanted to do was to spoil Rob’s day. I tried to think of a way to keep on fishing. I kept on trying to work the hook through the other side of my finger to cut-off the barb and make it easier to extract. Yep, shoulda pinched the barb down beforehand, but it was too late now. No good; most of the hook was buried and I was “wimping-out” at the pain. I thought I might be able to wrap a couple of bandages over the protrusion near the hook eye and worry about it later. In the end, I showed it to Rob and was surprised he kept his cool. My respect for his tolerance for this ugly American grew even stronger. Dick and John were nearby so we motored over to their boat where Dick assessed the situation, offered to try and extract the hook then decided it best not to. Long story short, John offered to drive me to the Merritt Medical Center so that Dick and Rob could continue to fish. We exchanged boats and headed to Merritt.



J.E.: A painless extraction and last chance to catch a trout from Corbett Lake. Redemption on a dry fly. The doctor on duty at the Emergency Room in the small, one story center informed me that what with my inadequate insurance, I was looking at a $900 bill for hospital services. I thought then that a half bottle of scotch and a pliers back at the cabin looked like the way to go. Reading the discouragement evident in my body language he added, “There is another option. If you’re agreeable I can take care of this in a minute out in the parking lot, off the books, but,” and he spoke directly to the nurse receptionist holding my admittance form, “mum’s the word.” I agreed. She ripped up the form. Once outside and standing near his car where it appeared not to be a doctor tending to a patient¾we could have been friends comparing fishing gear, the Doc his forceps and me the lure¾he numbed the finger, yanked the fly out, handed me two bandages and said, “The rest is up to you.” And, no charge! Giddy with gratitude, my finger dripping blood, I about kneeled down and kissed his shoes. He saved the day. John and I were able to get back to the lake and in the boat for the rest of the afternoon.



The next morning, our last before heading back to Whistler, found Rob and I and Hurley together again. I can only surmise that Rob was on a mission to better my luck. Hurley may have been looking forward to my next mishap or he may have gained an air of empathy towards me since he stayed near me in the bow. But up until then, I half expected to be relegated to a lodge boat by myself with a pair of oars during the time we had left. It turned out to be the most exciting few hours of fishing for me since the day on Stoney Lake when we all caught countless rainbows on chironomids, dragonfly nymphs and trolling. This morning on Corbett, we anchored in the shallows at the end of the lake and fished midges below a strike indicator. The water was looking-glass clear; a loon appeared underwater near the boat chasing a trout. There were so many fish rising and jumping in the cove it was dreamlike. Rob assisted me in gauging leader length and fly size and we both caught a bunch during the chironomid hatch. Then a mayfly hatch began and we switched to dry flies. Rob caught two or three before I had re-rigged my rod. I selected an Eastern dry fly pattern I had in my box and tied it on. Time was getting short. We needed to get back soon and hit the road. The rises had let up and Rob was preparing to lift anchor and I began to reel in and call it a day. I was happy with the action we had and the fact that Mr. Murphy (of Murphy’s Law) wasn’t with me this day. There was a rise form just then and I thought I’d try one more cast. I managed an accurate presentation and the trout hit the fly. With the hook set, I had another trout on, but this one was more special than the rest, taken on a March Brown dry fly from my own fly box. This was the fishing I was used to: sight casting to rising trout. It jumped and ran and dove and then jumped again near the boat. Twice it took a run below the boat and twice I led it out. It finally relented and came to the net. I believe that Rob was just as happy or even moreso than I was. Of the many trout I did catch there in the lakes of British Columbia, this was the one I’ll remember most vividly.



J.E.: The good outweighed the bad: The weather was uncooperative much of the time with wind, rain and a cold night or two requiring a wood fire. Most of the time, unsheltered Minnie was choppy due to the wind and we opted to fish nearby Stoney Lake. Even so, it was comfortable there in the yurt what with a wooden floor, wood stove, bunk beds and small kitchen area. Even a heated outdoor shower. Following a day of fishing, there were steaks and other food prepared over an outside fire. In the mornings, a hearty breakfast. One evening as a late dinner was being prepared, a storm blew in with wind, rain and hail. When it had passed, the clouds opened and a vivid double rainbow arced across the full extent of the sky. We all paused in what we were doing, awestruck. I thought it apropos to end the day that way: a rainbow above the water with all those rainbows beneath the surface. It was as if all the vivid colorations of the trout inhabiting the lake were drawn up into the very sky.


There were numerous occasions such as that which made the small misfortunes seem insignificant. There were the evenings at the campfire when the coyotes sang; the call of loons; the sight of eagles; the beauty of the rainbow trout and so many to be seen rising and jumping. Hearing of Dick’s and John’s many catches including the special trout of theirs that tail danced on top of the water. There was the unforgettable scenery of the open and rolling range land around the lake with mountains as a backdrop. Simply breathing in the high mountain air. The morning I walked up the draw behind the yurt and saw two mule deer. The friendly people of Merritt and the Lodge at Corbett, the generous Doc, my new friend John Alexander. My more than generous hosts, Dick and Rob, who arranged for me to join them. Finally, that “last retrieve” I made on the trout on a dry fly. It wasn’t as poignant as the retrieve that Rob’s old dog Sedge made on their last hunt together and which proved to be the catalyst for the events that led to my being there in BC, but it was an act that seemed to make the whole of the experience come full circle. Sedge got to do it one more time and so did I.


Left to right: Rob Pomroy, Hurley, Dick Draper, John Alexander, Mark Cudney