SharedThought

Check out Bureaucrat by Day for an interesting post on the announcement by Darrell Issa that he will not be running for Governor of California. His financial contribution of nearly $2 million is credited with getting the stalled recall movement going. I posted a lengthy comment on Bureaucrat by Day, but wanted to post it here as a separate item, in slightly revised form.

The recall vote in California is emblematic of a growing movement to hijack democracy through seemingly democratic means. California’s recall election is only the latest and most visible example. California also had problems in the November 2000 general election with referenda that were put on the ballot by monied interests as an end run around the legislative process.

The recall of Davis is amazing in the simplicity with which it was pulled off. The number of signatures needed for a recall in California is set at just 12 % of the votes for Governor in the last election. That seems absurdly low (especially when that works out to only 6 % of registered voters). Why allow a democratic choice of a statewide electorate be subject to revision by a small minority individuals who can afford to finance a petition drive?

The New York Times is running a story about how Vice President Cheney’s pals at Halliburton are capitalizing on their original (secretly awarded) contract to assist in the reconstruction of Iraq. Halliburton, based on the information it gathered in its initial contract and their dealings with the Army Corps of Engineers, now appears to have the inside track in securing followup contracts that could be worth hundreds of millions of dollars.

Here’s an excerpt:

The Bechtel Group, one of the world’s biggest engineering and construction companies, has dropped out of the running for a contract to rebuild the Iraqi oil industry, as other competitors have begun to conclude that the bidding process favors the one company already working in Iraq, Halliburton.

You’ve accomplished something if you can get the best of Bechtel.

And then there’s this odd story from the Los Angeles Times (registration required) about U.S. Plans to Supply AK-47s to the newly formed Iraqi Army. Evidently the civilian transition team has initiated a process to buy 34,000 new AK-47s, notwithstanding the fact that our military has found or seized more than enough of them to supply the need. Here’s what an Army spokesman said when told of the move:

‘That’s surprising,’ said Army Capt. Jeff Fitzgibbons, a task force spokesman in Baghdad. ‘It would seem to me odd that we’re out there looking to buy more weapons for a place where we’ve already captured and set aside so many of them. It would raise a red flag for me, that’s for sure.’

In the inimitable words from Cool Hand Luke: what we’ve got here is a failure to communicate!

The Cultural Elite has a link to a Daily Howler story about Condoleeza Rice, the current frontrunner to replace Colin Powell. Ain’t she grand!

Potential roadblock to nomination: secret ties to the Clintons! It turns out she was Provost at Stanford when Chelsea Clinton visited campus with Hillary. She gave them a personal tour! It’s all there in the book.

I’m back. Tanned (sorta), rested (sorta) and ready (you bet). Today’s papers are abuzz with news that Colin Powell will be resigning at the end of President Bush’s first term. The departure is not as much of a surprise to me as is the time Powell chose to step down.

Last spring President Bush asked all of his cabinet officials and senior staff to step down this summer or pledge to remain with the administration through the election. Here’s an excerpt from a story that ran on CNN.com when Christine Whitman resigned as Director of EPA in May:

Cabinet officials and other senior staffers have been encouraged to leave by this summer if they do not wish to stay on through the 2004 campaign year so that Bush does not have to deal with high-level staff and agency appointments in the heat of an election season.

The officials cast Whitman’s decision in this light and noted she had always said she did not envision staying in Washington for too long.

White House Press Secretary Ari Fleischer cited the coming campaign in his decision to resign effective this summer.

The President is right about this. Can you imagine how hot things would have gotten if Colin Powell resigned next summer? You’d have had a couple of of news cycles discussing what he did, and why he was resigning. Then you’d have had a couple more on how the search for a replacement was going. After that you’d have had a feeding frenzy over the named replacement, and then a whole bunch more news cycles on the confirmation process that the Democrats would surely try to bottle up in the Senate.

The bottom line is that the electorate would have been distracted from the President’s campaign message, and the Democrats would have had a chance to make an election issue out of a cabinet replacement. But, since Powell is waiting until after the election to leave his job, none of this will happen, right?

Wrong! I think that is is exactly why Powell is announcing now that he is resigning at the start of the next administration. While he appears to be playing the part of the good soldier and sticking it out for the rest of the first Bush administation, he is effectively quitting now and forcing the President into an awkward, extended search for a replacement.

Powell has been so marginalized by Donald Rumsfeld and Condoleeza Rice (who probably both want his job) that the only way he can exact a slight measure of revenge is to slowly quit. The Democrats will now have fifteen months to run against the President’s foreign policy record. And Powell can sit back and watch it all with a smile on his face.

I’ll be on vacation until 8/4/03! I’m going to the Redneck Riviera (otherwise known as Pensacola Beach). I may check in and post a few items, but probably not. If anyone wants to tell Therapy Sessions why he’s just a greedy bastard out to keep poor folks down, please feel free. Otherwise the dialog will have to wait until I get back.

In the latest round of a dialog with The Therapy Sessions concerning raising the minimum wage, Therapy Sessions makes the point that raising the minimum wage would be like turning up the heat when its hot. I’m not quite sure how that’s analogous, but let’s assume his point is that indexing the minimum wage to inflation would create and unending escalating wage rate that would bankrupt American companies and also cause widespread pestilence and famine (maybe that last part’s an exaggeration).

First of all, inflation is not a problem in the current economy. In case Therapy Sessions hasn’t been paying attention, deflation happens to be the bigger concern at the moment. Here’s a snippet from a June 3, 2003 article on Forbes.com:

Long-dated Treasuries surged on Tuesday after Federal Reserve Chairman Alan Greenspan’s remarks about deflation inspired speculation that the central bank might buy longer-dated Treasuries to pre-empt deflation.

I think Therapy Sessions also missed my point about passive income vs. wage income. I identified capital gains tax cuts, dividend tax cuts, and estate tax cuts as evidence of the Republican party’s favoritism of passive income. I did not say that a tax cut is passive income. The underlying event that is receiving the tax break is the passive activity (asset sale, dividend receipt, inheritance).

I grant Therapy Sessions point about Social Security increases being different from wage increases. However, my point is that nobody opposes the annual cost of living increase for Social Security on the basis that it has an inflationary effect on the economy — even though the Republican party has long argued that government spending is a leading cause of inflation.

Therapy Sessions glossed over my point about Federal wages. Federal wages have a greater dollar impact on the national economy than minimum wages do, yet Therapy Sessions diminished their relevance by citing how small an effect $199 billion has on a $10 trillion economy. I would make the same point back. If minimum wages account for a substantially smaller portion of the national economy (less than $125 billion annually), why worry about the inflationary effect of a cost of living adjustment?

Finally, my reference to James Surowiecki’s article was not for validation of my argument in favor of indexing the minimum wage to inflation. I was referring to his support for the minimum wage as the driver for trickle-up economics. Here is the relevant portion from the article:

One answer to this would be just to let the free market sort it out, to let the tens of millions of negotiating sessions between employers and employees determine the prevailing wage. And in general, of course, that’s the best course and is what we do for everyone above the minimum. But what having a minimum wage does is, in the simplest sense, determine the baseline from which all those other negotiating sessions begin. It therefore has a necessary cascading effect, helping to boost wages across the board.

Contrary to what Therapy Sessions implies, minimum wage jobs aren’t going to go to cheap-labor foreign countries if the wage-rate increases. Minimum wage jobs are predominately service oriented jobs that cannot be exported in the way manufacturing jobs have been. Increasing the minimum wage (and tying future increases to the cost of living) will ensure that those at the bottom of the economy receive some of the benefits they have worked to bestow on everyone else.

In a recent post I took Congressional Republican’s to task for their defeat of an effort to increase the minimum wage. I received a comment from John Rogers, author of The Therapy Sessions that led to a bit of a dialog on the minimum wage. You can see his post on his website here. The main thrust of The Therapy Session’s argument against the minimum wage appears to be that by creating an artificial floor on salaries there is an upward pressure on all wages, and that this is bad. I guess we can just agree to disagree about this point. I personally don’t have a problem with increasing the wages of somebody at the bottom of the economic ladder, even if that leads to an upward pressure on all wages. In fact I think an increase in wage-earned income might actually be a good thing for the economy. I’ve had enough of the Republican Party’s emphasis on trickle-down economics and their favoritism of passive income over wage income (i.e., capital gains tax cuts, estate tax cuts, dividend tax cuts). How about calling an increase in the minimum wage trickle-up economics, then? James Surowiecki, a much brighter fellow than I, reaches essentially the same conclusion in a Slate piece from 1998 on the minimum wage.

Therapy Sessions had a particular problem with my idea of adjusting the national minimum wage to account for inflation. This is the same approach taken for Social Security benefits and Federal government wages, which have a greater overall economic effect than minimum wage income. For example, this year, nearly 47 million Americans will receive approximately $470 billion in Social Security benefits, and in 2002 Federal government wages were $199 billion. Conversely, the annual amount paid to minimum wage workers appears to be a good deal less than $125 billion (this is a rough estimation based on 11.9 million workers each working 40 hours at $5.15 per hour for 52 weeks). Thus, the inflationary effect on the national economy of raising the minimum wage would likely be slight. In addition, a number of states have seen the fairness of this approach and index their minimum wages to inflation — including the liberal bastion of Alaska!

The LA Times (registration required) is running a story about the Bush administration’s ‘victory’ in Congress yesterday. The Administration was heavily promoting the restoration of Snowmobiles to Yellowstone and Grand Teton National Parks.

While allowing motorized recreation in National Parks is pretty bad. The article buries some of the other environmental shenanigans the House Republicans pulled off. Here is some of the article:

Snowmobile use in the parks would have been phased out by next winter under a Clinton administration plan. But the Bush administration proposed new rules allowing the vehicles to enter the parks daily but setting standards for noise and pollution and limiting them to park trails.

And in another victory for President Bush, the chamber voted to uphold administration plans to allow development on some of the 58 million acres of federal forests where road building has been banned since the closing days of the Clinton administration.

The votes were among several triumphs for the White House as the Republican-led House debated a bill providing $19.6 billion for the Interior Department and other federal land and cultural programs next year. The overall measure was approved Thursday night by a vote of 268 to 152.

The House also rejected efforts to ban bear baiting — luring bears with food so they can be shot — on public lands, and to forbid federal funds from being used to kill bison that leave Yellowstone.

The Washington Post ran one of those “news” stories about the deficit today. Here’s some of it:

Federal Reserve Chairman Alan Greenspan warned yesterday that continuing large federal budget deficits eventually would cause long-term interest rates to rise and damage U.S. economic growth.

“There is no question that if you run substantial and excessive deficits over time, you are draining savings from the private sector, and other things equal, you do clearly undercut the growth rate of the economy,” Greenspan told the Senate Banking Committee.

On Tuesday, the Bush administration forecast that the deficit will reach $455 billion in fiscal 2003 and rise to $475 billion next year . . .

The Boston Globe Online runs a Washington Post story about a scientific critique of the administration’s missile defense program. In case you’ve forgotten, this is the Republican spending initiative to funnel government money to defense contractors.

The APS report said interceptor rockets would have to be ”substantially” faster and larger more agile than any developed so far.

They also would need to be very agile, the report said. Further, to stand any chance of catching up with an enemy missile, the interceptors would need to be positioned generally within 400 to 1,000 kilometers of an enemy’s launch pad. And after detecting a launch, US authorities would have only about a half-minute or so to decide whether to fire, risking confusion between peaceful space launches and missile attacks, the report said.

So, basically the report is saying that 1) we need better rockets to have any hope of ever making the system work, and 2) even if we can develop better rockets we need to know ahead of time where a missile will be fired from. Sounds like a great way to waste a few hundred billion dollars!