I’ve just published a foreign policy-related post at Outside the Beltway:

One Month?

A report has been produced saying that Iran is one month from being able to produce a nuclear weapon.

When I read this caption

“U.S. Has Annoyed and Alienated All of Europe”

on Roger Cohen’s latest column in the New York Times, I was amused. In fairness, that’s not the original caption (“The Handyüberwachung Disaster”) or what Mr. Cohen wrote. What Mr. Cohen wrote in this column about the European furor over U. S. NSA monitoring is:

Pivot to Asia was not supposed to mean leave all Europe peeved.

But all Europe is. The perception here is of a United States where security has trumped liberty, intelligence agencies run amok (vacuuming up data of friend and foe alike), and the once-admired “checks and balances” built into American governance and studied by European schoolchildren have become, at best, secret reviews of secret activities where opposing arguments get no hearing.

My immediate reaction to the caption above was take a number. We’ve annoyed and alienated just about everybody. We’re just sticking to our core competency.

Reporting on a conference on saving America’s cities, Joseph Fleming of RealClearPolicy writes:

The conference concluded with remarks by San Jose mayor Chuck Reed (whose interview with Stephen Eide can be found here), after an introduction by RealClearPolitics Washington bureau chief Carl Cannon. Reed walked the audience through his push for substantial pension reform in San Jose, noting that it is difficult to reconcile the premises of giving retirees the benefits they have earned, and giving citizens the services that they deserve.

Echoing one of the conference’s recurring themes, Reed warned that unfunded liabilities will translate into one of two outcomes: service cuts, or tax increases. Unless cities and states stricken by pension woes recognize the problems addressed by the panelists, and are willing to make the necessary reforms, it appears they will soon be heading down the same path as Detroit.

Chicago’s crisis may be sooner not later—the wheel hits the road in 2015:

What matters is 2015, when Chicago’s pension chickens come home to roost.

Emanuel left that stark reality-check for the finale of his speech, where he made a spot-on pronouncement:

“Should Springfield fail to pass pension reform for Chicago soon, we will be right back here in Council early next year to start work on a the city’s 2105 budget — a budget that will either double city property taxes or eliminate the vital services people rely on.”

The 2015 budget must cover a $1.1 billion pension bill, up $617 million from 2014. The leap is mandated by a state law designed to force the city to begin aggressively investing in its grossly under-funded police and fire retirements systems. The firefighters system, which has only 25 percent of the funds it needs, could be out of money within eight years.

Absent reforms to lower pension costs, the city will have to nearly double the city portion of the property tax bill (about 20 percent of the total bill), dramatically cut services or some combination. Emanuel wasn’t kidding when he told the Sun-Times Editorial Board that this will send Chicagoans packing: “I’m not being dramatic. I think people will flee.”

Flight is only one possible outcome. Those unable to pay the increased taxes could lose their homes. That’s of particular concern to people living on a fixed income. If increased property taxes on rental properties are passed along in the form of increased rents, it could put people out on the streets.

Chicago is already on track to have the highest taxes of any city in the country—its retail sales tax is the highest in the country, the increase in the city’s cigarette tax already enacted will make that the highest in the country, and doubling its property tax will make that the highest in the country. Whether Chicagoans will “flee” is unknowable but seems likely. I don’t think there can be much question that having the highest taxes in the country won’t attract people to the city.

The city has a host of major fiscal problems including the pension balloon payment hanging above its head (the product of years of political malfeasance), the rising cost of healthcare, bad accounting practice, unrealistic assumptions about investment returns, and slow growth. Illinois shares a problem with Michigan: reducing its pension liability is beyond its power and, indeed, absent constitutional amendment beyond the power of the state legislature. In theory it’s possible for the city to solve some of its problems going forward. Bad accounting and unrealistic assumptions, after all, are not works of nature.

But the other problems, the problems it’s gazing into today, are beyond its power to solve.

The New York Times points out that the PPACA tends to work to the disadvantage of the rural poor:

As technical failures bedevil the rollout of President Obama’s health care law, evidence is emerging that one of the program’s loftiest goals — to encourage competition among insurers in an effort to keep costs low — is falling short for many rural Americans.

While competition is intense in many populous regions, rural areas and small towns have far fewer carriers offering plans in the law’s online exchanges. Those places, many of them poor, are being asked to choose from some of the highest-priced plans in the 34 states where the federal government is running the health insurance marketplaces, a review by The New York Times has found.

but I don’t think that they quite appreciate what a problem the healthcare exchanges present to the rural poor. Reliable, high speed Internet connectivity, when available at all in rural areas, tends to be quite pricey. Of all of the people in the country the rural poor are the least likely to have high speed Internet and if you take all of the problems with the Healthcare.gov web site and multiply them times ten that’s probably about what accessing the site via a dial-up connection will be.

Presumably, for some this is more a feature than a bug. The rural poor aren’t their constituents.

Still, for somebody like Illinois Sen. Dick Durbin (the second highest ranking Senate Democrat), it’s going to present a problem. Illinois is already one of the states in which the PPACA is likely to produce substantial premium increases in the individual insurance market and these other issues with the legislation will aggravate the situation. I expect the upstate/downstate gap to be greater than ever in the 2014 midterms.

Now it’s time to play “Spot the Flaws” in the Common Sense Tax, proposed by John Goodman and Laurence Kotlikoff. Here’s the quick summary:

It features just two taxes. One is a payroll tax that taxes all labor earnings at a flat 13 percent rate. The other is a personal income tax with a 25 percent tax on household income above $100,000, in the case of married households, and $50,000, in the case of singles.

It’s a bit more complicated than that but not much.

I’ll get the ball rolling. Under the CST there are substantial incentives for high income individuals who are can arrange it to take their income as dividends rather than as labor income. So, for example, a married lawyer at a big law firm earning an income of $500,000 if taken as labor income would pay 13% on the first $100,000 and 38% (13% + 25%) on the remaining $400,000. If he reduces his labor income to, say, $1 a year he would pay $.13 in labor income and 25% of $499,999, a substantial savings. That option isn’t available to ordinary workers who’d pay the 13% on their full earnings plus, of course, an additional 25% on earnings above $100,000. Consequently, the tax would continue to be regressive.

Today, as is the case with many Thursdays, the offerings from media outlets are pretty boring. Since political blogging is, by and large, a reactive form, that doesn’t provide a lot of grist for the mill.

Why is Thursday so boring?

Writing at Fiscal Times, John Wasik produces what to my eye is a pretty fair set of benchmarks for determining whether the PPACA has succeeded or failed:

To date, about half a million Americans have applied for insurance through the online marketplaces, although the government isn’t saying how many have been able to get through the ongoing technical problems to actually buy a plan. Yesterday, President Obama said he would concentrate on fixing the snafus.“The website has been too slow, people have been getting stuck during the application process,” Obama said on Monday. “And I think it’s fair to say that nobody is more frustrated by that than I am – precisely because the product is good, I want the cash registers to work. I want the checkout lines to be smooth. So I want people to be able to get this great product. And there’s no excuse for the problems, and these problems are getting fixed.”Let’s take the president at his word and assume the website problems get sorted out, and fairly soon. How will Americans know if Obamacare is a success or failure? Here are four benchmarks…

Here are his benchmarks:

• Will the Government Exchanges Be Competitive with Private-Sector Prices?
• Will Customer Service Be Adequate?
• Will Out of Pocket Costs Be Reasonable?
• Will Those Who Need It Most Get Covered?

Read the article for analysis and his preliminary assessments. I’d suggest an even more basic standard: by March 31, 2014 will more people have healthcare insurance than did on February 1, 2009?

None of these, of course, satisfy the benchmark I’d like to see addressed: is real per capita healthcare spending lower than it was on February 1, 2009? If real per capita healthcare spending continues to increase faster than income, it will sink the budgets of many state and local governments not to mention private companies and individuals.

Ezekiel Emanuel is back, offering quack advice:

Now what should be done? On Monday, President Obama both criticized and defended the Web site. While he conveyed an all-hands-on-deck attitude and his commitment to solving the problems, he did not give sufficient specifics.

He proposes creating a new level of bureaucracy.

Definition: quack, n. an untrained person who pretends to be a professional

What qualifies doctor of medicine Ezekiel Emanuel to dispense advice in this area? Has he ever headed a large department? Been elected to high office? Managed a major computer project? He is, essentially, a medical consultant. He has no more authority in this area than any other amateur.

I agree with Dr. Emanuel that somebody needs to take responsibility for the project. Who could that possibly be?

However, I would remind him that no project has ever been sped up by creating a new department. And that “independent” is a term very loosely applied in the Obama Administration.

The editors of the New York Times warn that the skills of American workers are looking worse and worse when compared with the countries with whom we’re in competition:

Researchers have been warning for more than a decade that the United States was losing ground to its economic competitors abroad and would eventually fall behind them unless it provided more of its citizens with the high-level math, science and literacy skills necessary for the new economy.

Let me suggest a simple model that explains this:

1. Don’t create enough jobs for skilled workers in the United States.
2. Do import large numbers of unskilled or semi-skilled wokers into the United States.

I’d certainly like to see the Times’s prescription for solving the problem. They should take into account that

1. About a third of American young people are neither working nor attending school.
2. About half of young people in America’s big cities graduate from high school on time.
3. About an eighth of the people in America are immigrants, most of whom came here as adults without notable skills.

I’ve been searching for a good word that means the opposite of synergy, i.e. a situation in which the whole is less than the sum of the parts. The best I’ve come up with is “incoherent”.

IIRC the Times is in favor of instant legalization of the present illegal immigrant population and they think we should do something about U. S. workers “falling behind” our international competitors. Whatever merit those positions have individually, they’re incompatible. The Times is incoherent.

The only way I can see to square the circle is to redefine who our competitors are.