Privatizing

Since 1986 all federal employees have had a tax deferred savings plan in addition to their federal pension and social security. It is similar to a private company 401k plan. They can put up to $18,000 per year into a tax deferred plan where the contribution is before tax and the gain accumulates tax deferred and all the money is taxed at retirement when it is withdrawn. There are five investment accounts and members can move their money around in these accounts. Employee surveys indicate that they are very satisfied with this arrangement. I bring this up because there are discussions about privatizing social security and the investment plan would look like the federal savings plan. Employees pay in 6.2% of their salary into social security and the employer matches that. About one-third of this total goes to survivor and disability benefits leaving about 8% to invest. The advantage of this plan is that any money left over will pass to your heirs upon your death. On average people collect about what they pay into social security but as usual averages do not tell the whole story. Right now white females collect much more than they pay in and black males much less. A black male dies before using up what he has paid in and the remainder reverts to the government. With a privatized plan this excess money would pass to the black man’s heirs. Life expectancy for black males is 71 and for white females 81. For the average black man that would mean passing on $60,000. Surprisingly black leaders oppose the privatizing plan.

Border

It is slowly dawning on people that Trump is not a political animal. He is a pragmatist who is not concerned with party affiliation much to the consternation of the experts in the field of politics. A good example is the numbers crossing at the southern border. Conventional wisdom preached that republicans wanted illegal aliens to fill jobs and democrats wanted future voters. Trump has merely ordered the authorities to inforce existing laws and illegal border crossings are down 70% since he took office.

Sub nukes

When Obamacare came out, I immediately pointed out that while people may have insurance they would not be using it like they did in the past and the reason being deductibles. Most people were used to $100 or $250 deductibles and the Obamacare plans were more like $5,000. I pointed out that when a person has to pay the first $5,000 out of pocket they will not consider that insurance. I did point out that the upside was usage for anything less than critical would decline thus the cost of health care would decline. Finally in the past 6 months the problem with deductibles has come to the attention of our ever vigilante press and now it is in the news on a daily basis. We are facing a similar situation today regarding the situation in North Korea. All the news is about the ICBM threat saying that new missiles can travel the 4,000 miles polar path and hit US territory and we see daily reports the danger is increasing with each new missile test. Will someone please wake up to the North Korean submarines that can launch a nuke from under the sea just a few miles off our coast. Satellites keep close tabs in the locations of missiles in North Korea but location of submarines is not so simple. Once they have this capability we will be back with the mutually assured destruction policies of the cold war but with country where the leader has openly stated his willingness to use nukes against us. We have consistently under estimated the time line for North Koreas ICBM progress and we may be doing the same thing with their nuke launching subs. After considerable searching I found the following on CNBC: • The chilling thought of North Korea's fully submersible submarines firing a nuclear ballistic missile isn't as far-fetched as some might think.

Fusion

Early in Reagans first term he called the Soviet Union the evil empire and liberals went apoplectic fearing that he was about to start WW 3. At about the same time he proposed the Strategic Defense System which the liberals laughingly called Star Wars. Reagan wanted to end the almost 40 years of the cold war strategy called MAD or mutually assured destruction. His plan was to develop a missile that could shoot down another missile and he was roundly made fun of by the press and other political figures. The first use of these technology occurred in the Persian Gulf War when Israel using American made Patriot missiles shot down SCUD missiles fired by Iraq. More recently test firing missiles at ICBM’s and up to this point there has been a 50% success rate. With improving technology the hit rate will increase and this may be used to deter first strikes against the US. No one is laughing anymore and those commentators who laughed in the past are silent. When I talk with friends about creating almost unlimited electric power using hydrogen fusion they laugh and call it a pipe dream. The science is solid and engineering follows science. I bring this up in my discussion about global warming but many do not want to hear this as they have a political agenda which only has room for solar and wind. Some day in the future they too will be silent.

Clinton

It’s time for a trip down memory lane and return to 1994 when Attorney General Janet Reno appointed special prosecutor Robert Fisk to investigate Whitewater. Recall that the Clintons were connected to a failed real estate development called Whitewater. While several people were convicted of various crimes and served time the Clintons were exonerated. When Fisk rapped up his investigation in six months the Republicans were not satisfied and a second prosecutor Ken Starr was appointed to continue the investigation. It was then that a woman named Linda Tripp said she had taped conversations between President Clinton and a White House employee called Monica Lewinski. This led to additional women coming forth and finally the House voting to impeach the President. During the investigation it was revealed that two important Republicans, Henry Hyde and Robert Livingston were found to have had affairs and their careers ended. All of this activity led to the phrase, “politics of personal destruction” which is now part of the vernacular. It also revealed a lot of unscrupulous activity by the Clintons and led to the general feeling that the Clintons felt they were above the law. This idea continued to haunt Mrs. Clinton throughout the rest of her time in Washington. The investigation which began in 1994 didn’t end until Clinton left office and many say was responsible for Gore’s loss to Bush in the 2000 election. Knowing this we can expect the current special prosecutor to unearth a lot of material unrelated to the original interest in the Russia connection to the election. It will likely move to Trumps personal business dealings and that could lead to many New York business people including Trump being found guilty of unseemly activity which at best would be unscrupulous and at worst illegal.

Reconciliation

The term budget reconciliation is in the news as the senate tries to pass bills on health care and tax reform. This is a provision which allows the senate to pass legislation with 51 votes thus eliminating the filibuster. In order to pass this way the bill must be revenue neutral that is the cost of the bill must be offset by savings in other areas. With the health care bill this is causing a lot of consternation since it is difficult to juggle the books, however with tax reform there is a loophole that is commonly used in pension plans. Many public pension plans are underfunded which means they do not have enough money in the plans to meet future commitments. This poses a problem since unlike the federal government the states cannot just print up more money. In addition states find they must balance their budget. Their solution to the pension problem is to project higher returns on their pension portfolio. California for example projected an 8.5% return when CD’s were paying one percent. Since they did not meet that goal the fund was underfunded and they are in a pickle. The solution for the federal government to fund tax reform is to project a GDP of 4% and use increased growth to increase tax revenues. In other words project more tax revenue by cutting taxes. This has worked in the past but the congress has often used the increase in revenues to add more programs. During the Reagan years tax revenues went up but spending went up more and thus the deficits increased. During the Clinton years tax revenues rose but spending was held in check and deficits decreased. The question is will this attempt at tax reform increase or decrease spending. During the Reagan terms the congress was democrat and during the Clinton years the congress was republican. If past is prolog then the deficits should go down.

Follow the money

In 2009, Russian lawyer and auditor Sergei Magnitsky died in a Moscow prison after investigating fraud involving Russian tax officials. In 2012 the US congress passed a law called the Maganitsky designed to punish those thought to be responsible for Maganitsky’s death. In 2013 the names of 18 Russians who were to be adversely affected by this act were made public. Russian retaliated by denying any more Russian children to be adopted by US citizens. Next Russian banned 18 Americans from entering Russia. In 2016 Russian officials set up a meeting with Trump representatives to discuss the changes in the law regarding adoption. This is not something of interest to the Trump people but mention was made of some damaging information about Hilary Clinton so the meeting was set up. It turns out that there was no information about Clinton and no desire to discuss the adoption issue. The covert purpose was to discuss the Maganitsky law. The key question is what is so important about this law? The law is named after Sergei Magnitsky, a Russian lawyer and auditor who in 2008 untangled a dense web of tax fraud and graft involving 23 companies and a total of $230 million linked to the Kremlin and individuals close to the government. Magnitsky was the target of investigations, arrested by authorities and kept in jail without charges. He was beaten and later died under mysterious circumstances in jail just days before his possible release. It is reported that Putin is worth $200 billion and gets most of his money by providing favors to various wealthy Russian businessmen. The background goes back to the Helsinki process of the 1970’s. This was a policy set up to show the linkage between interest and values meaning this if a country is accused of human rights violations other countries can hold them responsible. Part of the Obama reset with Russia was to abandon this relationship. This mistake gave the green light to Putin to begin mistreatment of individuals to allow for profit. The money these oligarchs make with their illegal operations is kept in banks in the US and other western countries and part of the Magnitsky act freezes these accounts. It is this that the Russians are trying to get the congress to undo and they have numerous lobbyist working the congress on this repeal.

Capitalism

While the anti-capitalist riots continue in Hamburg it should be noted that China opened it markets to capitalism in 1978 and since then over one billion people have been freed from poverty. Additional millions in other Asia countries like India have benefited from market economies. In the 30 years from 1980 to 2010 China’s per capita GDP has gone from $1,000 to $8,000. This is a striking example of the power of free market capitalism.

Illinois

Under current law states are not allowed to file bankruptcy but the congress is working behind the scenes to change that. Just as banks became too big too fail and were thus bailed out by the feds some states feel that if they go far enough in debt the feds will allow them to file bankruptcy and then step in as they did with General Motors and restructure the state debt. Illinois is the prime example. They have done over the years what countries like Greece and Spain have done. The elected officials maintained their jobs by catering to the people who elected them and in both cases it was public employees. Public unions were able to put people into office who were owing to them and then they negotiated contracts which were too costly. The day of reckoning was pushed down the road for many years but now it is time to pay the piper. These unions followed the law and were so successful they have killed the golden goose just as unions at GM did. Union membership in Illinois represents only 15% of workers but they vote as a block and are thus able to elect representatives who are favorable to their demands. Each member gets his/her spouse and their parents and grandparents to vote. They hold coffee parties and go door to door and make campaign donations to their candidates and thus have the power to elect the people they want. It is particularly well organized in places like Chicago.

Look out poor people

Look out poor people, the government is coming to help you! Many people today propose replacing fossil fuels with solar and wind and these same people often propose higher taxes on liquor and tobacco products, higher taxes on gasoline, higher minimum wages for fast food workers and higher sales tax. What this means to the working family is higher utility bills, higher cost for driving and higher cost when the family goes to McDonalds and additional cost for most non-food items. What these changes have in common is that they adversely affect the low income people and have little to no effect on higher income people. Some who are opposed to stopping illegal immigration say that the price of vegetables will go up. These are the same people who want to move away from fossil fuel to solar and Obama himself said that if you do that electricity rates would necessarily skyrocket.