Saturday, January 30, 2010

Obama @ House Republican Retreat

Don't miss this excellent Q&A and talk by President Obama to the House Republican Retreat on 1/29/10:

The whole thing is quite long, but below is a portion of the Q&A:

THE PRESIDENT: But let's talk about just the jobs environment generally. You're absolutely right that when I was sworn in the hope was that unemployment would remain around 8 [percent], or in the 8 percent range. That was just based on the estimates made by both conservative and liberal economists, because at that point not all the data had trickled in.

We had lost 650,000 jobs in December. I'm assuming you're not faulting my policies for that. We had lost, it turns out, 700,000 jobs in January, the month I was sworn in. I'm assuming it wasn't my administration's policies that accounted for that. We lost another 650,000 jobs the subsequent month, before any of my policies had gone into effect. So I'm assuming that wasn't as a consequence of our policies; that doesn't reflect the failure of the Recovery Act. The point being that what ended up happening was that the job losses from this recession proved to be much more severe -- in the first quarter of last year going into the second quarter of last year -- than anybody anticipated.

So I mean, I think we can score political points on the basis of the fact that we underestimated how severe the job losses were going to be. But those job losses took place before any stimulus, whether it was the ones that you guys have proposed or the ones that we proposed, could have ever taken into effect. Now, that's just the fact, Mike, and I don't think anybody would dispute that. You could not find an economist who would dispute that.

Now, at the same time, as I mentioned, most economists -- Republican and Democrat, liberal and conservative -- would say that had it not been for the stimulus package that we passed, things would be much worse. Now, they didn't fill a 7 million hole in the number of people who were unemployed. They probably account for about 2 million, which means we still have 5 million folks in there that we've still got to deal with. That's a lot of people.

The package that we put together at the beginning of the year, the truth is, should have reflected -- and I believe reflected what most of you would say are common sense things. This notion that this was a radical package is just not true. A third of them were tax cuts, and they weren't -- when you say they were "boutique" tax cuts, Mike, 95 percent of working Americans got tax cuts, small businesses got tax cuts, large businesses got help in terms of their depreciation schedules. I mean, it was a pretty conventional list of tax cuts. A third of it was stabilizing state budgets.

There is not a single person in here who, had it not been for what was in the stimulus package, wouldn't be going home to more teachers laid off, more firefighters laid off, more cops laid off. A big chunk of it was unemployment insurance and COBRA, just making sure that people had some floor beneath them, and, by the way, making sure that there was enough money in their pockets that businesses had some customers.

You take those two things out, that accounts for the majority of the stimulus package. Are there people in this room who think that was a bad idea? A portion of it was dealing with the AMT, the alternative minimum tax -- not a proposal of mine; that's not a consequence of my policies that we have a tax system where we keep on putting off a potential tax hike that is embedded in the budget that we have to fix each year. That cost about $70 billion.

And then the last portion of it was infrastructure which, as I said, a lot of you have gone to appear at ribbon-cuttings for the same projects that you voted against.

Now, I say all this not to re-litigate the past, but it's simply to state that the component parts of the Recovery Act are consistent with what many of you say are important things to do -- rebuilding our infrastructure, tax cuts for families and businesses, and making sure that we were providing states and individuals some support when the roof was caving in.

And the notion that I would somehow resist doing something that cost half as much but would produce twice as many jobs -- why would I resist that? I wouldn't. I mean, that's my point, is that -- I am not an ideologue. I'm not. It doesn't make sense if somebody could tell me you could do this cheaper and get increased results that I wouldn't say, great. The problem is, I couldn't find credible economists who would back up the claims that you just made.

Now, we can -- here's what I know going forward, though. I mean, we're talking -- we were talking about the past. We can talk about this going forward. I have looked at every idea out there in terms of accelerating job growth to match the economic growth that's already taken place. The jobs credit that I'm discussing right now is one that a lot of people think would be the most cost-effective way for encouraging people to pick up their hiring.

There may be other ideas that you guys have; I am happy to look at them and I'm happy to embrace them. I suspect I will embrace some of them. Some of them I've already embraced.

But the question I think we're going to have to ask ourselves is, as we move forward, are we going to be examining each of these issues based on what's good for the country, what the evidence tells us, or are we going to be trying to position ourselves so that come November we're able to say, "The other party, it's their fault." If we take the latter approach then we're probably not going to get much agreement. If we take the former, I suspect there's going to be a lot of overlap. All right?

Q Mr. President, will you consider supporting across-the-board tax relief, as President Kennedy did?

THE PRESIDENT: Here's what I'm going to do, Mike. What I'm going to do is I'm going to take a look at what you guys are proposing. And the reason I say this, before you say, "Okay," I think is important to know -- what you may consider across-the-board tax cuts could be, for example, greater tax cuts for people who are making a billion dollars. I may not agree to a tax cut for Warren Buffet. You may be calling for an across-the-board tax cut for the banking industry right now. I may not agree to that.

So I think that we've got to look at what specific proposals you're putting forward, and -- this is the last point I'll make -- if you're calling for just across-the-board tax cuts, and then on the other hand saying that we're somehow going to balance our budget, I'm going to want to take a look at your math and see how that works, because the issue of deficit and debt is another area where there has been a tendency for some inconsistent statements. How's that? All right?

CONGRESSMAN RYAN: Say hi, everybody. (Laughter.) I serve as a ranking member of the budget committee, so I'm going to talk a little budget if you don't mind. The spending bills that you've signed into law, the domestic discretionary spending has been increased by 84 percent. You now want to freeze spending at this elevated beginning next year. This means that total spending in your budget would grow at 3/100ths of 1 percent less than otherwise. I would simply submit that we could do more and start now.

You've also said that you want to take a scalpel to the budget and go through it line by line. We want to give you that scalpel. I have a proposal with my home state senator, Russ Feingold, bipartisan proposal, to create a constitutional version of the line-item veto. (Applause.) Problem is, we can't even get a vote on the proposal.

So my question is, why not start freezing spending now, and would you support a line-item veto in helping us get a vote on it in the House?

THE PRESIDENT: Let me respond to the two specific questions, but I want to just push back a little bit on the underlying premise about us increasing spending by 84 percent.

Now, look, I talked to Peter Orszag right before I came here, because I suspected I'd be hearing this -- I'd be hearing this argument. The fact of the matter is, is that most of the increases in this year's budget, this past year's budget, were not as a consequence of policies that we initiated but instead were built in as a consequence of the automatic stabilizers that kick in because of this enormous recession.

So the increase in the budget for this past year was actually predicted before I was even sworn into office and had initiated any policies. Whoever was in there, Paul -- and I don't think you'll dispute that -- whoever was in there would have seen those same increases because of, on the one hand, huge drops in revenue, but at the same time people were hurting and needed help. And a lot of these things happened automatically.

Now, the reason that I'm not proposing the discretionary freeze take into effect this year -- we prepared a budget for 2010, it's now going forward -- is, again, I am just listening to the consensus among people who know the economy best. And what they will say is that if you either increase taxes or significantly lowered spending when the economy remains somewhat fragile, that that would have a destimulative effect and potentially you'd see a lot of folks losing business, more folks potentially losing jobs. That would be a mistake when the economy has not fully taken off. That's why I've proposed to do it for the next fiscal year. So that's point number two.

With respect to the line-item veto, I actually -- I think there's not a President out there that wouldn't love to have it. And I think that this is an area where we can have a serious conversation. I know it is a bipartisan proposal by you and Russ Feingold. I don't like being held up with big bills that have stuff in them that are wasteful but I've got to sign because it's a defense authorization bill and I've got to make sure that our troops are getting the funding that they need.

I will tell you, I would love for Congress itself to show discipline on both sides of the aisle. I think one thing that you have to acknowledge, Paul, because you study this stuff and take it pretty seriously, that the earmarks problem is not unique to one party and you end up getting a lot of pushback when you start going after specific projects of any one of you in your districts, because wasteful spending is usually spent somehow outside of your district. Have you noticed that? The spending in your district tends to seem pretty sensible.

So I would love to see more restraint within Congress. I'd like to work on the earmarks reforms that I mentioned in terms of putting earmarks online, because I think sunshine is the best disinfectant. But I am willing to have a serious conversation on the line-item veto issue.

CONGRESSWOMAN CAPITO: Thank you, Mr. President, for joining us here today. As you said in the State of the Union address on Wednesday, jobs and the economy are number one. And I think everyone in this room, certainly I, agree with you on that.

I represent the state of West Virginia. We're resource-rich. We have a lot of coal and a lot of natural gas. But our -- my miners and the folks who are working and those who are unemployed are very concerned about some of your policies in these areas: cap and trade, an aggressive EPA, and the looming prospect of higher taxes. In our minds, these are job-killing policies. So I'm asking you if you would be willing to re-look at some of these policies, with a high unemployment and the unsure economy that we have now, to assure West Virginians that you're listening.

THE PRESIDENT: Look, I listen all the time, including to your governor, who's somebody who I enjoyed working with a lot before the campaign and now that I'm President. And I know that West Virginia struggles with unemployment, and I know how important coal is to West Virginia and a lot of the natural resources there. That's part of the reason why I've said that we need a comprehensive energy policy that sets us up for a long-term future.

For example, nobody has been a bigger promoter of clean coal technology than I am. Testament to that, I ended up being in a whole bunch of advertisements that you guys saw all the time about investing in ways for us to burn coal more cleanly.

I've said that I'm a promoter of nuclear energy, something that I think over the last three decades has been subject to a lot of partisan wrangling and ideological wrangling. I don't think it makes sense. I think that that has to be part of our energy mix. I've said that I am supportive -- and I said this two nights ago at the State of the Union -- that I am in favor of increased production.

So if you look at the ideas that this caucus has, again with respect to energy, I'm for a lot of what you said you are for.

The one thing that I've also said, though, and here we have a serious disagreement and my hope is we can work through these disagreements -- there's going to be an effort on the Senate side to do so on a bipartisan basis -- is that we have to plan for the future.

And the future is that clean energy -- cleaner forms of energy are going to be increasingly important, because even if folks are still skeptical in some cases about climate change in our politics and in Congress, the world is not skeptical about it. If we're going to be after some of these big markets, they're going to be looking to see, is the United States the one that's developing clean coal technology? Is the United States developing our natural gas resources in the most effective way? Is the United States the one that is going to lead in electric cars? Because if we're not leading, those other countries are going to be leading.

So what I want to do is work with West Virginia to figure out how we can seize that future. But to do that, that means there's going to have to be some transition. We can't operate the coal industry in the United States as if we're still in the 1920s or the 1930s or the 1950s. We've got to be thinking what does that industry look like in the next hundred years. And it's going to be different. And that means there's going to be some transition. And that's where I think a well-thought-through policy of incentivizing the new while recognizing that there's going to be a transition process -- and we're not just suddenly putting the old out of business right away -- that has to be something that both Republicans and Democrats should be able to embrace.

--jump to end--

Now, I just want to point out -- and this brings me to the second problem -- when we made a very modest proposal as part of our package, our health care reform package, to eliminate the subsidies going to insurance companies for Medicare Advantage, we were attacked across the board, by many on your aisle, for slashing Medicare. You remember? We're going to start cutting benefits for seniors. That was the story that was perpetrated out there -- scared the dickens out of a lot of seniors.

No, no, but here's my point. If the main question is going to be what do we do about Medicare costs, any proposal that Paul makes will be painted, factually, from the perspective of those who disagree with it, as cutting benefits over the long term. Paul, I don't think you disagree with that, that there is a political vulnerability to doing anything that tinkers with Medicare. And that's probably the biggest savings that are obtained through Paul's plan.

And I raise that not because we shouldn't have a series discussion about it. I raise that because we're not going to be able to do anything about any of these entitlements if what we do is characterized, whatever proposals are put out there, as, well, you know, that's -- the other party is being irresponsible; the other party is trying to hurt our senior citizens; that the other party is doing X, Y, Z.

That's why I say if we're going to frame these debates in ways that allow us to solve them, then we can't start off by figuring out, A, who's to blame; B, how can we make the American people afraid of the other side. And unfortunately, that's how our politics works right now. And that's how a lot of our discussion works. That's how we start off -- every time somebody speaks in Congress, the first thing they do, they stand up and all the talking points -- I see Frank Luntz up here sitting in the front. He's already polled it, and he said, you know, the way you're really going to -- I've done a focus group and the way we're going to really box in Obama on this one or make Pelosi look bad on that one -- I know, I like Frank, we've had conversations between Frank and I. But that's how we operate. It's all tactics, and it's not solving problems.

And so the question is, at what point can we have a serious conversation about Medicare and its long-term liability, or a serious question about -- a serious conversation about Social Security, or a serious conversation about budget and debt in which we're not simply trying to position ourselves politically. That's what I'm committed to doing. We won't agree all the time in getting it done, but I'm committed to doing it.

Thursday, January 28, 2010

Negative Impacts of Cellphone usage and wireless internet

I’m pretty much of a techno-weenie, being an engineer by training, a Macintosh consultant, and general technology aficionado.

Thus I have been very aware of the issues surrounding cellphone radiation and its impact on the human body, wherever it comes in contact (usually our ears). The issues are highly political, and highly profit-biased, in that those companies who stand to make the most profit (cellphone manufacturers and wireless phone companies) are the ones who are doing all of the funding of studies researching the health impacts (and, of course, not finding any negative impacts at all).

Here is one recent article, this is from GQ magazine, which again notes the clear evidence, being covered up, that ill health effects from cellphone radiation is a timebomb waiting to happen... ESPECIALLY FOR YOUNG ADULTS who spend many hours a day with their cellphones glued to their ears.

So what to do about reducing the risk of developing brain tumors if you use a cellphone a lot?
1) Stop using cellphones (or reduce usage dramatically);
2) Use a headset! This is the approach I’ve taken, and recommend to everyone who uses a cellphone. With a wired headset between the cellphone and your ear, you effectively remove the harmful effects of the electromagnetic radiation (EMR) being emitted from the cellphone during use (as long as the cellphone is not right next to your body). This is because the EMR is proportional to the cube of the distance... so its harmful effects drop off very quickly the further the cellphone is from your body.
[Note: Using a bluetooth wireless headset will still use EMR to communicate wirelessly between the headset and the cellphone, so I do not recommend using them as a substitute, even though the EMR emitted from a bluetooth headset to a cellphone a few feet away is much much lower than the EMR emitted from a cellphone, which has to communicate to the nearest cellphone tower sometimes miles away, and thus must be much more powerful.

For those of us who don’t use cell phones very often (like me), I am not worried at all about using it a few minutes a day... I do think it takes a lot of usage to have a negative impact. But for all of the parents out there, please do pay attention to this for your kids, for they are the ones who will be adversely impacted. It will take years to manifest as brain tumors, but my gut, as well as a lot of scientific evidence, says that it’s a very likely possibility that can easily be drastically reduced with a little awareness, and not much expense.

Now as for wireless internet...
The same folks who are talking about cellphone radiation being cancer-causing are also against wireless internet networks for the same reason. Many people have what is being called  “Electromagnetic Hypersensitivity”, or EHS. Here is my thinking about this:

I think in-home wireless networks are VERY low powered, in terms of EMR. Yes, we are exposed to the wireless waves all the time we are in our houses, but the actual power involved is very low, and the distance between the source (i.e. the wireless router) and our bodies, is typically many feet.

However, I am very wary of the implementation of large-scale (i.e. city-wide) wireless networks, called WIMAX, that are being tested in cities around the world. This, to me, is another disaster waiting to happen... at least for those people who have EHS. Obviously as an evolutionary “stressor,” we can learn eventually to adapt to this new parameter in our “life conditions”... but I’m not sure such a wide-scale implementation is healthy for human beings... they don’t call places where wi-fi can be accessed “hot spots” for nothing.

Wednesday, January 27, 2010

George Soros Lecture 10/30/2009 — The Way Ahead

George Soros Lecture 10/30/2009 — The Way Ahead

Below is a link to a lecture given by George Soros at the Central European University in October 2009. In it he articulates the current state of the global financial economy, and a clear notion of how we can move forward to restructure it. Anything in brackets are my own comments. You can watch the lecture here:

Here are some of the highlights:

  • We are at a moment in which the range of uncertainties is unusually wide.
  • What makes this financial crisis different from previous ones [i.e. the Japanese real estate bubble, or the Great Depression] is that this crisis involves the entire world.
  • The magnitude of the credit and leverage (debt) problem today is more than double what it was when the stock market crashed in 1929.
  • In spite of that, this time the financial system was not allowed to collapse [so far…]
  • The recovery is liable to run out of steam, possibly followed by a double-dip recession in 2010 or 2011.
  • The prevailing mood is far removed from reality; this is characteristic of far-from-equilibrium situations when perceptions tend to lag behind reality.
  • The disarray in the international financial system is matched by instability in international relations; the New Order that will eventually emerge will not be dominated by the U.S. to the same extent as the old one.
  • Financial markets are a branch of history, greatly influenced not just by economic theory, but also by politics, which establishes the rules and conditions in which the market operates.
  • There are two tiers to the international financial system: the center and the periphery. Those countries who can borrow in their own currency constitute the center, and those countries whose borrowing is denominated in one of the hard currencies constitute the periphery. While the rules for borrowing are similar for both tiers, if the center becomes endangered, then preserving the system takes precedence over all other considerations [especially consideration for the people in the periphery countries].
  • Previous international financial crises originated in debtor nations, whose bailouts were securitized by the banks, leading to harsh measures placed on the people of those nations, as well as financial discipline and bailouts of banks whose collective failure would have endangered the system.
  • The financial crisis of 2007-2008 was different because it originated at the center, and the periphery countries were drawn into it only later. The IMF did a good job in managing this crisis, which began mainly in the private sector.
  • The failure of Lehman Brothers was a game-changing event, leading to a crisis of faith in the system, and financial markets ceased to function. Countries in the center interceded, effectively guaranteeing that no other institutions whose failure could endanger the system would be allowed to fail.
  • That’s when it spread to the periphery, because those countries couldn’t provide equally credible guarantees. But the center pumped money into the system, engaging in deficit financing to simulate the global economy on an unprecedented scale, and the current view is that the situation is stabilizing, slowly returning to “business as usual”.
  • This is likely not to be the case; the system is broken, and cannot be put back together again. This is because it was based on a premise that allowed financial capital to move around freely in the world, making it difficult to tax or regulate. This put financial capital in a privileged position. Governments had to pay more attention to the requirements of international capital than to the aspirations of their own people. But this system ended up to be very unstable because it was based on the false premise that financial markets can be safely left to their own devices. This is why it broke, and why it can’t be put back together again.
  • Global markets need global regulations. But the current regulations are rooted in the principle of national sovereignty as the ultimate source of authority. This gives rise to financial protectionism, which is at odds with a global financial system.
  • Thus a new regulatory system that is international in scope needs to be created from scratch.
  • In the current picture, the U.S. stands to lose the most, and China stands to come out as the greatest winner.
  • The U.S. has been the de facto international currency ever since the second World War, and it has derived immense benefit from that position. But starting in the 1980s, it has built up an ever-increasing account deficit, which along with the excessive amount of private-sector debt [households, mortgages, etc.] has lead to this crisis. The banking system has suffered, and now needs to earn its way out of a hole. In commercial real estate and leveraged buyouts, the blood-letting is still to come.
  • Because of these factors, the American consumer will no longer serve as the motor for the world economy.
  • China, on the other hand, has been largely insulated from the financial crisis, being seen as an external event that has hurt exports, but left its financial, political and economic system unscathed.
  • China has discovered a remarkably efficient method of unleashing the creative, acquisitive, and entrepreneurial energies of the people, who are allowed to pursue their self-interest, while the state can cream off a significant  portion of the surplus value of their labor by maintaining an undervalued currency and accumulating a trade surplus. So China is likely to emerge as the big winner.
  • At the same time, China’s command-and-control economy must also avoid social unrest if it wants to remain stable, and needs to keep its economic growth rate at a minimum of eight percent in order to create new jobs for a growing workforce. Its internal stimulus programs can be a smaller motor for the world economy. This is a tectonic shift, as other countries reorient themselves towards the source of positive impulses. This may not be permanent or irreversible, but it represents the most predictable and significant trend in the global political economy.
  • While China is practicing “state capitalism”, the rest of the world is currently under the auspices of the “Washington Consensus” of “international capitalism.” These two systems are in competition with one another. Each has its pros and cons. The Washington Consensus has failed – international capitalism in its present form has proven itself inherently unstable because it lacks adequate regulation. It’s also highly unjust because it favors the ‘haves’ over the ‘have-nots’.
  • At the same time, an international system based on state capitalism would inevitably lead to conflicts between states. The first signs of conflict are already beginning to surface, because, ironically, China is repeating the mistakes of the colonial powers in dealing with the countries that are rich in natural resources, just at the time when the colonial powers have learned from their past mistakes and are trying to rectify them. In order to gain access to natural resources, China is dealing with the rulers, and neglecting their people. This helps oppressive and corrupt regimes to stay in power. [China is quick to rebuff any objections to this approach from ex-colonial powers who did the same thing not to long ago.]
  • This has pushed China into dealing with those countries that the international financial institutions have shunned… Burma, Sudan, Zimbabwe, the Congo, Angola and Guinea are examples.
  • China prefers to expand on a bilateral basis, dealing with each country individually rather than with the international financial system. It does this at the same time as it is pegging its currency to the U.S. dollar, which keeps it very low, allowing the Chinese government to harvest the fruits of cheap Chinese labor through its undervalued currency. China is also promoting the use of Special Drawing Rights (SDRs) rather than the U.S. dollar as the basis for an international currency.
  • A new multilateral system based on sound and fair global principles is required, rather than trying to change the existing system, which is mired in existing legal and power structures which are very difficult to change. It would bring those countries who are in ascendance to the table as equals, and relinquish power of those countries who were powerful back when the existing system was created, but who are no longer as powerful.
  • We do need an alternative financial currency to the U.S. dollar such as SDRs, which are denominated in a range of national currencies. This would remove the dollar’s special and unfair advantage, but it could be done very slowly, and with that alternative, the dollar could still re-establish itself as the preferred single reserve currency, provided it’s prudently managed.
  • SDRs can be used to allow the international creation of money, which would be useful at times like the present.
  • Both the U.S. and China would benefit from such a strategy, if their leadership were far-sighted enough to see that neither will survive under the current circumstances… and both need each other in any kind of future world order.
  • The U.S. economy, as well as democracy, is in deep trouble in America. The financial crisis has inflicted hardship on a population that doesn’t like to face harsh realities. President Obama has deployed the confidence multiplier and claims to have contained the recession. If there is a double-dip recession, the population will become susceptible to all kinds of fear-mongering and populist demagogy. If President Obama fails, the next administration will be sorely tempted to create diversions from troubles at home, and that could be very dangerous for the world.
  • What is needed is the recognition by the U.S., China, and the world, that the system is broken and needs to be reinvented. Every country must rise to the occasion and do the difficult political work of changing their own sovereign systems to create a world that works for everyone. It is no exaggeration to say that the future of the world depends on it.