Tuesday, March 19, 2013

Iraq War 10th Anniversary

On this 10th anniversary of the the Iraq War, here is what we know:


No Oil.

No Saddam Hussein.

However, what did it all mean and what were the consequences, intended or otherwise?

There was no WMD.

Contrary to popular belief,  it appears that we didn't go to war because of Oil,  since even though we won, we  haven't gotten any Oil  from Iraq. 

While Saddam Hussein , a bad guy, is gone; the "democracy" there now isn't very good for us. But is for Iran.

Thousands of lives were lost, with  many more injured,  and  we spent, and will continue to spend, many billions of dollar.

What was accomplished?

Are we safer?  Maybe, but how can we tell? 

Do we have more Oil?  No

We're clearly not more well liked or regarded. Much of our foreign policy "political capital" have been spent, and we are withdrawing from other global responsibilities.

Query-- If Saddam Hussein were still in power, would there have been an Arab Spring when it happened and was that a good, or not so good, thing?  It clearly was for Islamists.

Oh the irony of  unintended consequences.


Friday, March 8, 2013

Drones in the USA

Other than as political theater, I don't understand the whole "using drones for killings on US soil" brouhaha?

The whole reason we use drones is to (1) protect our pilots from getting shot at and (2)  not actually physically entering another country's territory . Since we wouldn't shoot down our own pilots and we clearly aren't intruding onto another country's territory, those reasons for use of drones do not exist.  It's more akin to firing artillery shells across borders, but with more range and better accuracy.

The issue of killing Americans in this country without due process goes way beyond use of drones.

Why aren't  there similar calls for banning  use of  satellites,  helicopters, fighter planes, FBI agents, police, national guard, etc.

What's the difference?

Isn't it the killing that is the issue, not the type of  weapon used?

Whether you are for or against use of drones abroad, the whole domestic use thing seems like just trumped up political theater of the absurd.


Entitlement Adjustments

Frankly I don't understand the problem the President and Democrats have with making adjustments to entitlements that will enhance the likelihood those entitlements will be there for our kids and grand kids.

Recall that we ( or at least me) said that we will never get our Social Security. Guess what, I am ; because it got "fixed" by making adjustments . We can do so again with comparably little real "pain".

Why are President Obama and the Democrats resisting entitlement reform which mostly impact the rich ?

Here are some of the ideas that should get broad support :

1. Raise the eligibility age for Social Security and Medicare-- people are living longer and healthier lives - exceptions can be made for some jobs. Since poor people don't live as long as rich people and blue collar people don't live as long as white collar people and have less "healthy" retirement years, means testing may be the answer there, along with exceptions for more strenuous jobs.

2. Means test Medicare premiums. Maybe even receiving Social Security should be means tested while you're still working at a certain income level.

3. Adjust CPI if it would really be more accurate. This was designed to keep up with inflation, not be an added benefit. If current CPI is viewed as a needed benefit for the poor, means test those individuals getting CPI adjustments altogether.

4. Raise the payroll tax income cut off for Social Security without raising benefits ; and face up to the fact that it's a tax and not insurance, as originally structured . I understand that Obama and liberal Dems would do this in a second if they thought it would pass Congress . However I haven't heard them even propose it . Yes I know it would be considered a tax increase , but at least it won't be that onerous and it would really shore up the system.

5. All means testing should be based on cumulative lifetime income , which information is readily available from the statements we receive from the government periodically.

None of these changes if phased in over time would be catastrophic, and would go a long way towards solving the solvency problem of both programs.

Why are President Obama and the Democrats resisting this , especially for the benefit of the "rich" ?


Monday, March 4, 2013

One Way To Reform Tax Code

While everyone agrees we need to reform the tax code, that's about where the agreement stops.

Since it's likely that rates will not be raised beyond the recent  limited expiration of the Bush tax cuts, , the new mantra is closing loopholes and tax breaks.

 Again while everyone agrees we should close loopholes, doing so mean different things to different people.

For liberals, tax reform is code of higher taxes, mostly for those they consider to be rich. They want more revenue to grow government , combat income inequality and maybe reduce the deficit a bit.

For conservatives, it's broadening the base to lower the rates. However, the GOP wants the reforms to be revenue neutral because they don't want to grow government , and don't believe the new revenue would be used to reduce the deficit and the debt.

So what can be done that isn't actually harmful to the economy?  My guess is plenty, but we need "cracker jack" high powered corporate tax lawyers to tell us. These guys spend their lives figuring out how companies and the wealthy can minimize their tax bill. Who better to tell us what those mostly tax saving driven provisions are and how to eliminate them ?

I'm not talking about "loop holes" for home mortgage interest, charitable contributions , employer health insurance contribution, and state and local taxes. Those effect relatively ordinary people, and can have very adverse public interest consequences.

I'm talking about all the exotic stuff that only big time tax lawyers know about, but which could generate billions of dollars of revenue. So much of what businesses and wealthy people do is  tax driven. Let's just stop , or at least rein in, all of that .

Billions and billions of dollars have been saved by skilled tax lawyers for their corporate and wealthy clients. Who better to figure how that money can be freed up for the government, without curtailing vital public interests.

Example #1 of course is the treatment of carried interests as capital gains rather than ordinary income. But there are lots more examples and I'm sure they add up to big big dollars.

Even a regular real estate lawyer like me can come up with at least one big example . Eliminate the so called 1031 like kind exchange in connection with sales of property. Structuring sales in compliance with  Section 1031 of the Code ,  results in the deferral of millions and millions of dollars in taxes. I cannot think of any significant public purposes that arises from these " like kind " exchanges. People don't really exchange things much these days , and this is just primarily used a tax deferral technique.

Another easy one is the step up in basis upon death. Why can't the basis just carry over so taxes are not lost forever?

Just think what a group of high powered tax lawyers could come up with.

Those tax structures may be legal, but most don't seem to have any compelling public purpose beyond saving taxes. If that truly is the only reason, then eliminate it. Yes, I know that already is the law, but all too often the spirit of the law is sacrificed to the letter of the law. This is an area where those tax experts can really help tightened things.

Let these lawyers come up with their ideas before the politicians and special interest group get involved.

I know I'm way beyond my depth here , so I'd like to hear what more knowledgeable people think.