Author: PsiFighter37

(cross-posted at Deny My Freedom and Daily Kos)

On Friday night, the city that I grew up in held its annual 4th of July fireworks display. As they perennially do, they didn’t actually hold the event on Independence Day, but after skipping the event last year, I went and stood in the rain to watch fireworks that were fired in a fashion that clearly displayed a need of some artistic direction. They played music on the PA system while we woke up anyone who may have fallen asleep, but what stuck with me was the contrast between the first song they played and the last song. To me, it summarized, at both times, everything that was wrong and right with American political culture.

The two songs? The first one they played was Lee Greenwald’s God Bless The USA, and the last one was Bruce Springsteen’s Born  in the USA.
To me, songs such as “God Bless The USA” demonstrate a rabid sort of nationalism that has become embedded in this country since September 11. Before that tragic event, I’m sure that most folks on the right wing really didn’t give much of a damn themselves about making a show about being ‘patriotic’. Nowadays, almost every GOP politician (and some Democratic ones) wear a lapel of the American flag on their suits. At any chance they get, they’ll use the flag – or its potential destruction – for political gain. You have to prove your pro-American credentials for everyone because you’re either with us or you’re with the terrorists.

On the other hand, Springsteen’s song (which I was surprised to hear at a July 4th event) is tinged with sarcasm and is similar in content to Billy Joel’s song Allentown. ‘Born in the USA’ doesn’t celebrate the best spirits of America; instead, it speaks of soldiers who are forgotten when they come home and of the hard knocks that the average American has to endure. I’m sure most folks on the right wing would call such a song treasonous these days were in not for Springsteen’s stature as a legendary musician.

The difference is that Springsteen doesn’t aim for romanticizing America, as Lee Greenwood and countless others have tried to do as of late. We don’t have to be like Clint Black and boast of going to war. Instead, it speaks about real problems in America, not simply looking back at our past and glorifying what has occurred. The seminal contrast, though, is that after the past five years, no longer do patriotic songs like Lee Greenwood’s ring true for me. They now remind me of the need to burnish your pro-American-ness that seems so prevalent in politics today. Springsteen’s song isn’t outwardly patriotic, but, like the left wing, it doesn’t need to. Deep down, we know that we are patriotic; we don’t need to show it off at every possible moment. And speaking (or singing, in this case) truth to power like Springsteen does is what America needs the most right now. It was self-evident truths that we discovered that set us free from the British back in 1776. Today, it must be the inconvenient truths we face that will set us free from the right wing, who have shown that they have no ability to handle the truth but instead hide behind their nationalism.

So on, today – Independence Day – let us resolve to win our independence from this storytale nightmare we have been living in since December 12, 2000.

(cross-posted at Deny My Freedom and Daily Kos)

All of us in the blogosphere should remember July 27, 2004. Since I wasn’t active in Internet politics outside of lurking at one blog, I didn’t really know too much about Barack Obama aside from the fact that his Republican opponent for the Senate, Jack Ryan, had dropped out of race and that Obama was going to easily win the seat of retiring Sen. Peter Fitzgerald (R-IL). Network TV wasn’t going to cover Tuesday night of the DNC, so I decided to turn the old TV to PBS and watch the night’s events. To say the least, Obama was electrifying; the speech got a rousing ovation at the convention, and publicity on the convention tended to ignore Teresa Heinz Kerry’s remarks in favor of our new ‘rising star’. Obama had shown a charisma that we hadn’t seen in some Democratic politicians since Bill Clinton, and this part of his keynote address will forever be burned into my memory.

Now even as we speak, there are those who are preparing to divide us — the spin masters, the negative ad peddlers who embrace the politics of “anything goes.” Well, I say to them tonight, there is not a liberal America and a conservative America — there is the United States of America. There is not a Black America and a White America and Latino America and Asian America — there’s the United States of America.

The pundits, the pundits like to slice-and-dice our country into Red States and Blue States; Red States for Republicans, Blue States for Democrats. But I’ve got news for them, too. We worship an “awesome God” in the Blue States, and we don’t like federal agents poking around in our libraries in the Red States. We coach Little League in the Blue States and yes, we’ve got some gay friends in the Red States. There are patriots who opposed the war in Iraq and there are patriots who supported the war in Iraq. We are one people, all of us pledging allegiance to the stars and stripes, all of us defending the United States of America.

In the end — In the end — In the end, that’s what this election is about. Do we participate in a politics of cynicism or do we participate in a politics of hope?

Indeed, the speech was hailed widely, and people began speaking of Obama as a future presidential candidate. He may have been the product of a grassroots campaign that pushed him through a crowded Democratic primary, but it was clear that he was headed for bigger and better things. But 18 months into his first term, the grassroots has been largely disappointed in Obama, and as someone who got to see in Philadelphia just how powerful an off-the-cuff speech he could give, I’ve been disappointed as well.

Obama has had a fairly undistinguished voting record in the Senate, and the perceived lack of his using his star power to highlight issues for Democrats can either be attributed to his deference for being the 99th-most senior senator or to the fact that he doesn’t want to ruffle any feathers within the institution. While his vote today for the Oman Free Trade Pact is the most egregious mark against him at this point (as well as his vote for Condoleeza Rice’s nomination to Secretary of State), like Joe Lieberman, it’s his words that do the most damage. It’s not often you hear Obama getting into a verbal tussle with Republicans (his only real scuffle was with John McCain). The words that stand out is Obama’s words on the state of the Democratic Party. Consider this bit from his recent remarks at the Call To Renewal conference:

Democrats, for the most part, have taken the bait. At best, we may try to avoid the conversation about religious values altogether, fearful of offending anyone and claiming that – regardless of our personal beliefs – constitutional principles tie our hands. At worst, some liberals dismiss religion in the public square as inherently irrational or intolerant, insisting on a caricature of religious Americans that paints them as fanatical, or thinking that the very word “Christian” describes one’s political opponents, not people of faith.

[…]

We first need to understand that Americans are a religious people. 90 percent of us believe in God, 70 percent affiliate themselves with an organized religion, 38 percent call themselves committed Christians, and substantially more people believe in angels than do those who believe in evolution.

Why is Obama feeding the standard traditional media’s line about supposed Democratic discomfort about religion? The reason that our party is loathe to talk about religion is because of what the Founding Fathers stated when they wrote the Constitution – there is the whole idea of separation of church and state. Inherently, religion and politics are not supposed to mix. That’s why America is a secular state, Senator Obama, not a religious state, as you claim. Additionally, if a candidate chooses to talk about religion as how it relates to how it shapes their worldview, that’s fine. But it should not have to be a requirement for Democrats to keep their mouths shut about religion unless they are running against an Alan Keyes type, as Obama suggests.

To be fair, Obama does suggest that it’s not authentic for everyone to employ religion:

I am not suggesting that every progressive suddenly latch on to religious terminology. Nothing is more transparent than inauthentic expressions of faith – the politician who shows up at a black church around election time and claps – off rhythm – to the gospel choir.

But what I am suggesting is this – secularists are wrong when they ask believers to leave their religion at the door before entering into the public square. Frederick Douglas, Abraham Lincoln, Williams Jennings Bryant, Dorothy Day, Martin Luther King – indeed, the majority of great reformers in American history – were not only motivated by faith, but repeatedly used religious language to argue for their cause. To say that men and women should not inject their “personal morality” into public policy debates is a practical absurdity; our law is by definition a codification of morality, much of it grounded in the Judeo-Christian tradition.

I don’t ever recall the so-called ‘secularists’ (who the hell are these people, anyways? I didn’t know they were a powerful interest group), and the Democratic Party in particular, saying that you had to leave religion out of your political life. All we ask is that you don’t take political action in the name of religion.

When one reviews Obama’s comments, though, such as MyDD did back in March, one begins to see a consistent pattern of undermining the Democratic position on various issues, whether it be his ignorance on Feingold’s censure motion or on discussing the use of filibusters. In the end, this is what harms our party the most – by publicly undercutting the party in the frames that the GOP has established, it is setting back progress that we have made. Obama’s proclivities for being a public voice of dissent within the Democratic Party on various issues holds a lot of water given his stature, and it does nothing to improve our standing – except his own, perhaps.

While he’s nowhere near the level that Joe Lieberman is when it comes to cutting our legs out from beneath us, one must remember that Joe only became a vocal critic of Democratic positions in fairly recent times. Their voting records may differ, but the fact is that they both affirm the ‘problems’ that others believe our party has when they speak. If Obama wants to keep the respect of the movement that helped push him on the path towards stardom, he might do well to remember to speak out in support of progressive Democratic positions instead of repeating tired old talking points denigrating the Democratic party.

(cross-posted at Deny My Freedom and Daily Kos)

Today, the Federal Open Market Committee (FOMC) raised the federal funds rate 25 basis points to 5.25%. It was the 17th consecutive time that the FOMC raised the key short-term rate, but it seems that the American public had already had enough of the rising interest rates.

By a 65 percent to 22 percent margin, Americans oppose another rate increase by the central bank, which says such moves are necessary to counter inflation. The poll was conducted from June 24 to June 27, ending two days before the Fed’s latest rate decision, to be announced 2:15 p.m. today in Washington.

It makes sense that the average American would be against rising interest rates – it makes it more expensive for consumers to borrow money, and it makes mortgages on homes more expensive. Hell, even investors don’t like rising interest rates – higher rates make investment more expensive for firms, and it tends to have slow down the economy in general, especially the housing market.

What people don’t understand, though, is that the FOMC and the Federal Reserve do not base policy on popular sentiment. In fact, the very reason the Fed is independent of the government is so that it is not swayed by political or popular pressures to act in a certain way. Furthermore, the FOMC’s mandate is not to promote as much growth as possible. Contrary to what some may think, the Fed has exactly two obligations to fulfill in its mandate: promote policies that will ensure maximum sustainable employment and ensuring price stability.

When you examine the matter more closely, though, it becomes clear that maximum employment and price stability are goals that often conflict with each other. In the 1950s, an economist named A.W. Phillips noticed a strong negative correlation between unemployment; plainly speaking, when unemployment went down, inflation went up, and vice versa. If you look at the relation between these two indicators in the U.S. during the 1960s, the curve is quite distinct, and economists began to believe that we had a choice between having a strongly-run economy (low unemployment is usually a sign of a healthy economy) with high prices, or we could have lower inflation at the expense of employment.

From 1970 on, though, the Phillips curve began to show no meaningful correlation between unemployment and inflation; this has been partially attributed to the effects of the oil shocks that started in that decade. Instead, the hypothesis of the Phillips curve has become modified to become the expectations-augmented Phillips curve. This shows a fairly strong negative correlation between unexpected inflation (the difference between actual inflation and the amount of inflation that is expected) and cyclical unemployment (the difference between actual unemployment and natural unemployment – the rate of unemployment that were to occur should the economy be growing at the theoretical point of full employment). The argument, though, has been simplified, and it still holds in the general sense: there is a trade-off between a growing economy and low prices; maximum employment implies that an economy growing at a faster rate.

So how does the FOMC fit into all of this? To be truthful, the Fed is not a cure-all for the economy. In fact, they directly control only two interest rates: the federal funds rate (the interest rate at which members of the Federal Reserve banking system can lend money to each other) and the discount rate (the interest rate at which member banks can borrow money from the Fed itself; since 2003, this has been fixed at 100 basis points above the federal funds rate). However, this has a general ‘trickle-down’ effect of sorts; when the Fed rises interest rates, rates on everything – from commercial banks to mortgages – tend to move up with it. However, the interest rate has an overall impact on the economy, which I will attempt to explain in as much plain English as possible without the use of economic models.

When interest rates are low, people tend to save less and consume more – why bother saving at such a low interest rate? Furthermore, because rates are low, firms are more likely to undertake investment because financing them will be cheaper. These are factors that drive the economy, and it will generally lead to growth. As an economy grows, firms will attempt to match the increased demand for goods by producing more. While productivity will rise, there comes a point where they will hire more workers to keep up with demand. This is why employment tends to go up when the economy expands. However, as the economy begins to expand, firms have to pay additional workers, and they have to pay higher real wages for their laborers. They end up passing along these additional costs to consumers in the form of higher prices. This is why inflation goes up during times of economic expansion.

Let’s examine the case of a scenario where interest rates are high. At higher interest rates, consumers are more inclined to save their money, as they can earn a decent return by having it sit in the bank. Furthermore, because borrowing costs are higher, consumers cannot borrow as much money to fund their consuming habits. Additionally, because the cost of financing is higher, firms generally undertake less investment. Lower consumption and investment tend to produce a drag on the economy. Firms have trouble selling as many goods and services as before, and therefore, they tend to lay off workers, leading to lower employment. Since they can’t sell their products at high prices, firms are also forced to lower their prices – leading to low inflation.

As you can see, maximum sustainable employment and price stability (another way of saying low inflation) are often contrary to each other. In the present, a moderate rate of growth for the economy (as measured by GDP) is roughly defined at 3% on an annual basis. The Fed’s comfort range for inflation, although not explicitly stated, is implied to be in the 1%-2% range (why not 0% That’s another discussion for another day). As you saw above, the level of interest rates does affect the economy in a broader manner. In recent times – probably beginning with the chairmanship of Paul Volcker in 1979 – the notion of the FOMC having a dual mandate has become a more singular focus on keeping inflation under control. When Volcker became chairman of the Fed, inflation was in the double digits. He raised interest rates extremely high and was probably singularly responsible for sending the economy into a recession. However, he was able to get inflation down to acceptable levels, and we have not seen high prices of the like since. Alan Greenspan and Ben Bernanke have followed in their predecessor’s footsteps in being a ‘hawk’ on inflation – stating that they will keep prices under control, even if it means sacrifing growth. Whether or not the economy is better off by being tough on inflation instead of attempting to facilitate growth is up for debate, but one cannot argue with the fact that we have not faced a recession since then that comes even close to what was endured during the 1970s.

This may make Americans unhappy – after all, consumers in America have a negative savings rate (this means that they spend more than they earn; essentially, we fund our additional consumption through borrowing), and doing so crimps our ability to buy products. But it is not the Fed’s role is in monetary policy; it is to ensure that the economy as a whole is running well. It is the government’s role to conduct sound fiscal policy that will ensure that our standard of living is increased. Therefore, if you want to be mad at someone over the state of the economy…blame the politicians. Don’t blame the economists – because their purview is narrowly defined.

(cross-posted at Deny My Freedom and Daily Kos)

An alternate title for this entry could be David Sirota: left wing pundit uses right wing tactics. Why do I say that? In Sirota’s diary over at Daily Kos today, he wrote a story on the Wall Street Journal’s report on executive compensation – something that I had written about previously. Furthermore, he appeals to the left’s antipathy towards corporations and automatically assigns all the blame for the pension crisis to executives.

It’s disingenuous to put out an argument that negates to comprehend what the other side has to say, and it’s even more egregious to assign all blame on executive pensions. These one-sided arguments sound like something that right-wing pundits would use. What I’m going to do is explain the problem in technical terms that anyone without an accounting background can understand, and then you can determine who’s to blame.
The Problem

Before I start with pensions, I am going to explain the difference between the most common off-balance sheet financing tool and its counterpart. There are two common types of leases in accounting: capital leases and operating leases. Both have the same purpose – a firm is granted a lease on PP&E (short for property, plant, and equipment) for a given period of time in exchange for periodic payments. However, the way they are accounted for are different. Both operating leases and capital leases must be cancellable, but to be a capital lease, one of the following requirements must be met: the lessee assumes ownership at the end of the lease; the lessee can purchase the equipment at a significant discount; the lease term is greater than or equal to 75% of the equipment’s estimated useful life; or the present value of the lease payments are greater than or equal to 90% of the estimated fair market value of the equipment at the beginning of the lease contract.

Essentially, a capital lease assumes that the lessee, for all intents and purposes, will have possession of the equipment for the relevant period of its useful life. Because it is treated as such, both an asset (the equipment) and a liability (the present value of the lease payments) is created on the firm’s balance sheet (the balance sheet is a snapshot of a firm’s assets, liabilities, and equity at a given point in time). There is interest expense and amortization expense to record in each period’s income statement (a summary of a firm’s revenues and its costs over a given period of time), but depending on the life of the lease, this is not always equal to the way that an operating lease is accounted for. An operating lease does not meet any of the four aforementioned requirements; therefore, no liability is created on the balance sheet. Each period, a rent expense is recorded on the income statement, but you do not know how big the liability is by looking at the balance sheet – it’s not there. That is why an operating lease is termed an ‘off-balance sheet’ item. For operating leases, though, firms are required to list the payments that will be occurring in the next few years.

Let’s apply this to the issue of workers’ pensions and executive compensation. In this case, a worker’s pension is like a capital lease. There is an asset on the books (the cash that must be set aside for the pension), and a corresponding liability – the future payments for the plan. Because it is on the balance sheet, the pension plan can actually earn income; most companies will invest the pension funds in something, not just leave it sitting around earning 0%. Likewise, the executive pension is like an operating lease; it is an off-balance sheet liability that is not required to be funded beforehand. Therefore, when it is expensed on the income statement, the amount is much greater than it would otherwise be. Unlike operating leases, companies are not required to report on executive pension plans, leaving investors and analysts largely in the dark about what the actual amount of the future pension payments will be, and how it will be funded.

Who’s to blame?

When you hear corporate executives blame worker pensions for being a liability on their books, technically, they are correct. Working capital that could be used for investing in the company is simply sitting on the books, earning a rate that they probably believe is below their calculated internal rate of return (this is the firm’s derived measure of how much it will earn on its investments). Let’s use GM for an example. They essentially have $9 billion in cash equivalents not being used to fund the company’s projects. It is understandable that they would be frustrated that they cannot access that capital when the company is in such dire straits.

Whether or not the pensions of workers are too big or too small is not the question I am going to address here. What I will say, though, is that scapegoating the workers and the unions is the path of least resistance. Unions have been in decline for a few decades now, and with cheaper labor and less labor unity overseas, firms like GM can simply offer an ultimatum – take our retirement package or beat it. However, this is simply an easy solution to a bigger problem – namely, that the business itself is flawed. Consider that GM’s model this year to get itself back in the black is to produce more SUVs. Is that really the most prudent plan in a time when gas prices are higher than ever? Furthermore, there are several cogs within the company itself that can be looked at. Is the firm operating at full capacity? Can the supply chain efficiency be improved? What is our marketing strategy like? And finally, should top management be paid so much? If a firm is in trouble, it’s more likely than not that the top executives do not deserve a high salary or a hearty pension. The way executive pensions are booked makes it such that their pension expense detracts 100% from the bottom line – directly lowering the firm’s net income, the figure that is used to calculate a stock’s EPS (earnings per share). By doing so, the firm is not maximizing shareholder value. One of the main arguments behind justifying executive compensation is Milton Friedman’s claim that actions should be taken to maximize shareholder value. Giving corporate executives an unnecessary and unjustified largesse for their pensions would seem to be a contradiction. By not getting such large pensions, a firm’s earnings will be higher, thus making it a more attractive investment, and after all, if a firm is in trouble, wouldn’t they want more investment? As you can see, the direction taken on executive compensation can lead to a cycle of self-perpetuation.

All you need to know

In conclusion, the main thing to remember is that executive pensions, as a sum, is still comparatively small to workers’ pensions. Simply telling corporate executives to stop giving themselves a pension will not solve the problem. Might contracts need to be renegotiated? Probably. But in no way does this mean that companies have to start buying people out of their jobs. That’s just the easy way out for a corporation that has a flawed business model and does not want to address more fundamental issues that it needs to deal with. Additionally, Sirota’s claim that Congress has been bought off to ignore this issue is flimsy at best. Forget about the legislative branch; this is a matter of corporate governance. It’s up to the SEC to impose the regulations, and, more importantly, it’s up to people like us to make sure that the whole story is heard – and not just the side of the story that suits you.

(originally posted at Deny My Freedom and cross-posted at Daily Kos)

It’s become something of a narrative for the mainstream media these days: unions have caused companies to pay wages that are too high for their workers, even when they’re idle. The cost of healthcare benefits for these workers are rising, and, most importantly of all, the pensions of these workers are simply too burdensome of a liability for firms to carry on their balance sheet. Because of this, companies like General Motors, in order to stay competitive with other firms that outsource their labor elsewhere, say that they have to renegotiate contracts and offer workers a severance package. The most striking example of this has been GM and Delphi, who have been offering a package to help the latter company, a spun-off auto parts supplier for GM, emerge from bankruptcy. It’s also done in part to aid GM, which suffered a net loss of $10.6 billion in 2005.

However, this past Friday, the Wall Street Journal reported that although workers’ pensions may be expensive, there’s something that’s quite expensive itself: executive pension plans.

This is the pension squeeze companies aren’t talking about: Even as many reduce, freeze or eliminate pensions for workers — complaining of the costs — their executives are building up ever-bigger pensions, causing the companies’ financial obligations for them to balloon.

Companies disclose little about any of this. But a Wall Street Journal analysis of corporate filings reveals that executive benefits are playing a large and hidden role in the declining health of America’s pensions.

Whether or not corporate executives get paid too much – and I think they do – is a debate that will probably never be settled. However, contemplate that there are comparatively few executives when you think about the numbers of employees at these big firms. The fact of the matter is that although the number of workers causes their overall liability on a company’s balance sheet to be larger, the amount they get per worker is much, much less than retired or terminated executives will earn. Consider the inherent inequality that comes when you consider this:

But for executives, the percentage of pay replaced is itself higher. Compensation committees often aim for a pension that replaces 60% to 100% of a top executive’s compensation. It’s 20% to 35% for lower-level employees.

David Dorman was chief executive of AT&T Corp. from 2002 until its merger with SBC Communications in November. He left in January. His total of five years at AT&T earned him a yearly pension of $2.1 million. That will replace 60% of his annual salary and bonus in his final three years.

By contrast, former AT&T accountant Ralph Colotti’s $28,800 annual pension replaces 33% of his final pay. He was at the company for 33 years.

Something like this is completely unfair, as it clearly seems. Why should an executive who worked with the company for less than 4 years earn such a rich pension, while someone who was a loyal low-level employee for over 30 years earn a pension that, if he has a family to support, may not make ends meet? It boggles the mind, but it should come as no surprise given that the income gap between the wealthiest and the poorest of Americans has been increasing. The argument for the excessive pay for executives largely centers around the fact that they add much more value to the firm. However, once they quit, they are no longer actively contributing to the value-adding activities of the firm. Why should they be paid more than any former worker of the company? The plain and simple answer is that they should not. It’s unethical, to say the least, and grossly obscene.

By curtailing pensions for regular workers, large companies have reduced pension obligations to them by billions of dollars in recent years. So pension obligations to regular workers are stable or shrinking at many companies while those for executives rise. At BellSouth Corp., for example, the obligations for pensions for ordinary workers have edged down 3% since 2000. The liability for pensions for executives is up 89% over the same period. A BellSouth spokesman noted that, like many executive pensions, the benefit could be lost in the event the company becomes insolvent.

The promise of any pension becomes a corporate obligation. Although the payments are in the future, the promise means the company has a liability now. And a number can be put on it.

Since the turn of the century, there’s been a clear problem occurring – workers are promised smaller pensions, while those of executives are spiraling out of control. While this does create an increased liability, this does not mean that the true extent of the liability of executive pensions is known. This is mostly in part due to the quirky nature of accounting. Under generally accepted accounting principles (GAAP), you must capitalize (to put it on the balance sheet, which is a summation of a firm’s assets, liabilities, and equity) a liability if you can reasonably determine what future payments will be. However, as the graphic implies above, this is rarely done. Instead, executive pensions, for the most part, become part of a ‘pension expense’. In accounting terms, this is known as an ‘off-sheet liability’ – called so because it does not have to be recorded on the balance sheet. As opposed to a capitalized liability, which is amortized over a period of time, the full amount an executive receives is now expensed in the period it occurs. This shows up on the income statement, which is a periodic statement on the revenues and costs to a firm (the balance sheet is a summation of a firm’s assets, liabilities, and equity at a given point in time). This why you don’t see the pensions of executives showing up as a part of the overall liability, as the graphic above shows; instead, it is expensed immediately, lowering a firm’s earnings. New FASB (Financial Accounting Standards Board) rules adopted at the beginning of this year requires that stock-based compensation expense, a form of compensation that most executives receive (it gives the owner of an option the ability to buy a share of the company at a preset price); before, these expenses did not even have to be reported on the income statement. They were included in the footnotes to the financial statements, but they were given little attention. It’s probably a good explanation as to why you may begin to see larger dents in corporate earnings – but that’s only for the ‘salary’ an executive receives. As WSJ notes:

Even if a company’s liability for executives’ pensions totals hundreds of millions of dollars, its employees and shareholders may never know. Companies don’t have to report this obligation separately in federal financial filings. A few specify it in a footnote, and some provide clues that make it possible to derive the figure.

Speaking from the exposure I’ve had to date with accounting, deriving numbers is not an easy task. Companies have absolutely no reason to provide complete transparency when reporting numbers. Let’s take AT&T’s pension expense, for example.

At AT&T Inc., the pension liability for executives was a modest 3.8% of the company’s total pension obligation at the end of last year. Yet these promises to 1,000 or so highly paid people generated more than 45% of AT&T’s pension expense. The expense for them came to $113 million last year, and reduced AT&T’s 2005 earnings by that amount.

The other 55% of pension expense? It covered 189,000 regular employees.

For the highest-paid people at AT&T, the pension expense comes out to roughly $113,000 per executive. For regular workers, that amounts to a measly $1,328.63 per worker. You want injustice? This is injustice. You hear firms justifying outsourcing because it simply costs too much to keep workers on the payroll in the U.S. Sure, it may cost more than paying someone in a developing country to do the same job, but when the pension of workers have been declining slightly while those of executives have nearly doubled, it’s utterly deceptive to claim that it has to be done.

Furthermore, the liabilities that workers’ pensions create sometimes have a beneficial effect on the company. At GM, the pension plan for their workers generated over $10 billion in income. In other words, the company was actually increasing their value by having the pension plan in place. The executive pension plan cost GM $1.4 billion – as an unfunded, off-sheet liability, it has no ability to record income. In accounting, you cannot have an effect without a cause. In this case, the cause of the income from the pension plan is the liability that is on the balance sheet. Without a similar item to link the corporate executive pensions, there can be no income made; it will only remain an expense that keeps detracting from the profitability of the firm.

And that’s the bottom line.

(cross-posted at Deny My Freedom)

There has been a lot of good stuff coming out from the Democratic side this week on the ‘debate’ in the Senate about Iraq. In particular, Paul Begala wrote his first worthwhile piece in some time on the issue of division with Democrats. In fact, the idea that the Democrats are putting out two ideas for changing our foreign policy is a sign that yes, we do have ideas that are different from the GOP. Nowadays, it’s the Republicans that are for the same old stale failed policies that have encompassed the past 5+ years. But once again, the Associated Press steps up to the plate to deliver the meme: Democrats can’t seem to agree on anything:

WASHINGTON – When two Democrats looking toward 2008 pushed hard for a firm date on withdrawing U.S. troops from Iraq, they crashed headlong into Senate Democratic leader Harry Reid’s effort to retake the Senate this year.

Sens. John Kerry of Massachusetts and Russ Feingold of Wisconsin want to pull out all combat forces over the next year, a proposal that delights the left wing of the Democratic Party but that failed overwhelmingly in the Senate on Thursday.

First, let’s examine the substance behind the notion that Kerry and Feingold are doing this for their 2008 prospects. If conventional wisdom holds, and that generally seems to hold a lot of water with the mainstream media, the fact that Kerry lost in 2004 means he’s unlikely to win in 2008 – after all, Americans don’t like their losers. Feingold is a twice-divorced Jewish man, something that probably won’t win him many points in the less culturally astute parts of the country. Also, isn’t it true that the ‘far left’, otherwise known as the grassroots of the Democratic Party, are trumped by the more moderate voters in the primaries who look at electability, whatever that means? All sarcasm aside, what it demonstrates is that the news media, even after seeing what we were about at Yearly Kos, still doesn’t understand that we are not a bunch of people on the fringe. In fact, we’re not even an ideological bunch; what we ask for is principled opposition to policies that have sent this country’s reputation into the sewers.

Next, since when has setting a firm date for pulling out of Iraq been contrary to our efforts to taking back the Senate? Polls have shown that a majority of Americans favor setting a timetable for leaving Iraq – something that went even further than the inherently meaningless Levin resolution. So to say that it’s something that ‘delights’ the left wing of our party is bullshit. It’s a view that most Americans support. Furthermore, it’s not something that we’re wetting ourselves over – having to lose more than 2,500 soldiers to come to this recognition is no laughing matter.

Reading further along, it even makes it seem as though Joe Lieberman is facing a tough challenge from outside the party:

That 86-13 vote forced Democrats in difficult midterm election campaigns, such as Sens.
Joe Lieberman of Connecticut and Maria Cantwell of Washington, to go on record on the question of ending the military mission in Iraq — and risk the wrath of liberals in their states.

I wasn’t even aware that Cantwell had primary opposition, much less serious competition. The blogosphere, if it had a serious problem with her positions on Iraq, would probably have rallied around an alternative candidate, similar to the recognition Ned Lamont is getting. This brings me to my next point – Joe Lieberman is facing serious opposition within the Democratic Party. It’s not as if we are in any real danger of losing this seat; even if Lieberman decides to run as an independent and won, he would probably (much to the disdain of the blogosphere) caucus with the Democrats. The whole reason Joe is facing stiff primary opposition is because he has no vision for Iraq, and he continues to undercut our party at every chance he gets. Standing alone in the Senate, without a single Democratic senator behind him, and being praised by John Warner and Rick Santorum for his stance is a clear indication of just how alone Joe Lieberman is on this matter. Even Ben Nelson, Mary Landreiu, or some of the other more moderate Democrats didn’t even come to support him. The fact is, regardless of the outcome of this primary, Democrats will hold onto the CT-Sen seat. Cantwell will have a close general election, but it has nothing to do with liberals vs. moderates. It has everything to do with taking a stand versus willingly being a blind follower of the blind.

Aside from the fact that the debate in Iraq should not have been seen as any sort of arduous task for Democrats to speak about, it does seem like Harry Reid was not too fond of the idea of having two resolutions being introduced on the measure. While this story has a generally biased tone against the Democratic position, it speaks on two matters that did bother be some bit.

At one point, Republican officials said Reid told them he was trying to discourage Kerry from pushing for a vote on his proposal. After they heard this, Republicans brought up Kerry’s proposal and quickly dispatched it in what Democrats criticized as political gamesmanship.

[…]

Reid, officials said, was infuriated by Durbin’s defection as well as a presentation the Illinois senator made to the caucus Tuesday during Democrats’ weekly policy lunch.

The wide-ranging presentation on various issues included a poll that showed the American public leaning toward candidates who favor pulling out of Iraq in the next year — exactly the position of Kerry and Feingold.

Why on earth would Reid go to the GOP to inform them of our caucus’ predicament of settling on one resolution? We might as well just hand them a list of wedge issues on our side and tell them to hold a series of votes on them. To me, this reeks of the old politics of Washington, something one would have thought Reid would be against. Instead, he decides to abet the enemy simply because he’s not getting his way. The fact that he got upset over Durbin breaking with him is simply childish. Getting mad over the facts is something the Bush administration does. Furthermore, perhaps Durbin realized that the Levin’s statement – a nonbinding resolution pulling for an as-of-yet unknown ‘phased redeployment’ of our troops – was simply the same statement that Democrats have been making over and over the past couple of years. The fact that it’s different from the Republican’s stay-the-course non-plan does not make necessarily make it a better plan. It simply means that there is a little differentiation, and since it didn’t work in 2004, is it going to work again in 2006? I have my doubts.

Undoubtedly, the AP needs to improve its reporting and recognize that the Kerry/Feingold resolution was about standing on principle, not about politics. Harry Reid needs to recognize that America doesn’t want an opposition that plays semantics. They want a clear alternative to the current course, and what John Kerry, Russ Feingold, and John Murtha have offered is that clear differentiation that has been so elusive to Democrats of late when it comes to foreign policy.

(cross-posted at Deny My Freedom)

There has been so much going in recent days – and on issues of fairly great importance – that I’m not too surprised that I haven’t read anything around the blogosphere regarding an issue that will have an impact on the Democratic Party’s nomination process. In a story that slipped under the radar, the DNC decided to only let in two additional states into the early going of the presidential nomination process instead of four states, which had been the original plan.

CONCORD, N.H. – A Democratic National Committee panel considering changes to the presidential primary calendar voted Thursday to allow just two other states to join Iowa and New Hampshire in voting early in 2008.

If the full DNC adopts the recommendation, one state would be allowed to hold a caucus between Iowa’s caucus and the New Hampshire primary, and a second would hold a primary shortly after the New Hampshire contest.

This is a good step forward for our nomination process. Even though the small size of Iowa and New Hampshire allow for true retail politics, and both are swing states in this day and age, they simply aren’t representative of the demographics of the Democratic Party. Furthermore, just how important is retail politics? In local races, I think that retail politics is an absolute must; however, in the race for president, most people won’t even get to see the candidates in person, much less interact with them on a personal level. Frankly, most politicians are going to come off as nice guys (or women) when you speak to them up-close. You can tell your friends you may have met the future president, but ultimately, I don’t think retail politics by presidential candidates is that important. It’s the retail politics by the grassroots on a local level that will be make a bigger difference.

As the aforementioned article mentions, ten states, along with the District of Columbia, are applying to be the lucky two who will gain prominence in the primary system. They are Alabama, Arizona, Arkansas, Colorado, Hawaii, Michigan, Mississippi, Nevada, South Carolina and West Virginia. Of these choices, I think it’s imperative to choose states that are in regions not represented by either Iowa or New Hampshire; this limits the possible states to those in the mid-Atlantic region, the South, and the West. To be frank, I think that Hawaii and D.C. can be quickly eliminated – Hawaii because of the geographical space and time it would take to campaign there, and D.C. because it is so intensely Democratic to begin with.

For the South, I think that Arkansas is clearly the best choice. It’s a state that has remained predominantly Democratic on the national level, even though it has voted for Bush twice. Both senators (Blanche Lincoln and Mark Pryor) are Democrats, and 3 of the 4 representatives in the House are Democrats. While the rest of the South has rapidly filled its seats with Republicans, Arkansas remains a bastion of Democratic politics, and I think that our candidates would be best served by going to the state and learning something about politicking in the region aside from what Bill Clinton may have to say.

My next choice would most likely be Colorado, with Arizona coming in a close second. In 2004, as chronicled in Crashing The Gate, Democrats were able to force Democrats to put aside their stakes in various interest groups and unite for a common goal – getting our party back into a position of power. Not only did we pick up the Senate seat, but we also took over both houses of the state legislature. It’d be a wonderful place for our candidates to learn not to kowtow to the interest groups but to recognize that electing Democrats will allow these groups to be heard, something that is clearly not happening under Republican rule unless you have money.

By adding other states to the primary schedule, we may be able to select a candidate who represents all of us, not just the will of two states that are not the best representation of the Democratic Party. It can only help us out, and it’s breaking down yet another institution of the old guard. That’s what crashing the gate is all about.

(cross-posted at Deny My Freedom)

Over at Daily Kos, Darksyde posted this morning about what possible slogans the Democratic Party should adopt for the fall elections. As the thread has far more replies now than it did when I checked this morning, I haven’t had a chance to read through it. Based on what I did see, though, it still occurs to me that our party – whether it be our politicians or us, the grassroots – still doesn’t seem to get the point behind framing. I mean no offense to anyone, as it’s been a long time since the Democratic Party showed any adeptness at being able to frame without Bill Clinton’s charisma. Framing, in my view, has very little to do with having a few catchy phrases. Rather, the whole point behind framing is to create an entire language that supports your points.
It’s very simple to point out these blatant failures of Democrats to understand this. John Kerry and John Edwards used variations of “Help is on the way”, “Hope is on the way”, and “Make America stronger at home and more respected in the world” countless times. Nancy Pelosi and other congressional Democrats have completely worn out the alliterative ‘culture of corruption’. What Democrats don’t seem to understand is that slogans are not meant to be used all the time – these are the phrases you drop at the beginning and end of a speech. Instead, you have to create your own language that can be employed effectively against the complex, subversive language that the GOP has developed over the past 40 years. For them, it’s phrases like ‘personal accounts’ when referring to Social Security, ‘tax relief’ on tax cuts, and referring to terrorists as ‘thugs’ and other simplistic terms for bad guys in general.

This is the issue we have to address – it has nothing to do with what the slogans are. I think that too many Democrats bought into the idea of a ‘magic bullet’ when it comes to slogans simply because Clinton’s “It’s the economy, stupid” was a driving force in his successful campaign for president in 1992. Yes, snappy slogans are very nice. But in the long run, no one really remembers what the hell was on the banner at the campaign rallies. They remember the subtle repetition of phrases that trigger key psychological responses in the human consciousness. That’s why the Democratic Party needs to develop its own terms – we will no longer have to fight in the frame that the Republican Party has set for so long. When we can escape the habit of arguing on the GOP’s terms, we will be able to argue past their superficial language that avoids the real matters – and get to the heart of the issues.

Slogans are great. But framing isn’t about slogans. It’s about the language, stupid.

(cross-posted at Deny My Freedom)

I finally got around to reading George Lakoff’s seminal work, Don’t Think of An Elephant. It was a very revealing look into the politics of psychology and just how well the Republicans have utilized it over the past 40 years. But after reading the book, I didn’t feel better off for knowing the secret to the GOP’s success. In fact, I felt a lot worse than when I had just opened the book. Quite simply, Lakoff does a very good job of explaining the ‘what’ – what the issue of framing is really seeded in – and the ‘why’ – why the GOP has been winning elections, particularly in recent years. However, it simply does not explain the ‘how’ – how are liberals and progressive supposed to utilize these lessons to avoid being out-framed?

I was born to love you
I was born to lick your face
I was born to rub you
But you were born to rub me first

–Ty Webb, in the movie Caddyshack

The principal foundation for Lakoff’s beliefs on framing lie in the notion that there the two views of parenting dominate political discourse. There is the strict father model, upon which the man is the ‘decider’ and all power flows from him. Seeing conservative policies through this lens makes it extremely easy to understand why certain policies have been put in place; it removes the veil of stupidity from Bush’s childish proclamations to show something so subversively brilliant. On the other side, the perspective that liberals and progressives view things from, there is the nurturant parent model. It is grounded in the core human qualities of empathy and the belief that in order to institute policies, we have to understand what it is like to be in another person’s shoes. Just as easily, one can see how this view is replicated in our policies, from the New Deal to the Great Society.

One would think that a comparison of policies would draw a very simple conclusion: aside from the presidencies of Teddy Roosevelet and Abraham Lincoln, the Republican Party has contributed very little to American progress. It was Woodrow Wilson who won the First World War; it was FDR and Harry Truman who won the Second World War; and it was Lyndon B. Johnson who has probably been more responsible than anyone else for shaping government to its pre-Bush state. However, if one were to ask an average person who they thought the greatest president was, discounting the time before our present two-party system, I would venture a guess to say that Ronald Reagan would garner the most votes. Why has the modern-day Republican Party done so well? To me, the answer is quite clear, and it could easily be an addendum to Lakoff’s theory.

A thinking man once said, “No passion so effectually robs the mind of all its powers of acting and reasoning as fear.” To me, the GOP has won elections solely based on fear. The Republicans have been winning elections on the federal level since 2000 based on the fear of terrorism. But even before that, the GOP would play on the fear of how one was perceived. You don’t want to be known as someone who supports welfare queens or homosexual deviants, so you let the appeals to your standing as a human being drive you to vote the other way. Nixon won by capitalizing on the South’s fear of what racial integration might mean for them. Ever since Barry Goldwater’s campaign since 1964, Republican politics has been infected with the politics of fear, and they act as the father-like figure who can make it all go away – as long as you vote for them. And it’s worked – time and again, the American people continue to send incompetent fools to Washington simply because of the words they use, not because they believe in anything more than enriching themselves or further diluting our democracy. And even though it’s been clear that since Bill Clinton left office, we’ve had politicians who could tell you how to frame a picture a thousand different ways, but it’d drive you to breaking the glass over your head.

And so, my fellow Americans: ask not what your country can do for you – ask what you can do for your country. My fellow citizens of the world: ask not what America will do for you, but what together we can do for the freedom of man.

–John F. Kennedy

Even though Lakoff has purportedly been invited by congressional Democrats to talk about framing, I think that it’s clear that he has failed, just as he does in his book, to impart how to frame the debate. John Kerry’s signature slogan was ‘Hope (and help) is on the way’, but he used it far too much without backing it up. The same goes for Nancy Pelosi and congressional leaders, who have completely overused ‘Culture of Corruption’; I get the impression that it was the first clever thing that had been thought of in a long time by the Democratic Party that they completely forgot that the other side has an entire vocabulary to wield against us. The strict father mindset that the GOP uses is incredibly powerful – its foundations are rooted in several thousands of years of history in which the male, fairly or not, was looked upon as the dominant figure in society. Furthermore, it is exacerbated by the fact that we play into the GOP frame on the issues to begin with. The Democratic Party runs polls on the issues, and we campaign today with a “How this policy will help you” mindset. By doing this, we are already acknowledging the strict father model – how can we – the politicians, as the parents – guard us, the children. While Lakoff states that both the strict father and the nurturant parent model is in everyone’s mind, whether it be actively or passively, it seems that only the passive strict father model can be activated. This may be due to the fact that the GOP has unlocked that door with its frames and can easily access it, whereas we are far behind in learning how to even insert the key in the door. It could also be that quite simply, appealing to the greater good in people cannot be done using a ‘magic bullet’. Defining progressive values is far more difficult because we have a much more complex worldview. To understand us, we appeal to the minds of people – but the Republican Party appeals to the heart.

As Stephen Colbert would put it, “My mind is telling me no, but my gut is telling me yes.” Progressives have great trouble appealing to the heart, and I think that, just like everyone else, we have been cowed by fear. We are afraid to reveal that yes, we may actually put the welfare of others before ours, that we care about others, that the collective is more important than the individual. This is not something we should be ashamed of; indeed, it is a virtue that is admirable. The trouble is that we don’t have the language to express ourselves, and it continues to elude us as America slips further towards the point of no return. Is there an answer out there, as Lakoff purports there to be? Or are we forever cursed because English is not designed for progressive soundbites? Like the rest of us in the Democratic Party, George Lakoff may still be searching for the solution.

(cross-posted at Deny My Freedom)

Although there is definitely a side of religions of all denominations that are more open, it gets very little attention compared to the rabid evangelical Christians who comprise the fundamentalist base of the Republican Party. I’m no big fan of religion in general, but the Episcopal Church in America has been one of the most forward-thinking groups, installing a gay bishop almost three years ago. Now, the newest person to break the mold – a female bishop who now leads the Episcopal Church – addresses the issue of homosexuality.

Newly elected leader of the U.S. Episcopal Church Bishop Katharine Jefferts Schori said on Monday she believed homosexuality was no sin and homosexuals were created by God to love people of the same gender.

[…]

Interviewed on CNN, Jefferts Schori was asked if it was a sin to be homosexual.

“I don’t believe so. I believe that God creates us with different gifts. Each one of us comes into this world with a different collection of things that challenge us and things that give us joy and allow us to bless the world around us,” she said.

“Some people come into this world with affections ordered toward other people of the same gender and some people come into this world with affections directed at people of the other gender.”

Whether or not you’re a religious person or not, this strikes at the core disagreement of homosexuality – whether or not it is inherent in people or if it a lifestyle choice. Most religious groups denounce homosexuality, quoting some passage or other from the Bible as proof that God hates gays. In this case, Jefferts Schori speaks about the issue in the perfect religious – and moral – framework. We are all different, and each of us lends a uniqueness to the world. Our sexual orientation does nothing to change that, and every life should be celebrated for the diversity that it adds to the wonderfully intricate quilt of humanity.

The article ends on this excellent quote from Jefferts Schori:

“The Bible has a great deal to teach us about how to live as human beings. The Bible does not have so much to teach us about what sorts of food to eat, what sorts of clothes to wear — there are rules in the Bible about those that we don’t observe today,” she said.

“The Bible tells us about how to treat other human beings, and that’s certainly the great message of Jesus — to include the unincluded.”

Better words could not be said.