Democrats' crass obsession with income inequality will be on full display this week when President Obama unveils his administration's major initiatives in his State of the Union address. A dominant theme will be how the rich have become too wealthy at the expense of the poor.
Although it's a feckless premise, Obama understands his thesis will appeal to the uneducated, envious, naive and guilt-ridden. The audacity of Obama's claims are breathtaking, considering his policies have widened the yawning chasm between the rich and poor.
The Census Bureau recently issued a report which indisputably shows that income inequality under Obama has reached its highest level since the agency began recording data in 1947. Since 2009, the bottom 90 percent of earners' share of total income has dipped below 50 percent for the first time in American history.
But that won't stop the politically motivated president from railing against greed, racism and unfairness as the deep-rooted causes of the wealth gap. He will demand that Congress address inequality by raising the minimum wage, extending unemployment benefits and hiking taxes on the wealthy.
There is only one problem with the narcissistic president's simplistic approach. None of his proposed remedies will narrow the gap between the rich and poor. That is because his solutions have nothing to do with the social and economic drivers which have exaggerated the pay disparity.
Instead of trying to inflame class warfare, the president could learn something by studying testimony from the Brookings Institute to the U.S. Joint Economic Committee, a bipartisan group of the House and Senate. The presentation entitled, "Income Inequality in the United States," was delivered January 16.
For the record, Brookings is a nonpartisan think-tank ranked in some quarters as the most influential in the world. Headquartered in Washington, D.C., Brookings normally leans liberal or centrist in its approach. It certainly is not some rawboned conservative outfit.
In her testimony, senior Brooking fellow Melissa Schettini Kearney, makes three key observations based on research about the phenomenon of growing income inequality in the United States:
1. Inequality over recent decades is largely the "result of structural changes in the labor market that have favored the highly skilled." The gaps in wages and employment opportunities are greatest among those with college education versus those with less schooling. In other words, a majority of opportunities require college educated workers, leaving only the lowest-paying jobs for the uneducated.
2. Income inequality can be traced to the "sizable gaps in education achievement between the children of the rich and the poor." The fact is children of wealthy families also enjoy greater advantages because of their access to the best schools, starting with pre-school and extending through college. The growing gap in education performance "is not the result of eroding support for public education," according to the report. School performance is often linked to a two-parent household.
3. Economic despair and marginalization can lead individuals "to simply drop out of the mainstream climb to economic success." What this means is that people "do not see promising opportunities and so they essentially give up." Their environment, their location and their lack of skills make even middle class seem to be a goal too far, so they choose the path of least resistance.
These findings were based on decades of research by Brookings. Solutions to the problems identified in the investigation defy quick fixes. Unfortunately, the illusion of an immediate solution makes President Obama's politically expedient measures so seductive to the pseudo-compassionate.
Those serious about addressing economic disparity are not interested in more platitudes from a president who wants to exploit class warfare for political benefit. His approach will divide the nation, not unite Americans to support long-term solutions that could actually shrink the gap between rich and poor.
Monday, January 27, 2014
Monday, January 20, 2014
Political Payback: IRS Slapped With Budget Cuts
In a rare show of contempt for the Internal Revenue Service, Congress took a meat cleaver to the agency's 2014 spending scheme, carving $1.7 billion from the president's proposed budget. The move, orchestrated by Republicans, is political payback for the targeting of conservative groups.
Under the recently approved budget, IRS funding for this year was sliced to $11.3 billion. That is less than the agency spent in 2013 and lowers the budget to 2009 levels. No politician rushed to defend the unpopular agency's budget, including Democrats and President Obama.
The IRS became a target after jack-booted workers caused a political firestorm in 2013 by harassing conservative groups seeking tax exempt status. To underscore its budget message, Congress inserted language to limit the agency's ability to "target citizens for exercising their First Amendment rights."
Treasury Secretary Jack Lew, whose department includes the IRS, wanted to beef up the already bloated budget in order to triple the size of the workforce dedicated to the president's health care reform from 700 to 1,954 employees.
The IRS has one of the government's largest workforces, 87,000 people. The agency accounts for nearly 90 percent of the Treasury Department's payroll of 101,000 employees. For some perspective, more than one-half of the Fortune 500 companies have smaller payrolls than the tax agency.
Slashing the agency's budget will not cripple the the IRS' role in enforcing Obamacare as some claim. Duplicitous Democrats made sure of that when they authorized a slush fund for the IRS as part of the health care reform law.
The clause creating the fund was buried deep in the legislation to keep it hidden from the public. As of the end of last year, the government had already funneled about $1 billion into the fund, officially called the Health Insurance Reform Implementation Fund.
The boodle has attracted the interest of the Treasury Inspector General for Tax Administration. The inspector general found the IRS could not account for $67 million stashed in the fund. The report, dated September 18 of last year, cited several other abuses involving taxpayer funds.
The news media has turned a blind eye to the abuse. Meanwhile, the IRS continues to milk the slush fund as it ramps up to play the triple-threat role of accountant, enforcer and paymaster for the president's signature legislation.
Under Obamacare guidelines, the IRS will be charged with verifying whether an individual has health coverage and collecting penalties from those who fail to purchase coverage. The agency is empowered to withhold future tax refunds from those who don't pay for health insurance.
The agency's power extends to overseeing businesses with 50 or more employees, ensuring the firms provide government-approved health coverage to workers. The IRS will have the authority to levy and commandeer penalties from negligent employers.
To police the purchase of health insurance, the IRS will collect massive new amounts of personal health information from virtually every American. Insurance companies will be required to report the names, addresses, identification numbers and health policies purchased by every citizen.
Furthermore, the agency has the legal clout to pay subsidies to individuals who purchase health insurance, based on a financial means test. The Congressional Budget Office (CBO) projects the IRS will dole out more than $1.1 trillion over the next decade in subsidies and other funds.
On that last point, flaws already have been uncovered in the IRS platform to determine subsidies. In a report late last year, the Treasury Inspector General for Tax Administration performed a system audit and found "critical" security controls failed during the testing.
"The IRS's existing fraud detection system may not be capable of identifying refund fraud or schemes prior to the issuance of tax return refunds," the auditors wrote in their report. The inspectors called for wholesale changes to be made prior to the issuance of subsidies.
In light of all these revelations, Congress should have done more than just cleave $1.7 billion from the agency's budget. Legislators should have abolished the Internal Revenue Service.
Under the recently approved budget, IRS funding for this year was sliced to $11.3 billion. That is less than the agency spent in 2013 and lowers the budget to 2009 levels. No politician rushed to defend the unpopular agency's budget, including Democrats and President Obama.
The IRS became a target after jack-booted workers caused a political firestorm in 2013 by harassing conservative groups seeking tax exempt status. To underscore its budget message, Congress inserted language to limit the agency's ability to "target citizens for exercising their First Amendment rights."
Treasury Secretary Jack Lew, whose department includes the IRS, wanted to beef up the already bloated budget in order to triple the size of the workforce dedicated to the president's health care reform from 700 to 1,954 employees.
The IRS has one of the government's largest workforces, 87,000 people. The agency accounts for nearly 90 percent of the Treasury Department's payroll of 101,000 employees. For some perspective, more than one-half of the Fortune 500 companies have smaller payrolls than the tax agency.
Slashing the agency's budget will not cripple the the IRS' role in enforcing Obamacare as some claim. Duplicitous Democrats made sure of that when they authorized a slush fund for the IRS as part of the health care reform law.
The clause creating the fund was buried deep in the legislation to keep it hidden from the public. As of the end of last year, the government had already funneled about $1 billion into the fund, officially called the Health Insurance Reform Implementation Fund.
The boodle has attracted the interest of the Treasury Inspector General for Tax Administration. The inspector general found the IRS could not account for $67 million stashed in the fund. The report, dated September 18 of last year, cited several other abuses involving taxpayer funds.
The news media has turned a blind eye to the abuse. Meanwhile, the IRS continues to milk the slush fund as it ramps up to play the triple-threat role of accountant, enforcer and paymaster for the president's signature legislation.
Under Obamacare guidelines, the IRS will be charged with verifying whether an individual has health coverage and collecting penalties from those who fail to purchase coverage. The agency is empowered to withhold future tax refunds from those who don't pay for health insurance.
The agency's power extends to overseeing businesses with 50 or more employees, ensuring the firms provide government-approved health coverage to workers. The IRS will have the authority to levy and commandeer penalties from negligent employers.
To police the purchase of health insurance, the IRS will collect massive new amounts of personal health information from virtually every American. Insurance companies will be required to report the names, addresses, identification numbers and health policies purchased by every citizen.
Furthermore, the agency has the legal clout to pay subsidies to individuals who purchase health insurance, based on a financial means test. The Congressional Budget Office (CBO) projects the IRS will dole out more than $1.1 trillion over the next decade in subsidies and other funds.
On that last point, flaws already have been uncovered in the IRS platform to determine subsidies. In a report late last year, the Treasury Inspector General for Tax Administration performed a system audit and found "critical" security controls failed during the testing.
"The IRS's existing fraud detection system may not be capable of identifying refund fraud or schemes prior to the issuance of tax return refunds," the auditors wrote in their report. The inspectors called for wholesale changes to be made prior to the issuance of subsidies.
In light of all these revelations, Congress should have done more than just cleave $1.7 billion from the agency's budget. Legislators should have abolished the Internal Revenue Service.
Monday, January 13, 2014
Four Ideas That Could Change America
New innovations burst onto the scene daily in the United States. What once seemed impossible becomes reality in the blink of an eye. Thanks to new technologies, the country has undergone a metamorphosis that has altered the way we live, work and play in our lifetime.
But there is still room for innovation that can transform the nation. Here are four ideas that could save money, increase productivity, create jobs and add to the well-being of every citizen. Amazingly, the technology required to implement these applications already exists in most cases.
1. Solving the transportation crisis. Many cities in the United States are gripped by gridlock as population growth has worsened traffic congestion. Current public transportation systems are costly and inefficient, despite billions of dollars in expenditures at the local, state and federal levels. Americans love their cars and are unwilling to give them up for a less than satisfactory experience with public transportation. Some believe the solution is smart cars that drive themselves. That may make the roads safer, but it does nothing to ease the burden of congestion. The cost of traffic congestion was estimated at $121 billion in 2011, according to a study by the Texas A&M Transportation Institute. The answer is not building more public transportation. Every major system in the U.S. already requires massive government funding to underwrite the costs because user fees do not recoup the operational expense. What the country needs is a superstructure transportation network that zips cars and their occupants along a conveyor-like system powered by nuclear energy. Think people-movers on steroids. The network could be built along existing major highways and interstates or actually replace the paved road network. Americans get to keep their cars. Driving would be safer. The expenditure for the superstructure could be partially funded from the savings in building new paved roads. And electric cars would become more practical because the vehicles would only have to travel short distances to access the car transport system.
2. Improving health care access while reducing costs. More than 90 percent of Americans visited a doctor at least once in the past 12 months, according to a Gallup Poll. Every year the growth in physician office visits increases. Each occurrence costs patients and their health insurance companies an average of $158, reports the Center for Disease Control and Prevention. The expense for just this one health care episode is responsible for billions of dollars annually. Most office visits are for routine ailments with easily recognizable symptoms that could be diagnosed without driving to a physician's office. However, doctors feel compelled to actually see a patient in person before subscribing any medications. That can be solved with virtual doctors. Smartphones equipped with cameras would allow a patient to have "face time" with a doctor without an actual office visit. Patients would have the assurance of "seeing" a doctor. Physician groups and hospitals could hire and train doctors for the task, including sharpening their video skills as part of their instruction. Appointments for the video sessions could be made online. Insurance information would be collected in the online process. Apps could be created to enhance the remote examination process. Already, there are affordable devices that measure heart rate, pulse and body temperature. Doctors could "see" more patients than they do today. The cost of each session would be less than today's office visit because of the reduction in overhead. But what about all those "poor" people without smartphones? Virtually every American has at least one television in his or her household. New televisions would come equipped with a two-way video feature. Old sets could be retrofitted. Implementation would result in a gargantuan savings in health care costs while helping to relieve the looming doctor shortage. It would also bring improved care to rural sections of the country where often patients must drive miles to find the nearest physician or forgo treatment.
3. Fixing the country's water issues. In 2012, the United States endured the most severe and extensive drought in at least 25 years, impacting 80 percent of the country's agricultural land. Droughts shrink crops and livestock herds, raising retail food prices. According to the U.S. Department of Agriculture, the cost of the drought two years ago was estimated as high as $50 billion. Yet even in years of severe drought, some parts of the country are awash in floods. The problem is that nothing currently exists to use excess water in one part of the nation to help another section suffering through a drought. Every city has water pipes transversing its landscape. The flaw in the system is often the excess run-off is not stored, but simply allowed to seep back into the earth. The country needs giant underground rainwater storage tanks and an interconnected network of pipes that pumps water throughout the United States. Pipeline construction technology has advanced to the stage that it should be relatively easy to build and maintain the system. If the country can distribute gas and electricity and telecommunications service via national grids, why not water? The biggest obstacle would be the political in-fighting over which section of the country gets the excess water. But surely the acute impact of droughts on every consumer would trump politics.
4. Improving education by increasing innovation. Total expenditures at the state and federal level for public elementary and secondary schools in the United States was $607.2 billion in fiscal 2009-2010, according to the National Center for Education Statistics. That translates into about $12,473 annually for every student, one of the highest expenditures in the world. Those dollars do not include more than $55 billion in annual capital outlays by schools for everything from new buildings to computers. Yet for all this spending, American schools are failing. Educators are spending too much time offering book knowledge, instead of focusing on developing each student's innovation skills and motivation to succeed. There is no competitive advantage for a country to have educated people, if they don't know what to do with all that knowledge and aren't encouraged to develop their curiosity and imagination. America needs to transition from a knowledge-driven educational system to an an innovation-driven model. Achieving that goal would generate robust job growth and fuel an unprecedented economic boom. That requires a massive evolution in the way the country educates and rewards its students in the 21st century. The emphasis needs to be on critical thinking, problem solving, collaboration and analysis, not on memorization of state capitals, math tables, chemical formulae and ancient poems. One catalyst for change would be making the best teachers available to students throughout the nation, regardless of location. This could be done with high speed digital links that connect classrooms equipped with computers with video conferencing capability. In addition, this would facilitate collaboration between students from different cities, states and even other countries. In today's global economy, it would promote a new kind of teamwork required for tomorrow's leaders. The additional cost would be minuscule when compared to the influx of more students better equipped to change the world after they leave school.
None of these ideas are far-fetched. Each can be implemented using existing technology coupled with some additional innovation. Money always rises as a hurdle, but this country spends trillions of dollars each year on a myriad of programs that are failing to improve the life of most Americans.
What the country needs is vision and courage. Unfortunately, both are in extremely short supply. However, that could change if a few determined leaders stepped forward with bold solutions supported by an informed citizenry demanding new solutions.
But there is still room for innovation that can transform the nation. Here are four ideas that could save money, increase productivity, create jobs and add to the well-being of every citizen. Amazingly, the technology required to implement these applications already exists in most cases.
1. Solving the transportation crisis. Many cities in the United States are gripped by gridlock as population growth has worsened traffic congestion. Current public transportation systems are costly and inefficient, despite billions of dollars in expenditures at the local, state and federal levels. Americans love their cars and are unwilling to give them up for a less than satisfactory experience with public transportation. Some believe the solution is smart cars that drive themselves. That may make the roads safer, but it does nothing to ease the burden of congestion. The cost of traffic congestion was estimated at $121 billion in 2011, according to a study by the Texas A&M Transportation Institute. The answer is not building more public transportation. Every major system in the U.S. already requires massive government funding to underwrite the costs because user fees do not recoup the operational expense. What the country needs is a superstructure transportation network that zips cars and their occupants along a conveyor-like system powered by nuclear energy. Think people-movers on steroids. The network could be built along existing major highways and interstates or actually replace the paved road network. Americans get to keep their cars. Driving would be safer. The expenditure for the superstructure could be partially funded from the savings in building new paved roads. And electric cars would become more practical because the vehicles would only have to travel short distances to access the car transport system.
2. Improving health care access while reducing costs. More than 90 percent of Americans visited a doctor at least once in the past 12 months, according to a Gallup Poll. Every year the growth in physician office visits increases. Each occurrence costs patients and their health insurance companies an average of $158, reports the Center for Disease Control and Prevention. The expense for just this one health care episode is responsible for billions of dollars annually. Most office visits are for routine ailments with easily recognizable symptoms that could be diagnosed without driving to a physician's office. However, doctors feel compelled to actually see a patient in person before subscribing any medications. That can be solved with virtual doctors. Smartphones equipped with cameras would allow a patient to have "face time" with a doctor without an actual office visit. Patients would have the assurance of "seeing" a doctor. Physician groups and hospitals could hire and train doctors for the task, including sharpening their video skills as part of their instruction. Appointments for the video sessions could be made online. Insurance information would be collected in the online process. Apps could be created to enhance the remote examination process. Already, there are affordable devices that measure heart rate, pulse and body temperature. Doctors could "see" more patients than they do today. The cost of each session would be less than today's office visit because of the reduction in overhead. But what about all those "poor" people without smartphones? Virtually every American has at least one television in his or her household. New televisions would come equipped with a two-way video feature. Old sets could be retrofitted. Implementation would result in a gargantuan savings in health care costs while helping to relieve the looming doctor shortage. It would also bring improved care to rural sections of the country where often patients must drive miles to find the nearest physician or forgo treatment.
3. Fixing the country's water issues. In 2012, the United States endured the most severe and extensive drought in at least 25 years, impacting 80 percent of the country's agricultural land. Droughts shrink crops and livestock herds, raising retail food prices. According to the U.S. Department of Agriculture, the cost of the drought two years ago was estimated as high as $50 billion. Yet even in years of severe drought, some parts of the country are awash in floods. The problem is that nothing currently exists to use excess water in one part of the nation to help another section suffering through a drought. Every city has water pipes transversing its landscape. The flaw in the system is often the excess run-off is not stored, but simply allowed to seep back into the earth. The country needs giant underground rainwater storage tanks and an interconnected network of pipes that pumps water throughout the United States. Pipeline construction technology has advanced to the stage that it should be relatively easy to build and maintain the system. If the country can distribute gas and electricity and telecommunications service via national grids, why not water? The biggest obstacle would be the political in-fighting over which section of the country gets the excess water. But surely the acute impact of droughts on every consumer would trump politics.
4. Improving education by increasing innovation. Total expenditures at the state and federal level for public elementary and secondary schools in the United States was $607.2 billion in fiscal 2009-2010, according to the National Center for Education Statistics. That translates into about $12,473 annually for every student, one of the highest expenditures in the world. Those dollars do not include more than $55 billion in annual capital outlays by schools for everything from new buildings to computers. Yet for all this spending, American schools are failing. Educators are spending too much time offering book knowledge, instead of focusing on developing each student's innovation skills and motivation to succeed. There is no competitive advantage for a country to have educated people, if they don't know what to do with all that knowledge and aren't encouraged to develop their curiosity and imagination. America needs to transition from a knowledge-driven educational system to an an innovation-driven model. Achieving that goal would generate robust job growth and fuel an unprecedented economic boom. That requires a massive evolution in the way the country educates and rewards its students in the 21st century. The emphasis needs to be on critical thinking, problem solving, collaboration and analysis, not on memorization of state capitals, math tables, chemical formulae and ancient poems. One catalyst for change would be making the best teachers available to students throughout the nation, regardless of location. This could be done with high speed digital links that connect classrooms equipped with computers with video conferencing capability. In addition, this would facilitate collaboration between students from different cities, states and even other countries. In today's global economy, it would promote a new kind of teamwork required for tomorrow's leaders. The additional cost would be minuscule when compared to the influx of more students better equipped to change the world after they leave school.
None of these ideas are far-fetched. Each can be implemented using existing technology coupled with some additional innovation. Money always rises as a hurdle, but this country spends trillions of dollars each year on a myriad of programs that are failing to improve the life of most Americans.
What the country needs is vision and courage. Unfortunately, both are in extremely short supply. However, that could change if a few determined leaders stepped forward with bold solutions supported by an informed citizenry demanding new solutions.
Monday, January 6, 2014
Home Burglaries Spur Growth Industry
Americans are shelling out billions of dollars annually to thwart home burglaries, fueling a technological revolution and generating a boom in new business opportunities for an expanding list of companies.
Worried Americans seeking self-preservation spent $13 billion last year on home security systems. Experts are forecasting a 9.3 percent annual growth rate in residential security expenditures, soaring to $17.4 billion this year.
The surge in spending mirrors the rising losses suffered by homeowners. The Federal Bureau of Investigation (FBI) reported that Americans were hit with $15.5 billion in losses in 2012, the most recent year for which national crime statistics are available.
According to the FBI, there were 8,975,438 property crimes in 2012. The lion's share were residential burglaries, which accounted for 73.9 percent of the total. In the time it has taken you to read to this point, two home burglaries have been reported to police somewhere in the U.S.
Although home invasions have declined sightly, the arrest rate for residential burglaries remains among the lowest of all property crimes. Statistics show that only 12.6 percent of burglaries are cleared by police, which helps explain the lure for criminals.
The average haul in a home heist is more than $2,120. Typical items stolen include clothing, furs, luggage, jewelry, watches, keys, appliances and electronics. To collect the loot, burglars spend an average of only eight to twelve minutes in a residence before making their getaway.
Most burglars strike in broad daylight. Police reports show the thefts occur between 10 a.m. and 3 p.m., when most residents are not at home. Although a few thieves enter the home through an unlocked door, most use some type of force to enter the dwelling.
This onslaught of brazen thievery has birthed a robust home security industry. Traditional players such as ADT have the major market share, but new entrants such as AT&T, cable companies and even Direct TV are offering sophisticated security products to residents.
In addition to the standard alarms, these companies are selling advanced video surveillance systems featuring wireless cameras that can be manipulated remotely with a smartphone. Using those same smartphones, homeowners can monitor their residences from the office or while on vacation.
Virtually all systems notify the system's monitoring firm, which dispatches police or fire department personnel in the event of a break-in or blaze. Some will simultaneously deliver a text and email alert to your smartphone.
Virtually all systems notify the system's monitoring firm, which dispatches police or fire department personnel in the event of a break-in or blaze. Some will simultaneously deliver a text and email alert to your smartphone.
Additional gadgets include devices that alert consumers if there is a water leak in the residence or in the event someone disarms your system. With the latter feature, consumers may provide unique entry codes to maids or others who need access to the residence.
Cable companies and telecommunications firms are expanding the variety of security products to include home automation services, which allow customers to tap their broadband systems to control lights, appliances, televisions and thermostats remotely.
Price is emerging as a key competitive battlefield for the providers as companies bundle services to offer bargains to consumers. Home security monitoring costs range from $30 to $60 per month, depending on the complexity of the systems. Cameras, video recorders and other devices cost extra.
But consumers are finding the added peace of mind is worth the expenditures. Although no dwelling is completely safe. Even the White House was the scene of an attempted break-in.
If you recall, last year a delusional driver dared to try to crash her car through the gates of the impenetrable White House. Although she failed, if armed security didn't deter her attempt, then every American's residence is no less safe from intrusion.
If you recall, last year a delusional driver dared to try to crash her car through the gates of the impenetrable White House. Although she failed, if armed security didn't deter her attempt, then every American's residence is no less safe from intrusion.
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