Tuesday, December 14, 2010

$3 billion wasn’t enough?

Thomas Friedman: $3 billion wasn’t enough?

By thomas l. friedman

The New York Times Published: December 14, 2010 01:01AM

The failed attempt by the United States to bribe Israel with a $3 billion security assistance package, diplomatic cover and advanced F-35 fighter aircraft — if Prime Minister Bibi Netanyahu would simply agree to a 90-day settlements freeze to resume talks with the Palestinians — has been enormously clarifying. It demonstrates just how disconnected from reality both the Israeli and the Palestinian leaderships have become.

Oil is to Saudi Arabia what unconditional American aid and affection are to Israel — and what unconditional Arab and European aid and affection are to the Palestinians: a hallucinogenic drug that enables them each to think they can defy the laws of history, geography and demography. It is long past time that we stop being their crack dealers.

At a time of nearly 10 percent unemployment in America, we have the Israelis and the Palestinians sitting over there with their arms folded, waiting for more U.S. assurances or money to persuade them to do what is manifestly in their own interest: negotiate a two-state deal. Shame on them, and shame on us. You can’t want peace more than the parties themselves, and that is exactly where America is today. The people running Israel and Palestine have other priorities. It is time we left them alone to pursue them — and to live with the consequences.

They just don’t get it: We’re not their grandfather’s America anymore. We have bigger problems.

Israeli and Palestinian negotiators should take a minute and put the following five words into Google: “budget cuts and fire departments.” Here’s what they’ll find: American city after city — Phoenix, Cincinnati, Austin, Washington, Jacksonville, Sacramento, Philadelphia — all having to cut their fire departments. Then put in these four words: “schools and budget cuts.”I guarantee you, if someone came to these cities and said, “We have $3 billion we’d like to give to your schools and fire departments if you’ll just do what is manifestly in your own interest,” their only answer would be: “Where do we sign?” And so it should have been with Israel.

Israel, when America, a country that has lavished billions on you over the last 50 years and taken up your defense in countless international forums, asks you to halt settlements for three months to get peace talks going, there is only one right answer, and it is not “How much?” It is: “Yes, whatever you want, because you’re our only true friend in the world.”

Palestinian President Mahmoud Abbas, what are you thinking? Ehud Olmert, the former Israeli prime minister, offered you a great two-state deal, including East Jerusalem — and you let it fritter away. Now, instead of chasing after Obama and telling him you’ll show up for negotiations anywhere under any conditions that the president asks, you’re also setting your own terms. Here’s some free advice: When America goes weak, if you think the Chinese will deliver Israel for you, you’re wrong. I know China well. It will sell you out for a boatload of Israeli software, drones and microchips so fast that your head will spin.

I understand the problem. Israeli and Palestinian leaders cannot end the conflict between each other without having a civil war within their respective communities. Netanyahu would have to take on the settlers, and Abbas would have to take on Hamas and the Fatah radicals. Both men have silent majorities that would back them if they did, but neither man feels so uncomfortable with his present situation to risk that civil war inside to make peace outside. There are no Abe Lincolns out there.

What this means, argues the Hebrew University philosopher Moshe Halbertal, is that the window for a two-state solution is rapidly closing. Israel will end up permanently occupying the West Bank with its 2.5 million Palestinians. We will have a one-state solution. Israel will have inside its belly 2.5 million Palestinians without the rights of citizenship, along with 1.5 million Israeli Arabs. “Then the only question will be what will be the nature of this one state — it will either be apartheid or Lebanon,” said Halbertal. “We will be confronted by two horrors.”

The most valuable thing that President Barack Obama and Secretary of State Hillary Rodham Clinton could do now is just get out of the picture — so both leaders and both peoples have an unimpeded view of their horrible future together in one state, if they can’t separate.

It’s all a fraud. America must get out of the way so Israelis and Palestinians can see clearly, without any obstructions, what reckless choices their leaders are making.

Make no mistake, I am for the most active U.S. mediation effort possible to promote peace, but the initiative has to come from them. The Middle East only puts a smile on your face when it starts with them.

Thursday, October 28, 2010

The Overseas Profits Elephant in the Room

There's a trillion dollars waiting to be repatriated if tax policy is right.

By JOHN CHAMBERS AND SAFRA CATZ

During last year's "Jobs Summit," President Obama said he was open to any good idea to get the economy moving again. Today he should be especially so, since Washington's many monetary and fiscal policy decisions have not been able to spur the robust growth or job expansion that we all would like. And yet there is a simple idea—the trillion-dollar elephant in the room—that has apparently been dismissed for no good reason.
One trillion dollars is roughly the amount of earnings that American companies have in their foreign operations—and that they could repatriate to the United States. That money, in turn, could be invested in U.S. jobs, capital assets, research and development, and more.
But for U.S companies such repatriation of earnings carries a significant penalty: a federal tax of up to 35%. This means that U.S. companies can, without significant consequence, use their foreign earnings to invest in any country in the world—except here.
The U.S. government's treatment of repatriated foreign earnings stands in marked contrast to the tax practices of almost every major developed economy, including Germany, Japan, the United Kingdom, France, Spain, Italy, Russia, Australia and Canada, to name a few. Companies headquartered in any of these countries can repatriate foreign earnings to their home countries at a tax rate of 0%-2%. That's because those countries realize that choking off foreign capital from their economies is decidedly against their national interests.

Many commentators have pointed to the large cash balances sitting on U.S. corporate books as evidence that the economy is still stalled because companies aren't spending. That analysis misses the point. Large cash balances remain on U.S. corporate books because U.S. companies can't spend their foreign-held cash in the U.S. without incurring a prohibitive tax liability.

Especially with corporate bond rates falling below 4%, it's hard to imagine any responsible corporation repatriating foreign earnings at a combined federal and state tax rate approaching 40%.
By permitting companies to repatriate foreign earnings at a low tax rate—say, 5%—Congress and the president could create a privately funded stimulus of up to a trillion dollars. They could also raise up to $50 billion in federal tax revenue. That's money the economy would not otherwise receive.
The amount of corporate cash that would come flooding into the country could be larger than the entire federal stimulus package, and it could be used for creating jobs, investing in research, building plants, purchasing equipment, and other uses. It could also provide needed stability for the equity markets because companies would expand their activity in mergers and acquisitions, and would pay dividends or buy back stock. And when markets go up, confidence increases and businesses and consumers begin to spend.
The $50 billion boost in federal tax revenue, meanwhile, could be used to help put America back to work. For example, Congress could use it to give employers—large or small—a refundable tax credit for hiring previously unemployed workers (including recent graduates). The tax credit could equal up to 50% of a worker's first-year and second-year wages, capped at $12,500 per year (or $25,000 total per new hire).
Such a program could help put more than two million Americans back to work at no cost to the government or American taxpayers. How's that for a good idea?
Mr. Chambers is chairman and chief executive officer of Cisco Systems. Ms. Catz is president of Oracle Corporation.

Sunday, August 29, 2010

Peter Berkowitz: The Death of Conservatism Was Greatly Exaggerated - The Wall Street Journal.

Peter Berkowitz: The Death of Conservatism Was Greatly Exaggerated

http://online.wsj.com/article/SB10001424052748704147804575455090270186082.html

Thursday, August 26, 2010

Arnold Schwarzenegger: Public Pensions and Our Fiscal Future - The Wall Street Journal.

Arnold Schwarzenegger: Public Pensions and Our Fiscal Future

http://online.wsj.com/article/SB10001424052748703447004575449813071709510.html

Sunday, August 01, 2010

Arthur Laffer: The Soak-the-Rich Catch-22 - The Wall Street Journal.

Arthur Laffer: The Soak-the-Rich Catch-22

http://online.wsj.com/article/SB10001424052748703977004575393882112674598.html

Monday, July 12, 2010

Go Dan Go -- States Shift to Hybrid Pensions

States Shift to Hybrid Pensions

Facing Shortfalls, Some Combine Guaranteed Plans With 401(k)-Like Options

By JEANNETTE NEUMANN

State governments, one of the last bastions of guaranteed pensions, are increasingly taking a page from the 401(k) plans that dominate the private sector.

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Ramin Rahimian for The Wall Street Journal

Utah state Sen. Dan Liljenquist pushed his state to move toward a pension plan more similar to those used in the private sector.

Some new state workers in Michigan and Utah will soon begin to receive part of their retirement benefits from a 401(k)-type plan, after lawmakers there recently voted to adopt plans that combine a 401(k) component with a guaranteed benefit.

These hybrid plans are a cost-cutting measure for states seeking to pare back the guaranteed-retirement payments considered a bedrock benefit for government workers. The new plans shift more responsibility for funding retirement benefits to employees and, some say, could make government jobs less attractive. In down markets, the plans could mean less-generous benefits for these workers, who have sidestepped the market volatility many of their private-sector counterparts endured in recent years.

Utah and Michigan join six other states that have some form of hybrid plans for public workers. Most of those states, including Oregon and Washington, created hybrid plans within the past 15 years.

A number of other states, facing looming pension-fund liabilities, have expressed interest in hybrid plans, industry participants say. Some officials in North Carolina and Pennsylvania, for instance, are contemplating a move to a hybrid plan.

"Reality is not negotiable," says Utah state Sen. Dan Liljenquist, a Republican who was instrumental in crafting the legislation for the state's pension changes. "The fact is somebody bears the risk. Ultimately, the state is bearing more risk than it can."

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Total unfunded public-pension liabilities in the U.S. increased to $457.8 billion in fiscal year 2008 from $368.5 billion in 2007, according to a June report by Standard & Poor's. States have taken various measures to bridge that funding gap, including scaling back cost-of-living adjustments, increasing monthly contributions from employees toward their pensions or extending the retirement age. Often the changes only affect new hires.

Governments trying to rein in pension costs hope these hybrid plans can represent a middle ground. Since they maintain a defined-benefit plan for workers, the hybrid plans can help lawmakers skirt the political backlash that could accompany any threat to a pension, while they move some of the investment risk to employees.

Though not a booming trend, "hybrids are being looked at now more than ever before," said Cathie Eitelberg, senior vice president and public-sector practice leader at the Segal Co., whose clients include government pension funds.

In Utah, most current employees are in a pension where the state in 2010 contributes 16% of an employee's monthly income. Workers do not contribute. Faced with rising contribution rates, lawmakers voted to have new workers as of July 1, 2011 choose to enroll in a defined-contribution plan—like a 401(k)—or a hybrid plan.

In the hybrid plan, workers can invest in a 401(k)-type fund. State and employee contributions to the defined-benefit portion of the hybrid plan fluctuate based on the financing of the pension fund. The state contribution is capped at 10% across both parts of the plan.

In Michigan, new school employees as of July 1 contribute 2% of monthly income to a 401(k)-type fund, with state employers matching up to 1% of pay. Employees are automatically enrolled in the fund but can choose to opt out or choose to contribute more.

There is still a defined-benefit component, but it will cost the state less: Public employers will contribute on average 2.5% of an employee's monthly income toward retirement, down from an average base of 4%. There is no longer a cost-of-living adjustment in retirement.

Retirement officials hope that most new employees will contribute to the 401(k)-type fund to try to maximize their retirement benefits by taking advantage of the employer match, said Phil Stoddard, director of Michigan's Office of Retirement Services.

"We hope to create a culture of savings" with the defined-contribution component, Mr. Stoddard said. The 401(k) component becomes portable, which he said can make the benefit plan attractive for younger workers who are unlikely to remain in one job for 30 years, Mr. Stoddard said.

Some workers aren't enthralled. "It's less benefit overall because of the variability of that 401(k) component," said Doug Pratt, director of communications for the Michigan Education Association, a union representing 130,000 school employees.

The reduced benefits mean "we're going to lose some good people" who will find the benefits package less attractive, he said. But a hybrid plan is "certainly a better alternative than ditching pensions all together."

The vast majority of public sector employees have a defined-benefit plan-79% in 2008, according to the Employee Benefit Research Institute, a nonprofit research institute in Washington. In comparison, 33% of private-sector employees were enrolled in a pension plan in the same period.

Eighteen percent of state workers had a defined-contribution plan in 2008, compared with 55% of private-sector workers enrolled in a defined-contribution plan.

The heightened interest in hybrid plans doesn't appear to foreshadow a swift change toward defined-contribution plans. Though defined-contribution plans are often on legislative agendas, they rarely have been adopted in the public sector, says Ron Snell, director of the state-services division for the National Conference of State Legislatures.

Only Alaska and the District of Columbia have mandatory defined-contribution plans for all workers, according to a June report by Mr. Snell.

Wednesday, June 30, 2010

Woot vs Amazon?

http://www.woot.com/Blog/ViewEntry.aspx?Id=13390

Tuesday, June 29, 2010

Why Obamanomics Has Failed - The Wall Street Journal.

Allan Meltzer: Why Obamanomics Has Failed

http://online.wsj.com/article/SB10001424052748704629804575325233508651458.html

Monday, June 28, 2010

Manute Bol's Radical Christianity - The Wall Street Journal.

Manute Bol's Radical Christianity

http://online.wsj.com/article/SB10001424052748704853404575323043046894012.html

Monday, June 21, 2010

McGurn: The Obama Speech We're Waiting For - The Wall Street Journal.

McGurn: The Obama Speech We're Waiting For

http://online.wsj.com/article/SB10001424052748704895204575320922399530274.html

Thursday, June 10, 2010

Andy Kessler: The iPhone, Net Neutrality and the FCC - The Wall Street Journal.

Andy Kessler: The iPhone, Net Neutrality and the FCC

http://online.wsj.com/article/SB10001424052748703303904575293021509968904.html

Sunday, June 06, 2010

Storming the School Barricades - The Wall Street Journal.

I thought you would be interested in the following story on WSJ.com.

Storming the School Barricades

http://online.wsj.com/article/SB10001424052748704635204575242123324855474.html

Arthur C. Brooks: Slouching Towards Athens - The Wall Street Journal.

Slouching Towards Athens

http://online.wsj.com/article/SB10001424052748704764404575286451653109876.html

Monday, April 26, 2010

How Hard is Wireless?

Monday, April 12, 2010

Incentives Not to Work - The Wall Street Journal.

Incentives Not to Work

http://online.wsj.com/article/SB10001424052702303828304575180243952375172.html

Monday, March 22, 2010

Why America Needs a National Broadband Plan -- John Chambers

Why America Needs a National Broadband Plan

Business' ability to compete—and Americans' well-being—depend on fast Internet access. Washington can help push the U.S. ahead, says Cisco's Chambers

By John Chambers

If the U.S. military ranked 17th in the world, you can bet that as a nation we would make strengthening our armed forces a national priority. Yet that's just how the U.S. stacks up against the rest of the world in terms of access to high-speed Internet connections. The vital communications systems that make our economy work and serve as a platform for business innovation and social interactions are second-class. Sadly, many of us have accepted that.
It's time to overcome our broadband complacency. The national broadband plan sent to Congress on Mar. 16 by the Federal Communications Commission is critical to our economic and national security. Without a plan, we simply cannot compete.
Some pundits have suggested that businesses are against the national broadband plan. A Mar. 15 editorial in The Wall Street Journal said the plan is "opposed by industry." It's true that some will reject the effort, saying it's not up the government to set industrial policy. Generally, I agree with that sentiment. But we should remember that government leadership can point our nation in a direction that businesses and citizens can follow. We need not look any further than President John F. Kennedy's call to put a man on the moon in the 1960s or the very creation of the Internet, which started as a government project until businesses seized on it as an economic and social platform.
Making broadband a national priority will help us become more competitive globally and help us see firsthand how new jobs, businesses, and even new business models can be enabled by access to faster Web connectivity.

Personal Success and Job Creation

Broadband empowers our citizens and businesses. It helps homeowners and business operators understand, control, and even manage their carbon emissions. Through smart highways, it lets workers take control of their commute. Through connected systems, it helps people manage the information they need to be successful in an office, at home, or while traveling. It will enable citizens to get the health assistance they need virtually—whether the doctor is sitting next door or a thousand miles away. And it eliminates barriers to quality education for all Americans.
As we gain access to ever faster broadband speeds, the relationship between businesses and their employees, customers, and partners is dramatically altered. More than 80% of 18- to 24-year-olds participate in some form of social networking. Organizational models are being rethought as global leaders face the imperative of bringing teams together across businesses and functions as well as regions, cultures, and languages. The very question of how businesses interact with customers and suppliers is now open to debate, thanks in part to the new platforms presented by broadband and video technologies.
Our world is increasingly defined by data and video, balanced by our ability to act upon it. We see it in our daily lives, whether it's the decisions we make at work, home, or on the move, on any topic such as health, education, or entertainment. To put it in perspective, by 2015 the yearly amount of U.S. traffic on the Internet will reach the equivalent of the contents of 50 million Libraries of Congress. Our ability to access that information, analyze it, and make decisions will determine not only our personal success but also the future of our job creation within businesses, industries, and ultimately countries.

A Critical Stage for Digital Networks

At Cisco, our core business is networking and providing bandwidth, so ultimately we should benefit from this plan. However, because of broadband's impact on the larger economy, and on health care and education in particular, we would be supportive even if we did not stand to benefit.
As profound an impact as the Internet has made so far, we are still at the early stages. Electricity was a game-changer at the start of the 20th century, but for everyone to benefit the government had to get involved. So we are at a similar inflection point with our digital networks.
It may take years for us to grasp either the speed or the magnitude of the changes happening globally. For example, in the next three years the number of Internet users will increase by 500 million, most of them from Asia, and the number of Internet-enabled devices will nearly double, creating new business and social dynamics.
Here is what we do know: We are only as strong as the systems and infrastructure we have. A world that used to be defined by who ruled the High Seas is now defined by who delivers the best network connections. The FCC has shown leadership by pointing us in a direction. Now it's time for the rest of us to build the systems that are vital to the economic and social future of every nation.

Chambers is Chief Executive Officer of Cisco Systems, the world's largest maker of networking equipment .

Monday, March 15, 2010

Letter to UTA on Proposed Centerville Streetcars

UTA & Consultants,

I appreciate the professional manner in which UTA and their consultants have shared information on the South Davis Transit Study with citizens and residents in our community. The open house at Centerville Jr. High School on March 2nd was very well attended. Despite a lot of emotional responses from the public, the UTA team was able to stay completely professional, as far as I could observe. Thank you for your efforts in that regard.

As a Main Street resident, I have no desire to ever see a streetcar line built on Main Street in Centerville. However, the planning that has been done is valuable, and I can understand that someday in the future, the population density of Centerville, and of South Davis County may increase, and change demographically in such a way that a more upscale mass transit system, such as streetcar system, could benefit many.

At the current time I see absolutely no economic justification for spending the estimated $400M+ required to build the system, or the increased maintenance costs. Currently there is very little public support for the streetcar system, and significant opposition. I suspect there would also be overwhelming opposition to the tax increases that would be required to build the proposed streetcar system at this time.   I am also opposed to the current design of the system in Centerville with a final stop near Center street. It would like require condemnation of portions outside the right of way, which the City Council has opposed. The business owners in this area have expressed opposition to the stop, and this area does not seem a logical location for a transit stop. In my opinion, a better design would be to have the system stop at Pages lane as the final stop, or continue on to Parish, with a final stop nearer to the commercial and entertainment district on Parish Lane and 400 West.

Out of the choices available in the study, my personal opinion and recommendation is to favor the "no build" option. I believe that Centerville served relatively cost effectively with the bus program in place.   I would like to see two major improvements to mass transit in Centerville that are not mentioned in the study, and would have a much better cost/benefit impact for residents and visitors than the streetcar system:

Bus Stop Shelters on Main Street in Centerville. There are Main Street bus stops in Centerville that are frequently used, where riders would benefit significantly from simple bus stop Shelters. I frequently see potential riders in the rain or snow waiting near Parish and Main St and at other busy stops between Pages Lane and Parish Lane. For a relatively small amount of money, shelters could improve the transit experience in Centerville significantly, and would likely boost ridership.
Frontrunner Stop at the planned Legacy Crossing development. A frontrunner stop integrated into the proposed Larry H. Miller Theater entertainment center and multi-family residential development near I-15 and Parish Lane would be very attractive to our community and would likely be used significantly more than a streetcar system. There is a great opportunity to plan now for the possibility of a Front Runner stop that would serve substantial commercial & residential traffic. A stop in this area would likely cost less than Centerville's portion of the streetcar system, and would attract riders.

Thank you again for the opportunity to share my comments.