Across the Great Divide

Forget Climate Change if You Have the Right Insurance Policy.

Private contractors aren't only in Iraq. They're on the scene wherever public resources are deemed not sufficient  to serve the needs of the wealthy. In this case, in the wildfire-threatened American West:

New Jersey-based Chubb Corp. [...] began offering free fire protection to its clients in 13 Western states in March. Already 11,000 homeowners have signed up, more than a third of those in wealthy and fire-prone enclaves like Lake Tahoe and Marin County. The company plans to expand the service to other states before the start of next fire season.

Chubb hired Montana-based Wildfire Defense Systems Inc. to protect homes with a replacement value of $1 million or more. The company is now subcontracting a pool of 50 fire engines throughout the West dedicated exclusively to Chubb policyholders.

A relative and career forest fire fighter confirms that insurance company crews have been showing up to foam the roofs of multi-million-dollar houses in places like Big Sur. In California, public agencies trying to manage fire on a broader scale have already run through half their budgets before reaching the main fire season, which starts in August.

My brother-in-law, recently in Wisconsin from the wildfires of California, says he stopped seeing smoke in the sky only after he crossed the Black Hills of South Dakota.

Here's How to Fix the Congressional Housing Crisis.

I'm not a fan of gotcha political stories, regardless of who's being got. The story on Norm Coleman's Washington DC crash pad is one of those. Dinging him for accepting landlord leniency just invites counterattacks and ends up lowering the public's respect for all elected officials even further. (See the latest revelations about Rep. Charles Rangel's rent deals.)

Coleman is paying below-market rent to a friend who does work for his campaign, which doesn't look great, but it's hardly a Capitol crime compared to, say, taking big favors from big pharma.  Beyond appearances, the issue really is who's giving the break and what they expect in return.

Coleman is already giving his landlord his campaign direct mail business, it appears. Yes, it's a benefit not available to the general public, but it's hard to see how shaving a few bucks off his rent would make a difference.

I'm more bothered by this one detail in the Strib's showcase tour of Coleman's crib:

Turn the corner and the senator is within leaping distance to his tall full-sized bed, covered with a mound of pillows.

"Full-sized" is a pretty imprecise description of a furnishing that has well-known size designations, and a "mound of pillows" is a very curious feature in an otherwise spartan batch pad that barely has room to turn around.

To reporter Emily Kaiser, this decorator's touch may have seemed normal. But I would ask my male readers to tell us whether they have ever remotely — without female intervention — considered voluntarily piling any bed they occupied with pillows, which must be removed each night, put somewhere, and then replaced again in the morning.

Not. Gonna. Happen. This could be a realty house stager trick, the act of a woman with a shopping habit, or a basement display of metrosexuality, but it is not what regular guys do.

We had a discussion about this in our household, and my domestic partner came up with the idea that each state could provide optional housing for its Congressional delegation — a sort of DC apartment version of the governor's mansion concept.

In my big government extension of her states rights version, the federal government buys or builds housing near the Capitol available to any elected official required to maintain a residence in their home district. One complex would consist of apartment units for members who decide to move their families to Washington; the other would be designed for single members who are simply looking for convenient, affordable quarters while they are in town.

Rents would be priced at the same level as the income-based reimbursement available through Section 8 housing vouchers. Members would be free to accept the subsidized, below-market rate, or to find their own accommodations. Unrented units would be offered to public renters who qualify for Section 8 subsidies.

Just a thought.

Lorena Ochoa: Just Doing Her Job.

No matter where she plays golf in this country, Lorena Ochoa has fans. Sure, she's the best woman golfer in the world right now, but the friendly young player isn't just popular with the country club set.

Ochoa out-polled Mexico's president to be named Mexican of the year for 2007, and Time named her one of the 100 most influential people in the world. Golf is only part of it.

At many tournaments, Ochoa visits with the course maintenance crews, many of whom are Latino immigrants. She thanks them for their work and talks about life back home.

    

Ochoa laughs when asked about "distractions" that accompany her high profile. She takes pride in being a role model and representing Mexico.

    

"I always do it with a smile on my face, and I think it's a part of everything," Ochoa said. "It's like paying taxes – you know, hopefully you pay a lot of taxes. It is part of my job."

Today and tomorrow, I'll be working as a course marshal at the U.S. Women's Open and watching her do her job.

 

Join the Army and See College.

Ed Humes recently recently reminded us of the importance of the GI Bill in building America's middle class.

The original GI Bill — signed into law in 1944 — was one of the most important laws ever adopted by Congress. It transformed the nation after World War II in epic fashion, with generous college benefits, stipends, subsidized mortgages, business loans, and job training and placement.

Veterans got free rides to any college that would accept them. Tuition, books, housing and living expenses were all covered, giving rise to a new generation of scientists, inventors, teachers, doctors, civic leaders and artists. Low-interest, no-money-down home loans backed by the government made it less expensive to buy than to rent. Suburbia, widespread homeownership, college as a majority aspiration, the middle class — all were built on the back of the GI Bill. It reinvented the American dream.

My father was one of those dirt-poor veterans whose life on a remote Arizona ranch was forever transformed by the GI Bill, and my own family's even greater prosperity grew because of the head start we got in life from a stable household instead of a stressed and near-nomadic one.

For too many Americans, perhaps, this transformative investment is now invisible and irrelevant historic trivia. Two generations removed from the Great Depression and thoroughly indoctrinated in Norquistian economics, they see whatever success they may enjoy as purely of their own making and whatever failures as being of government-funded dependency.

But the truth is, America once honored military service and used it as a way/excuse to profoundly redirect the economy.  Today, sadly, our military gets the car magnets and lapel pins, but fends for itself once it moves back to civilian life.

Maybe this would be an okay bargain if all we were doing was entering an employment agreement that said: You're going to be a security guard — not at a mall or bank but at an Iraqi pipeline — with commensurate benefits but much higher risk.

Instead, the marketing is more like this: You will be defending your country from extremists and helping spread democracy; in exchange, we'll make sure you can afford to go to college.

It hasn't happened quite like that.

The department's most recent data show just 3 percent of veterans who entered a four-year college program in 1995 graduated by 2001, compared with a 30 percent overall graduation rate.

Another reason for that gap is the military experience itself. The Pentagon sells an educational dream to recruits. In addition to promising tens of thousands of dollars for a service member's college education, recruiters promise future soldiers that they'll be able to "attend college anywhere they are based and even in the combat zone through Internet classes offered from the college they are enrolled in."

But most Iraq War veterans say that’s a promise that exists only on paper.

The fulfillment of the promise is very different than it was for my father, who was able to take a full ride to the University of Colorado, where he very luckily met my mother.

Some young people, like my nephew, will still be well-served by their military service. With a college degree aleady under his belt, he's going on to further training instead of a second tour of Iraq. His unit will go there without him.

But for too many young people, their service will result in far less reward than my father's greatest generation received.

In the next post, I'll look at one way our nation's covenant with its military has diminished.

Are You Gonna Eat That?

Americans waste an astounding amount of food — an estimated 27 percent of the food available for consumption, according to a government study — and it happens at the supermarket, in restaurants and cafeterias and in your very own kitchen.
[...]

The problem  isn’t unique to the United States.

In England, a recent study revealed that Britons toss away a third of the food they purchase, including more than four million whole apples, 1.2 million sausages and 2.8 million tomatoes. In Sweden, families with small children threw out about a quarter of the food they bought, a recent study there found.
— New York Times

As a member of the Clean Plate Club and the Great Auckland Post-Humeric Compost Society, my motto is, if it doesn't stink, it won't hurt you. And if it does, compost it.

Step Through a Crack, Break Your Own Back.

I ran into a couple stories recently that call into question both the morality and effectiveness of our private health insurance system. I had meant to research this more deeply before writing it, but it's not going to happen. (Names and circumstances have been changed to protect their privacy.)

"May" works in a personal services business and was diagnosed with breast cancer a couple years ago. Her work is more physically demanding than a desk job, and she had to take time off from work while undergoing treatment. As a self-employed contractor, she didn't have group insurance through an employer, but was carried on her husband's policy through his company.

Last month, May's husband was laid off from his job in construction-related sales. The company had to reduce its sales force because of the slumping market, but it apparently didn't just look at seniority or sales performance when deciding who to cut loose. The one guy on the street is the one who has the wife with cancer.

I heard the company HR person apologized privately to May and her husband, which is at least an admission of human guilt feelings if not actual corporate culpability. They can COBRA coverage while he looks for another job, but if he can't find employment with health benefits, they may be out of luck when COBRA coverage expires. The company doesn't exactly get off free, as I understand it. Because it  self-insures, it will still have some costs it will have to cover for its former employee on COBRA. (Insurance experts are free to chime in here.)

Now May's husband feels like he's a bad provider who let his wife down. May feels like her condition led to her husband being laid off. This adds to the financial strains and anxiety of unemployment. The woman with cancer becomes the bread winner for now. For the future, who knows?

Karl quit a job that was stressing him out, right before the economy went in the tank. Because he has mental health issues, he made sure to keep his health coverage through COBRA. Months later, he discovered the policy he was able to afford only covered inpatient mental health services — not the outpatient services that were covered under his work policy — the primary reason he made sure to stay insured.

Was he misled about his benefits under the policy or did he screw up? At this point, it's hard to say, but now, though he's paid his premiums, he's also on the hook for $2500 in charges both he and the providers believed were covered. He's barely hanging on with odd jobs and collectors calling him.

Opponents of a single payer system who think health care access here is so much better than in Canada should look beyond their personal situations and talk to the Mays and Karls of the country. The measure of a great country is not just how well we treat the people with money.

Not Much Payoff from Pay Day Study.

You may have missed that today is Equal Pay Day, which is sort of like Tax Freedom Day, but occurs one day earlier. It signifies how far into 2008 a woman would have to keep working to raise her last year's earnings to equal what the average man earned in 2007.

For unmarried women, the disparity is far greater. Their Equal Pay Day doesn't arrive until September 27th. According to Women’s Voices Women Vote, the average household income of unmarried women is almost $12,000 less than that of unmarried men. 

The report doesn't address why unmarried women earn less than married women or whether unmarried women earn less for the same job than married women. Do working women earn more because they are married or are women more marriageable because they have higher earning potential? The defenders of marriage want to know!

Clearly, a superficial study aimed at lazy reporters and bloggers, not one that will illuminate an important dimension of the growing income gap in America.

A Little Tax Lesson.

From Visualizing Economics, a chart showing the makeup of reported income for the top 400 taxpayers in the U.S. — those earning more than $100 million in 2005.

With 58% of their income flowing in the form of lower-taxed capital gains, it's easy to see one way the rich have been getting richer. 

Other charts at the site depict how the average tax rate for the top 400 has dropped from its high in 1995 (30%) to 18%; and effective federal tax rates at different income levels.

Taxes: Whe-e-e-ere's Johnny?

I recently wrote about whether conservatives are truly more generous than progressives, based on research into charitable giving. With the disclosure of tax returns by most figures involved in presidential politics right now, it's possible to look from a different angle.

The Bushes and Cheneys released their 2007 tax returns this week. Mr. Straight Talk is the only one silent as April 15th looms.

The TaxProf Blog provides this handy summary chart and has posted other analysis of candidate returns over the years.

Some caveats in comparing the families. Charitable giving is subject to a number of factors that may not show up on a tax return or in a simple calculation.

This study found that almost three in ten households shift every year between giving and not giving. In 2005, tax returns in the $500,000 - $1 million adjusted gross income (AGI) range that itemize (like the Bushes and Obamas) gave 1.3 percent of their AGI in charitable contributions. The average for household incomes aver $100,000 is 2.2 percent.

Stage of life, for example, influences disposable income. Families with younger children, mortgages and other debts are more likely to be still building assets, while older, high net worth individuals may be more inclined to distribute them. Couples whose incomes spike because of short-term windfalls like book sales (enjoyed by all our filers) may respond to income volatility with generosity or caution in a given year.

Then, of course, come the political considerations. Charitable giving can cut both ways for candidates, since it demonstrates generosity while also reducing one's tax obligations.

The Bushes, historically very generous, continued in that vein for 2007, giving the highest percentage of their AGI to charity. Most of the family's $165,660 in donations was from book advance proceeds paid Laura Bush which she turned over to two teaching programs.

The Cheneys were also more generous than the average American donor. They also paid the lowest effective federal income tax rate. The Bushes and Cheneys claim residence in states where they pay no state income taxes.

The Obamas' giving has been bumped up in recent years as the couple's income grew and Barack rose as a national political prospect. In 2006, the Obamas gave $22,500 to Trinity United Church of Christ. In earlier years, their charitable giving was below average for their income, though perhaps not for a family in a formative stage.

The Clintons' returns received the most attention because of their $109 million in income in the years since the couple left the White House. The Clintons have a family foundation, not unusual for high-net-worth families seeking to manage their giving, that's been criticized by a Wall Street Journal editorial.

Meanwhile, the Clintons also made liberal use of the charitable deduction, claiming $10.2 million in charitable giving over the eight years. Intriguingly, nearly all the donations went to the Clinton Family Foundation, which has disbursed only half the money. The Clintons can thus use the foundation for, er, strategic giving, such as the $100,000 it donated last year to a local South Carolina library – the day after Mrs. Clinton debated in that key primary state. There are other examples of such politically targeted philanthropy, and it's worth noting that most of the foundation's disbursements came only after Mrs. Clinton announced her Presidential run.

It's presumably also worth noting that the foundation report for 2006 [Download pdf] showed many of its grants went to Arkansas charities as well as local New York charities. They gave $75,000 to two churches.

Then there's McCain.

Arizona Senator John McCain, the presumptive Republican nominee, has not released his own tax returns for the past several years, drawing criticism from Democrats who say McCain is not living up to his image as a leader on congressional ethics.

Like the Clintons, McCain has funneled his giving, primarily proceeds from his book deals, through the John and Cindy McCain Foundation, according to Harper's. But there are some differences.

Between 2001 and 2006, McCain contributed roughly $950,000 to the foundation. That accounted for all of its listed income other than for $100 that came from an anonymous donor. During that same period, the McCain foundation made contributions of roughly $1.6 million. More than $500,000 went to his kids’ private schools, most of which was donated when his children were attending those institutions. So McCain apparently received major tax deductions for supporting elite schools attended by his children.

The foundation's charitable gifts totaled $187,639 for 2006, according to its 990 report [Download pdf]; McCain contributed all $80,390 it received that year. McCain is listed as the seventh wealthiest member of the Senate, ahead of Ted Kennedy and Hillary Clinton. His wealth is tied to his heiress second wife, Cindy Hensley McCain, who now heads Hensley & Co., a major Arizona Anheuser-Busch distributor.

The candidate who is pursuing evangelical Christian groups he once scorned gave $4,000 to North Phoenix Baptist Church through the foundation in 2006. In the prior two years, when the foundation disbursed nearly  half a million dollars, no donations to churches were made.

 

                                                                                                              

Old News.

A new report on economic inequality contains some old news. The gap between top earners and the rest of the population continues to grow. The rest is over here.