Friday, January 25, 2013

Future Republican Strategy

The recent publication of the final election results shows that President Obama won the popular vote by almost 5,000,000 votes. He received 65.8 million votes to Governor Romney’s 60.9. The Electoral College vote was even more decisive with the President garnering 332 Electoral College votes to his opponent’s 206.

Since the election innumerable pundits have chimed in on what Governor Romney should have done differently, or what future Republican candidates will have to do to gain the White House. Most of the suggestions have been largely ideological. Conservatives argue that Romney should have been more conservative and less moderate. Liberals argue that he was too conservative, especially on the so-called social issues.

I believe that most of the post election analysis failed to consider what actually is working in this country. There is a great issue that could unite both conservatives and liberals. So far the issue seems mainly to be confined to the state and local level and has not as yet reached the national level. At least it was not existent in the most recent campaign. Simply stated the issue has to do with the overwhelming dominance of so-called public service unions in American politics, and the increasingly disparate gap between their compensation and benefit packages and those of the great mass of people that they are supposed to serve.

It is interesting to look at election results in some of the key battleground states. Governor Romney was originally from Michigan but he could only gain 44.6% of the votes in that state. However, on the local level Republicans dominate the state. The Michigan Senate has 26 Republicans to 12 Democrats, and the House has a solid Republican majority of 59 to 51. Nevertheless, in a national election the state was an easy win for the Democrats. You can say that this had to do with the personalities of Obama and Romney but I think it had to do with the fact that at the local level Republican politicians are making headway because of the increasingly obvious disparity between the public and private sectors in that state.

Wisconsin was another good example. Republican Vice-Presidential candidate Paul Ryan wasn’t able to bring his home state into the Republican column. Yet the state has a Republican legislature and governor who had only recently won a significant victory over public service unions who were joined in battle by union forces all over the country. Nevertheless, Wisconsin was an easy win for President Obama.

Finally, no state was more closely contested than Ohio. On election night all eyes were on Ohio and it seemed as if as Ohio goes, so goes the election. In the end, President Obama won a narrow 88000 vote victory despite the fact that the electoral map indicated a sea of red surrounding a couple of blue islands. Yet Ohio also has a very popular Republican governor and an overwhelmingly Republican legislature. What is going on? Why do local red votes turn blue nationally?

I can only guess that on the national level Republican politicians are ignorant of what is going on in their own states. I’ll just use tiny Connecticut as an example. Connecticut is one of the most liberal states in the country and the Romney campaign hardly showed up. Even the Republican Senatorial candidate, Linda McMahon, distanced herself from the Romney/Ryan ticket. At the same time she ignored the dominance of the public service unions in the state and was content to waste 50 million dollars in attacking her little known opponent. She went down to a resounding defeat. She should have trusted her wrestling instincts. If something doesn’t work, don’t keep doing it. ###

Sunday, January 20, 2013

Les Miz

I would urge everyone to see Les Miserables, the film adaptation of the great stage musical.  My wife and I had been looking forward to seeing the film version since it opened last Christmas Day, and we finally got to see it a few days ago and I can report that it is a faithful adaptation of the stage play. Practically everything is still there: the great and moving story; the wonderful, memorable music and lyrics; and a beautiful and attractive cast.

Anyone who hasn’t seen the stage play should certainly go. It is far above the usual movie fare. However, it is perhaps even more important for those who love the stage version to see the film in order to appreciate why audiences have flocked to the stage version for so long. The stage version packed an emotional wallop that for some reason the film version fails to deliver. Les Miz has been playing to packed houses all over the globe for over 25 years, and my wife and I have seen it on Broadway and in traveling companies at least four or five times. Every performance ended with a prolonged standing ovation. What has happened?

In the first place, I believe that most of the responsibility rests on the shoulders of director Tom Hooper who time after time uses or overuses film techniques that have the effect of taking the actors out of the show. For example, in the play we are introduced to Thenardier, the scoundrel innkeeper, and his low-down wife in the great comic number, “Master of the House.” In the play the scene always brings down the house as Thenardier is given ample opportunity to milk the scene for all it’s worth. Unfortunately, director Hooper uses MTV like cross cutting to obscure the action and remove any comic effect. Maybe Sasha Baron Cohen and Helena Bonham Carter were not up to the roles, but it seemed to me that the rapid cutting never gave them a chance.

Second, Hooper uses the close-up camera way too much. For example, Anne Hathaway sings Fantine’s signature song, “I Dreamed a Dream” almost entirely in close-up. In my opinion the interminable close up weakens, not strengthens, the emotional intensity of the number. Hathaway never got a chance to use her body to express emotion. Close ups work best when done sparingly or when more than one actor is involved. The “Heart Full of Love” number between Marius, Cosette, and Eponine was very moving and brilliantly edited. The actors who played these three roles were as good as any I’d seen on the stage.

I also believe that the film had major casting problems. The play showed that a good play and good roles don’t require stars, and indeed can make stars out of relative nobodies.  Plaudits have been given to Hugh Jackman for his portrayal of Jean Valjean but, in my opinion, he lacked the necessary strength or gravitas for this central role. On the other hand, Russell Crowe has been panned for his Inspector Javert, but I think he turned in an excellent performance. His singing voice has been criticized but I thought he handled his numbers very well.

Sadly, I believe that even Colm Wilkenson, who played the original Jean Valjean on stage, was miscast as the ascetic bishop who gives Valjean a chance at the outset of the play. He reminded me of Edmund Gwenn’s portrayal of Kris Kringle in the Christmas classic, Miracle on 34th Street. There was little hint of the spiritual power of the ascetic bishop who bought Valjean’s soul for God.

I hate to criticize a film that I think everyone should try to see. I could be wrong and I must confess that parts of the film did bring tears to my eyes. But many of the great numbers just left me with little emotional response. I would just suggest that anyone look at the following YouTube clip of “One Day More” done in concert and just compare it with the film version. ###

Saturday, January 12, 2013

Social Security for us, Pensions for them

The maximum Social Security benefit for someone retiring today at age 66 is about $2500 per month or $30000 per year. The Social Security benefit formula is based on a worker’s average pay over 30 years. There is also a cap on Social Security benefits. Even if someone earns over $100000 per year, his or her Social Security benefit can only be based on the first $100000 of earnings. In other words, if someone makes $200000 per year, only the first $100000 will count in the computation.

Using a 30-year average benefit formula, and putting a cap on benefits were sensible, practical features that have been part of Social Security from the beginning. It was always expected that people would have to supplement their Social Security retirement benefits with their own personal savings. To assist in saving for retirement Congress over the years has allowed workers to utilize a variety of tax-sheltered retirement plans like 401ks and IRAs.

It is shocking to compare the system that our elected representatives have created for us to the one they have created for themselves. Members of Congress now participate in social Security just like the rest of us. However, they also participate in FERS (Federal Employees Retirement System). In addition to Social Security they only have to work for 5 years to be eligible for another pension. Here's how it works.

Rosa De Lauro
Member of Congress
If they serve in Congress or another branch of government for 20 years, this additional benefit will be based on the average of their highest 3 years salary, not the highest 30 years. This pension benefit can be as high as 80% of the average of their 3- year average. Ordinary members of Congress now make about $175000 per year. For example, if a member of Congress like Connecticut's Rosa De Lauro decided to retire with only 20 years of service she would receive 34% of pay or about $60000 per year in addition to her maximum Social Security benefit. For this extra pension she contributes about 1.5% of salary. What a bargain!

Members of Congress, however, seem like pikers compared to many state and municipal employees. State employees in Connecticut can retire as early as age 60 on 75% of the average of their highest three years pay. In California many municipal employees can retire as early as age 50 on 80 to 90% of the average of their last two or three years pay.

Just recently it was disclosed that in Fairfield, Connecticut firemen can retire on up to 80% of their final salary. For some firemen this was not enough and the Chief obligingly promoted them into a higher paying position just days before their retirement. In some cases this meant a monthly pension increase of over $600. That amounts to $7200 per year for life. It would take $180000 earning 4% interest to provide an annual income of $7200 per year.

The saddest or most comical part of the Fairfield incident was the admission by the Fairfield First Selectman that he was shocked to discover that the firefighter’s contract allowed such a practice. Where has he been? ###

Sunday, January 6, 2013

Pensions Bankrup Stockton CA


The city of Stockton, California has been in the news lately. Stockton has declared that it is bankrupt and its fate is in the hands of the courts. In other words, the city cannot meet its financial obligations and has not only run out of cash, but has also exhausted its ability to borrow. The major reason is the incredible pensions it has been paying to municipal employees.

News reports indicate that so-called public service employees in Stockton can retire at age 50 on 90% of pay. For example, let’s assume that a police or fire chief was only earning $100000 per year. At age 50 he or she would be able to retire on $90000 per year for life. Actually, such pensions usually go up a little each year according to a cost of living factor. It’s very likely that the chief’s pension would double by age 65.

What are the consequences of this incredibly generous benefit? In the first place, the city of Stockton is paying three or four people to do one person’s job. First, there is the chief who retires and collects $90000 each year. Second, there is his replacement who is paid $100000 per year to actually do the work. Third, there is the chief who retired 15 years ago and is now at age 65 getting a pension that has probably doubled since his early retirement. Finally, there might be the 80-year-old widow of the chief who retired 30 years ago who is receiving the survivor benefit of her husband’s pension. Her monthly benefit is probably greater than the salary of the current chief.

The cost of these pensions is astronomical. It would take 2.25 million dollars earning 4% interest to provide an income of $90000 per year. Public service workers will argue that they pay into their pension plans but their contributions would never be able to provide 90% of pay at age 50. that's only for one retiree.

There are other hidden costs. Stockton has had to layoff young firefighters and policemen because of the costs of these pensions. In addition, employees retiring at age 50 quickly take other jobs in the public sector. Other towns like to hire them as contractors since they don’t need benefits. Younger employees are also blocked from advancement by the presence of these fat cats.

Stockton’s problems were compounded a few years ago by an ingenious scheme to bolster the assets of their pension funds. The town decided to borrow money by issuing bonds. It was hoped that the funds received from the bond sale could have been invested at a higher rate in order to not only pay off the bond interest but also provide more income for the pension funds.

Investors will recognize this as a very risky strategy. In effect, you are borrowing money to make an investment. Many things can go wrong and in Stockton’s case they did. The stock market tanked in 2008 and the expected high returns never materialized. Now the town can’t pay the interest on the bonds, and the investments they made have gone sour. It would appear that some are urging the bankruptcy court to allow the town to default on the bonds and screw the investors. The last thing they will give up or reform is the sacrosanct, exorbitant pensions. ###