State of the Union 2014

In tonight’s State of the Union message President Obama is expected to focus on income inequality, something that he has already indicated will be the signature issue of his second term. More specifically, he will probably paint a picture of dramatically increasing inequality between the rich and poor in the Nation. 

This is a powerful political message even though, if true, it is an indictment of his own five years in office. However, is increasing income inequality based on fact or is it based on flawed and misleading government statistics? How does anyone know what are the incomes of 300 million Americans? It would appear that there are two sources. First, there are figures compiled by the Census Bureau that appear in the annual Current Population Survey, or CPS. These figures represent estimates based on census questions. The second source would come from the Internal Revenue Service (IRS) and are based on the total of all individual income tax returns.

Not surprisingly, these sources can yield very different results and be subject to much interpretation or spin depending on one’s point of view. Just last week the Wall St. Journal published an article by two former high officials in the Social Security System. The opinion page article, “Retirees Aren’t Headed for the Poor House”, showed an incredible difference in the CPS and IRS figures on retirement income.

For example, in the year 2008 the CPS reported that retirees took  $5.6 billion dollars out of their IRAs. Yet, in that same year retirees reported to the IRS that they took $111 billion dollars out of their IRAs.  In that same year retirees showed $222 billion in pension and annuity income according to the CPS but actually reported $457 billion to the IRS. That is a huge disparity.

What explains the difference? The CPS only considers retirement income received on a regular periodic basis but fails to include as-needed, lump sum withdrawals from IRAs and 401ks. The IRS figures are much more accurate but inevitably politicians and pundits will choose to rely on the Census Bureau figures. Already Democrat Senators Tom Harkin of Iowa and Elizabeth Warren of Massachusetts are proposing legislation to increase Social Security payments across the board for all seniors.

Both senators are also pushing the need for a new government run retirement savings plan based on CPS under-reporting of American participation in retirement plans. CPS figures claim that only half of Americans are offered retirement plans by their employers but the authors of the WSJ article cite a 2011 Social Security study that indicated that 72% of all workers were offered retirement plans by their employer, and that the number increased to 84% for firms with more than 100 employees.

I am afraid that the President’s claim of increasing income inequality in this country will be based on equally flawed figures that he and others will use to advance their own political agenda. What could be more popular issue in this year’s congressional elections than an increase in Social Security benefits? Below here are some figures that measure the median incomes of various income groups.

In the year 2000 the median income for the bottom 10% was $13398. By the year 2008 it had dropped to $12315 and in 2010, two years into the President’s first administration, it dropped to $11904. The median income for the whole country in 2000 was $53164. Median means that half the taxpayers in the country reported less and half reported more. By 2008, the income of those in the 50% percentile had dropped to $50939 and by 2010 it had dropped again to $49495. Finally, for those in the top 10% the median income in 2000 was $141805. By 2008 it had dropped to $140050, and then in 2010 it had dropped again to $138923. Even the top 5% has experienced a similar decline.

These figures do not tell the whole story and will require further discussion in future posts but it would appear that while there is income inequality in this country, it is not increasing at an alarming rate. There are problems in the country today but if the President and his advisors do not understand the problem, and base their solutions on false statistics, they will not be part of the solution.

###

Martin Luther King's Dream

Today is Martin Luther King Day, a National Holiday. All government offices will be closed today in honor of Dr. King and his pioneering role in the civil rights movement back in the 1960s. This is a unique holiday since he is the only man or woman to be honored with his own day anymore. Great Presidents like Washington and Lincoln have lost their individual holiday status and are now lumped together next month on President’s day. Poor Christopher Columbus has also slipped into virtual oblivion in deference to political correctness.

If Dr. King were alive today, I believe that he would be shocked to see how his famous dream has been turned into a nightmare. Recent statistics show that over 70% of black births now occur out of wedlock. This alarming figure has been rising every year since the time of Dr. King. The disintegration of the black family in America is perhaps the major reason for the fact that over 70% of the prison population today is black. Of that number the great majority would appear to be young black males. Most of these will have grown up without a father.

Critics can cry racism but I believe that the failure of the dream lies elsewhere. The integration of America’s public schools was one of the key elements in the civil rights movement but integration had turned out to be a disaster for most of the blacks in this country. Recently, a columnist in the Connecticut Mirror, an online newspaper, cited studies that showed that practically every attempt to integrate Connecticut’s schools has not only failed but has actually made things worse.

Magnet schools have only drawn the best students with the most involved parents away from the other schools. Attempts to bus inner-city students into nearby suburban schools have also failed to meet expectations. Even though they admit failure, politicians and commentators can only suggest more of the same.

A favorite catch phrase of the civil rights movement was “ If your not part of the solution, you’re part of the problem.”  Today, it would appear that after years of failed experiments like the ones above, and the outlay of billions of dollars, that it would be better to say that the solution was the problem. Integration was the supposed solution offered by well-intentioned civil rights advocates, but it has actually turned out to be the problem. How did this happen?

I am old enough to have witnessed the civil rights movement and I will use the nearby city of Bridgeport, Connecticut as an example. Integrated in Bridgeport abolished neighborhood schools, and as a result it destroyed existing neighborhoods and communities.  Integration accelerated the already begun exodus of the white middle classes from Bridgeport into the nearby suburbs. At the same time, these people did not leave their jobs. They now lived outside the city but continued to hold their jobs as teachers, policemen, firemen, sanitation men, and other civil servants. Their unions even lobbied successfully to abolish laws that prohibited them from living outside the city.

As a result the jobs that other groups had used to advance into the middle class were not available to blacks in Bridgeport. More than two generations would pass before they began to be teachers, policemen, fireman, and civil servants in any significant number. Even if a student managed to finish high school what could they do to earn a living? Many turned to a life of crime, especially the drug trade. This is one of the factors behind the high percentage of blacks in American prisons.

 Others try athletics but we know that only a small minority get recruited by colleges, and that only a handful hit the pro jackpot. The other day a friend sent me an article from USA Today about a scandal at the prestigious University of North Carolina. At UNC football players were able to take classes in the African American studies program that required no class attendance, only the submission of a paper at the end of class. These were pretty obviously phony courses created especially for black football players. Heads have rolled and Julius Nyang’oro, the head of the program, is under investigation. Other studies have shown that black athletes are reading at below eighth grade levels at many colleges across the country.***

So, it turns out that the integration of American schools did not usher in an educational utopia. After fifty years advocates admit that despite all their efforts and reforms, segregation has not been eliminated. Moreover, it is clear that integration has done little to improve education itself. In fact, it appears as if integration had more to do with social engineering than with education. Can it be that integration was the “problem” and not the “solution”?

The last fifty years have seen the disintegration of the black family; an incredibly high out of wedlock birth rate, jails filed with young black criminals, and an educational system whose reforms have gone sour despite good intentions. Martin Luther King could never have imagined that his dream would have turned out this way.

***Here is a quote from the USA Today article.

"More than 50 classes offered by the African Studies department, and very popular with athletes, appear not to have actually existed. Some of these courses listed instructors who had not 'supervised the course and graded the work.' and others 'were taught irregularly'...UNC's chancellor and football coach lost their jobs. the African studies department chair...is under indictment."

###

Hall of Shame

                                             

This time of year usually features all kinds of award shows. There are the Oscars, the Emmys, the Globes and others where entertainment people appear dressed to the nines to pay each other on the back. Major League Baseball has just conducted its annual voting for its own Hall of Fame. In this spirit I would like to inaugurate a new feature on the Weekly Bystander called the “Bystander Hall of Shame.” We will begin the nomination process this month and continue throughout the year. The new year has already produced some good candidates.

New Jersey Governor, Chris Christie, tops the list so far this month with the now famous “bridgegate” scandal. Although he has apologized profusely for the political decision that caused massive traffic jams at the entrance to the George Washington Bridge in Fort Lee, New Jersey, he insists that he knew nothing about the decision of his underlings to punish the Fort Lee Mayor for his failure to endorse Christie.

A couple of aides have been dismissed and Governor Christie can only hope that his run for the Presidency has not been damaged too badly. Despite his apology the Governor still deserves nomination to the Hall of Shame. The deliberate traffic jams did last four days and occurred four months ago. It took him that long to realize that something was wrong. Also, he was the one who appointed the nefarious aides who have now been thrown under the bus. He must have hired them for a purpose. It is hard to imagine that the Governor’s aides would have had the authority to direct the New Jersey transportation authorites to set up phony construction sites in Fort Lee without knowing that the Governor would have no objection.

Perennial candidate Hillary Clinton earns the second nomination this year for the revelation in a new book by Robert Gates, the former head of the Defense Department, that she opposed the 2008 military surge in Iraq only to head off the candidacy of Barack Obama before the Iowa primaries. This is not as bad as her Benghazi blunders of 2012 and 2013 but we will see what develops.

The third nomination goes to the group of more than 100 New York City policemen and firemen who managed to scam the City with false disability pension claims. A disability pension will not only often result in higher benefits but it also has the advantage of being free from Federal income taxes. New York pensions are already free of state and local income tax. These nominees apparently employed two octogenarian former state officials to show then how to make their fraudulent claims for largely psychological ailments. Some even had the gall to claim 911 trauma when they had been nowhere near the scene.

Senator Richard Blumenthal and Wife

Finally, another nomination goes to the Connecticut Post, the newspaper of Connecticut’s Fairfield county. The editorial page of the paper continually runs cartoons depicting Republicans as wealthy fat cats. However, last Sunday’s front page led with a story about the multi-millionaire status of Connecticut’s all Democrat Congressional deligation. Senator Richard Blumenthal led the list with a net worth of around 120 Million although he did explain that most belonged to his wife. He was followed by Rosa Delauro ($26 Million), Jim Himes (9 Million), and Elizabeth Esty (5.6 Million). I don’t complain about the wealth of these public servants. It is important to hold office to protect and enhance your wealth. They might earn a subsequent nomination for the fact that they will receive pensions and medical subsidies but for January the nomination to the Hall of Shame goes to the Connecticut Post for constantly portraying the Republicans as the party of the rich.

### 

Income Inequality 2014

     

I don’t like to make predictions but it is not going too far out on a limb to predict that in 2014 Democrat politicians from President Obama on down will make “income inequality” a major issue this year. Bill DeBlasio, New York City’s new Mayor, has promised to make “income inequality” his number one priority.

It is certainly a hot topic since government statistics seem to show that in the past few years the gap between the incomes of the richest and poorest in our society has dramatically increased. Inevitably such statistics, whether accurate or not, will be used by politicians, pundits, and celebrities on the left to castigate the big bad businessmen, usually white, who are oppressing the poor for their own benefit. 

 

I will discuss these statistics in a future post but for now I would like to make another prediction. In 2014 none of the critics of “income inequality” will ever direct their criticism at significant favored elites whose incomes put them in the top 1%. Entertainers, rock stars, and athletes will be given a pass. For some reason their enormous incomes are not signs of “income inequality.” Here are some examples.

New Year’s Day used to mark the height of the college football bowl season. However, nowadays it is just part of the bowl season that began early in December and will continue to the BCS championship next week. I counted about 35 bowl games this season for a total of seventy teams.  If there are an average of 70 players on a team, there would be almost 5000 players involved in post-season games.

By NCAA rules none of these players can be paid for their participation. Sure they get a free ride in college and all the perks that go with being an athlete on campus. But their salaries are zero while their coaches now earn in excess of a million dollars a year. Just recently, the University of Connecticut hired a new head coach with no former head coaching experience. His base salary is $400000 but he will be guaranteed various speaking engagements that will bring in over a million dollars each year. In addition, he will collect substantial bonuses if the team attains certain objectives. None of these objectives have anything to do with the actual education of his players. I’m sure the salary of the new Connecticut coach comes nowhere near that of coaches at traditional college powerhouses.

Only a tiny fraction of the 5000 players in the bowls will have a chance of being drafted into the pros and ever making any big money. Most of the remainder will probably not even graduate with a degree. Only a handful will wind up with what could be remotely be called an education. The fact that most of these football “slaves” are black will bother no one.

I know some will say that football programs bring in monies that support the rest of the University. A few years ago UCONN played in the Fiesta Bowl that should have been called the Fiasco Bowl since it cost the University 13 Million dollars in unsold tickets. That cost was borne by students and taxpayers. The UCONN coach quickly left for greener pastures at the University of Maryland.

The income inequality in professional sports is even greater. Will the President complain that quarterbacks like R.G. Griffin III of his hometown Washington Redskins makes substantially more than the linemen who block for him? Will Mayor De Blasio of New York do anything to cut the salary of Yankee third baseman Alec Rodriguez who makes over $25 million per year? What about Yankee hero Derek Jeter, a bachelor who currently resides in a 20000 square foot home in Tampa? Who will ever complain about that?

Of course, the President will never complain about the celebrities who make much more than the CEOs of the despicable Wall St. firms. On the contrary, he spends most of his time traveling around the country soliciting these wealthy celebs for donations.

Here is last year’s top ten celebrity earners from Forbes magazine. Oprah Winfrey, the idol of poor black women everywhere, made 77 Million although that was down from her previous year’s record of over 120 Million. Female Rock stars like Madonna (125 Million), Lady Gaga (80 Million), and Beyonce (53 Million] were also on the top ten list. Country star Taylor Swift only made 53 Million, a little less than teen idol, Justin Bieber. Even an aging rocker like Jon BonJovi made 79 Million. Ellen DeGeneres, the darling of the oppressed gay community, made 56 Million. Rounding out the top ten were movie magnate, Steven Spielberg at 100 Million, and tennis player Roger Federer (71 Million).

None of these people on the top ten list produces any of the necessities of life for the poor or anyone else. They do not produce the energy that heats and lights our homes. They do not produce the food and drink necessary for our daily existence. They do not manufacture our phones, cars, or furniture. They are more like parasites who live off the innumerable small donations of their humble but adoring fans. For some reason even the poorest of their fans don’t seem to mind reading about luxurious clothes, cars, and homes. Democrat politicians, pundits, and media types will never include them in their diatribes about income inequality. After all, they are cut from the same cloth.