Should Scheller Be A Columnist?

As you know I have of late been publishing much of my commentary as Letters to the Editor of my local paper the Fort Lee Suburbanite. This frequently gets me into exchanges with people who have a different viewpoint making for, what I consider to be interesting dialogue.

A week ago Friday, on August 15, a Letter to the Editor was published a copy of which I reproduce below:



To the Editor:

I am flattered by Shel Haas’ Letter to the Editor entitled “Give Mr. Scheller his own column” Suburbanite August 15. I would like nothing better. I have dreamt of being a columnist since the days when Walter Lippmann graced the pages of the New York Herald Tribune.

As for my never having met a Democrat I didn’t like, let me assure Mr. Hass that there have been very many, among them Senators Bilbo of Mississippi, Strom Thurmond of South Carolina and Governor George Wallace of Alabama, to name a few from the past. But there are quite a few today, such as Ed Koch of New York and Joe Lieberman of Connecticut.

As for being a dud in economics, I will match my knowledge of economics with Mr. Haas, and even Senator McCain, any day of the week, and I assure him that it doesn’t require much knowledge to accomplish this feat.

If Mr. Haas would read my letters with greater care he would see that my facts are not from Democratic sources. My citing the use vehicles in China compared to ours came from T. Boone Pickens, as good a Republican as one could find, and as I stated, a financier of the Swift Boat ads.

As for drilling in Alaska, even John McCain opposes that harebrained scheme, for it would endanger some the most pristine lands in the world and would not produce enough oil to make a significant contribution to the world supply.

The principles of the Sierra Club to which Mr. Haas refers with such venom are to preserve the God given beauty and the environment of our nation, a goal to which Republican President Theodore Roosevelt, a man who McCain has cited as being the President he most admires, was dedicated.

Mr. Haas describes global warming as “the biggest farce of them all” ignoring the fact that it is an accepted fact by the overwhelming majority of the scientific community, by Senator McCain, and finally even by that long denier of it, President Bush. If Mr. Haas wants to remain in denial that is his privilege, but he might as well deny that the earth rotates around the sun rather than the other way around.

Finally I am at a loss to understand how my views are “opposite President Kennedy’s.” Mr. Haas does not even give us a clue as to how he arrived at this strange conclusion.

Emil Scheller
Fort Lee, New Jersey

The Media & McCain

I find myself more and more disillusioned with our media. I have for a long time been upset at the media for their tendency to copycat each other and for their focus on trivia or scandal. The lead-up to the Iraq war was a perfect example, for every major news outlet trumpeted the same Administration propaganda, acting as a megaphone for the White House.

But my disgust reached a new plane this past week when it was revealed that John Edwards had had an extra-marital affair. Just why this was newsworthy escapes me. Even if he were still a candidate, which he is not, it has no bearing on his ability to serve our country, and its revelation at this time can only serve to hurt his wife who is already struggling with terminal cancer. In the immortal words of Joseph Welch during the Army McCarthy hearings in the 1950s, “Have (they) no sense of decency? At long last, have (they) left no sense of decency?”

At the moment that this news broke, Russian troops were pouring across its borders into Georgia, hundreds of civilians were dying and the Olympics were about to start in China. I was trying to get updates on developments and so I turned on CNN. They were talking about Edwards and his private life. In disgust I turned to CNBC. They were talking about Edwards and his private life. I turned to Fox News. They were talking about Edwards and his private life. I turned to NBC. They were talking about Edwards and his private life. I gave up and stayed with a program where Lanny Davis, the former Special Counsel to President Clinton was being interviewed about, you guessed it John Edwards. Mr. Davis suggested that maybe we aught to have some of the people in the media being exposed for any dalliances. I wanted to applaud.

But the media isn’t my only area of disappointment that I have had lately. John McCain is a man for whom I never could have voted, because to me his mindset is entirely too much on military options rather then on diplomacy. He was too much of a cheerleader for that option leading up to the Iraq war. He has been highly critical of the Bush Administration for its use of diplomacy with North Korea, and he sees humor in the dangerous confrontation that we are having with Iran. Singing, "Bomb, bomb bomb, bomb bomb Iran" to the tune of Barbara Ann.

Similarly on the domestic front he has been a strong advocate for supply side economics, also known as the trickle down theory, which I strongly believe to be erroneous and counter-productive.

I did, however, respect McCain for his integrity and for a measure of independence. Both of these positive traits seem to have evaporated as the bug of Presidential ambition has infested the man. Once McCain denounced vicious negative campaigning and to his credit he took exception to the Swift boat ads that were run against Kerry. Now McCain sees nothing wrong with impugning the patriotism of his opponent, accusing him of wanting to lose a war to further his Presidential ambitions. McCain knows better than that, and the old McCain would have had nothing to do with such slander.

At one time McCain would have had nothing to do with environmentally unsound drilling in our coastal waters and would have honestly told voters that such drilling would not affect the price of gas either now or in the future. But the new McCain stands there before his audiences and chants, “Drill Here, Drill Now” as though oil lay beneath their feet then and there. What a hoax. McCain knows that the reason the price of gas has come down is because we are using less of it, and that conservation is the only option that can affect the price of gas in the short run, but the new McCain wouldn’t tell anybody that because he wants people to believe that just chanting, “Drill Here, Drill Now” brought down the cost of gas. Next he will tell us that the tooth fairy did it. He has even run ads claiming that Obama is responsible for the rise in the cost of gas.

McCain knows that some of his supporters have been using e-mail and the web to slander Obama as being a Muslim, as being for the terrorists, and above all, as not being like other Americans. (Subtext being African-American). The old McCain would have denounced such slander and such racism. The new McCain used Obama’s reference to such attacks as an excuse to accuse Obama of introducing the race card.

The old McCain and his Straight Talk Express gloried in being the darling of the media. The new McCain denounces the media because he is no longer their darling. He tells out and out lies, such as Obama canceling a visit to the troops because Obama couldn’t take the photographers with him, when he knows that the press had not been invited.

The old McCain wouldn’t have allowed himself to trivialize the race for the Presidency by introducing Paris Hilton and Britney Spears into the campaign. The new will use any and all means if he thinks they may aid his ambition.

The old McCain…is he just too old?

I don’t think so! Being even older than McCain I can remember that Conrad Adenauer was an effective Chancellor of Germany well into his eighties. But Adenauer never showed any signs of losing touch with the world around him. McCain, on the other hand, has confused Sunnis and Shiites, talks about Czechoslovakia, a country that has not existed since 1993, and talks about the Iraqi border with Pakistan when the two countries do not have a common border. He has not yet caught up with the age of computers and finds them beyond his comprehension. His age is not a problem, but for a man running on experience and knowledge, his lack thereof is indeed worrisome.

Obama has shown a grasp of today, and the problems and geography of today. He has shown an ability to sit down with world leaders as an equal, and his connection to the Europeans makes it clear that an Obama Presidency would reinvigorate our alliances, which have suffered so badly in the last eight years. McCain makes fun of Obama's gift at oratory, a gift that is so obviously lacking in McCain. Of course McCain knows, as we all do, that this gift is an important one for anyone who aspires to leadership. The gift to inspire; the gift to lead is a God given gift that served Franklin Roosevelt and John F. Kennedy so well. It is not to be denigrated. It is to be applauded. The old McCain might even have had the grace to give credit where credit is due.

But the new McCain…well that’s the trouble - the new McCain isn’t the old McCain.

The Deficit & Spending

That we are in an economic downturn there can be no doubt but to blame it on the normal cyclical effects of the business cycle and to the price of oil is to ignore, as some would like, the failed policies of the past eight years. When this Administration with its Republican Congress took office we had just completed eight years of economic prosperity. When Clinton took office he inherited from twelve years of Republican misrule a failing economy (see here) and a $290 billion deficit. When he left office eight years later he had succeeded in turning that into a $100 billion surplus that was expected to quadruple in the decade ahead. There was even an expectation that before long the National Debt accumulated since the founding of the Republic would be wiped out. Now eight years later we have, according to the Office of Management and Budget, a deficit projection of $482 billion, the largest deficit in American history eclipsing the previous record of $413 billion set in fiscal 2004. See here.

Deficits matter! In fiscal year 2006, the U. S. Government spent $406 Billion on interest payments to the holders of the National Debt, which for the most part is China. Compare that to NASA at $15 Billion, Education at $61 Billion, and Department of Transportation at $56 Billion. It is the third largest item in the Federal budget after Defense and the Departments of Health and Human Services. If that 406 billion were available it could have been spent at least in part, on shoring up our infrastructure, which is collapsing, on education, and the myriad needs of our country. Right now numerous vital agencies, such as the FDA are under funded. When Congress recently passed a bill putting tobacco under the jurisdiction of the FDA the White House objected on the ground that the FDA is having enough problems dealing with its present jurisdiction for foods and drugs but never considered giving it the resources that it needs. Our National Parks are under funded and not being maintained. Our educational system is in crisis. And of course our energy needs are not being addressed.

In 2001, when this Administration took office gasoline was priced at about a $1.60. Now it is over $4.00. Who is to blame? It is a matter of world supply and demand but the supply has been relatively steady. It is demand that has skyrocketed. Many have pointed to China and India as the culprits and to be sure their demand has gone up. But their demand is a fraction of ours particularly when counted on a per capita basis. According to T. Boone Pickens, a leading oil magnate, (and incidentally a man who helped finance the Swift boat attacks,) we were importing 24% of our oil in 1970. By 1990 that had gone up to 42%. Now in 2008 we are importing 70% of our oil at a cost of $700 billion a year or $7 trillion over ten years. Yet when it was proposed that the CAFÉ gas efficiency requirements on autos be raised early in this Administration, this Administration and its cohorts in the Republican Congress wouldn’t hear of it. When other conservation measures were proposed, they wouldn’t hear of it. Instead, they gave away billions of dollars to the oil industry

They like to blame China and India and other emerging economies for causing the increased demand, but again according to Pickens the Chinese have 44 cars per 1,000 people as compared to 750 cars per 1,000 people in the US. The whole world consumes 85 million barrels of oil of which the US consumes 21 million or 25% even though the US population is only 4% of the world population.

Some talk about our present economic malaise as being part of the business cycle, exacerbated by greed in the housing and financial markets but fails to point out that Republican policies were to blame. Now the Administration, through its Secretary of the Treasury, Henry Paulson, is calling for regulations but that is closing the barn door after the horse has gotten out. It is the failure to anticipate and to have put regulation in place before the crisis is at the heart of the crisis just as the failure to address the oil crisis before it came upon us is to blame.

They talk about posturing but fail to talk about the real posturing that is being fostered upon us. Instead of real solutions to our problems we are offered drilling off shore. Aside from fouling our beaches and our environment it would do nothing for our economy or the price of oil either in the short run or the long. As Pickens points out we can’t drill our way out of this mess. Any oil extracted would not come on the market for ten years and even then the amount extracted would be insignificant and do nothing to favorably effect supply or the price of this commodity. And McCain stands there and postures and postures and in typical Rove manner slanders and slanders.

In the end they offers us the same policies that got us into this mess. His solution is to cut out wasteful spending, something we can all be for, but that is a bromide that keeps being offered and never turns out to be a solution. The idea that taxes must be reduced and reduced and never increased is what got us into this horrendous deficits, not just on the national scene but in the States as well. Both New York and New Jersey are facing budget crisis.

They talk about Social Security being taxed, but fail to tell us that this is a tax that was proposed by the Reagan Distraction or that it was intended to shore up Social Security and that every cent of that tax goes back into the Social Security Trust fund. Nobody has proposed its elimination, and its elimination would further undermine the solvency of SS.

As for the ATM it is unfortunate that this was not indexed for inflation. As it has been pointed out too much revenue is being generated from this tax for it to be eliminated, but it will be adjusted as it has been in the recent past so that it does not hit the middle class, and it will be indexed for inflation. Even then it will be a large loss of revenue for the Federal government and means must be found to make up for this loss.

The suggestion that tax collections be stepped up is a sound one but there has not been the will on the part of the Bush Administration to tap this source and McCain, despite disclaimers appears to have adopted every one of the Bush policies. It should be noted, however, in order to accomplish this, new laws targeting off shore tax shelters would have to be enacted and there seems to be no desire on the part of Bush/McCain to pursue this avenue. In addition additional funding for IRS’ enforcement would have to be appropriated not something Bush/McCain team has given any indication of favoring.

However, there is no reason why income earned from capital gains should be taxed at a lower rate than income earned from labor. We take pride in being a country that has a work ethos but taxes our labor as if it had less value than a passive return on capital. It is this, of course that causes the enormous inequality in the burden of the rich whose main source is return on capital as opposed to the middle class which earns most of its income from the effort of its labor, whether white collar or blue.

First we must bring our taxes in line with our expenditures. We cannot go on with an ever-increasing deficit. We cannot do this simply by cutting out waste. Cuts in other areas are simply not possible without hurting the middle class and the poor. We must pay for the war in Iran and in Afghanistan and its aftermath, which will cost billions even after those wars are concluded in replacing equipment and caring for our wounded veterans. We will not tolerate an attack on our main social programs such as Social Security, which McCain referred to recently as being an outrageous system, or Medicare or Medicaid. We should put a stop to the huge subsides paid to farm corporations but that is not about to happen. There are definite limits on our ability to substantially cut expenditures.

Thus if we increase tax on capital gains we can close the budget gap and then substantially reduce the tax burden on our working population.

Without a doubt middle class working people invest in the market and any increase in the capital gains tax would, to a limited extent, impact those people but the impact on someone who has a $10,000 or even a $100,000 investment in the market is miniscule, and can be more than offset by lower taxes on his salary or wages. If budget balance is achieved a lowering of taxes on labor may be possible. Right now earnings on capital are favored in so many ways that it is no wonder that that billionaire, Warren Buffet said that his tax rate is lower than his maids. We should consider lowering the payroll tax on the lowest earners and make up for the loss to the SS trust fund by increasing the cap on contributions. Capital gains are favored in so many ways other than by the low rate that substantial additional revenue can be obtained from this source simply by requiring brokers to notify the IRS when a security is bought and its purchase price. Right now brokers are only required to notify the IRS when a security is sold, so that short of an audit, the taxpayer can easily misrepresent its basis and its purchase date.

Under the present code even the small capital gain on investments is taxed only when security is sold but tax payers who are wealthy enough to let the securities increase in value until their death escape paying any tax either by them or their heirs. When the Security is passed to the heir, the heir does not inherit it with a basis of the purchase price, but rather gets a new basis as of the value of the security at the time that he inherits it. This is patently unfair to those who because they need the proceeds of the security before dying must pay capital gains taxes.

The Bush tax cuts which expire in 2010 had this expiration date built in because the figures of lost revenues were so large that the Administration knew that without the cutoff date it could not be passed. This is still true. The revenues lost from a total renewal of this ill conceive tax cut would lock our deficit in and assure its growth for decades to come. That is why no Republican Congress extended it when they had the majority. To now ask the Democratic Congress to take this irresponsible step is the height of Chutzpa. It should be allowed to expire, though tax adjustment to protect the middle class will be passed or as Obama has said, “No tax increases for people making under $250,000.” Personally I would have made that $150,000 but the promise has been made and will be kept.