2centsworth.info

Another little tidbit buried in the business section of the New York Times (“A Losing Year for Countrywide, but not for Chief“, NYTimes 4/25/08 page: C3). It describes the compensation package for Angelo R. Mozilo, the CEO for Countrywide, during a year when Countrywide lost $704 million dollars and lost 79% of its share value. This was the first time in more than 30 years that Countrywide lost money.

Before we review what this business genius made in the last year of his tenure, let’s see what the consequences of his decisions were… As already stated, the company lost $704 million and share holders lost a huge amount of share value, Countrywide was then bought at firesale prices by Bank of America… Oh, and 11,000 rank and file employees lost their jobs. And the Countrywide meltdown was a major contributor to the current national and international credit crisis.

Mr. Mozilo, on the other hand, made:

• $121.5 million from exercising Countrywide stock options
• $20 million from additional stock and option awards
• 1.9 million in salary
• $176,513 in “other compensation”
• $44,454 in usage of corporate aircraft for personal use
• $8,581 for country club dues
• $23,755 in usage of company cars

He was also “entitled” to $37.5 million in severance pay ($3,409 for each of the 11,000 employees laid off) but was shamed into turning it down.

Just another example of why this country is in decline. We have a whole class of executives who are in their positions, not out of merit, because they know how to work their connections, select a board of directors full of cronies, and engineer obscene compensation packages. These guys through their incompetence and corruption have done immense harm to their employees, their investors, their customers, the tax payers, and the entire country but are themselves totally shielded from the consequences of their actions.

The US healthcare system is a disaster. If you total up all the healthcare costs (government tax dollars, private insurance premiums, etc.), US healthcare costs about twice as much per person as the healthcare in any European country, Canada, or Japan. And yet we have 40 million or so uninsured and on virtually every measure of health, the US ranks close to last of all the developed countries.

So the whole system needs to be changed. But we have all sorts of powerful, enormously wealthy institutions (insurance companies, drug companies, medical diagnostic labs, medical equipment suppliers, etc.) who are making vast amounts of money under the current system. They will resist any changes that they think will threaten the gravy train. And they and their lobbyists have had Congress in their pockets for decades.

There is a growing consensus among the public that the current system is not serving anyone well, not even those of us who have healthcare coverage. So the question is what sort of system to we move to.

To me it seems obvious that we should be moving to a single-payer system that is managed by the government and that guarantees that every citizen gets the same access to care. That’s what almost every other developed country in the world has and, while their systems certainly have problems, the statistics show that their plans are both less expensive and produce better results than what we have.

The opponents of single-payer systems are quick to point out, for example, that Canadians must wait months for routine medical appointments but when US seniors are struggling to find affordable prescription drugs where do the turn… They buy the drugs from Canada. And who is trying to stop them? The US Food and Drug Administration under the influence of the pharmaceutical industry lobbyists. And why are these drugs (most manufactured in the US) cheaper in Canada? Because the Canadian healthplan used their leverage as the sole provider of prescription coverage in Canada to negotiate better prices.

When the Republican Congress created Medicare Plan D they specifically forbade Medicare from negotiating drug prices. So now the Medicare Plan D prices are significantly higher than, for example, the prices charged the Veterans Administration. Why? Because the Veterans Administration is allowed to negotiate drug prices.

So why do I say that there is going to be a battle between “Universal Coverage” and “single-payer”? Because Universal Coverage is a nice sounding name for a Rube-Goldberg mess by which private insurers will be subsidized using tax dollars to provide 2nd-class-citizen coverage for the less affluent members of US society.

We currently have two single-payer plans in this country (Medicare and the Veterans Administration) that appear to work rather well. My understanding is that they are actually more efficient in their administrative costs than private insurers. We should be studying them and the single-payer health plans in place in other countries to try and come up with a single-payer plan that is better than all of them.

There was an interesting editorial in the July 27th USA Today talking about the attempt by the Republicans to do away with what they call the “Death Tax” and what the rest of us know as the Estate Tax. Basically, it is a tax on inherited wealth.

Doing away with it was on the top of GW’s legislative agenda from the beginning of his first term. (After all, George Senior is getting on in years and repealing the estate tax will save GW millions of dollars when GH kicks the bucket.)

The main Republican tactic has been to give the Estate Tax an unattractive name… After all, who could be in favor of the Death Tax? And to get everybody all teary-eyed with the thought of hundreds of “family farms” being sold because of this huge tax burden imposed by the evil IRS and the Death Tax.

The USA Today editorial was quoting from an analysis done by FactCheck.org and itemized some rather interesting facts:

• Only 1% of all the estates settled in 2003 paid any “Death Tax”
• Of the 18,000 estates that did pay “Death Tax” in 2003 only 340 were a single farm or small business
• Eliminating the “Death Tax” will cost the Treasury $196 billion over the next ten years (Which will have to be paid by other less wealthy taxpayers or will result in a commensurate increase in our already jaw-dropping national debt…)
• Under the current Estate Tax, estates worth between $1 million and $2 million only pay %4.7

The bottom line is that repealing the “Death Tax” will actually hurt 99% of the population and will only benefit the richest 1% of the population which just happens to include the President, every member of his cabinet, and a substantial fraction of “our” Senators and Representatives.

One last quote from the USA Today editorial “The Senate measure, which is still being negotiated, would tax inherited wealth of millions of dollars at a lower rate than what a teacher pays on a $70,000 annual salary. It would also give inherited wealth a more privileged status than money made from hard work or putting capital at risk.”

I find it striking that, even after months (heck, years!) of public debate and newspaper articles, the average US citizen does not understand that Congressmen from both parties have been, in essence, using Social Security to swindle the public for going on thirty years now.

We now have the leaders of the Congress intoning that “Social Security is in a crisis and needs to be fixed.”

And what is the substance of this crisis?

That the “BabyBoom generation” is about to retire and there won’t be enough money in the Social Security system to pay for the benefits they have been promised.

OK, that’s simple enough… But let’s analyse that further:

• What is the “BabyBoom generation”? Basically it is the people born in the period shortly after World War II, roughly, between 1945 and 1960. There was a significant spike in the birth rate during that period over the birthrates during the Depression or during the 1960/70’s.
• Why won’t there be enough money in the system to provide the benefits they have been promise? The answer is that money used to pay the Social Security benefits for those that have retired is taken directly from the paychecks of the younger workers who are still in the workforce. Because of the BabyBoom “bulge” there will be more people retiring and drawing benefits than there are working folks to pay for the benefits.
• What seems to have escaped everyone’s notice is that, for the last 25 years or so, the BabyBoomer’s have been paying more into the system than the Depression era generation has needed to pay for their benefits.
• And what happened to all that excess cash that the BabyBoomers have been contributing to the ironically-named Social Security Trust Fund? Basically, two generations of Democratic and Republican Congressmen have conspired to spend the excess funds on pork-barrel projects that would help them get re-elected.
• And they did this in the full knowledge that by looting the fund they were endangering the benefits of the BabyBoomers and creating this so-called crisis.

To put it simply, for 20 to 30 years, the BabyBoomers have been required to pay vastly more into Social Security than was needed to pay current retiree benefits. And for 20-30 years, Congress stole the excess. And now Congress and our Billion-Dollar-Baby President are telling the BabyBoomers, “Sorry but we are going to have to cut your benefits.”

And even now, with twenty years to go before the tail end of the BabyBoom retires, Congress is still looting the Social Security contributions.

And this idea of private accounts for Social Security is another scam. If anyone wants to invest retirement savings in stocks or mutual funds we already have a slew of IRA plans, Keogh Plans, and 401K’s, and 403B’s. We don’t need Social Security private accounts in addition.

Furthermore, Social Security was created at the end of the Depression to provide a limited safety net after an entire generation had lost their shirt in the 1929 stockmarket crash.

And by taking Social Security contributions of future workers putting them in private investment accounts means there will be even less money avialable to pay benefits to the BayBoomer retirees.

The only people who are guaranteed to benefit from Social Security private accounts are the well-connected firms on Wallstreet that will end up being paid billions of dollars to manage them.

The Founding Fathers were all “god fearing Christians” but they understood the dangers of mixing religion with government. They were well read and remembered recent history… The religious “authorities” in Salem, Massachusetts had executed people for witchcraft; others had been executed merely for being Quakers in a colony dominated by Puritans. And tens of thousands had died in Europe in battles between Protestants and Catholics or in the Catholic Inquisitions. Secular scholars like Galileo had been threatened with being burned alive for publishing ideas that conflicted with church doctrine.

The Founding Fathers recognized what a lot of people now seem to have forgotten. That when people start injecting religion and faith into politics, terrible things happen.

One can count votes and make a decision on that basis. That’s Democracy. But if anyone, in the minority or the majority starts claiming divine authority then things can get very ugly indeed. How can one reasonably compare conflicting claims of divine authority? The answer is you cannot. Any attempt to argue a point of faith eventually degenerates to the childish equivalent of “my bible is bigger than your bible” (or koran, or talmud, etc.). Once you get to that point, violence is the usual result.

The Founding Fathers also knew that those claiming religious authority for themselves or their actions could be corrupt or even insane. In case one has the impression that things have changed since the 18th century, here are a few recent events:

• The Catholic Church has an ongoing world-wide scandal involving the molestation and abuse of thousands of children by dozens of church officials. Senior church officials were aware of these crimes and actively covered them up for decades. A Cardinal publicly called down the wrath of God on the newspaper and the reporters who were exposing the scandal in his Archdiocese. {Can you spell blasphemy?}
• The Reverend Jim Jones and Richard Koresh claimed divine authority for themselves and used it to justify their having sex with any of the women in their congregation. Most of their congregations died, either by “drinking the coolaid” or in a violent conflict with the US Government.
• Religious leaders from Jim Baker to Jimmy Swaggert have been exposed as philandering hypocrites or embezzlers.

Last year, a woman in Texas murdered her children. She claimed that God had told her to. She was arrested and charged with murder. But if you carry the current trend of mixing religion with the court system, there may come a day when she wouldn’t be arrested. Some religious leader may decide that she is a modern-day Abraham who made the ultimate sacrifice. Her home might become a place of pilgrimage.

We already have parts of the country where a pharmacist can refuse to fill a legal prescription because the drug in question violates his (or her) religious beliefs. Where does this sort of thing lead? There are religions that ban women from driving cars. Does that mean a woman will have to find a Meineke branch run by a manager of the correct denomination in order to get her muffler fixed? Do I need to make sure the supermarket is run by a Christian if I want to buy some pork chops?

I am rather surprised that more religious leaders do not see the risks for themselves and their followers. In the end, religious disputes are always decided by violence or the threat of violence unless there are secular authorities to intervene. And in the absence of a secular authority only one religion will be paramount. And then you get things like the Puritans hanging Quakers or Catholics persecuting Jews.

Secular authority is not incompatible with religion; it enables the free practice of religion. In its absence the only people free to practice their religion are the members of the most popular religion or the one that controls the police and the military.