We're going about this thing all wrong

I'm talking, of course, about the economy. It's annoyingly broken, and for some reason just refuses to fix itself.

The tea party gang would have you believe it's as simple as spending less money and reducing the deficit. However, they can't actually believe that will work. Every economist and his brother-in-law tells us that cutting government spending will just send the economy further into the toilet. Economies in the toilet, as we've seen recently, tend to result in larger deficits.

Of course, Obama and the Democrats don't have a much better plan. They're banking on stimulus that's so tepid that Republicans might even vote for it if they hold their noses. Tepid stimulus leads to, you guessed it, tepid recovery.

I have a modest proposal.

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A Deficit of Honest Discussion

No matter which party is in power, the other party thinks that the budget deficit is a vital issue. The party in power, generally, considers it a lower priority.

But, at least for the time being, the GOP has convinced enough voters the issue is critical. So now both parties are talking about how to reduce our country's deficit spending.

Of course nobody is proposing anything that will seriously make a dent at any time in the foreseeable future. Each proposal simply reflects the ideological priorities of the proposer, and suggests cutting programs they don't like.

Anybody can play that game. See how easy it is to trim the deficit by $100 billion.


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Whose words?

Many are happy to interpret recent election results, but to me it's simple. People are out of work and taking it out on their elected officials.

According to my statistical analysis of past elections, the unemployment rate has been responsible for about a third of switched congressional seats. Further, when the unemployment rate is above about 7 percent, that contribution leaps to somewhere between half and two thirds.

When unemployment is high it is a huge factor in house seats being lost by the president's party. When unemployment is low, other factors come more into play.

Based on this theory, you could have predicted that Democrats would lose at least 40 seats in the House without looking at a single news story, poll result, party platform, or campaign ad.

But there's more to this story.

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Local Taxing Issues

For those of us living in Boulder, five of six local ballot issues this year include tax increases. Given the current financial conditions, we need to look closely at the short-term and long-term benefits of each before casting our ballots.

County Issue 1A's property tax increase was drafted in response to a confluence of three factors. State legislation required the county to spend down its human services rainy day fund; state funding for human services needs has been cut significantly; and, due to the recession, the rainy day has arrived.

Not only is it wise and humane to help people in our community who are feeling the worst pain of the economic downturn, the county is also required to do so by state law. This measure is responsibly crafted: It has a five year sunset, makes good use of public/private partnerships, and directs the commissioners to reduce the new tax as state funding is restored and conditions improve.

County Issue 1B is a new 0.15 percent sales and use tax for open space acquisition. Most people are not fans of higher sales tax, but most in the county like our open space.


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W's last laugh

It's not totally correct to blame the pending tax increase on Bush. Although the 43rd President did push for and sign the law, it was Congress (primarily the Republicans) who came up with this clever scheme and wrote the laws that will raise all of our taxes on Jan. 1.

The tax acts of 2001 and 2003 included temporary tax cuts followed by corresponding increases. Republican marketing at the time focused on tax relief, but today's press focuses on the tax increase, conveniently while the other party holds the Presidency and Congress. The GOP gets all of the credit and none of the blame, in an election year to boot. Brilliant.

Of course, at the time there was no way to know Democrats would be in power when the tax increase was scheduled to tax place. That's just happy coincidence.

The sunset provision was purely a political ploy. By keeping the tax cuts in effect for fewer than ten years, Republicans could sidestep rules that would have required paying for them, a tacit admission that tax cuts do not pay for themselves.

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Summary of 2009 Boulder Ballot Issues

This post summarizes my analysis of the 2009 City of Boulder and Boulder County ballot. You may not agree with any particular recommendation, but you can easily see how I came to my recommendation and come to your own decision based on all of the facts. My biggest goal is to ensure that fewer people vote on issues based on either just the ads or just reading the issue title on the ballot.

Remember, when in doubt, vote no! Here's the list. Click on any specific issue to see my full analysis.

Boulder County Measures

Vote	Issue
YES	Issue 1A Open Space Sales and Use Tax Extension
YES	Issue 1B ClimateSmart Bond Authorization
YES	Issue 1C Energy Conservation Bond Authorization
YES	Issue 1D DA Term Limits Extension

City of Boulder Measures

Vote	Issue
YES	Question 2A Sales and Use Tax Extension
YES	Question 2B Open Space General Obligation Bonds
YES	Question 2C Pension Bond Funding
NO	Question 2D Changes to Housing Excise Tax

City of Boulder Council

Vote
Barry Siff

City of Boulder 2009 Ballot Issues

City Council approved four issues for the 2009 ballot, all related to taxes and debt, and all deserve careful consideration before voting.

Each ballot issue is defined in an ordinance that includes a summary of council`s findings on the issue - good for letting voters know council's rationale. But each ordinance also specifies that these findings are not to be printed on the ballot - bad for deciding how to vote.

Voters who want to know more can find these ordinances on the city's Web site and in the county election pamphlet. But for additional information about the issues voters need to know at which council meetings they were on the agenda, search for meeting notes, and hope that the discussions were actually documented.

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Boulder City Council Election 2009

There are five open seats on council up for election. I'm not going to endorse five candidates, because I don't think there are five outstanding candidates.

The ballot tells us to vote for up to five candidates. I've asked several people who they are supporting, and usually they can rattle off two or three or four names. But they're not sure who they are going to add to make up their five choices.

Here's what I tell them: Don't do it. If you really like three candidates, vote just for those three. If you also vote for two candidates you think are okay but not great, those two votes are votes against the people you support. Your second tier candidates may win against your favorites because of your votes and the votes of others who also just included them to get up to five.


There are many specific issues on which to evaluate the candidates. But I don't think this is about specific issues. I think this is about principles, and about the kind of person.

Here are some of the things that I think are important for council, and candidates should be on top of these:

• Council needs to learn to run this city without micromanaging. Council meetings cannot go until 2:00 AM just because they can't get through all the issues.
• Council needs to set direction, and staff needs to be on board and held accountable. Today there are too many rogue departments and rogue department heads who are interested in turf building, rather than supporting the direction defined by our elected representatives.
• Council needs to lay down the law with the City Manager to make sure she is enforcing this principle with all departments.
• There is no real understanding of business principles in the council. As far as I can tell, some departments don't even understand which aspects of their programs make money and which ones lose money. Council can't make sound fiscal decisions without this kind of information, and nobody on council seems to have the background to understand what is necessary.
• Fitting in with the national mood, it seems to be common belief that you have to be either pro-environment or pro-business. Yet our leaders need to embrace both in order to properly represent our interests and serve us.
• The relationship with the county government is good, and the relationship with CU is improving. But the relationships with Boulder Valley School District and RTD are dismal. It is critical that the city be able to work well with these other government agencies.
• It is a PR nightmare when the city moves forward with big, unpopular capital projects while cutting back library services. The city needs to better figure out how to remain flexible in its budgets and responsive when needed.
• In fact, in general the city government needs to work on its PR. They makes lots of decisions that are controversial, and the reasoning behind the decisions is only evident to the people who stayed to 1:00 AM at the council meeting at which the topic was discussed. Currently, the public discussion is often controlled by the opponents to these decisions, who make their own one-sided emotional appeals. There's nothing wrong with one-sided appeals to the public, but the council needs to figure out how to get its story out too.
• Make it a high priority to make information available and to make it easy for people to actually find that information.
• Be willing to drop an idea if the public is obviously opposed. For example, whether or not council deserves a raise, they should have dropped the idea once the public voted it down the first time.

So, who am I endorsing?

I've known Barry Siff for several years, so perhaps I'm biased. But he is taking his council bid so seriously that it is impossible to ignore him.

When Barry started considering the run for council, he started going to every single council meeting, and he stayed until the bitter end. He even sold his booming business to be able to concentrate on this effort.

Barry has been in business for years and has business savvy. He understands all aspects of running a business, having been in senior management at a large company, as well as owning and running a small local business. He understands the bottom line, and he knows the value of having the best people working for him -- without that nothing can happen.

Barry is excited about changing the way council runs, stopping this crazy business of running meetings until the wee hours of the morning. After all, the way things are now, citizen participation is a joke.

Barry took a small local triathlon, and built it into a successful business that ran several races every year. So successful, in fact, that he had several suitors when he was ready to sell. He picked the buyer that would be best for the sport and best for Boulder -- Ironman is the biggest brand in the sport and is well-known outside the sport, and bringing that brand to Boulder without the city having to court them is a huge coup.

While running 5430 Sports, Barry did something he didn't have to. He turned his races into an environmental example for the entire multisport community around the country. It wasn't just having Eco-Cycle come in and collect recycling and compostables. It was actively pursuing what he called tri-sustainability. Using solar power at the races. Encouraging alternative transport. Even finding ways to recycle water bottles, bike parts, and energy bar wrappers. This shows that Barry is not just talk, that he can not only do the right thing, but also show the way to the rest of the world.

Everyone talks about having good relationships with other government entities. However, Barry called up Bruce Benson, the President of CU, made an appointment, and sat down with him. Our current council members are not doing that, much less the other candidates.

Barry has put a huge amount of effort into supporting low-income children in Boulder. He just doesn't talk about it, he does it.

Barry has more energy and enthusiasm than anyone I know. He's a former adventure racer, and so has unique qualifications to make it through marathon council meetings. He is also a huge Boulder booster.

Look at who is backing Barry. It's everyone from the most conservative to the most liberal. He doesn't have the biggest name recognition, but he is becoming well known all around town.

I say, when you make your city council selection(s) this year, include Barry Siff. I'm convinced he will make a huge contribution to the city. I don't agree with him on every issue, but on the guiding principles he is a perfect match.

From Fat, Dumb and Happy to Healthy, Wealthy and Wise

Manufacturers use a tool called Pareto analysis to evaluate quality issues. They rank the problems and attack the biggest ones first.

I don't have to draw a Pareto chart to see where to start with health care costs. More than 75 percent of medical expenditures are for treating people with chronic diseases.

Chronic illnesses include cardiovascular disease, cancer, respiratory disease, and diabetes. A large percentage of cases are preventable, or can at least be managed less expensively.

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Keep on Clunkin'!

The cash for clunkers program may be many things. However, environmentally friendly isn't one of them.

Look at it this way. Suppose you trade in a car that gets 18 MPG for one that gets 28 MPG, and that you driver 12,000 miles per year. Also, assume that you will keep the new car for the typical six years.

For each of those six years, you will be burning 428 gallons of gas instead of 667 gallons. You save 238 gallons per year, or about 35% of the gas you would have burned.

A study by Toyota showed that as much as 28% of the carbon dioxide emissions generated during the life of a car occur during its manufacture and its transport to the dealer. That means that up to 38% more CO2 is generated than the CO2 generated from the burning of fuel during normal operation.

So, you emit 35% less CO2 during operation, but the act of buying a new car results in up to 38% more CO2 just to get you that car.

Ignoring the economic impact, the very best thing you can do is keep driving that car until it doesn't go any more.

The only exception I can think of is if you put lots and lots of miles on your car every year and plan to keep it a long time. Then, it might make more environmental sense to buy a new, more fuel-efficient car, and donate your old car to charity.

But scrapping the old car, as is required by law under this program, is pure waste.

Obama's New Direction on Economy: Declare Success and Move On

The Obama administration is ready to announce a completely new direction in its attempts to rescue the economy, according to new information from Christina Romer, the head of the President's Council of Economic Advisors. In an interview with David Gregory, to be aired Sunday on Meet the Press, she discussed the idea, originally put forth by the President's newest advisor, Gunduz Caginalp. Caginalp is a mathematician from the University of Pittsburgh and past editor of the Journal of Behavioral Finance.

Obama was intrigued, according to Romer, by Caginalp's work, and by the idea that the economy is driven by human nature as much by "invisible" market forces. Within a month of entering the office, the President launched a behind-the-scenes project to see if psychology could be leveraged to help solve the current economic crisis.

If it works, it will certainly be a first in human history.

Nobel winning economist Paul Krugman, not a fan of the President's efforts so far to fix the economy, accused Obama of being nothing more than "an armchair psychologist". "There are real problems here," Krugman said, "problems that have been fueled by over two decades of bad policy. If the President thinks he can just click his heels together and wish the problem gone, he is indeed living in the land of Oz."

Romer, paving the way for the President's new plan, was definitely upbeat. "The American workers are sound," she said. "We have a good capital stock. We have good technology. We are just temporarily in a mess."

When asked how Obama's new plan would work, Romer would not give specifics, saying that the details would be given in a speech to the nation next week. But she did give Gregory an outline of some of the key points.

Obama intends to explain to the American people that the economy truly is sound. Nothing has changed since a year ago, when people weren't worried about their houses and jobs. The only thing that has changed, Obama will tell us, is that people got worried. They stopped spending, they stopped borrowing, they stopped hiring.

Romer would not tell Gregory exactly what the President's full message to the people would be. But she hinted that Obama would tell us that the future of the economy is not in the hands of Congress, it is not in the hands of Wall Street, it is not in the hands of the bankers. Any improvement in the economic situation will depend on the actions of all of the American public.

So, apparently, the President is going to tell us all to go out and spend, borrow, hire, invest, build, and pretend that this whole economic meltdown never happened.

"That's just crazy," Krugman said of the plan. People are hurting because of wishful thinking. And now the President of the United States, possibly the smartest man to hold that office in the past hundred years, is wishing on a star, crossing his fingers, and saying the magic words, hoping that we all won't notice what is happening behind the curtain."

Caginalp has not been available for interview by anyone. But one of his former colleagues, economist Vernon Smith, and like Krugman a Nobel laureate, said, "This is just crazy enough that it might work." But he added, "Of course, it would be nothing more than a smoke screen. If we were lucky, it could last to the end of Obama's term in office, and hs successor would be left with double the mess to clean up."

But Romer summed up what many people are privately thinking: "Let's wait to see what Obama has to say." We know he is a great salesman, and it may be that a great salesman is exactly what this country needs right now.

And so the country waits to see if the man behind the curtain can really give us a heart, a brain, and some courage.

AIG on their Faces

So, whose fault is it that AIG is using their bailout money to pay huge (by most people's standards) bonuses to the very people who made the bad decisions that brought them to where they needed the bailouts?

Well, clearly there is plenty of fault for Bush and the 110th Congress, as well as Obama and the 111th Congress. They tell us that these bonuses were required by contract and had to be paid.

But didn't the big automakers just get some bailout money, and wasn't one of the conditions that they had to renegotiate union contracts? Clearly it can be done.

Also, retention bonuses are paid to keep good employees on board. What's the worst that would have happened? These great employees would have left?

But I think a huge part of the blame falls to all of us, who seem to require quick action from our government in preference to correct action. We've seen it many times, and rarely do the legislators involved ever get called to task for responding to this primal fear.

It seems to me that the best time to enact protections against the things that contributed to the current economic crisis is when writing "emergency" legislation. Wouldn't it make sense to tie any stimulus or bailout money to regulations and protections against financial abuses, rather than spending the money and then going back later and trying to pass the new regulations when memories have dimmed?