• The Republican Tax Proposal: A Quick Summary

    Articles chosen with care. Your comments welcomed.
    Linked articles in bold purple

    ◆ Republicans roll out their tax plan. Here are the key provisions

    The Wall Street Journal (subscription) reports:

    Business: 

    • Rates permanently drop from 35% to 20%, with lots of other changes in deductibility
    • One-time tax of 12% to repatriate overseas profits, returning them to US

    Individuals:

    • Reduces seven individual income tax brackets to four at 12%, 25%, 35% and 39.6%.
    • Top tax bracket set for married couples earning $1,000,000 per year and individuals earning $500,000.
    • Bottom tax bracket extends up to $90,000 for couples and $45,000 for individuals.
    • The proposal doesn’t change the top tax rates on capital gains and dividend income.
    • Keeps 401(k) rules intact
    • Nearly doubles individual standard deduction to $24,400 for married couples and $12,200 for singles in 2018.
    • Increases child tax credit from $1,000 in 2017 to $1,600 plus $300 for each taxpayer, spouse and non-child dependents.
    • Places new limit on home mortgage-interest deduction at loans up to $500,000, down from $1,000,000, but existing loans would be grandfathered.
      • Comment: Big impact on expensive homes, especially hitting NYC, San Francisco, Boston, and wealthy suburbs
    • Keeps estate-tax. Sets exemption at $5.6 million per person and $11.2 million per married couple. Repeals the tax in 2024.
    • Repeals the alternative minimum tax
    • Repeals an itemized deduction for medical expenses.
    • Repeals deduction for student-loan interest.
    • State tax deduction eliminated; local tax deduction changed (link here)

    Families would also no longer be able to deduct their state income taxes from their federal taxable income, another change that would have a particular impact on places like New Jersey and New York, where state taxes are higher than in other areas. Taxpayers will be able to deduct their property taxes up to $10,000. –Washington Post

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  • ZipDialog Explainer: The Cubs’ “W” Fly Speaks to An Earlier Era of Urban Baseball

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    Think back to a time long before cell phones.

    Think further back to a time long before portable radios.

    It’s the 1930s or 40s, and you are riding from your work in “de Loop” or a nearby factory to your home on “de nort side.”

    It’s late afternoon and the Cubs play all their home games in the afternoon.

    By 5pm, the game should be over, So, who won?

    To answer that question for fans on the “el” (the elevated train), going past Wrigley field, the Cubs starting flying a “W” flag in the 1930s.

    It was visible from the tracks, so fans could see the good news–if there was any.

    They even had a “L” flag, which, unfortunately, got lots more use for 108 years.

    The Cubs installed spotlights aimed at the flag so riders at night could see the results, too.

    When you see the “W” flags flying or being waved by the faithful, think about generations of disappointed Cubs fans riding home on the El, hoping that Jimmie Foxx or, later, Ernie Banks, had belted one and the flag was flying.

     

  • Simple Suggestion to Speed-Up Cars Getting Gasoline to Escape Hurricanes

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    Why not have two or three lines where

    • Customers pay a flat rate in cash only $20, $30, $40, $50
    • An attendant fills the tank, while customers remain in cars

    No need to make change or wait for credit-card authorization.

    This “quick cash” procedure would speed the customers’ pass-through, minimize wasteful time in lines, and perhaps eliminate lines entirely.

    It is at least worth a try, to see if it helps.

    One or two lines could remain open for credit-card purchases, if stations wished.

    Implementation should be easy

    Individual gas stations can implement this procedure immediately, using their own employees. No need to wait.

    Simply advertise it on their station signs, perhaps with a standard slogan such as “Quick Cash Gas” for Emergencies.

    If more attendants are needed, then disaster-relief personnel can help during the 2-3 days when evacuation relief is needed.

    The procedure could be tried for several hundred miles along the evacuation routes.

    Potential Problems?

    The only potential problems I see are

    1. Theft of cash, always a problem with cash transactions, and
    2. Shortages of cash at ATMs, if the procedure takes off.

    A third potential problem is wanting “cash back” in these special lines.

    Let’s say you gave the attendant $60, hoping to fill up the tank, but the gas cost $43.57. The real problem is that everybody leaving town would like a full tank, so they would overpay and then seek cash back. Making change is time-consuming and would defeat the purpose of moving the line quickly.

    So, I suggest “Quick Cash Gas mean no change, no cash back,” with that rule announced clearly in advance. The station pockets the difference. The goal is speed.

    Bottom Line: Speed

    Again, I am not saying it would definitely work.

    I am saying it is worth trying to see if it speeds up lines. If unexpected problems crop up during implementation, solve them as they emerge.

    That’s Friedrich Hayek’s point about interventions like this one. You can’t know all the issues in advance. But none seems insurmountable.

    For now: Cash only. Even amounts only, such as $20, $25, $40. No coins, no change.

    See if it helps.

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  • Boffo quiz: You know the words. But where did they come from? UPDATE. Answer: Variety

    All these words came from the same place.

    Any guesses? (Answer later)

    sitcom
    baloney (meaning “nonsense”)
    big time
    bimbo
    bellylaugh
    blockbuster
    cliffhanger
    corny
    deejay
    demo
    disc jockey
    dj
    emcee
    freeloader
    hick
    hoofer
    inside stuff
    looker (meaning “beautiful person”)
    oldie
    palooka
    payoff
    payola
    platter (meaning “a record”)
    pushover (of people)
    scram
    soap opera
    vamp
    warbler (meaning “singer”)
    whodunit

    Kudos to Dave Nix for being the first to answer.

  • New Feature: Guess what explains some things you see everyday; today’s question is about litter

    It is a beautiful day in the neighborhood, quite literally, in Chicago’s Hyde Park today.

    On my morning stroll through this lovely area, I noticed two things that are worth explaining:

    1. The whole neighborhood is very clean. There is not much litter anywhere. Why?
      • The side streets, filled with single-family homes and low-rise apartments, have no litter at all.
    2. Still, some areas do have a bit of litter. These are areas with about the same amount of foot traffic. Why the variation?

    There are no right or wrong answers. Just your thoughts.

    And, of course, there are multiple answers that might be plausible or interesting.

    After your guesses, you are welcome to explain what your answers say about any larger issues.

    Btw, this is a description of the neighborhood (in case it helps):

    • Middle- to upper-middle class; families, couples, some students
    • Highly-educated, as you would expect near a university
    • The “main street” in our immediate area is not dense; it has small, neighborhood stores and restaurants

     

  • The “Game of Camps” Revisited: Why Qatar? Why Now?

    Brief background on Qatar

    Until recently, Qatar has managed to play a complex role in the Gulf as a small, very rich, Sunni-Arab sheikdom, with a citizen population of just 250,000-300,000 plus some two million “ex-pats” (the majority workers from South Asia on term contracts).

    Qatar, ruled by its monarchy, has until recently managed to navigate in such a way that it worked both sides of the geopolitical street. 

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    Between Two Worlds, Playing a Double Game

     On the one hand it takes part in the modern, Western-oriented, liberal world order.

    It hosts a vast U.S. airbase and related anti-terrorism facilities.

    It has created and funded Education City, an enclave for a half-dozen major American universities.

    Its national airline, Qatar Airways, has become one of the Gulf giants, challenging the legacy carriers of the US and Europe.

    And it continues to export vast quantities of liquefied natural gas (LNG) from its huge reserves — the largest of which it shares with Iran.

      On the other hand, it

    • Has long supported the Muslim Brotherhood, which other Sunni regimes see as a threat.
    • Maintains very close working relations with Iran.
    • Is widely alleged to be the source of funding for terrorism.
    • Hosts and funds Al-Jazeera, whose programming Egypt and Saudi Arabia see as a threat, and
    • Hosts Sheikh Yusuf al-Qaradawi, a highly-influential militant Muslim scholar whose program on Al-Jazeera has a wide audience throughout the region, and who has justified suicide terrorism (“heroic martyrdom operations”), and justified domestic violence against women as well as female genital mutilation.

    For more on Sheikh Yush Al-Qaradawi, see this profile at the Investigative Project (link here).

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    Why Are the Saudis, Egyptians, and Emirates taking on Qatar now?

    In an increasingly fraught Middle East, with Iran increasingly seen as the predominant regional threat, Qatar’s big neighbor, Saudi Arabia, along with Egypt, the UAE, Bahrain, and other Sunni states now have found this an opportune time to rein in their troublesome Gulf neighbor.

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     Additional Readings, setting the Qatar Crisis in the context 

    Eran Lerman’s essay (link here) provides an incisive treatment of this issue.  It is up-to-date and deeply-informed. (BESA, the Begin-Sadat Institute, Bar-Ilan University, Israel)

    The Qataris have been playing a dangerous game for years. They have provocatively supported the Muslim Brotherhood and actively promoted the destabilization of existing regimes, using huge sums of money as well as the pernicious influence of Al Jazeera TV. The dramatic steps taken against them over the past few days are thus hardly surprising, but they shed some light on the present stage in the struggle for regional hegemony. –Eran Lerman

     Yaakov Amidror writes a complementary essay (link here, also at BESA) arguing the Qatar crisis is a sign of weakness in the Sunni Arab world.

    The fact that the Sunni Arab world was unable to impose its basic approach on a small peninsular emirate is indicative of the deep crisis brewing in the Gulf over the lack of real leadership in the Sunni world.

    Sunnis are the vast majority in the Muslim world, making up some 85% of Muslims – and yet somehow, the Iran-led Shiite minority is the driving force behind the processes moving the Middle East. –Yaakov Amidror

     Michael Rubin, writing at Commentary, urges the US to “Support the Anti-Qatari Coalition: A Long-Overdue Epiphany on Terrorism

    The simple fact is that Qatar supports destablizing, radical movements across the region. –Michael Rubin

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    Robert Lieber, a professor at Georgetown, is one of the country’s leading analysts of US foreign policy, with special interests in the Middle East, Europe, and energy.

    His most recent book is Retreat and Its Consequences: American Foreign Policy and the Problem of World Order (Cambridge University Press).

  • ZipDialog Roundup for Tuesday June 6, 2017

    Articles chosen with care. Comments welcomed. Linked articles in bold purple

    ◆ D-Day: 73 years ago today. The US, Britain, and Canada opened a second front against the Nazis.
    A young, low-level intelligence contractor is first person charged with leaking, re Russian interference in 2016 election 
    (New York Times)

    She’s a big Bernie Sanders supporter and may have thought this was part of the “Resistance,” which she has supported online.

    The case showed the department’s willingness to crack down on leaks, as Mr. Trump has called for in complaining that they are undermining his administration. His grievances have contributed to a sometimes tense relationship with the intelligence agencies he now oversees.

    The Justice Department announced the case against the contractor, Reality Leigh Winner, 25, about an hour after the national-security news outlet The Intercept published the apparent document, a May 5 intelligence report from the National Security Agency. –New York Times

    Comment: Good. A first step.

    Now, go after the big boys and girls, who aren’t as careless as kids still on their parents’ insurance.

     Chicago’s free fire zone: 3 dead, 3 wounded in eight hours (Chicago Tribune)

    “I always see this on TV,” [the uncle of 23-year-old-victim Devonta Scott] said looking at frantic relatives holding each other splashed in strobing police lights. “I just never thought it would happen to me.” –Chicago Tribune

    And then, the most common ending to all this shootings in poor, black neighborhoods.

    Police reported no arrests. –Chicago Tribune

    Comment: The problems are extremely serious and just as hard to manage.

    • The city needs a lot more police but cannot afford them.
    • The worst neighborhoods know who the criminals are, but they don’t cooperate with the police, either because they don’t trust the cops or they fear the bad guys, or both
    • The gangs have splintered, so dozens and dozens of gangs are fighting lethally for each street corner.
    • The gang members have no fathers, no education, and no jobs

    The headlines mislead outsiders in one important respect. The crime and killing is largely a product of–and confined to–very poor neighborhoods. Occasionally, it spills out as members try to escape their enemies or rob the rich, but that’s uncommon.

     The sanctions against Qatar are beginning to bite.  

    Qatar flight ban begins as Gulf crisis grows (BBC) The Saudis and Egyptians are leading this move.

    Several countries have cut ties with Qatar, accusing it of supporting terrorism in the Gulf region.

    Qatari nationals in Bahrain, Saudi Arabia and the UAE have been given two weeks to leave.

    Qatar denies backing militants and its foreign minister has called for “a dialogue of openness and honesty”.

    Egypt said it was closing off its airspace to Qatar from 04:00 GMT on Tuesday “until further notice”. –BBC

    Comment: The sanctions are a very good idea against a very bad actor, one the US has coddled for years because we have bases there. No more. And the shift in US policy made it easier for the Arab states to form this coalition.

    The question is whether it’s a first step or a showy diversion to avoid taking others, such as staunching the local donations to terrorists.

    Additional Reading:

    For a magazine-length piece on Qatar’s controversial history, this new article in The Atlantic is very good.

     Over 130 British Imams have refused to perform burial services for the attackers  (CBS)

    The ritual is normally carried out for every Muslim, regardless of their actions.

    In what is a highly unusual move, Muslim religious leaders from different schools of Islam — both Sunni and Shia — issued a statement late Monday saying their pain at the suffering of the victims of Saturday’s attacks had led to their decision, and they called on others imams to follow suit. –CBS

    Comment: Good. Also good: it seems like several Muslims who knew the attackers told the police about them, but the officials dropped the ball.

    One reason why important things slip through the cracks: the UK current has 500 active terror investigations, plus another 3000 top-tier subjects of interest, and 20,000 more one tier below that. Those numbers are overwhelming.

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  • Robust job growth. Implication: More interest-rate hikes coming

    ADP is a private firm that does its own surveys of the job market, independent of the regular government reports.

    The headline: Private sector job growth ‘rip-roaring’ in May: ADP (Fox Business)

    Quickie Comment: Assuming the official report confirms ADP’s survey, the evidence is building that the economy is back so more Fed interest rate hikes will be coming this year.

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    “Quickies” are a new feature at ZipDialog.

    They are, as the name wryly implies, very short, usually a link to a story and a brief comment.

  • ZipDialog Roundup for Saturday, May 27

    Articles chosen with care. Comments welcomed. Linked articles in bold purple

    ◆ Comment: Trump’s Trip in a Nutshell 

    • Saudi: Completely reverses Obama’s disastrous tilt toward Iran, reorients US policy to fight Iran and terrorism, makes a promising effort to incorporate a large coalition of Muslim states in the fight; good speech, too
    • Israel: Hard to say whether the Palestinian-Israel talks will go anywhere; what Trump did in Saudi does set a positive context, but it is still a stretch; the negatives are that Iran, Hezbollah, and Hamas will do everything they can to stop it, and the Palestinians have no effective government to make peace with, nor has their population come to grips with the far-reaching and permanent concessions they will have to make; the Israelis have no confidence that a peace deal would be adhered to or give them more security
    • NATO: Telling the Europeans the hard truth that they need to pay up is good. What’s bad is Trump’s failure to restate the core principle of NATO, that an attack on one is an attack on all (Article 5). That omission could send a catastrophic signal to Russia about the vulnerable Baltic states, which are NATO members. The only reasonable explanation is that Trump is signaling the Europeans that, if you don’t pay up, you cannot expect us to treat you as full alliance partners. Very risky business.

     Jared Kushner’s talk with Russians during transition included possibility of establishing back channel to discuss issues such as Syria  (Washington Post)

    Jared Kushner and Russia’s ambassador to Washington discussed the possibility of setting up a secret and secure communications channel between Trump’s transition team and the Kremlin, using Russian diplomatic facilities in an apparent move to shield their pre-inauguration discussions from monitoring, according to U.S. officials briefed on intelligence reports. . . .

    The meeting also was attended by Michael Flynn, Trump’s first national security adviser.

    The White House disclosed the meeting only in March, playing down its significance. But people familiar with the matter say the FBI now considers the encounter, as well as another meeting Kushner had with a Russian banker, to be of investigative interest.

    Kislyak reportedly was taken aback by the suggestion of allowing an American to use Russian communications gear at its embassy or consulate — a proposal that would have carried security risks for Moscow as well as the Trump team. –Washington Post

    Comment: Initial public interest has focused on the idea of a “back channel.” That’s not what’s important here; back channel communications are common. What’s important here is two things. First, the idea of using the Russians’ equipment to communicate this is amazingly amateurish and reckless (or at least at seems that way to me, as a non-professional in secret communications with adversaries). This scheme was probably Flynn’s misjudgment and Kushner’s inexperience. Second, it says the Trump team was extremely concerned the Obama administration was monitoring everything they had to figure out a different way to communicate securely.

    A third issue is bound to come up. What did they want to talk about? If they were talking about Syria, you could criticize them for undermining the sitting president. If they were doing anything that affected the business interests of private parties–and there is no indication they were–then that would be corruption.

     Hillary reappears at Wellesley Commencement, bitter, and attacking Trump (Washington Post)

    Comment: This has to be a Republican plot. It has to be.

    Only the Republicans could possibly gain from having Hillary out there hectoring the crowds, her shrill voice and tone-deaf delivery proving she still cannot give a decent speech, despite her having received tens of millions for giving them. (That’s a cruel joke, of course. She was paid because she and Bill provided access to power. It was a corrupt, rent-extraction game on a vast scale.)

    For Democrats, the real problem is that she reminds people of the none-too-glorious past and makes it harder for the party to develop new faces for the future. To recharge things, the Democrats need some new voices. It would help if they were not yet living in a retirement community on Social Security and a Reverse Mortgage.  

     US, worried about North Korea, plans a test shoot-down of ICBM  (ABC)

    Comment: The dangers from North Korean nukes are real and present. Their last test was a solid-fuel rocket (which means it can be launched quickly) and went to a very high altitude (which means it can already hit targets as far away as Guam).

    To kill these intercontinental missiles, which leave the atmosphere, is different from killing shorter-range missiles.

    The US has been working on this incredibly complex technical task since Reagan proposed the Strategic Defense Initiative (Star Wars). The latest iteration is what they will be testing.

    There is a partisan-political dimension here, too, aside from the need to fund the program. Now that America needs a serious anti-missile defense to protect against a North Korean attack on the continental US, people might want to look back and ask who has opposed, undermined, and underfunded that research at every stage over the past three decades. These political opponents, unlike North Korean missiles, won’t be especially hard to identify.

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  • ZipDialog Explainer: What Do the Unemployment Numbers Mean?

    Each month, we hear news reports about “today’s unemployment figures,” numbers that are currently very good and getting better.

    What do those unemployment numbers measure? Are there different ways to figure them?

    Basically, the numbers we hear are the “top line” numbers, collected by the United States Bureau of Labor Statistics (BLS), based on their surveys. But, just as the Dow-Jones Average is only one measure of how the overall stock market is doing, those top line numbers are only one gauge of employment.

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    The goal here is simply to explain what those unemployment numbers include and what they leave out.

    First, the official BLS numbers come from sample surveys, which are adjusted later as additional data comes in.

    Second, the numbers need to be adjusted for seasonal-weather effects. If we didn’t do that, then we couldn’t fairly compare unemployment in January and July. So, we adjust for known seasonal effects. The problem is that the average effects for January may not apply to this January. Perhaps it is warmer than normal so more construction can be done outdoors. Or perhaps a major storm knocked out power. These differences mean seasonal adjustments are always approximate. That’s why it is more reliable to look at trends and averages.

    BLS data includes both seasonally-adjusted and raw numbers, but the news reports only the adjusted number. That’s reasonable. Sometimes, they add the caveat that this year’s weather may tilt the numbers in one direction or another.

    Third, there are different ways to decide

    • Whether someone is fully employed, unemployed, or underemployed (either working fewer hours than full-time or working in a lesser position), and
    • Whether someone is part of the potential work force or not. Are they of working age and fit to work, mentally and physically? Are they actually looking for work?

    Since there are different ways to answer these questions, the BLS offers several ways of measuring unemployment, from U1 to U6. These are the 3 most important:

    1. U1: The narrowest measure of unemployment.
      • Persons unemployed 15 weeks or longer, as a percent of the civilian labor force
    2. U3: The standard measure–the one reported in the news
      • Total unemployed, as a percent of the civilian labor force
      • These are people who are without jobs and have actively looked for work within the past four weeks
    3. U6: The broadest, most comprehensive measure
      • Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force

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    These numbers usually go up and down in sync, but not always. When the job market gets stronger, some people move off the sidelines and begin hunting for jobs again. If they don’t find them right away, their failure actually increases the U3 unemployment number (since they had not been counted as unemployed when they were not actively looking).

    Since we mostly hear about the U3 rate, it is important to understand who is not included. If I were laid off, age 39 as the Chicago White Sox backup shortstop and stopped looking for work because I knew nobody was hiring 39 year-old shortstops, I would not be counted as unemployed. Why? Because I wasn’t looking for work.

    If I decided, as a last resort, to work 10 hours a week coaching a high-school baseball team, I would be counted as employed, even though I wanted to work 40 hours. So, the U3 rate leaves out some people that you or I might consider “unemployed” or “underemployed.”

    To get this larger picture, you can look at a more comprehensive measure, such as U5 or U6.

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    Fortunately, the numbers on all these measures is good and getting better. Here are the seasonally-adjusted numbers.

    Here is the ten-year trend for U3,  showing the drastic rise with the financial crash and the steady improvement since unemployment peaked in late 2009. If GDP growth had been stronger, the numbers might have been better sooner. But the Obama Administration can rightly look at this steady improvement in employment numbers and tout it as a major achievement.♦♦♦♦♦♦♦♦