Banks and Crooks - Who is the crook?

I just read Meagan McArdle's blog about people defaulting on a mortgage and being happy about it.  The whole scenario stinks for people that are responsible, invest in a house they can afford, and stick to it when times get tough to pay their bills.  She quoted an excerpt from a 12-10-09 Wall Street Journal.

PALMDALE, Calif. -- Schoolteacher Shana Richey misses the playroom she decorated with Glamour Girl decals for her daughters. Fireman Jay Fernandez misses the custom putting green he installed in his backyard.  But ever since they quit paying their mortgages and walked away from their homes, they've discovered that giving up on the American dream has its benefits.

Both now live on the 3100 block of Club Rancho Drive in Palmdale, where a terrible housing market lets them rent luxurious homes -- one with a pool for the kids, the other with a golf-course view -- for a fraction of their former monthly payments.

Rethinking the American DreamView Interactive.The housing bust has brought big changes to the 3100 block of Club Rancho Drive in Palmdale, Calif. See details on the homes, debts and residents.

."It's just a better life. It really is," says Ms. Richey. Before defaulting on her mortgage, she owed about $230,000 more than the home was worth. People's increasing willingness to abandon their own piece of America illustrates a paradoxical change wrought by the housing bust: Even as it tarnishes the near-sacred image of home ownership, it might be clearing the way for an economic recovery.

Thanks to a rare confluence of factors -- mortgages that far exceed home values and bargain-basement rents -- a growing number of families are concluding that the new American dream home is a rental.

Some are leaving behind their homes and mortgages right away, while others are simply halting payments until the bank kicks them out. That's freeing up cash to use in other ways.

Ms. Richey's family of five used some of the money to buy season tickets to Disneyland, and plans to take a Carnival cruise to Mexico in March. Mr. Fernandez takes his girlfriend out to dinner more frequently. "We're saving lots of money," Ms. Richey says.

I read this and then paused and re-read it.  I then read the comments and people kept complaining about how banks took advantage of them and rarely admitting that it was their own ignorance of the contract, their own poor planning and unrealistic ambitions of success that made this acceptable behavior.  Some even mention that a bank is a business and buying a house is a business event and that it was fair that the payments were not made since both parties enterred into the contract willingly.

I will admit that some people were taken advantage by some unscrupulous lenders, but they are the minority.  I can partly fault the government for encouraging the concept that owning a house is the only american dream that shows you are a success.  A recently re-exposed document shows that the Clinton administration went to ridiculous lengths to increase the homeownership rate through the The National Homeownership Strategy: Partners in the American Dream. It promoted paper-thin downpayments and pushed for ways to get lenders to give mortgage loans to first-time buyers with shaky financing and incomes. It’s clear now that poor lending standards pushed prices up by increasing demand, leading to defaults by people who never should have bought a home in the first place.  Items such as the American Dream Downpayment Act of 2003 signed by Bush, continued the practices because matched his Ownership Society goals.  Congress was strongly behind the push for home ownership too.

When you analyze it, it appears that both the bankers and the general population are crooks, when they feel it is the responsiblity of others to honestly tell people "no, you can't have that house, car, vacation" without paying cash for it.  The enablers in this script are our own elected officials.  The people mentioned in the article are crooks, just as much as the bankers that let them have the mortgages.

When did the people of the USA quit being responsible for their own actions?  I feel it is when we became a nation of people that feel entitled.  We feel entitled to everything from free health care upon retirement (and some people it should be free sooner) and a host of non-necessity items like cheap cell phones, cable TV, and museums, parks and local airports.  It is only when we are forced to pay for our own welfare or entertainment that we are careful about how our money is spent.  There are people that need our help to make some decisions, but they are in the minority of people.  Most people can make logical choices that are in their own best interests if you give them a few reasonable choices, show them the costs out of their own pocket for each choice. 

When the costs come from your own pocket, you can chose parks, over museums, over local private airports.  You also have an increasing interest in managing all other costs (for ex. medical) when higher percentages come directly from your pocket, so maybe higher deductibles is one way to reign in health care costs.  Sometimes, our elected officials also need to be told "no more" to funding projects that are not mandatory for the welfare of the entire community and to represent the whole welfare of the populace which means "no, means no" when the populace says, how about funding my teacup museum?.

Vampires - Myth and Reality

Vampires have become big business.  The success of the Twilight series, True Blood on HBO, stories by Anne Rice, Stephen King and others shows just how big the business is in blood sucking.  Most of these people attempt to glamorize the Vampire, often as a creature sympathetic to humans.  Where did this modern view of vampieres come from?

Some people trace vampire mythology to Vlad Tepes of Romania, for his impaling his enemies on stakes, drawing and quartering or burning them alive during his revolt from the Ottoman empire.  It turns out that he wasn't the only one doing this in the 1400's.  His contemporaries did similar things including most other Middle Ages Rulers and even the Catholic Church.

According to Paul Barber, author of "Vampires, Burial, and Death," nearly every culture have some version of the vampire, and those myths are similar to the European one.  In the Middle Ages, when misfortune struck a person, family, or town, the vampire or other boobyman would be put forth as the origin.  Vampires are an easy answer to illiterate people trying to explain why bad things happen to good people.

Add to this people's inate fear of the dead and misunderstanding about the cause of the death.  History shows that normal body decay wasn't understood and people assumed that it always happened at a fixed rate.  Yet in the summer a body would decay fast while a body buried in winter would not decay, making the body appear undead.  People would unearth graves when things went badly and find bodies more intact than anticipated and assume that the person was undead and therefore the reason for the misfortune.  As we became more informed about death and decay, the vampire legends disappeared.

If you go back in history you will also find other vampire related horrors such as Lamia, a demoness with the head and torso of a woman and the lower body of a snake.  The Greeks also feared the empusai, the malicious daughters of Hecate, the goddess of witchcraft. The empusai, who could change form, came up from Hades (the underworld) at night as beautiful women to seduce shepherds and then devour them. A similar creature, the baobhan sith, shows up in Celtic folklore.  Indian folklore describes a number of nightmarish characters, including rakshasa, gargoyle-like shape-shifters who preyed on children.  All of these alternative vampire historical figures add to the potential movie horror themes.

Interest in Vampire disappeared for decades but has become commonplace in movies and literature in the last 10-20 years.  Is it a case of people enjoying the bad boy image, the power over others, or fascination with supernatural things?  What is scary is that they are real and have entire websites to determine if you or someone you know is a vampire.  There are many such sites and they seriously talk about Slayers (from Bucky the Vampire Slayer fame).

So now we ask are they real.  Checking on informed sources (wikipedia, lol) you can find the following response. 

First is the medical condition porphyria, which may cause a combination of anemia and psychological disorders leading to the belief that one must drink blood to survive. Secondly, the existence of psychologically impaired individuals organizing into "vampire cults", such as the so-called Kentucky Vampire Clan, makes the existence of persons who attack other humans and drink their blood a real phenomena, though an exceedingly rare one both pathologically and criminally speaking.

The article goes on to talk about Viral Vampires,  Immortal Vampires while others add Pranic or Psychic Vampires (feed on energy).   Are they real?  Yes, with the exception of Immortal, because  there isn't proof that they do or do not exist.

So why do a blog about them.  I love the special effects of the movies.  The New Moon, Interview with a Vampire, Underworld, and Blade movie shows some interesting special effects, and I like special effects.  I also like other movies with great effects including Shrek.

Besides, it is hip.  It seems that there are real vampires.  It just depends upon how you define them; they are a myth, so we can be loose with our definitions.  To be serious for a moment, are there blood sucking people taking advantage to drain the lifeforce of others?  We all feel that someone is taking advantage of the system.  We might even call them blood suckers.  Those people are called   __________________________________ (Fill in the blank).  Suggestions might be Welfare recipients, Democrats, Republicans, Investment Bankers or Lawyers and you get to pick your favorite.

As we think of our current blood sucking enemy, remember they might look at you the same way.  Seriously, who really cares if people enjoy a good horror movie if it is all in fun.

And now to vampire humor -

What does a vampire fear most? Tooth decay
Why did the vampire's lunch give him heartburn?  It was a stake sandwich.

Yeah, childish attempt at humor but so are vampires......

Who Went Missing - Another Exercise in English

I was asked to write a bit on a phrase that grates on people's nerves. 

English is a fun language.  Where else in the world do we complain when people don't speak our language correctly yet make it difficult for them to figure us out at the same time.  We use cliches that make no sense to the outside observer.  We use phrases like "He always talks behind my back." Wrong, if he is talking behind your back, then he is really talking in front of you.   Our media personalities and politicians badly fumble our language, and they were born into it in most cases. We use the same sounding word with different meanings, our language is gender neutral versus most foreign languages, and cliches and colloquialisms that seemingly make no sense. We may have read a book but the book may be yellow, blue or black, not red. I could be a well read, red faced, hooligan attempting to read red words.


 Imagine someone trying to figure out English reading the following Headlines.  They must think we are nuts. 

"Death In The Ring: Most boxers are not the same afterward"

"If the baby does not thrive on fresh milk, it should be boiled."

"Panda Mating Fails; Veterinarian Takes Over"


We butcher our language daily and none more often than public figures.  There are great examples of bloopers out there.

Debating John McCain, Bush made this point: “I think we agree, the past is over.” He then complained the Arizona senator “can’t take the high horse and then claim the low road.” I won't bother going through the jumbled speech patterns of Bush since that has been done before, and even to music.

Gore told an audience, “My mother always made it clear to my sister and me that women and men were equal — if not more so.”

Bill Clinton is claimed to be the consummate public speaker, but at the University of Hawaii in 1992, Clinton told students, “This is still the greatest country in the world, if we just will steel our wills and lose our minds.” I think he proved his point about lost minds with Monica.  It seems to be contagious based upon Hillary's continued marriage to him.

And that brings us to Dan Quayle.  We all know about the potatoe but do we remember his thoughts on geography: “I love California. I practically grew up in Phoenix.” or the environment, “It isn’t pollution that is harming our environment. It’s impurities in our air and water ” or parenting  “Republicans understand the importance of bondage between a mother and child,” and finally and science, “For NASA, space is still a high priority.”

As I see it, the problem is that people want to look intelligent and instead of using simple words, like me instead of myself, we grab a dictionary and come out with gibberish that makes us look like English is not our primary language, as we speak before we think of what we should say.  That old saying that God gave us two ears and one mouth so we can hear twice as much as we say is ignored by all of us. 

But I digress.  As it turns out, "went missing" is proper, albeit old English, and not really American English.  To quote an expert -

The originsof 'go missing', gone missing', and 'went missing' are English (British English language), not American nor Canadian, as some have suggested. The common interpretation describes someone or something when they not shown up as expected, in which case it simply refers to the person having 'gone' (past tense of 'go'), ie., physically moved elsewhere by some method or another, and being 'missing' (= absent), ie., not being where they should be or expected to be (by other or others).

Most sources seem to suggest 'disappeared' as the simplest single word alternative. The expression is very occasionally used also in a metaphorical sense to describe someone not paying attention or failing to attend to a task, which is an allusion to their mind or attention being on something other than the subject or issue at hand (in the same way that 'AWOL', 'gone walkabouts' might also be used).

I've heard it suggested that the 'gone' part is superfluous, but in my opinion 'gone missing' more precisely describes the state of being simply just 'missing', the former conveying a sense of being more recently, and by implication, concerningly, 'missing'. 'Went missing' is another similar version of the same expression.

Thinking I was not fully researching it, I checked the Grammar Girl who had posted on this topic years ago.

The reason went missing sounds strange to Americans is that it's a British idiom (1, 2). I've seen sources placing the first use of went missing as far back as 1944 (3), but my version of the Oxford English Dictionary places the first use in a 1958 book by British writer Norman Franks (4). The OED places gone missing in the same category as the phrase go native, which is used to describe a turn to or relapse into savagery or heathenism. I've also heard the term go native used to describe the transition a newcomer to Washington D.C. undergoes as he or she accepts the government bureaucracy, which I suppose could be considered turning to savagery or heathenism

As she says, while it definitely riles the hackles on some people's backs, it is correct use, just not normal American-ese use.  It is found in the Oxford English Dictionary and other commonly used sources. 
 
I did find another source that said it is wrong and gives a long explanation that seems right.  While it might be technically correct, there are always idioms and exceptions that make the rules wrong (just to confuse any non-English speakers further).  There are rules today, but the rules change with time, so it might be right and it might be wrong.  Today it might be right and tomorrow wrong, so WTF.
 
As if this isn't enough to confuse people, we now have people using AIM-speak as if it were real!  I have heard people that will use IRL for in real life and FYI, ASAP for real words.  Let's just make it impossible for anyone to speak our language and make a law that says you must speak English.  Those of us that are older than 15 will end up being deported.  AFAIK those of us over 35 would be in trouble.
 
Not for Nothing, I dislike the sound of Went Missing too.

Republican Plans Part 2 - Patients Choice Act

This is the 2nd of the three plans I will cover.  This plan is an adaptation of the McCain formula offered during his campaign.  McCain's plan was targeted by the Democrats as being costly to middle Americans that already have insurance and of little value to the least insured group of people.  I have also discovered that there are even more plans that I had originally thought.  This makes a reasonable comparison difficult to impossible.  Without narrowing the plans down to a manageable level, an analysis could be done on a plan that doesn't have a chance of moving forward.

Patients Choice Act

Plan Summary -

• Stress prevention by giving some added money for the analysis and to make recommendations on preventative care and reward those that adopt healthy lifestyles with lower premiums in Medicare
• Create Health Insurance Exchanges
• Give Americans the option to buy into the same Heath Plan available to the Congress.
• Protects the most vulnerable Americans to ensure that no individual would be turned down by a participating
   
  Exchange insurers based on age or health
  
• Creates a non‐profit, independent board to risk adjust among participating insurance companies to penalize
  companies that “cherry pick” health patients and reward insurers that encourage prevention/wellness and cover
  patients with pre‐existing conditions
  
• Providing an advanceable and refundable tax credit of $2,300 per individual or $5,700 per family
  
• Improving the operation of Health Savings Accounts [HSAs] by allowing health insurance premiums to be paid with HSAs without a tax penalty
  
• Allowing preventative services to be covered by High Deductible Health Plans
  
• Increasing the amount of money an HSA owner may annually contribute to their account.  Under the Patients' Choice Act, individuals and families could buy a private policy through state-run health insurance exchanges, which Obama also proposes. Plans in the exchange would have to offer coverage to all comers, regardless of age or health status.
  
• Encouraging states to adopt a number of legal alternatives entirely run by the state that would include the establishment of expert medical panels to resolve disputes, creation of health courts, or a combination of both.  This eliminates your own personal expert and substitutes a panmel of experts picked by states.
  
• Creating a Healthcare Services Commission that relies on a public/private partnership to enhance the quality,
  appropriateness and effectiveness of health care services through the publication and enforcement of quality
  and price information
  
• No mandatory requirement for everyone to get coverage
  
  
  

This plan attempts to create a level playing field where everyone receives the same deduction for their healthcare and provides a subsidy for low income individuals to buy plans.  It solves the problem of pre-existing conditions to some extent but for those people deemed uninsurable, they are ported to the states high risk pools (similar to what happens today).  It places a higher burden on those with unhealthy lifestyles or that make bad choices.  The plan is one where responsibility and knowledgeable consumerism is rewarded.   

It places a state board in charge of determining reasonableness in fees and coverage instead of a Federal panel, like the Democratic Plans, so it really doesn't use true free market principles to guide pricing and procedures.  Which board is better is debatable.

The main financial feature of the plan is removing the tax exemption for benefits from employers and using that money to directly provide refundable tax credits. This tax credit can only go for either health insurance or health care – it can’t be used for anything else. It can go to pay part of your premiums for your employer-based insurance, it can go to you buying your own, or it can go into a Health Savings Account.

Costs are paid for in a manner similar to the the Empowering Patients Act via changes to medical malpractice but  adminstered via the states versus the federal level in the Empowering Patients Act.  Further decreased costs are claimed by pushing for preventative care versus catastrophic care, like every other plan.  The plans also eliminate the problem of insurance companies crossing state lines which will increase competition and the lost deduction for insurance by employers.    It covers its costs better than most other plans because of the revenue gained by the lost deduction by employers.

The potential problem areas -

 

1. Health insurers are unlikely to participate in the GOP version of the exchanges. That's because the Patients' Choice Act (and the other GOP bills) would not require Americans to obtain coverage. The insurance industry has stated it will only agree to accept all comers if everyone is mandated to buy. Otherwise people could buy coverage at the point when they need care. That's a sure way for insurers to lose money.
2. The GOP subsidies would cover less than half the cost of a comprehensive health insurance policy and they might barely pay for a high- deductible policy.  This leaves people exposed to steep out-of-pocket costs, a major problem causing bankruptcy today. A family earning $40,000 a year would receive no more help than a family earning $200,000. The proposal would encourage people to start tax-free health savings accounts to cover these expenses, but don't explain where families would find the money.
3. These policies would not have to comply with the rules in the state where the customer lives. Insurers could offer cheaper, stripped-down plans, for instance, by not having to cover mental health conditions, maternity care or well-child care.  On top of that, the out of state plans will have to work hard to negotiate discounts with local doctors.  Without agreeing to discounts, doctors will be able to charge whatever they want for procedures.
4. Under the heading of government controlled insurance.

"The PCA creates a Healthcare Services Commission that relies on a public/private partnership to enhance the quality, appropriateness and effectiveness of health care services through the publication and enforcement of quality and price information.”

After much protest that a bureaucrat should not be involved, this plan created their own bureaucracy.  Both plans utilize a board to review insurance, it is just a matter of where the board is located.

If you think you get to keep your policy under this policy, you need to think again.  The Republican Policy summary states

Americans happy with their employer‐sponsored health benefits should be able to keep what they have, but they should make that decision instead of the government. Tax breaks should go directly to every individual with a healthcare plan. This will give hardworking Americans the control and the freedom to decide how best to spend their hard earned dollars when it comes to providing superior healthcare to their families.

In the Democratic Plan, Obama has stated

“Under our plan, if you like the health coverage you have, you can keep it. If you have health insurance through your employer, nothing will change.”

 

These two statements are different but mean the same thing.  Your current plan is normally covered by your employer and he gets a tax deduction.  Whatever plan you have isn't up to the individual, it is probably employer based and therefore the employer will make a decision about whether you keep your policy or it gets changed or eliminated.  It is also up to your fellow employees, who could opt for the credit and leave the employers plan.  This would have devastating results for small businesses that depend upon having higher numbers i nthe plan to keep costs down.  If this Patients Choice Plan works, most employees will leave the small business plan to join a better or larger group plan admisntered by the state and only large companies will keeep their insurance plans, since they already have a large group. 
 
A general summary -
 

This plan has the tenents of a big government plan, just administered by the states.  The major benefits are the portability of the plan since your insurance can come from the Exchanges and giving deductions to everyone, whether buying a policy as an individual or as a employee.  It levels the plain for more people.  It strongly encourages healthy lifestyles through preventative care and "bad choices" we make to cost us in higher costs for insurance. The HSA approach has significant benefit for younger people but assumes you have money to put in the plan.

 

The problems for some of us will be that it will cost those of us with great plans because our good insurance becomes taxable.  The credit does not offset the tax deduction benefit since the typical policy value is over $8,000 and the credit is $5,000 for a family.   For small businesses, it may force them into the Exchange, just like the Democratic Plans.
 
If a plan covers more people and does not significantly increase costs, then it should be considered.  The final cost of any plan has to be weighed against the benefits of covering more people.  Encouraging healthy lifestyles is always a good step but it does seem that the plan's state boards seem like another big government entrance into our home. 
 
In any plan chosen so far, there appear to be added costs borne by people that have insurance, so there always seems to be a tax increase coming if a new Federal Policy or Plan is adopted. 
 
 

Republican Health Plans

There is a debate about whether Republicans have offered plans for addressing the health care situaiton in the USA.  They have offered a patchwork of plans, but nothing comprehensive that coverss the pre-exisiting conditon problem facing all approaches.  The critical problem is that the Republicans have not backed any single plan and therefore none of the plans will be pushed forward for discussion.  The major plans are the Empowering Patients First Act, Patients Choice Act, and Healthcare Freedom Act.  This will be a multipart blog due to the complexity of commenting on the plans.

 

Empowering Patients First Act

Major Tenents of the Plan -

• Allow people who purchase coverage in the individual market to deduct the cost of premiums from their income taxes.
• Provide refundable tax credits to individuals and families with incomes below 300% FPL to purchase insurance in the individual market. Establish Association Health Plans and Individual Membership Associations through which employers and individuals can purchase coverage.
• Implement state highrisk pools or reinsurance programs to provide coverage for people with pre-existing health conditions.
• Require states to provide coverage to 90% of children with family incomes below 200% FPL as a condition for expanding child eligibility to 300% FPL, and require states to provide vouchers to children eligible for Medicaid and CHIP, to be used to purchase private insurance. 
• In this program, the concept is to allow people that do not get coverage from employers to be given tax deductions for paying insurance premiums.
• It offers additional assistance to those at the lowest income levels. Provides additional loan assistance for doctors in certain feilds in return for service in under covered locales.
• It also specifically prohibits any plan that might be fully or subsidized from offering abortion coverage.
• It permits insurance companies to cross state lines with the laws in their primary state applying to plans offered in other states. It states that the cost for the plan is paid for by limiting malpractice claims, reducing payments to hospitals that cover a high percentage of uninsured people and reducing discretionary non-defense spending.
• It would automatic enrollment and opt out approaches to get more people convered by employers.
• It would allow you to "own" your policy as opposed to the current system where your employer owns it. 

 The concept covers several of the key problems with today's plans by allowing deduction of insurance plans by individuals.  Today, only companies get that benefit.  It helps get more children covered by allowing Medicaid or SCHIP coverage to a greater extent.  It encourages employers to adopt plans where individuals with healthy lifestyles will pay less for insurance.  Insurers can vary insurance premium by up to 50% for participation in a wellenss plan.  It also sets up a website to allow comparision of health plans. 
 

It does not allow any government sponsored plan and therefore avoids the major costs associated with most of the Democratic plans.  It is not great for those that have unhealthy habits or are unwilling to partipate in a wellness program because the 50% premium savings becomes a 50% increase for those that do not participate.  The plan allows insurers to use pre-existing conditions to prevent coverage but forces states to adopt a high risk pool to cover those people.  This just transfers the costs to the states, where it resides today with Federal copayments for the un-insured.

 

This plan is great for those with Health Savings Accounts and Insurance, I.e. people that already are covered.  It is also good for those that want coverage but need to get some added benefit in the form of tax credit to afford it easily.  It does not allow coverage of illegal aliens and leaves the problems found in our emergency rooms exactly where they are today, with the hospitals.  It gives an added deduction for self employed persons, but will require significant auditing to make sure it is not abused.

The major complaints about this plan is that the subsidies only cover about 1/2 of the cost of a typical high deductible plan leaving people exposed to major costs and still does not significantly increase the number of people covered.  Like the current Democratic plans, it relies on heavy Medicare cuts and requiring seniors to pay more.  These policies would not have to comply with the rules in the state where the customer lives. Thus, insurers could offer cheaper, stripped-down plans, for instance, by not having to cover mental health conditions, maternity care or well-child care.  That is fine for generally healthy people but not for young parents or people with pre-existing conditions.

State insurance commissioners say the plan would leave consumers vulnerable to abusive out-of-state insurers who can't or won't pay claims, which has happened in the past. It would encourage cherry-picking of healthier subscribers and hurt people with medical conditions that states now require insurers to cover. Insurers likely would set up shop in states with the loosest coverage and consumer protection rules. 

While it adds equity to employer paid plans, it may also encourage employers to drop people and force them out into the general pool of people looking for insurance.  Your pre-exisiting condition that is covered today may destroy you financially under this plan if you are dropped.  That is true of all plans today, unless you utilize Cobra and HIPAA.

To be reasonably attractive they need to modify the bill to set up a system to guarantee payments of claims, and resolve the problems of cherry picking of clients.  Opening the door to competition is great at keeping costs down, but if health coverage is anything like phone service coverage, there are significant gaps that will need to be closed. 

The cost of this plan ranges from a low end of $0 to a high end of ~ $50B per year.  The cost savings are optimistic since there is no proven record of saving for eliminating malpractice claims.  The current CBO and other government venues estimate that the total cost savings is 0.5%, but in a Trillion dollar arena, it is still not chicken feed.

The Empowering Patients First Act would require Medicare to cut payment or services if costs rose above a certain threshold, so it could force the same kind of cuts or rationing health care that people worry about with the Democratic Plans.  Keeping costs down is important for our countries fiscal health, so it is not a bad thing, just the reality of our situation.  There will be some form of rationing in all plans and this plan is a small step forward with gaps that can be addressed if it makes it out of committee.

Next blog I will cover the Patients Choice Act.

IRS Audits - We Need More

Everyone hates the IRS.  Who could possibly love them?  People hate the idea of audits even more.  An audit brings to thought nail biting, grand iquisitors, hot coals and bamboo under the fingernails.  The reality is much simpler where most people make an honest mistake and have to rethink their income or deductions.

In a survey, 96% of the respondents agreed with the statement "it is every American's duty to pay their fair share of taxes."  93% agreed that everyone "who cheats on their taxes should be held accountable."  In the same survey, only 62% felt that fear of an audit was why they paid their taxes correctly.  The numbers have only shifted slightly in 2008 to 89% feel you should pay all of the taxes you owe, but it is still a very high margin and even higher margins say the government should punish those found to cheat.

The IRS did a survery in 2001 of 46,000 random returns and found that the tax gap, the amount owed versus what was paid,  was $345 Billion or roughly the same amount as th deficite for that year.  The part of the income that has only 1% error is wages, salaries and tips.  The non-farm proprietor incomewas off by 57% or $57 Billion.  Non-farm income is covered by self employed or owners of businesses.  The problem is that the only person reporting the income for these business owners is the owner himself/herself.  The wage earners have to report income each pay period.  This means that the self employed person has a much higher ability and incentive to cheat.  I am sure we all know of the self employed painter, business owner or restauranteur that doesn't count income/receipts paid in cash. 

Why doesn't the business ower pay his fair share of taxes?  It is the right thing to do according to him and 93% of all Americans.  The reason is that the chance of being audited is so small at less than 0.2% of all individuals.  He/she also looks at the other burdens he faces in state compliance and those are costs that he has thanks to our regulations.

Part of the problem is the "cash" basis that some businesses operate under.  Too many places only accept cash, only record trackable transactions (credit cards and checks), and pay employees on a cash basis to avoid FICA.  Part of the problem is that people feel they pay too much already and are entitled to this "minor" entitlement.

Each of these issues cannot be easily solved by the current system.  It also would not be solved by any "Fair Tax" system where only goods sold would be taxes.  It would immediately cover the cash payments to your help because paying them in cash has no benefit or detriment.   A Fair Tax approach eliminates under reporting income because income is not taxed, spending is taxed, therefore saving is encouraged.

However, it would encourage those businesses that already rely on large quantity of small cash transactions, that they do not report now, to continue to not report them.  They have an even larger incentive to pay in cash because the tax savings is even larger versus the income tax.  It covers that portion of the illegal aliens that pay taxes at regular stores, but it still does not cover those small businesses that under report transactions each year and would encourage more in kind trading, to avoid the onerous sales tax.

The net impact of a Fair Tax should be neutral but it does not impact government spending more money than it takes in, but that is the problem with our current system too.  In times of poor spending, like 2009, the income receipts drop just like they do with the current system, but it might create a magnifier.

So, to get back to the basic Blog, we should encourage more audits, not less.  It will statistically increase the percentage of people that report their income.  The audits should cover more self employed and businesses where it is easy to lie about deductions and income.  Since relying on honesty is not motivational then the only alternative is to rely on fear of an audit.  If people should truly pay what they owe and are agast at people cheating on their taxes, then increasing the number of audits is a good thing.  Collect the money due the government, monitor those places prone to small frequent cash transactions for incorrectly reporting receipts, and force more places to use trackable payment methods.  Then the quote from 1984 will prevail.

"There was of course no way of knowing whether you were being watched at any given moment. How often, or on what system, the Thought Police plugged in on any individual wire was guesswork. It was even conceivable that they watched everybody all the time. But at any rate they could plug in your wire whenever they wanted to. You had to live—did live, from habit that became instinct—in the assumption that every sound you made was overheard, and, except in darkness, every movement scrutinized"

I do feel that more audits makes sense.  It is mentally straining, but it you are honest, you have nothing to fear from an audit.  I disliked my audit, but once it was done, I can appreciate why the audit was triggered and that taxes must be paid.  If I pay my part and try to be honest in my tax reconciliation, I expect the same from everyone else.

Polite versus Correct

Much has been said about bowing to foreign dignitaries.  Many have said that a president never did it before.  They are wrong.  Nixon did it.  Eizenhower did it to many people including the Pope, the President of France, and a host of others.  Oh my gosh, even president Bush bowed to the Pope and kissed and walked hand in hand with the King of Saudi Arabia.  Does this mean that any president is subserviant to another person?  Does it mean Bush was gay? Seems that bowing and other non-tranditional greetings and familiarities by Presidents is not uncommon.  And what is more curious is when important figureheads shake hands with the worst despots on earth, such as Sadam and Mao.  Many Presidents have shaken hands with these incredibly vicious people.  In reality, we end up doing things today that look good and bad in the future and that is reality.  The main point is that it was correct and polite at the time.

If one cares about such things, then with a cursory reading of polite customs in different countries will see that being polite and subserviant are two different things.  In Japan and China, I bowed to many people and there is a class people in Japan take on the correct level to bow in each circumstance. 

As Mr. Miyagi said in Karate Kid, always look at the eyes is the general approach, but the bow itself in Japan is to show respect where touching another person is frowned upon.  The bow to a figurehead, like the emperor of Japan is also not the same as a bow to the head of their government.

Should he have bowed?  IRL who cares except people that have a problem with Obama in general.  Was it polite, absolutely.  Was it correct?  It is correct if you assume that following the customs of the guest country are reasonable.  Do you point the bottoms of your feet towards a Saudi in his country, absolutely not!  Always stand for your Host enterring a room and clean your plate in Indonesia.  Are any of these offensive to us or indicate we are subserviant to another person?  I would think they are merely polite and show courtesy to your host.

Did he bow too low?  Possibly, but unlike the Chinese, the Japanese don't structure their bows as much as the Chinese, but since he was in Japan, his bow was reasonable and nobody really cares. 

To Quote a excerpt from a Fox News Poll -

Despite an overwhelming number of conservative comments, the majority of Americans, don't have a problem with it. Even among Republicans, 53% see no problem with it and 67% of all Americans don't have a problem with it.

Manners, whether we like it or not, are sadly missing from our day to day dialog.  Cutting people off, insulting them, and crying foul for reasonable manners is more of a problem than the deed itself.  Being polite and accurately informed is the best way we can help correct many problems that face the country.  When we are treated politely, we are more likely to seriously consider diverging dialog.  The opposite is also true, so bowing is fine by me if it helps open a door for meaningful discourse.  Just do it right and with the right people..... ;o).