Is Congress Missing the Big Picture?

It was refreshing to see Senator Marco Rubio (Republican from Florida) and Senator Chris Coons (Democrat from Delaware) appear on Morning Joe (MSNBC)  this morning.  They were promoting a new Job Bill (Agree Act)as an alternative to the President’s Job Bill that hasn’t gone anywhere.  The key difference between the Senators’ Job Bill and the President’s is that this bill covers items that both parties can agree on, which in turn they hope will result in passage of the bill in both houses.

Senator Coons (D) and Senator Rubio (R)

This bill does provide some positive news for America.  It does include items that would help the business community and job creation efforts, but it also shows bi-partisan efforts, which has been lacking in congress ever since Obama got elected to be President.  Some of the highlights of the Jobs Bill are:

1) Extend 100 percent bonus depreciation through 2012 for the full cost of qualified investments such as equipment and property

2) Extend Section 179 expensing levels for small businesses through 2012

3) Eliminate taxes on certain small business stock through 2012

4) Extend the Research & Development tax credit until 2013, increase theAlternative Simplified Credit (ASC) from 14 percent to 20 percent, and makes the ASC permanent

5) Provide veterans with a tax credit equal to 25% of the fee associated with starting a franchise up to $100,000

6) Provide a five-year exemption from Section 404(b) of Sarbanes-Oxley for the first five years of a company going public, or for those below $250 million in total gross revenue (whichever comes first)

7) Eliminate the per-country numerical limitation for employment-based immigrant visas and adjusts the limitations on family based visa petitions from 7% per country to 15%

Protect intellectual property by clarifying the Trade Secrets Act, and making it explicitly clear that it is not a crime for federal officials, in the performance of their duties, to share information about suspected infringing products with the right holder of a trademarked good

How can de U.S. win the war against drugs? Tax it!!!

Even though President Richard Nixon introduced us to the infamous ‘War on Drugs’ in 1971 the U.S. government has been officially battling illicit drugs since 1914.  The Harrison Narcotics Tax Act of 1914 was the first federal law written by congress to control the distribution of illicit drugs in the U.S. (and tax it).  So it’s fair to say that the government has been waging a ‘war’ on drugs for almost 100 years now.  If this were a war between countries we’d be about to make history by overtaking the war between the House of Valois and the House of Plantagenet (100 years war) as the longest recorded war in human history.

Global Drug Route Map

Why did the U.S. create laws against distribution of drugs to begin with?

Unfortunately it can be contributed in part to racism and protectionism.  According to the New York Times it was estimated that 1 in 400 people (0.25%) had become addicted to drugs by 1914, especially opium.  For the most part the ‘addicts’ were women, who had been legally prescribed some form of opiate by their physicians to treat ailments such as menstrual pains.  Since legally prescribed opiates or marijuana had to be bought from Chinese immigrants (opiates) or Mexican immigrants (marijuana) it stirred racists overtures by politicians, especially from the south, who were looking to grab some easy votes from the white majority.

The politicians objected to the lucrative trade without the federal government being able to collect taxes on it and used unfounded crimes committed by minorities to blame it on drugs.  Racist articles published in the Journal of the American Medical Association back in 1900 added fuel to the fire and helped push the first federal law against the distribution of certain drugs through congress.  Never mind that physicians were making a lot of money prescribing the drugs to their patients.  Even companies such as Sears Roebuck got into the act; in the 1890s in its catalogs you could buy syringes and a small amount of cocaine for $1.50.

Has this law or subsequently other laws reduced the distribution of illicit drugs?

Of course the answer is no.  In fact the distribution of drugs has never been this high in recorded human history.  1% of global GDP can be contributed to the drug trade.  In 2003 the U.N. estimated that $321.6 billion in drugs was traded worldwide.

Mexican Drug Trafficking Activity

Many experts compare the ‘failed’ war against drugs to the prohibition period in the U.S. from 1919 to 1933.  The Eighteenth Amendment to the United States Constitution made it illegal to manufacture, sell and distribute alcohol.  Sadly, we all know the unfortunate consequences of this ‘experiment’ in U.S. history.  It was the driving force in expanding organized crime and resulted in mostly low income people being thrown in jail for violating the prohibition laws, which is exactly what’s happening with the war against drugs.

How much does the war on drugs costs the U.S. annually?

It costs the U.S. government (federal, state and local) about $40 billion per year.  To give you an idea of the astronomical dollar impact fighting this war, in 2008 1.5 million Americans were arrested for drug violations; of those, 500,000 ended up going to jail.

US Incarceration Rate

It costs between $25,000 (federal prison) and $26,000 (state prison) per person to incarcerate someone for one year.  An average drug violator costs the government (federal , state and local) about $450,000.  This covers the costs of arrest, conviction, room and board.

Besides the cost of imprisoning a drug violator, the federal, state and local governments spend billions for treatment programs, educational programs and supporting foreign government in their fight against drugs.  In 2008 alone, congress appropriated $1.6 billion in aid to central American governments over three years in order to assist them in the fight against drugs.  Let’s not even go into the billions of dollars wasted in lost productivity due to drug abuse and the war against drugs.

So how do we win this war against drugs?

Tax it!!!  Of course in order to do that you’d need to make the drugs legal for manufacturing, sale and distribution.  I know, it’s highly controversial, but in today’s budget crisis (federal, state and local) it makes financial sense to legalize it.  It’s no wonder states are slowly adopting marijuana as a legal form of trade in order to fill the state coffins with tax revenues.

Here’s the math as proposed by Harvard Economist Jeffrey A. Mirron: $44.1 billion in savings by no longer having to spend money on law enforcement fighting the war against drugs and $32.7 billion in tax revenues for federal, state and local governments.  That’s a total savings of $76.8 billion per year for the U.S. alone.  Of course you’d need to use a portion of the savings to fund treatment programs to get people off of drug addiction, but the savings should still add up to well over $60 billion per year.

The federal government should spend $13 billion on drug treatment programs and the states should chip in $6 billion.  This would still generate about $43 billion in added revenues to the federal government, $10 billion for state governments and $4.8 billion for local governments.

Top Benefits for taxing it:

Drug Rehab

1) Reduces Drug Abuse – the government will actually have money to treat people that it spends now fighting a losing battle.  This should ease the concerns of many more conservative groups that advocate against legalizing drugs.  Treatment is proven to be more cost beneficial versus imprisonment.  It saves $4 for every $1 spent according to an independent study at UCLA.  Again, I’m not advocating drug use, but by making it legal the government will be able to afford treatment for every addict and thus reduce drug abuse over the long run.  This is clearly a much more cost effective way to reduce drug use.

2) Revenues For Cash Strapped Governments – it would help alleviate budget deficits for many states and local governments, which in turn will help other programs such as education and public transportation.  They’re taxing addictive substances such as cigarettes and alcohol, so why not for cocaine or marijuana?

3) Reduces Crime – By taking billions of dollars away from organized crime it would destroy the income for many crime syndicates.  Neighborhoods become safe again, especially in low income areas as there’s no longer a need to protect a territory.  500,000 current drug violators going to jail will no longer end up in jail, but instead have a better chance of becoming law abiding citizens.  The prison system breeds criminals.  It’s well documented that without an effective treatment program prisoners being paroled end up going back to jail and actually become more violent in many cases.  Most drug offenders in prison/jail are non-violent anyway.  Instead, require them to go to treatment and you won’t see that many repeat offenders come back into the judicial system as you do now.

Final Thoughts…

It’s not a very popular stand to take as a politician as it can be seen as being soft on crime.  However, in today’s age wherein all forms of U.S. government is strapped for revenues, crime is relative high to other industrialized nations and the current war against drugs has no end in sight, it only makes sense to start exploring the possibility to legalize the trade in drugs.  States such as New Jersey, California and Colorado are already experimenting with legalizing marijuana.  The first results are encouraging, but a lot more work needs to be done.

Bear in mind again, I’m not advocating the use of drugs.  Companies should still be allowed to test employees for drug use and fire them if caught using drugs against company policy.  Law enforcement should still arrest people if caught driving while under the influence of a substance, but legalizing will reduce the overall number of drug users in the long run.  It will reduce crime and create a much safer society that will only make the U.S. more competitive.

Share your thoughts.

What’s wrong with our highways?

I live in northern New Jersey with my wife in a small town surrounded by woods, hills, streams and lakes.  Not the typical New Jersey people are accustomed to, but that’s why I love surprising first time visitors to the Garden State.

Once a year my wife and I drive to Old Orchard Beach, Maine to visit my in-laws who make an annual pilgrimage from Quebec to Old Orchard Beach.  Apparently it’s been a long tradition for people from Quebec to spend their construction vacation in Maine.  If you look at the map it’s actual the closest beach for most people living in Quebec, which is why half the population in Maine during the summer speaks French.

Eisenhower Interstate System

If you mapquest the drive from northern New Jersey to Old Orchard Beach it will tell you that it’s only a 5 hour drive.  However, over the years I’ve learned that it takes me at least 7 hours to get there, unless I’m willing to get up at 2am, in which case I could make it in 4 ½ hours.  Why does it take that long?  It’s because the Eisenhower Interstate System was built for traffic in the 50s, not for traffic in 2011.  It’s frustrating as hell to be stuck in traffic, pretty much all the way up.

So what’s the solution?

I’ve been telling you on my blogs that we need to at least triple the transportation budget in conjunction with spending cuts and revenue increases to balance our federal budget, but also to keep America working and in order for America to maintain its number one status as an economic power in the world.

So what’s wrong with the highways and what can we do to fix it?

1) Lack of lanes

If you’ve ever driven through Connecticut between I-684 and Hartford you will understand my frustration with having a highway that only has 2 lanes on each size.  It should be against federal law to have an interstate designation if you only have 2 lanes on each side.

Truck traffic alone slows these lanes down, so for automobiles it’s frustrating that there’s not a designated car lane, which you can have in the left lane if you had 3 lanes going in each direction

Eminent Domain is warranted here.  Highways should have a minimum of 3 lanes going in each direction and wherever traffic numbers are too high it should be increased to at least 4 lanes

2) Ramps need to be doubled/tripled in size

One of the most frustrating parts of a traffic slowdown is when traffic backs up for a mile or more because you’re leaving one highway to go onto another highway

US Interstates

A minimum of 2 lanes should be mandatory for ramps connecting highways at intersections, and one of the ramp lanes should be transitioned into a regular lane, not a merging lane

This would keep traffic flowing freely

3) Enforcement of passing on the left

I just came back from a business trip in England.  I’ve also had the luxury of having driven on the Autobahn in Germany and on the Autostrasse in Italy.  The beauty about highway driving in those countries: peddle to the metal in the left lane at 100mph+

The problem of doing that in the U.S. (besides running the risk of getting a speeding ticket); idiots not knowing traffic rules that clog up the left lane by going the speed limit without passing anyone

I believe I was given the finger by at least 6 people on my way up to Maine, when I was able to go 90mph on short stretches, but then got stuck behind some %@#$% idiot in front of me

Instead of police enforcing speed tickets they should instead focus on ticketing people in the left lane that do not pass people!  The ticket should be at least $300 and hopefully that will send a strong message to get out of my lane…

4) Speed up tolls

It’s nice to have an EZ-Pass in the Northeast, because it allows you to go through toll-boots without having to stop, or so the thinking goes.  The problem is that most toll plazas are still set up in such way that a car will need to slow down to 15 mph in order for the meter to pick up your pass reading

Install high speed systems at every toll boots, so that traffic doesn’t have to slow down

5) Wider emergency lanes

3 times I got stuck in traffic because a friendly state trooper had pulled someone over or he/she was assisting an unlucky motorist with a flat tire, etc.

The problem is that it slows traffic down, because safety is important of course and nobody should be hitting the broken down motorist or the trooper trying to assist

Wider emergency lanes would help alleviate the situation as it would give other motorist more leeway with passing the emergency vehicles and traffic (although slowed down) could still move at a relative descent speed, 50 mph versus 15 mph for example

6) Block view

We don’t like to admit to it, but everyone likes to look at someone else’s misfortunes such as a bad traffic accident.  It’s human nature to slow down and get a quick peek at those unlucky people

The problem is that it slows down traffic, even for traffic going in the opposite direction

The solution?  Put a barrier in between, high enough that car drivers cannot see the other side of the road, which should help keep traffic moving during accidents on the opposite side

Now if we could only cut spending by about $500 billion per year, increase revenues by another $500 billion per year and then spend $250 billion per year on transportation then I can get to Maine in 4 hours or less next summer…

Share your thoughts?

Where are the jobs in the ‘recovery’?

Unemployment is at 9.2% according to the U.S. Labor Department, while real unemployment is actually closer to 20% if you count people that have given up looking for work, college kids working at Starbucks and part timers looking for full time jobs.  The President talks about giving it more time for the economy to get out of this mess he inherited and his opponents (Republicans) blame the high taxes and regulations for this mess.

But what’s really missing are concrete solutions from both parties!

Let’s get a few things straight first.  Both parties talk about cutting the federal budget deficit and hopefully paying off the national debt in the long run, but both parties vary on how to go about it.

Democrats want to cut some spending, but would rather see revenue/tax increases by closing loopholes and tax subsidies.  Call it whatever you want, but in the end it closes the budget deficit.  Republicans would rather cut spending and use that to cut the budget deficit.  Republicans accuse Democrats that if taxes were increased it would hurt the economic recovery.  Democrats on the other hand accuse Republicans of much the same by telling them that too much cutting will hurt the economy as well.

Guess what?  Both are correct; if you cut spending by $4 trillion over 10 years (latest proposals floating around) you take $4 trillion out of the U.S. economy.  That’s probably going to cost us about 2.8 million jobs in healthcare, education, state/federal workers, etc.    On the other hand if you raise taxes by $1 trillion (suggested by some Democrats) you will also cut employment by roughly 600,000 workers.  In either case, it’s a tough pill to swallow!  We have to cut the budget deficit, I don’t think anyone is arguing about that, but how do we do it without destroying America’s economy?

Here’s the solution:

1) Cut spending by $600 billion per year (defense, healthcare, social security, debt and discretionary spending).  It’s a very painful and austerity measure, but it needs to be done

2) Raise revenues by $500 billion per year (VAT at 7%, social security taxes for income $100k+, raise federal gasoline taxes by $0.80 over 4 years per gallon, etc.)

3) Put it all in a Balanced Budget Amendment so that government will have to stick regardless of what party is in power

The above will cost the economy about 3 million jobs and will dramatically change the landscape of the U.S. economy.  However, to offset the massive job losses, the government will need to invest heavily in infrastructure projects.  A proposal to spend about $300 billion per year directly into projects would put millions back to work.

It would offset the job losses from the austerity measures described above and America stands to benefit long-term by getting a first rate infrastructure in return, which in turn will help foster millions of jobs and set up America for a prosperous long term future.  Infrastructure spending should be focused on massive job creation projects such as:

US Infrastructure Spending

1) Upgrading the Eisenhower Interstate System.  It was build for 1950s capacities in most cities and needs to be dramatically upgraded10,000+ miles of high-speed rail that for example can bring a passenger from New York City to Atlanta in 5 hours, with stops in Philadelphia, Baltimore and Washington

2) Expand the nation’s airports.  They were also built for a different era, most of them before WWII and is in desperate need of expansion and modernization.  Landing at LaGuardia in NYC feels like landing in Lagos, Nigeria…

3) Upgrade the power grid.  More nuclear power-plants are needed and the grid needs to go underground so the power can stay on in Joplin, MO or in Galveston, TX next time mother nature strikes

4) Desalination plants in California and in Texas to feed the Southwest of America with much needed fresh water to expand the agriculture business, keep local economies growing (Phoenix, Las Vegas, etc.)

The travel industry would be very pleased with these upgrades as will the transportation industry, utilities, states, etc.  It’s short term pain for long term gain, which is difficult to comprehend in D.C., but it’s the only sensible way to get us out of this recovery (if you can call it that way…).

Agree, don’t agree?  Share your comments

How do we get out of this federal financial mess?

For the third year in a row the U.S. government is about to run another trillion dollar plus budget deficit!  Yes, you’re reading it correctly.  The federal government has succeeded in running up almost $4 trillion in national debt in just over 3 years.  Our current national debt stands at $14.3 trillion.

Congress

To put this in comparison; the average American household earns over $49,777 per year.  The average household would’ve had to have a credit card debt of $220,000 to match the ratio of debt the U.S. government is carrying compared to its annual earnings.  If this were reality, needless to say, this household example would’ve filed for bankruptcy protection a long time ago!

Since the U.S. government can’t file for bankruptcy as they ‘own’ the bank that prints its own money many people argue that this debt is not that big of a deal.  Under a strong healthy economy that would grow at 5% annual GDP with a 4% unemployment rate I would almost agree with those people, because if you keep that growth up and spending under control at some point your debt to earnings ratio would drop dramatically in which case managing the debt isn’t so bad.

Reality being reality, we’re far away from that!  Trillion dollar budget deficits put a strain on any economy.  It hurts long term growth and it puts the U.S. dollar in a bad position, which makes us uncompetitive in a global market.  On top of that we spend close to 20% of government revenues on national debt payments and that’s money wasted down the drain, which could be spend on badly needed infrastructure projects.

So what are the solutions?

1. Reform the Tax Code

• Lower corporate taxes from 35% to 18%
• Maintain individual tax rates for people earning over $100,000, but lower tax rates by at least 5 points for everyone else
• Remove 95% of all tax deductions and subsidies.  This includes mortgage deductions, child deductions, medical deductions, but also ethanol, oil, gas and sugar subsidies for companies
• Social security and medical taxes to be taxed on 100% of earnings (no longer capped at $120,000)
• Institute a 7% VAT

2. Overhaul Healthcare (including Medicare and Medicaid)

• Require all medical institutions (hospitals, clinics, physicians, medical supplies, etc.) to be hooked up to the same federal computer system
• Doctors/nurses are required to fill out patient information on tablets, not charts/paperwork, which are hooked up to the federal computer network
• Sell insurance across state lines
• Tort reform to protect physicians and lower insurance rates
• Penalize unhealthy people (smokers, obese people, etc.) by taxing them, but provide them with a one year waiver to allow them to become healthy
• Everyone is required to carry insurance.  You’re allowed to decline, but you’re penalized with 7 basis points on your individual income taxes.  An insurance pool is created, which is regulated by the government, but run by private insurance companies to provide insurance to the poor, self employed, etc.  Insurance rates cannot surpass 5% of gross earnings for people making less than $20,000/yr.

3. Defense Budget

• Close unnecessary military basis around the world
• Immediately nullify all contracts for unnecessary weapons systems not requested by the Pentagon, but forced on the Pentagon by congress
• Reduce total troop levels by 20% over 6 years without firing anyone
• Modernize the military.  For example:
  

  Predator Drone

  • Replace 100 F-16s with 1,000 predators and you will still save money on equipment, training, maintenance, etc.
  • Expand special forces, but reduce size of regular army troops
  • Expand on space systems, but reduce cold war relic weapon systems such as tanks, aircraft carriers, etc.

4. Social Security

• Increase the retirement age by 3 years for all three categories for people 49 years or younger
• People with a net worth of $5 million or more are not eligible for social security (adjusted for inflation every year)
• Social security taxes to be taxed on all incomes, no caps on high incomes
• Increase social security payments by 10 basis points (one time), then increase it based on cost of living increases every year

5. Education

• End tenure for all teachers in public schools (new federal law)
• Fire immediately all teachers ranked in the bottom 10% of performance
• Salary for teachers based on performance.  Salary plus bonus will be the new form of earnings for teachers.  Teachers can earn as much as $130,000/yr in public schools based on rankings and can earn tenure if they maintain a ranking of 80% or better
• Institute new teaching techniques that work

6. Infrastructure

• Double spending of infrastructure by increasing the transportation budget from $72 billion to $144 billion
• Increase spending based on mathematical formula for budget surpluses

The action items mentioned above will result in the following:

1. It cuts spending by $470 billion
2. It increases tax revenues by $680 billion
3. A net result of $1.15 trillion for the federal budget
4. Stimulation of the economy as efficiencies will create new businesses by shifting resources and an influx of new infrastructure spending will put blue collar workers back to work

In order for this materialize we need two very important things to happen in U.S. politics.  First of all, we need a balanced budget amendment.  Congress unfortunately cannot be trusted to balance its own books, therefore a new amendment is required to ensure that politicians will no longer look out for their own interests but rather put the interests of the United States of America first.

Secondly, we need a third political party in congress.  It would almost guarantee that no political party will have a majority in congress (house and senate) and therefore compromising will become a necessity within the restrictions set forth by the balanced budget amendment.  One can no longer create a spending bill without having a way to pay for it (cut spending or increase revenues will be the only way, and for that you’ll need to compromise).

Reform Party anyone…?

Congress can’t multi-task?

It’s astounding to me that many members of U.S. congress have criticized President Obama for going to Latin America while the earthquake/tsunami disaster unfolded in Japan, the crisis in Libya erupted and the U.S. economy continues to be sluggish at best.

President Obama and President Dilma Rousseff

Pundits were very critical of the President that he left the White House at all.  “How dare he leave Washington D.C. on a trip to Brazil, Chile and El Salvador, while 15+ million Americans are out of a job, the bombs are dropping in Libya and a potential nuclear crisis is going on in Japan?”  The best part of the critique is that not only was he being criticized from the right (GOP), but also by members from his own party.

Let’s get a few things straight:

1) 21st Century Communication – The President doesn’t leave his laptop or Blackberry at home on Pennsylvania Avenue.  I mean, does it really matter if he calls President Sarkozy from the White House or from a secure room in Rio de Janeiro?  They have satellite connections in Latin America and state of the art communication equipment on Air Force One so he can be up-to-date 24/7 from any place in the world.  For crying out loud, George W. Bush pretty much governed from the West House (his ranch in Texas) during his 8 years as U.S. President.

2) It’s the Economy Stupid – Pundits wanted the President to go to Michigan or Ohio instead.  They argued that there is where the jobs are needed the most since so many manufacturing jobs have been lost over there in the past few years.  Aren’t we forgetting something?  It’s a global economy in 2011.  In order to create jobs at home you will need to trade with other nations; hence the trip to Brazil, which is rapidly becoming an economic powerhouse in the world.  No trade agreements, no jobs in Michigan or Ohio.

3) Multi-Task – Since when can’t a President multi-task on the job?  Isn’t just everyone with a white collar job these days multi-tasking at work?  I mean, he’s the President of the United States!  He has a support staff that will give him a daily rundown of what’s going on in the world and at home.  The President can make multiple decisions in one day and thanks to modern communication (see above) he can relay his message to anyone in the world within seconds from any place on earth.

If you’re going to criticize the American President do it because of his policies, but don’t do it because he decided to take an important trip to allies in Latin America that could help the U.S. economy and certainly don’t criticize him for being a multi-tasker.  If only congress were able to multi-task then we wouldn’t be bogged down in ‘waste-of-time’ conversations about cutting funding to NPR, Planned Parenthood, Obama Care, etc.  Instead they should be multi-tasking and discussing solutions to Social Security, Medicaid, Medicare, defense spending and the national debt/deficit.  Those are topics worth discussing for the future growth of America!

The President could play a round of golf every day of his presidency for all I care, provided he is able to do his job in between the rounds of golf then who cares?

Share your thoughts

Taste Challenge – Twitter Wine Tasting

My wife and I have attended a few wine tastings hosted by the friendly folks atWineTwits and I’m happy to see and hear that they are putting together some tasting events available to the public.

The events, named Taste Challenges, compare wines of the same varietals or made in a similar way, against one another in blind tastings (my favorite part of the tastings). The purpose of this type of event is to allow wine fans to taste the wines, share their thoughts on them via Twitter, see what other tasters have to say and pick their favorites. The Taste Challenge series begins with a tasting of two Italian DOC Pinot Grigio wines on 3/24 at 8:00 PM EST.

WineTwits is promoting a neat giveaway associated with the event – a chance to win a trip for two to Venice, Italy (see details at www.WineTwits.com).

Anyone interested in participating in the upcoming Taste Challenge can take advantage of free shipping on all orders of the Taste Challenge Tasting Kits ($30 per kit). The kit includes the two wines being tasted, which have a retail value of $40.

To register for the event, and for details on the Venice trip giveaway, visit www.WineTwits.com.

ARE YOU READY TO WINE DOWN?

Wouldn’t you love to wow your friends with wine knowledge or have more confidence ordering off a wine menu? Then don’t miss the 4^th Annual New York Wine Expo (www.NewYorkWineExpo.com) featuring wine tastings from around the world and educational seminars that can turn even the most inexperienced wine lover into a seasoned connoisseur.

The New York Wine Expo is on February 25th and 26th at the Jacob Javits Convention Center. The Grand Tasting offers attendees a chance to sample more than 600 wines from over 150 winemakers from around the globe. Attendees can casually sip and stroll through old world Italian, French, German Austrian, Spanish and Portuguese wines then let their taste buds lead them through the new world wines of South America, Australia, Canada, South Africa and the United States.

“Wine makers love to come to New York because the attendees are eager to try new varietals and blends as well as share their personal passion for wine,” said Ed Hurley, New York Wine Expo Show Director. “It is an exciting time for the wine industry, with every region of world now offering unique and flavorful wines at affordable prices, and the Wine Expo is the place to be to see them all in one place.”

Attend the Expo not just for the sampling, but for the learning experience as well. To date, seminar presenters will include Gloria Maroti Frazee, who oversees Wine Spectator School and Leslie Sbrocco, award winning author, and Founder of “Thirsty Girl” a multi-media company focused on wine, food and travel.

New York Wine Expo: Hours & Ticketing:

• Friday, February 25, 2010, 6:00 – 10:00 PM;  One-day ticket – $80 prior to 2/18/11/$90 after that date
• Saturday, February 26, 2010, 2:00 – 6:00 PM; One-day ticket – $90 prior to 2/18/11/$100 after that date.

Seminars:

• • Friday, February 25
  • • 6:00 – 7:00 pm: Taste Wine Like A Pro: Learn the Secrets Behind How to Taste Wine Through a Blind Tasting
• • Saturday, February 26
  • • 12:30 – 1:30 pm: “Wine 101”– A Fun-Filled, Crash Course on Wine Basics with Leslie Sbrocco
  • • 3:00 – 4:00 pm: Wine Spectator Presents The ABCs of Argentina

For tickets, an updated seminar schedule and event information, visitwww.NewYorkWineExpo.com or call 800-544-1660.

Note: Sunday, February 27 is dedicated to trade representatives. Liquor licensees from throughout the region are invited to attend on Sunday along with attendees of the co-located International Restaurant & Foodservice Show of New York. The Wine Expo is not open to the general public on Sunday.

About the 4th Annual New York Wine Expo

The New York Wine Expo is produced by ResourcePlus Shows & Events.  The company specializes in management services for consumer/trade shows, meetings, and special events. In addition to the New York Wine Expo, ResourcePlus’s portfolio of events includes the Boston Wine Expo, The Newport Mansions Wine & Food Festival, Build Boston and Residential Design and Construction. Located in Boston, Massachusetts, ResourcePlus is a business unit of Seaport Companies.

4 Ways to Solve the Budget Deficit and National Debt

President Obama submitted his budget proposal to congress this week.  Here are some of the highlights or lowlights (depending how you look at it):

1) $3.7 trillion in spending is forecasted for next year’s fiscal year, which runs from October 1, 2011 through September 30, 2012

2) $2.6 trillion in revenue is forecasted for the same fiscal year

3) $1.1 trillion budget deficit is the result

4) $15+ trillion national debt by late 2012

2012 Budget

In short, the budget calls for a freeze on federal spending for five years, which means that spending levels stay as is and cannot increase, but it doesn’t cut the spending in general.  The administration sees this as a spending cut as they claim it will save the U.S. tax-payer about $400 billion over 5 years.  The majority of the ‘savings’ will come from tax increases on the wealthy, by letting the current Bush tax cuts expire in two years for the wealthy.  Then on top of that, discretionary spending is being cut for such programs as heating assistance for the poor.

What’s wrong with this budget?

1) It’s a political move by the President.  Rather than leading as a President and setting a good example, the President is banking on the Republicans having to make the next move, which will be more dramatically in the sense that they will need to cut deeper as they face enormous pressure from the Tea Party constituents.

2) It doesn’t touch the entitlement programs, which need to be looked at if we’re serious about reducing the budget deficit and the national debt.  Again, it’s a political move by the President so that he can blame the Republicans in 2012 if they went ahead and cut the entitlement programs too deep.

3) It doesn’t address Defense spending seriously and again it leaves out spending for Iraq and Afghanistan.  If a U.S. tax-payer left out part of his income or debt to the IRS he or she would face jail time, but apparently it’s okay for the U.S. government to omit this $100+ billion annual spending bill from the budget entirely.

4) It doesn’t even mention paying down the national debt of $14+ trillion.  It’s probably because in the plan it’s dumping another $1.1 trillion on top of it.

Will the Republicans counter with a better budget?

The short answer is probably not.  I guarantee you they won’t cut the spending down to $2.6 trillion, which is the magic number to close the budget deficit.   Remember, even at that level the government won’t pay down the national debt.

Entitlement Spending

The Republicans want to cut $100 billion from 2011 fiscal year.  So far, they’re close to $60 billion, but I doubt it they’ll be able to get the full $100 billion.  Even that is just a symbolic move as it does nothing to our long term debt obligations as a nation.  The idea that the Republicans will be able to come up with $1.1 trillion in spending cuts for 2012 is next to impossible.  You would have to cut every budget by 42.3% in order to have a balanced budget.

Bill O’Reilly even suggested last week that we should go back to pre-recession spending levels, but here again that would still leave us with a $400 billion budget deficit.  Okay, so let’s try some drastic austerity measures and see if we can close the gap by spending cuts alone…

Defense

The Defense spending is 19.27% of the budget or $712.99 billion.  Cutting it by 42.3% would mean that the defense department would have to cut its budget by $301.59 billion.  Yeah, good luck on that one at Capitol Hill.  At most the Pentagon will be able to come up with $78 billion (Robert Gates has the report he submitted not too long ago).  We can talk about pulling our troops out of Iraq and Afghanistan, but there again, we don’t account for that spending in the $712.99 billion…!  So let’s be optimistic and we’re going to tighten our belts for real and get the Robert Gates’ number up to $150 billion in spending cuts.  Sorry Boehner, your jet engine ‘pork’ project is out the door.

Social Security

20.04% of the budget is spent on social security or $741.48 billion.  One problem about this program; it’s a self-sustaining program, at least that’s how it was designed by FDR’s administration.  In other words, we cannot cut this program to pay for other programs, we can only cut it to keep the program itself alive.  Changes are needed to keep it solvent, but the taxes taking out of everyone’s paycheck for social security are meant for social security and not for other programs.

Medicare / Medicaid

22.62% of the budget is spent on Medicare / Medicaid or $836.94 billion.  Cutting back by 42.3% would mean a cut of about $354.02 billion.  It’s not a big secret that that there are two huge savings to be made in this program.  The first one is regarding the fraud committed on an annual basis, which adds up to about $60 billion annually.  The second one is automation of the system, which could add another $10 billion to the savings, but that’s only 20% of the cuts needed to the program.  Cutting it any deeper will put an enormous burden on the States, who already face budget deficits of their own.  But, let’s compromise, and let’s say we’re going to cut it even more by doing away with the prescription program that Bush enacted without paying for it during his administration.  This will save the tax payer an additional $100 billion per year for a total savings of $170 billion.

Net Interest

This accounts for 6.31% of our budget or $233.47 billion.  Problem of course is that we can’t cut here since it’s our debt obligation, so no savings here.  As a matter of fact we’d actually have to increase this budget if we want to pay down our debt, but we’ll save that for 2013 and beyond for now…

Discretionary Spending

31.76% or $1.175 trillion is spend on everything else (housing, education, unemployment, subsidies, transportation, Veterans, etc.).   Let’s jump on the Tea party bandwagon for a second and cut this budget by 42.3%.  So we’re going to save $497.03 billion across the board.  We’d probably have to do away with programs such as farm subsidies, oil industry subsidies (a.k.a. tax credits), heating assistance, etc., but let’s assume the politicians are able to bite the bullet and manage to save us $497.03 billion.

Total Savings

Add all the savings up from above and we come to a total savings package of: $817.03 billion.  I bet you this savings total will be much more than the Republican’s plan that we’re going to see here shortly.  However, we have a $1.1 trillion budget deficit, which means we’re still short by $282.97 billion in order to close the gap.  See the dilemma?  Either way you’re going to slice it, we have to make some tough decisions and that means that tax increases are going to have to be on table as well…

Problems with this Plan?

1) Cutting defense, Medicare/Medicaid and discretionary spending will put a few more million people on the street as they will become unemployed.  Defense contractors will have to lay off people.  Hospitals, nursing homes, etc. will have to lay off people.  Dept of education, veterans affairs, etc. will have to lay off people.  Since we’re cutting off farm subsidies, some farmers will go out of business.  In other words, we run the risk of throwing this country back into a deep recession.

2) It doesn’t address the long term debt issue of $14+ trillion

What are the solutions?

Compromise is the only way.  Tea party members don’t like it, Republicans won’t like it and Democrats won’t like it, but we need to make tough choices.  If we’re going to cut our spending dramatically and still aren’t able to close the gap it would leave us with no other choice but to raise revenues.

1) Targeted budget cuts.  Instead of maybe cutting the budget by $812.03 billion, you’d cut it be $550 billion instead.  Remember, we have to compromise…

2) Revenue increases.  Instead of increasing revenues by $312 billion, you’d have to increase it to over $550 billion instead.

3) Run a small budget deficit for a couple of years to use the money for targeted infrastructure spending to put people to work and to get the U.S. economy in shape for future growth.  Remember, the drastic cuts are putting a few extra million Americans back to the unemployment line.

4) Once the economy picks up steam the revenues will only increase, but congress needs to keep the spending levels down.  This way you’ll be in a budget surplus by 2015 and then can start using the surplus to pay down the debt

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Should the U.S. Electric Grid be Underground?

Have you ever wondered why the power seldom goes out in Manhattan, New York City?  It’s because the power-grid, including phone/internet, gas and cable is buried underground!

I used to live in Oakland Park, Florida and it pretty much guaranteed that my power would go out every time a summer thunder-storm would roll through the area.  I can’t count the number of times I sat without power; sometimes even for days during hurricane season.  For those people who’ve never lived in the south, it sucks to be without A/C in July or August.  My friends living further out west in Weston, Florida never had these types of issues.  Why?  You guessed it, their power-grid was completely buried underground.

U.S. Power Grid

So why with all the hurricanes that strike the Gulf Region, all the Tornadoes that strike the Midwest and all the ice/snow storms that strike the Northeast aren’t we burying all utilities underground?

Very simple, it costs a lot of money to change the existing above ground system to an underground system.  Yet, many regions across the country are slowly adapting to underground services, especially in new construction communities and in heavily congested areas such as downtown areas of larger cities.  So let’s take a look at the disadvantages versus advantages of underground utilities with the emphasis on the electric grid to keep it simple for argument sake.

Advantages for Underground Utilities

1) Eye-sore is gone.  Let’s face it; nobody wants to look outside their window and look at an ugly utility pole with wires hanging across your backyard or front-yard.

Underground Grid

2) Power is more likely to stay on during weather related events such as wind, ice and snow.  Trees won’t fall on power-lines and ice/snow can’t form on the lines, thus keeping your power on; even during a hurricane.

3) Safer – for the environment and people.  No more need for cutting down trees for the thousands of utility poles that are needed to replace broken ones and people don’t have to worry about the electromagnetic fields surrounding electric cables.

Disadvantages of Underground Utilities

1) Cost of Repairs – if something does go wrong with the underground cables then the cost is much higher versus above ground and it takes longer to fix.

2) Doesn’t work well in flood prone area – it’s a fact that if an area regularly floods during rain storms or flooding due to excessive snow melt, etc. the underground system tends to break down a lot more.

From the above it would seem that it would make sense to bury everything underground.  If your power goes out 4 – 6 times per year (average for above ground utility) and then compare it against it only going out once every 2 years (average for underground utility) then most people would prefer an underground utility in their neighborhood; even if it meant that if the power goes out it may take a few extra hours to get the power back on.

So why aren’t all municipalities switching to underground utilities?

It makes financial sense to bury everything underground when constructing a new community.  The cost per household on average goes up by $500 for new construction.  So a $175,000 home construction would cost an extra $500 to construct in order to have underground utilities or add about 0.3% to the cost.  Needless to say, this makes sense.  Not only for the city and the citizens, but for the utility company as well since it reduces maintenance costs over the long run.

The problem arises when cities want to switch from existing above ground utilities to underground utilities.  The rough cost is about $1 million per mile to bury it underground.  To give you an idea, FPL (Florida Power & Light) has a total of 64,000 miles of distribution lines.  A little over a third, 24,000, is buried underground.  Therefore, if FPL had to bury everything underground they would look at a total cost of 40,000 x $1 million = $40 billion!  That’s roughly $15k per customer or $9.5k if you want to split the cost amongst all customers, which needless to say is a huge amount of money.  Even if you divested the cost over ten years for the consumer it would still add $79 – $125/month to their electric bill.  Not many customers will opt for that, I can guarantee you that…

Blackout

One may argue that if you take into consideration the cost annually associated with repairs to the system that it should pay for itself over an extended period of time, but that’s not really the case.  Case studies in North Carolina, Florida and Seattle have shown that it would only cover 15% in a worst case scenario and up to 38% in a best case scenario.  So in Florida’s case it would only save FPL about $15 billion, thus leaving them with a $25 billion gap.

Is there any solution that could make financial sense to bury utilities underground?

Most of Western Europe and most of Japan has gone underground in the past few decades, so why them and not the U.S.A.?  The reason is that most countries in Europe heavily subsidized the construction of the underground utilities during the 70s and 80s and in today’s political and financial climate there isn’t going to be an appetite in the U.S. to spend tens of billions of dollars every year for this massive undertaking.

Going back to the FPL example; hypothetically for a 15 year project, FPL could cover the $15 billion in cost as that’s the amount of money it’s going to save in repairs/maintenance anyway, so in essence it doesn’t cost them a dime.  In other words the $1 billion per year they would spent on construction is earned back in a reduction of repairs.  However, somebody will still need to cover the difference, which is $25 billion.

Power Failure

If you were to cut it in 3 parts then the Federal government would subsidize about $8.5 billion of it.  The State would contribute another $8.5 billion and the consumer would have to cover the remaining $8 billion; again, all this spread out over 15 years so about $530-$565 million per year.  This adds up to about $126 per FPL customer per year or about $10.50 per month extra in the electric bill.

Bear in mind that the State would have to come up with half a billion dollars per year as well, so it’s likely they would need to raise revenues through the form of added utility taxes, unless of course they can find the money by cutting spending.

For now, it’s more likely that municipalities will continue to force utilities and contractors to bury utilities underground for new construction projects, but existing above ground utilities are going to stay until a better financial/economical climate starts taking hold.  Even then it’s going to be an uphill battle for proponents to get this approved, but maybe another catastrophe will push the public and political appetite in that direction.  Also, bear in mind the number of outages, including massive blackouts, has been going up by 9.5% per year since the early 1990s.  The main reason for this is that the U.S. power grid is outdated.  It was built over half a century ago, so maybe it may not be a bad idea to upgrade the system and bury the cables underground while we’re at it…

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