Tax & Spend Administration?

Last night Secretary Paulson announced that the U.S. would seize control of Fanny & Freddy Mae, the two largest loan corporations in America. Those two are so large that they could not fail, and yet there was the distinct possibility. And so the government stepped in. The terms of the seizure are not yet clear, but it’s sure to cost tax payers a bundle, although it will surely be less than if the loan system failed.

The administration probably did the responsible thing at this point in the game, by acting to see that chaos didn’t prevail in the loan market. However, all of their protestations of keeping government small should be taken with a very very very small grain of salt, given that this administration will have spent more money and placed America in more debt than the previous two administrations combined (and perhaps the 2nd Reagan administration). Also, stricter regulation of the loan market would have prevented such silliness in the first place, proving that some regulation actually saves us money.

So when Republicans say they’re for smaller government, be sure to ask who’s paying the bill for Fanny and Freddy.

Oops! McCain loses one point

He was doing just fine at his lovefest in the Twin Cities, but then Senator John McCain started talking about cutting taxes. As I wrote earlier, he was palatable because he was talking about the least offensive tax, a corporate tax cut. As he takes a more offensive position by generalzing cuts, especially in light of news like the Federal Highway Fund running out of money, now I’m giving Obama the win for the economy, and McCain loses personality points for pandering.

Social Contracts on Internet Security

Everyone and I mean EVERYONE tells you that the best thing you can do for yourself and others if you have a Windows system on the Internet is to run anti-virus software, and keep your patches current. Otherwise your system can be a nuisance to others, as it is broken into and used as a bot to attack others.

That doesn’t work so well when the anti-virus software causes the user problems. These systems take a performance hit, that is for sure. But they can have bugs as well, as this page from McAfee demonstrates. What has happened here is that a program called “McScript_InUse.exe” has gone crazy, pegging the system’s CPU. Not only does this kill performance of every other application on a system, but it can have an impact on your energy bill, because a 100% used CPU means that it will run faster with more fans on and more cooling required.

McAfee cannot be condemned for having bugs in their software, even though it is ironic that they exist in large part because Microsoft Windows has bugs that are taken advantage of. It never-the-less brings up the question of whether such active scanning technology is the right approach, or whether we have to do better at providing better underlying security. The extreme version of this would be provably secure programming, a field in which Dr. Gene Spafford (a network legend) has devoted his career.

In the meantime, however, we have to hold McAfee to a higher standard, just as we should Microsoft. When people believe that they will be harmed by the very software that is meant to protect them and others, especially when the more negative consequences impact others, they will not upgrade. We discussed this with the ETH Study, some time ago, and now we can expect additional consequences.

Georgia: In the “Better Late than Never” Category…

Seven years and six months into his administration, President Bush seems to have realized that Vladamir Putin isn’t always such a nice guy. The Wall Street Journal reported today that the administration is putting all bilateral contacts with Russia under review. This occurred after a near face-off between a Coast Guard cutter and the Russian navy. As I have written previously, we are at least in part to blame for the fiasco in Georgia, and so this can be seen as corrective at best, and palliative at worst. Just like his father, had President Bush sent strong messages (perhaps with soldiers) before the invasion, perhaps there never would have been one to begin with.

This was a win/win/win for Russia. They managed to demonstrate to the west and elsewhere that they will have their views taken seriously, they invaded the portion of a neighbor that has many Russians, and they may well have destabilized alternative energy transmission paths that the U.S. proposed, demonstrating the old axiom that all war is over wealth.

President Clinton reminded us at the Democratic National Convention this week that we as a nation cannot go it alone, that it is not in our best interest to go it alone, and that cooperation amongst nations is best for the United States. I am glad we are standing by Georgia, even if it is very late, and I hope that other countries will send stronger messages than they have until now. I am referring in particular to Germany and France.

McCain v. Obama: The Economy

Bureau of Economics I typically surprise many of my friends with just how fiscally conservative I can be at times. I believe for some reason that people should get the government they pay for, and no more. To me that means not running a deficit. One of the best things we can do for our economy is balance the amount of money we’re taking in versus what is spent. I do not suggest that this needs to be done on a year by year basis, but rather on a decade by decade basis.

I do not believe in tax breaks for the rich, or even for the upper middle class. In the United States we have a creaking infrastructure, as I have previously mentioned. Our roads are in need of repair, our education system is in shambles, our health care system is reserved for the upper middle class who work, and we do not as a country save enough. To me that means we as individuals have to pay for all of these things somehow. Either we pay for them in our taxes or we pay elsewhere. If we pay elsewhere, often times those who cannot get left behind. In some of these areas I believe that to be bad policy.

Where do the candidates stand? Senator McCain wants a corporate tax cut from 35% to 25%. As Republican proposals go, this one is pretty mild, and nearly heretical for a Reagan Revolutionary. Indeed according to Wikipedia at least, McCain generally prefers reducing the deficit to other forms of tax cuts.

Recently, Barack Obama recently sat in a discussion next to Robert Rubin and said that at the time that he would not have been as fiscally conservative as President Clinton was. The problem with that statement is that it was at least in part that fiscal discipline that closed the budget deficit that itself caused interest rates to drop. His web site states that he would provide for a $10 billion foreclosure defense fund, and a $20 billion general stimulus package.

At the same time he wants to cut taxes for the middle class as well as for senior citizens. Once again, Obama does not say how he would pay for all of the programs he mentioned. I don’t have a problem with the programs, or even the bill for those programs. But he has to say how he is going to pay for those programs.

Until I hear more details from Obama, McCain gets this round.