How does the U.S. government know how much it owes?

There is a lot of news lately about the Federal government potentially running up against a debt limit and not being able to keep borrowing. This raises the question of how the government keeps track of debt. http://www.publicdebt.treas.gov/ doesn’t explain anything about the information systems used by the Federales. Are we sure that we didn’t blow through the debt limit some months ago? http://www.fms.treas.gov/index.html makes it look as though some efforts are being made to keep track of the cash, but with $16.94 trillion to track, it seems possible that bonds and other obligations could slip through the cracks.

How do we know what we know about the debt?

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Is Stephen King’s End of Western Affluence theory too pessimistic?

A friend emailed me “When Wealth Disappears,” a nytimes op-ed by Stephen King, chief economist as HSBC and the author of When the Money Runs Out: The End of Western Affluence. The guy starts out by pointing out the obvious: old established governments such as the U.S. and its counterparts in Western Europe are spending way more than they can ever hope to take in via tax revenues. He says that profligate spending worked out okay in the past because of five factors that generate crazy amounts of GDP growth: (1) globalization of trade, (2) financial innovation, (3) social safety nets that encouraged consumers to spend rather than save, (4) women entering the labor force, (5) increasing percentage of people going to college.

Is the guy too pessimistic?

On globalization of trade, Apple was able to Fedex an iPad directly from the factory in China to my parent’s house in Bethesda, Maryland. However, for a smaller enterprise there remain substantial obstacles to working with people in India and similar foreign nations. Improved telecommunications and video conferencing systems should help here.

On financial innovation, one the one hand you’d think that that Collapse of 2008 shows that it would be nice to have our finance industry be a lot less innovative. But on the other hand, the fact that it costs us more than 8 percent of GDP (source) indicates that there is a lot of room for cost reduction here. For example, shouldn’t it be possible to match savers and borrowers in the home mortgage market for a lot less than we are currently spending?

Regarding social safety nets… if the government runs out of money and people need to work in order to pay rent, buy food, obtain health care, wouldn’t that motivate a huge number of people to go back to work? CNN says that the employment rate right now is near a 30-year low.

Women entering the labor force… that does seem as though it was a one-time event. On the other hand, if cities and states run out of cash to pay retired 50-year-old government workers their pensions there will be a lot of able-bodied middle-aged folks reentering the work force.

As far as the quality of education goes, the people most likely to celebrate the value of a college education are those who haven’t been in a classroom lately! Books such as Higher Education and Academically Adrift: Limited Learning on College Campuses show that there is a huge amount of room for improvement in what gets delivered during four expensive years.

What if Americans simply pushed themselves to be better workers, e.g., by showing up on time every day, being more organized, answering customer inquiries faster and more reliably, following up? Couldn’t we get a lot of GDP growth out of that?

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Highs and lows of American culture

I went to the White Mountains this weekend to see the foliage and encountered some of the highs and lows of American culture.

For the high point, see the photo below of a nice-looking Swiss watch, pinned up at the Piper Trail trailhead parking lot. It has been there for a week waiting for its rightful owner. No other hiker has been tempted to appropriate it. For the low, check out the photos below of the restroom entrance at one of the most popular stops along the Kancamagus Highway. Apparently bathrooms are not an essential government service…

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Why are citizens more interested in marriage laws than divorce laws?

The September 30, 2013 New Yorker magazine carries “The Perfect Wife,” an article about the widow of a lesbian multi-millionaire who went to the Supreme Court to obtain a refund of about $640,000 in federal and state estate taxes (the inheritance would have been tax-free had it been the result of a heterosexual marriage). Thus continues a stream of intense news coverage and popular interest in the subject of gay marriage.

On the same day that I read the New Yorker article, I received an email regarding an effort by the National Parents Organization to get a shared parenting presumption enacted here in Massachusetts (see their request that people write letters to Governor Deval Patrick to weigh in on the work of a committee that may produce recommendations for new legislation regarding child custody). There is so little media and citizen interest in the topic of whether a child of divorce ends up with one parent or two parents that a Google News search for “Working Group on Child-Centered Family Law Massachusetts” produces no results. Other than this one organization, nobody seems to care what the Governor and Legislature are doing.

Why should marriage be more interesting to people than divorce? The ability to marry has very little effect on children. The children of couples, for example, who elect not to marry but stay together, have the same life experience as the children of married couples who stay together. The rights of children to inherit from their parents are similarly unaffected by whether or not the parents are married. Weddings can be costly, but it is a cost that is voluntarily incurred and controllable by the bride, groom, and families.

Divorce, by contrast, has a tremendous effect on children, who often lose access to one parent in states where sole custody awards are the norm. Divorce laws have a huge effect on adults and in fact the economists and lawyers who’ve studied the laws have found that the laws determine the likelihood that a divorce lawsuit will be filed. (See “These Boots are Made for Walking: Why Most Divorce Filers Are Women” (Margaret Brinig and Douglas Allen; 2000; see the PDF version of the paper or this New York Times article regarding the paper). In a more recent paper by the same team, “Child Support Guidelines: The Good, the Bad, and the Ugly” (Family Law Quarterly, 45:2, Summer 2011; PDF is available for free) the conclusion was that the possibility of larger child support payments motivated divorce lawsuits to the point that if the potential payor’s income increased by $100,000, the probability that the potential payor would be sued for divorce and child support rose by 10 percent: “We suggest, based upon twenty years of data from the United States and Canada, that some well-intentioned child-support-guideline measures have actually encouraged divorce by compensating custodial parents beyond the amounts actually needed for their children’s support.” The divorce industry does not like to tout its revenues the way that the wedding industry does, but if the median cost of a wedding is $18,000 (source) it seems obvious that the divorce industry is much larger than the wedding industry. Given that the official end of a marriage is a lawsuit, it will take only a small percentage of divorcing couples to hire attorneys to overtake all marrying couples in spending.

Given that divorce has a larger effect on peoples’ lives, that many of the people affected are children, and that it consumes a larger share of the GDP than marriage, why is there so much more popular interest in marriage? Is it simply because people find it more pleasant to contemplate marriage than divorce?

[Oh yes, in case you’re curious about why people are writing to Governor Patrick, here’s a quick summary of how child custody works in Massachusetts…

Take everything from this posting regarding divorce in Denmark and invert it.

In Denmark cases go from an administrator who tries to get couples to resolve the divorce quickly and inexpensively, then to a single judge, then to a three-judge panel that re-hears all of the facts. In Massachusetts cases go directly to a judge (there is no jury) unless couples voluntarily elect to mediate. The most important decisions, e.g., whether a child should have two parents at the end of the process or one parent and one “visitor,” are questions of fact and therefore there is no practical right of appeal. A child’s future is determined by a single individual (the trial judge).

In Denmark children do not have a substantial cash value ($8000/year maximum) and therefore, as predicted by Brinig and Allen, custody litigation is uncommon and children of middle class parents almost always end up with a 50/50 schedule. In Massachusetts, by contrast, typically the mother would win “sole physical custody” and the child’s access to the father would be reduced to an every-other-weekend experience. A 2004 ballot referendum that would impose a joint custody presumption won approximately 85% approval (results), but was not binding on the Legislature and no action was taken. Massachusetts thus remains what one lawyer described as a “winner take all” state, in which one parent will get the kids, the house (since the kids need a place to live), and the cash. As noted by Brinig and Allen, the possibility of “winner take all” is a strong motivation for the filing of divorce lawsuits in the first place. (How much of a financial motivation could there be? The Massachusetts child support guidelines start at $40,144 per year, tax-free, if the payor has an income of at least $250,000 (prior to 2013, the amount was $47,580). In other words, a one-night encounter with a drunken radiologist will lead to a guaranteed stream of payments of $50,000 per year for 23 years, or $923,000. A second one-night encounter with a different high-income man that produces a second child will yield an additional $40,144 per year in tax-free payments, because the child support for the first child is not counted as income to the recipient. These numbers are the minimum and when a payor has substantial income or savings it is not uncommon for a child support plaintiff to seek $100,000 or $150,000 per year for a single child. If the parents had been married, the financial rewards from a lawsuit are potentially larger and can include an award of the defendant’s pre-marriage savings (Massachusetts is not a community property state) as well as alimony (until a 2011 legislative change, it was possible to be married for a day and then collect alimony for the rest of one’s life).)

Judges in Massachusetts have a variety of ways of justifying the award of the children to just one parent and, even with a shared custody presumption in the law, it is quite possible that the outcomes wouldn’t change much. For example, one current justification for an award of sole custody is if the parents have “conflict.” In other words, shared custody should be awarded only if a plaintiff and defendant have gone through two years of litigation and a trial while remaining on friendly terms. Another justification is the historical pattern of child care. If a plaintiff can show that he or she did more of the child care prior to filing the divorce lawsuit, the plaintiff can ask that the arrangement be perpetuated indefinitely. Thus only if it can be proven that the parents had an exact 50/50 split of child care tasks prior to the lawsuit being filed will a 50/50 schedule be awarded post-divorce.

A litigator explained to me how it all plays out in practice:

“The Massachusetts Legislature practically guarantees that family lawyers will bill until the family’s assets are exhausted. The Legislature gives the judges almost infinite discretion to do whatever they want. Suppose that some guy is having an affair with an office hottie. The angry wife comes into my office. I tell her ‘I can get you 100 percent of his savings and 100 percent of his income going forward. I can get you 100 percent custody and control of the children so that this guy that you hate will never see them again. Just give me $50,000 as a retainer.’ I’m not lying, but what I didn’t say is that, depending on what the judge had for breakfast, it could also be zero, zero, and zero. Meanwhile the defendant goes into a lawyer’s office and the lawyer says ‘You have to give me 100 percent of your money.’ The guy asks how come? The lawyer says ‘If you don’t give me 100 percent of your money, your wife could get it from the Probate court judge and you might never see your kids until they turn 18.’ After the house has been triple-mortgaged, the 401k accounts emptied, and the mutual funds transferred to the lawyers, the woman’s lawyer says ‘The case isn’t going as well as I thought. This judge just isn’t sympathetic to our case. Your husband doesn’t look like such a bad person. I think you should settle.’ Then there is a boring settlement that looks like every other divorce settlement or judgment. The woman stays in the fancy house. The dad turns over most of his after-tax paycheck to the woman, moves to a studio apartment, and sees the kids every other weekend. He behaves like a ‘Disney Dad’ because, realistically, why would he want to spend his limited time with the kids nagging them to do their homework? You don’t have to worry about property division at that point because there isn’t anything left. The litigating couple could have gotten the same result from a mediator for $3000 and the kids would still have had their college fund.”

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So… what do readers think? Why has gay marriage been in the spotlight for years now while child support and custody laws elicit yawns?

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California’s $327 million web site in operation

Back in September 2012 I wrote a posting about California’s state government spending $327 million to build a seemingly straightforward web site where consumers could go to find health insurance plans. The web site is now up and running.

I told the site that I lived in Berkeley, earned $80,000 per year, and was a single 50-year-old who was neither pregnant nor disabled (click on image below to enlarge):

The site helpfully told me that I may qualify for free coverage through Medi-Cal, but the linked-to fact sheet says that it is for “an individual who earned less than $15,856 [per year]”. I was also offered “Access for Infants & Mothers” though it was unclear how this could apply to a household with one adult. In any case the linked-to fact sheet says that it is for “income between $3,256 – $4,884 per month for a family of 3.”

In other words, for $327 million the government purchased a computer program unable to determine that $80,000 is more than $15,856.

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Hanscom Air Force Base during the Government Shutdown

I taught a helicopter lesson today at the Bedford airport, a combined civilian/military field. Our helicopters live in a hangar on Hanscom Air Force Base so we often need to drive through the main gates of the base to get to our machines. After September 11, 2001, Massport invested heavily in additional security. We have fancy security gates everywhere. We have SIDA badges for which we must apply with our passports, take special training every two years, and undergo criminal background checks and fingerprinting. In recent times the SIDA badge could be printed with a special logo that entitled the pilot to drive onto the base. This summer, however, the government decided that SIDA badge holders would have to come to an office on the base every year or two to apply for a Department of Defense ID. There doesn’t seem to be any additional security as a result of this additional ID, since it is issued automatically upon presentation of one’s SIDA badge and driver’s license.

Today at the main gate I was told that they really shouldn’t let me in because I had only the SIDA badge and not the additional ID, but then I was let in. After working with an instrument-helicopter student for a bunch of approaches (Air Traffic Control is up and running as usual), I decided to go to the badge office on the base. There was a sign on the door that said “All services are suspended due to the government shutdown, except for issuing [the particular card that I wanted].” I had heard horror stories about multi-hour waits in this office and indeed there were at least 50 chairs for adults plus a substantial kids’ play area. However, due to the shutdown, I was the only customer and I got my badge very quickly from the one uniformed soldier who was actively working. In another area of the shut-down office, four additional uniformed soldiers were chatting. They were being paid to come to the office, but due to the government shutdown had nothing to do.

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The world is going to hell in a handbasket (the government shutdown as seen by senior citizens)

I went to a dinner party at which one topic of discussion was an impending government shutdown. A man in his 70s maintained that this was going to be a terrible event. I asked “Why would it be worse than all of the previous government shutdowns?” (Wikipedia has a list of 18 since 1976). His answer was the Republicans and Democrats in Congress had less of a “dialog” than before. I estimated that there was no way that the shutdown could last more than 45 days, on the grounds that “All politicians love to tax citizens and then spend the money; they just have a few disagreements around the edges.” I said that no previous shutdown had lasted more than 21 days (yay, smartphone!) and therefore 45 days would be a real statistical outlier. He persisted in arguing that American politics is completely different (and worse) than at any time in the past. (This was Cambridge, mind you, so 100 percent of the blame for the degradation is due to “crazy Republicans.”)

The government does seem to be shutting down, thus proving this guy right so far. But on the other hand I’m wondering why the situation seemed so much more dire to the oldest person at the table than to the younger guests. He’d lived through at least 17 previous shutdowns, not to mention a world war, and somehow everything that turned out all right.

Other old people that I know have access to the same news as young and middle-aged folks yet they are much more concerned about unusual weather and foreign conflict. If they are freaked out about floods I might point out that most of the world is enjoying sunshine. If they are freaked out about U.S. economic stagnation I will point out that the world is still improving because China is much more populous and their economy is growing robustly. If they are freaked out about the fact that various people in the Middle East hate each other I will point out that there are lots of peaceful parts of the world. None of my “look at the places that the news media isn’t bothering to cover right now” statements have ever helped.

So… for the readers…

  • Am I correct in that the same events are more worrisome/upsetting to older Americans?
  • If so, why? Given that they have fewer years of life expectancy, shouldn’t the potential for long-term damage be less frightening?

One of my theories is that people have only a fixed number of things that they can worry about. A person between 30 and 50 may use up all of his or her potential for worrying with job- and kid-related concerns. He or she simply doesn’t have leftover slots to care about Syria, Congress, the melting of assorted continents, etc. Once comfortably retired, however, and all children settled in their own homes, a person will naturally fill up those worry slots with issues from the media.

If my theory is correct the only sensible way to live in retirement is with a complete ban on news media.

[Oh yes, back to the shutdown. I’m going to go on record with a prediction that the future will look like the past. The average length of a previous shutdown was about 8 days. So I will predict that this shutdown lasts 8 days. If it lasts until the end of October I am going to invite all of my readers to join me at Margarita’s for a Taco Gigante on my dime! If it goes beyond the 45-day limit above, they won’t be doing Taco Gigantes anymore so I will host a blood donation party at Children’s Hospital in Boston.]

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National Taco Day

I’m going to try to lose some weight this fall, so I’m swearing off McDonald’s and all of that fattening fast food. I’ll be having sit-down cooked-to-order lunches and dinners at Margarita’s instead. A press release indicates that they are bringing back a special taco for National Taco Day (October 4). Here’s what the weight-/health-conscious consumer will receive:

The two-pound goliath is hand-crafted, made-to-order and presented in distinctive tongue-and-cheek Margaritas style. The Taco Gigante is made with a crispy 12-inch tortilla shell and comes stuffed with lettuce, refried beans, Mexican rice, seasoned chicken, taco beef, pork carnitas, bacon, salsa fresca, cheese and queso sauce. Topped with crema, pickled jalapenos, picante sauce and hacienda sauce, the $9.99 gargantuan is worthy of its title.

I don’t want to overeat so I’ll be asking them to make mine without the lettuce.

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Learn about how bad white men are by seeing The Spectacular Now

A friend and I enjoyed the fine craftsmanship and lack of exploding superheroes in the movie The Spectacular Now. If you need to be reminded about all of the space on the planet that is being unjustifiably taken up by white men, go see the film right now. The basic white guy prototype in the movie is a selfish drinker/doper who abandons his responsibilities to the wife and kids, either by running away or overdosing and dying. Younger white guys simply drink. White guys who are too young to drink sulk on a sofa and play video games. Occasionally a white guy will become financially successful, in which case he is a stuffed shirt/blowhard. A final, but rare option for a white guy is to be a failing small businessman.

Not all of the male characters are reprehensible. There is one male high school student who shows some promise; he is black. There is one male teacher who cares about the students; he is black.

Most of the women in the film are strong, smart, prudent regarding the future, and trustworthy.

I would write more about the film but a buddy of mine is coming over and I need to crack open another 6-pack and bottle of oxycodone for him…

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iOS 7: Apple catches up to Android …

… in terms of draining the battery. My iPhone 4S used to last about 24 hours before needing a charge. After the iOS 7 upgrade it lasts from 8 am until about 4 pm.

This reminds me of first-generation Android phones.

Separately, the photography interface on iOS 7 seems to have gotten better for sharing photos. After taking a picture from the Camera app you can touch it and then share it. On the previous versions it was necessary to back out into the “Photos” app before sharing. For taking pictures, however, the interface is worse. There are on-screen controls for the flash, HDR, etc. that make it hard to compose the image (by obscuring the virtual viewfinder). I can’t see any way to hide these controls and look mostly at the image to be captured.

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