The chains of inflation

THE CHAINS OF INFLATION
By Bob Confer

We have a federal government that has a spending problem and because of that it has a revenue problem, too. So what is a government to do? Congress could openly raise taxes, but doing so would hurt them come election time. So would cutting benefits. Anyway you put it, a spendthrift would be a marked man as would his pennywise foil.

The only option left for them is to do those tasks secretly. There would be no more clandestine way to do that than to manipulate the statistics that govern our public policy. That could happen with a little gimmick called the Chained Consumer Price Index. It has been proposed as a new way to calculate inflation and it really gained traction over the last six months as the dueling Congress looked for ways to address the deficit and debt in the long term.

Under the Chained CPI the standard CPI would be cast aside. In the current method, the cost of a fixed basket of goods and services is tracked over time and that growth in value represents the inflation rate. The Chained CPI would take that simple, straightforward calculation and turn it on its head, making it subjective and something of a fantasy. In the new method, the federal economists would adjust the basket for assumed changes in buying behavior; no longer would it be designated collection of items. In their eyes, if a shopper won’t buy a beef roast because it went up X dollars, he would probably buy a replacement meat, like pork chops. So, the Chained CPI would adjust for the modified basket (as theoretical as it may be) and track the price of the chops, noting its price variance (up or down) versus the roast that used to be in its place.

Since there’s a good chance that the modified basket will collectively feature lower-priced replacements, the Chained CPI will produce an inflation rate that is lower than today’s CPI. On average, it would cut the accepted inflation rate by a third of a percentage point per year. It doesn’t seem like much, but it is. Consider that inflation has been pegged to be 3.4 percent over the past 12 months. So, were the Chained methodology in play, it would bring that number down to 3.1 percent.

That small change would yield big results for a Congress afraid to do almost anything. It’s been said that over the first decade alone Chained CPI would shrink the deficit by $300 billion, through a combination of $100 billion in new tax revenues and $200 billion in spending cuts. That’s because the inflation rate affects a little bit of everything in the federal budget since it is used to determine both the revenue side and the cost side of things.

The new revenues would be achieved by sticking it to those who pay income taxes. Since wages will, in many cases, rise at a rate greater than what will be a much smaller inflation rate, more people will jump into higher tax brackets – more quickly, too - since those brackets are continually adjusted for inflation. At the same time, personal tax loopholes will grow at an equally smaller rate, preventing people from deducting higher dollar amounts that would have tracked the CPI now in place. We’re not talking peanuts, either: According to federal studies, over the first 10 years the tax burden for a low-income family would be 15% higher under the Chained CPI than it would be through the current CPI.

Significant cost savings would be gleaned from those who rely on the government for a retirement income. Social Security beneficiaries count on their benefits growing at a rate in step with inflation. In recent years the calculated rate of inflation has not been high enough to warrant a cost-of-living adjustment and seniors have been really feeling it. Imagine that pain for the long haul. In 2012, the adjustment will be 3.6 percent, but under Chained CPI it would be 3.3 percent. Following that trend, someone who starts collecting Social Security in the first year of Chained CPI will see $560 less per year after 10 years, and almost $1,000 less per year after 20 years.

The weight of Chained CPI will bring a good many people down. It’s an unscientific manner to calculate one of our economy’s most important statistics and an easy way for Washington to earn and save money, without making the hard, important decisions they should.



Bob Confer is a Gasport resident and vice president of Confer Plastics Inc. in North Tonawanda. E-mail him at bobconfer@juno.com.



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This column originally ran in the 02 January 2012 Greater Niagara Newspapers

On 911, Upstate mythology and payroll taxes

ON 911, UPSTATE MYTHOLOGY AND PAYROLL TAXES
By Bob Confer

Some random musings this week…

Congresswoman Kathy Hochul’s ALERT ACT has been welcomed with open arms by many people in her district, including my friend Scott Leffler who addressed it in his column last week. He supports the Act in entirety. I, on the other hand, can’t do the same.

I agree with the usefulness of the portion of her bill that demands cell phone service providers send a return text saying that texting 911 is not an option for anyone who tries to contact dispatch through that method. But, I wholeheartedly disagree with her plan to update 911 call centers so they can receive and transmit text messages. In my opinion, doing so will be deadly for either the patient or the responding officer depending on the reason for the emergency contact.

How can I say this politely? Americans as a rule are functionally illiterate. Have you ever tried to decipher a text that your friend has sent you? Better yet, have you ever read a text from a teenager? The language shortcuts and general disdain for proper English make most text messages incomprehensible.

Now, imagine being at the dispatch desk, trying to figure out those messages. You’ll receive and respond to the initial message. Then you’ll have to inquire about various details in separate messages. What has happened? How many people are hurt? Is there a threat? Are other people in imminent danger? So on and so forth. Think about how long it will take the dispatcher to compose outgoing messages then translate the incoming messages. Think of how long it will take the distressed to respond and give details; that is, if her nerves aren’t shot and she can somehow have a steady typing hand.

Call me old-fashioned but vocal communication is the only way to go. A dispatch center can quickly and fluidly glean accurate and appropriate information, while at the same time adequately prepare emergency personnel for what’s ahead. Texting affords none of the above. Lives will be lost by texting; you can count on it. Delays will cost patients their lives while unsuspecting lone officers might come into a situation more dangerous than alluded to in a text.

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I’ve always been dismissive of the idea that we should cut free New York City and make Upstate New York the 51st state. The general sentiment feeding that fantasy was this mythology that Downstate somehow took all of Upstate’s money. That’s contrary to reality as was proved in a report issued by the Rockefeller Institute of Government last week. They found that the 48 Upstate counties (excluding the Capital Region) paid 24 percent of the state's revenues and received 35 percent of state dollars back. Upstate would have lost up to $9.3 billion if its share of revenues matched its share of funding. You can see the report at www.rockinst.org.

But, that doesn’t mean Downstate is perfect. In my opinion, the policies created by their legislators are responsible for a great deal of the economic malaise in Upstate. First and foremost is their approach to Medicaid funding. It’s extremely difficult for Upstate people to pay for Medicaid out of their property taxes. That approach doesn’t carry the same effect in the NYC region. High rent is almost looked at as a necessary evil in the world’s most vibrant metro area, an assumed cost of doing business/living.

But still, that doesn’t mean we should cut off our nose to spite our face. New York City is important to our fiscal well-being. If you value our roads, schools, and state lands Upstate, know we really can’t survive without New York City.

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The Democrats must think we have short memories. Maybe most of us do.

They’ve been raising a stink the past month-plus over the manufactured threat that the Republicans will bring an end to the Social Security payroll tax cut. Where was this care for our pocketbooks exactly one year ago? Then, the President and Democratic Congress allowed the expiration of the Making Work Pay tax credit that helped buoy consumer spending in 2009 and 2010 as the economy crawled out of the recession. Most American workers benefited by $400 per year because of it. Alas, that credit was allowed to sunset, just as the Democrats intended when they designed it.

That makes the current hubbub so disingenuous to me.

Bob Confer is a Gasport resident and vice president of Confer Plastics Inc. in North Tonawanda. E-mail him at bobconfer@juno.com.

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This column originally ran in the 26 December 2011 Greater Niagara Newspapers

For the love of the game

FOR THE LOVE OF THE GAME
By Bob Confer

In my younger years I was, like any red-blooded American, an avid professional sports fan. I tried not to miss the baseball and football highlight shows, Monday Night Football, and my annual pilgrimage to Pittsburgh to catch my beloved Chicago Cubs while they were in town.

But, when I hit 30 years of age, things changed dramatically. Just like a switch, my love for the pros turned right off. Now do I rarely watch any football or baseball highlights. I couldn’t even tell you the last time I watched a football game from start to finish. As a matter of fact, I can’t even name the starting rotation for the Cubs.

You see, as I aged I grew disgusted by pro sports. I was driven away by the greed, egos and outlandish salaries, and maddened by the marketing that somehow makes everyone believe pro spots are the most important thing in the world and worth every exorbitant penny. From those criteria, numerous disdainful questions have racked my brain. Why can people name their team’s starting line-up but not their elected officials? Why do fathers abandon their sons and daughters on Sundays? Why should taxpayers feel obligated to pay for the stadiums of billion dollar leagues? What human being is worth a quarter of a billion dollars, just to hit a stupid ball?

Even though my admiration of pro sports died, my appreciation for sport itself did not. I still value the thrill of competition, the drama of a good match-up, and the diversion from daily stress that spectator sports present. Instead of finding that joy in the big leagues, I find it in a setting that I had become accustomed to in the early-1990s: College campuses.

These are not just any campus. Most Division I programs (especially when it comes to football and basketball) are no better than the pros. They emphasize athletics over academics while many of their athletes play only for a chance to reap big rewards from the NFL and NBA, leagues that use DI as some sort of minor league system and, somehow, get away with it!

Instead, I get my athletic fix from Division III programs. In DIII, the emphasis is on academics over athletics. There are no sports scholarships. The athletes are talented but they understand that they have almost no chance of playing professional sports, knowing that guys like the Buffalo Bills’ Fred Jackson are anomalies. In DIII, they play for the love of the game. That’s it.

It’s that pristine brand of competition – free of the trappings of avarice – that make DIII sports so refreshing. Where else can you find men and women playing a game at a high level with only the sports’ basal tenets in mind? They pursue victory with vigor, aided by the bond of teamwork and guided by their own ethic and determination, driven for personal betterment on the field and in the mind. That emotion and desire among the players - and also the fans - in DIII is unparalleled in all of sports.

The best sporting events I’ve ever witnessed have, far and away, been in DIII football stadiums and ice arenas. I’ve seen many a tight game and marveled at countless exciting plays. And to think, they were playing for free and my ticket cost me only $5.

You have plenty of chances to take part in these events in Western New York. It’s been said, depending on who you ask, that we’re either a football town or a hockey town. Either way, the games await. DIII football can be had at Brockport, Alfred University and Buffalo State. DIII hockey - which has a rabid fan base (me among them) - can be found at Brockport, Buffalo State, Fredonia, and Geneseo.

If you’ve never savored a DIII game, make it a point to do so. You won’t regret it and you, too, might even change your outlook on athletics for the better and turn your allegiance from the pros to players who understand the real value of sport.

Bob Confer is a Gasport resident and vice president of Confer Plastics Inc. in North Tonawanda. E-mail him at bobconfer@juno.com.


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This column originally ran in the 19 December 2011 Greater Niagara Newspapers

An alternative to war

AN ALTERNATIVE TO WAR
By Bob Confer

Last week I was the guest on Don Griffin’s “Second Opinion” on KJSL in St. Louis. The topic of discussion was a 2009 column I wrote about a part of the Constitution that gives Congress the power to issue Letters of Marque and Reprisal. These are contracts that allow American citizens abroad to defend themselves from a defined threat, or grant them permission to retaliate against – and even take the possession or life of – the same. My column had addressed granting Letters to seafarers so they could protect their craft and personnel from the modern day pirates off the Horn of Africa.

Don had me on his show to further expand on that concept; he wisely wondered if maybe this little-known and little-used rule could be applied to ground efforts as well, as a sort of alternative to war. It certainly can and our nation would be better off if we had used it. But we didn’t.

In October of 2001, just a few weeks after we were attacked on our soil, Congressman Ron Paul penned two bills that would have authorized the government to issue Letters to US citizens, giving them permission to hunt down and capture or kill the terrorists who planned the 9/11 attacks and/or were planning others. Nearly all of his peers at the Capitol looked at the bills with udder disdain and the legislation went nowhere.

10 years after the fact, there are probably scores of Congressmen who quietly admit they wish they had sided with the doctor. That’s because the War on Terror has proven to be an impractical war. Our enemy isn’t a nation. It isn’t an organized army. It is, instead, a splintered collection of extremists located throughout the world, operating in small cells located in places ranging from the obscure to the populous. It has been extremely difficult to properly to track and battle such forces using standard military tactics (strong in numbers and equipment), yet our armed forces have had numerous victories, both large and small. All of them, though, have come with a huge cost in life and dollar. The conflicts in Iraq and Afghanistan have claimed the lives of more than 6,000 American military personnel. Those same wars have consumed more than $1.19 trillion.

The War on Terror is actually something more fit for the recipients of Letters of Marque and Reprisal. Legal mercenaries, small in numbers, but highly-trained and effective, would have been able to operate under the radar and at their own discretion. As a result, the lives lost would not have numbered in the thousands. Rather, it would only have been in the dozens.

The monetary cost would be relatively miniscule as well. When Letters were granted in volume (by the US prior to and during the War of 1812 and by the Confederacy in the War Between the States), they featured bounties or rewards for the captured or killed. The same would have been applied to the likes of bin Laden and his fellow dregs of humanity. Instead of spending trillions (with a “t”) on the destruction of terror sects, the government would only have needed to invest millions (with an “m”) on financial motivators for those seeking the glory of fulfilled retaliation. Letters of Marque and Reprisal are unique in that regard, relying on the free markets to achieve what war typically would.

Most people have never heard of the Letters, or realized that they could be applied to privatization of threat neutralization. Others know of them but don’t care for their utilization, either considering them a Constitutional antiquity or something far too risky. Those of the latter mindset often think of Blackwater. That private company, favored by the Bush Administration, committed many atrocities in Iraq, including the murder of innocents. But, Blackwater was not commissioned by the Letters and was unconstitutionally used by the Executive Branch as an instrument of war. Actual Letters come with a collection of rules and restrictions, a means of control to ensure the contractors operate in the best interests of our nation.

It’s never too late to use Letters. A good application still exists for them in Iraq. Although the war may be identified as finished, thousands of our troops will remain there to aid and protect Americans conducting nation-building activities, ranging from construction to social work. Why should they have to? Letters would extend the privilege of protection to private Americans and their companies, granting them the power to retaliate and defend against terror attacks.

That privilege should be recognized now and it should have been in October of 2001.

Bob Confer is a Gasport resident and vice president of Confer Plastics Inc. in North Tonawanda. E-mail him at bobconfer@juno.com.


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This column originally ran in the 12 December 2011 Greater Niagara Newspapers

A tax cap with no teeth

A TAX CAP WITH NO TEETH
By Bob Confer

Earlier this year, the tax cap was instituted by the state legislature at the behest of Governor Cuomo as a means to curtail the ongoing decline of New York State by limiting the growth of property taxes which are already 79 percent higher than the national average.

Although the basic concept itself was not perfect – after just 5 years of 2 percent hikes your taxes will be more than 8 percent higher – it was advertised as being better than the alternative: This century it has not been uncommon for municipalities and school districts to drive up their levies by more than 5 percent per year. Case in point, during a three-year period ending in 2007 my total property taxes (local, county, school) grew by a combined 17 percent.

But, as taxpayers like me who are pained by these growing levies have found out recently, there’s a huge difference between the original intent of the law and the reality of what it became. The tax cap is really nothing of the sort, a law saddled with loopholes that permit tax growth far in excess of the 2 percent mark.

First and foremost among these flaws is the ability of governing bodies (such as town and village boards) to create a local law applicable to the budget year that would allow them to exceed the cap. To do so, they need only hold a public hearing followed by approval of 60 percent of the board. School districts, too, can pass higher budgets given that, unlike the towns, their residents elect to do so with a vote of at least 60 percent.

It’s too bad that rule of public approval applied to schools wasn’t required of the other taxing jurisdictions, because many boards across the state have been using the loophole. Last week the office of State Comptroller Thomas DiNapoli provided me some numbers about how many taxing entities (specifically cities, villages, towns, counties, fire districts and libraries) have informed him of their plans regarding the cap. So far, 40 percent have submitted their plans and of those 1,125 bodies, 217 of them – or 19 percent – have expressed their intent to override the cap.

The cap’s weaknesses further confound local taxpayers with an exclusion for pensions; their growth is allowed to exceed 2 percent. Unlike private retirement investments such as IRAs or 401(k)s, public pensions have guaranteed outcomes in New York. So, when the economy falters, taxpayers have to make retirees “whole” by picking up the slack for the low or negative rates of returns on the investments that back state pension funds. DiNapoli said municipalities will have to increase their pension contribution rates from 16 percent of payroll to a tad under 19 percent (that’s a growth of 16 percent!). For police officers, the payment will go from 22 percent to 26 percent of payroll. So, in most cases, it’s guaranteed that the theoretical 2 percent cap will be exceeded by pensions alone.

The greatest problem with the tax cap, though, doesn’t occur in our neighborhoods. Albany is the root of all evil in this state. The state legislature and executive branch can’t force unconscionable mandates upon taxing jurisdictions and expect them to stay within budget, especially when the state has done little to nothing to reform the requirements of said mandates. If Cuomo and Friends were serious about stemming the loss of New York’s economic lifeblood they would introduce any of hundreds of suggested reforms to these programs, the worst being Medicaid, for which the counties are on the hook for nearly $10 billion annually.

Albany, too, should cap its spending (Google my 2008 column: “Taking the tax cap to the top”) because what’s good for the goose is good for the gander. Every government entity - our towns, schools, agencies and capitols - should cap (preferably decrease) their spending…just like we have to in our businesses and families if we expect to stay in business or not lose our homes to foreclosure.



Bob Confer is a Gasport resident and vice president of Confer Plastics Inc. in North Tonawanda. E-mail him at bobconfer@juno.com.


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This column originally ran in the 05 December 2011 Greater Niagara Newspapers