Pulling the Brake

Last year we, er, railed against the boondoggle known as the California high-speed rail (HSR) project, aka the train to nowhere. Yesterday Sacramento judge Michael Kenny halted the $10 billion expenditure of bond funds until a realistic plan for raising the remaining $15 billion is presented.

the state's current financing plan does not comply with the promises made to voters in 2008 when they approved selling $10 billion in bonds for the project. Beyond the $6 billion in state and federal funds for the first 130 miles, the judge said, revenue is theoretical rather than "reasonably expected actually to be available starting in 2015." The current cost estimate for building the first 300 miles, which the judge has indicated he believes is what the bond measure intended to finance, is $31 billion.

Supporters of HSR were undoubtedly counting on the project's momentum and arm-twisting by special-interest beneficiaries to force continuation of the project regardless of the wording in the 2008 initiative. HSR may still proceed if the legislature votes the funds, or if a realistic financing plan is devised.  Nevertheless, Judge Kenny's insistence that the Governor and other supporters live up to the promises they made to get the law passed is refreshing....and rare.

164th Diocesan Convention

Graced with Light, by Anne Patterson, at Grace Cathedral.

As they did last year, delegates from 74 Episcopal congregations gathered at Grace Cathedral to conduct the business of the Diocese of California (summary here).

Like most corporations, non-profits, and other non-governmental entities, the Diocese is required to have an annual meeting to receive reports, elect officers, and vote on resolutions. Over the years it's been a challenge to avoid losing control over time, since every Episcopalian who loves to hear the sound of his or her own voice shows up at convention. (Your humble observer, a kindred soul to Chauncey Gardiner, just likes to watch.) The organizers are to be commended for strict enforcement of the two-minute speaking rule. (The bishop was exempt.)

The most spirited discussion concerned a resolution that would order the endowment manager to divest all shares in fossil-fuel companies, a tricky and somewhat costly proposition if one participates in a broad-based investment fund. A counter-proposal to invest new monies in alternative energies won the day, although everyone seemed to agree that being anti-carbon was a good thing. As for me, I sympathized with all the employees and retirees of Chevron, Exxon-Mobil, Philips Petroleum, and Occidental whose livelihood was lumped in with apartheid (divestment was a favorite method of expressing disapproval of South Africa in the 1980's). Fossil-fuel people won't debate, they'll just join the millions of others who have stopped coming.

So why do I stay? I've already stated my reasons, or maybe I'm just a creature of habit. © 2013 Stephen Yuen

There's Always Next Year

Blue Shield Silver is the closest to what we have now,
and the net cost through Covered California will be half
of what we will pay next year.

The open enrollment period on my retiree health plan expires today, October 25th, when I have to decide whether to re-up for 2014 or take my chances on the California Obamacare exchange, Covered California. If we do choose Obamacare, however, we can't go back to our old retiree plan...ever.

On the one hand I can pay over $1,000 per month--my share of the cost, with my former employer kicking in a smaller amount--or pay a lot less through Covered California, provided I am willing to do or believe the following:

1) Manage our household income to be below four times the poverty rate (in our case that means capping it at slightly less than $79,000). This will enable us to a) limit the premiums to 9.5% (or less) of our income and b) receive a tax subsidy.

2) The extensive personal data that we will be entering into Covered California is secure.

3) The benefits and costs from the insurance company that we select are as described on the website.

The decision isn't close. We will stay on the insurance plan that we know, though we will pay thousands of dollars more. It's a matter of risk, but most of all it's a matter of trust---the fact that we trust health insurance companies more than the government to deliver on promises is a terrible indictment of our current system.

And there's always next year to change our mind. I'll be happy to be proven wrong. © 2013 Stephen Yuen

The Endless Loop

Two weeks should have been enough time to correct startup glitches, so I decided to check out the Covered California website, reputedly one of the most reliable of the Obamacare exchanges.

Coveredca.com: an attractive home page...on to "getting covered"

Getting covered: let's try the "Shop and Compare Tool" links.

Oh-oh, we're back here again.

You are in a maze of twisty little passages, all alike.

Kidding aside, some links do work and it is possible to get to the Shop and Compare Tool.

Whew! and to think that almost three years ago I was a worry-wart.

A Lucky Guy

Updated from five years ago: Happy birthday to my youngest brother, who dated the prettiest girls and had more friends (and fun) growing up than any of us.

Two years ago he got married to a beautiful lady lawyer and settled in Orange County. He watches his diet, exercises regularly, and is the model for all his older brothers.

His good fortune has been mis-attributed to his double-lucky birthdate. The reasons are decidedly less mystical: character, hard work, and smarts that were well-concealed during the first half of his life.

Congratulations, brah, hope to see you soon. © 2013 Stephen Yuen

Cool Enough

We do have home air conditioning (see related post below), but in our city next to the Bay we only need to turn it on a few days each year. Most summer days are like this one, where we can take our bikes along the levee without breaking a sweat.

There is a lot of sound and motion at the eastern edge of Foster City--ducks, waves, airplanes heading north to SFO, roller skaters, and dog walkers--yet today it feels quiet. Traffic along Beach Park Boulevard is light, and the few small businesses (music studios, family restaurants, specialty shops) along this stretch aren't busy.

My friend sold his Foster City townhouse last year and retired to putter around in the Southern California desert. Even if I played golf as much as he does, I wouldn't move down there. Palm Springs ain't cool like here, man. © 2013 Stephen Yuen

Party On

Fireworks for sale at Don Quijote market.

In Hawaii New Year's Eve has always been the principal fireworks holiday.

Everyone participated. As a 4-year old I waved my first sparklers, creating a figure-8 with the blue trail. The older boys threw cracker balls, trying to make each other jump. The men and women lit a few cherry packs ritualistically, then went back inside to enjoy food, drink, and conversation.

At midnight the patriarch of the family, then my grandfather and now my father, lit a string of 10,000 firecrackers hoisted on a ladder. Many of the other families in the neighborhood were doing the same, and the din was earsplitting. After watching for a few minutes, I would go inside to get away the noise and smoke.

July 4th in Hawaii has become a second fireworks holiday, mainly due to commercialization. Although the meaning of Independence Day is quite different in the Islands (where some believe that "independence" was forcibly taken away by the United States at the end of the 19th century), for most people the desire to have a good time overwhelms historical misgivings.

Party on. © 2013 Stephen Yuen

Long and Winding Road

Nine years after San Francisco Mayor Gavin Newsom began issuing marriage licenses to same-sex couples the U.S. Supreme Court

dramatically advanced gay rights Wednesday in rulings that direct the federal government to provide equal treatment to same-sex spouses and allow the resumption of gay marriages in California.

In a pair of 5-4 rulings on the final day of the court's term, the justices struck down the 1996 Defense of Marriage Act, which denied federal benefits to gay couples married under state law, and let stand a ruling that found Proposition 8, a 2008 voter initiative that ended same-sex marriage in California, unconstitutional.

The court tiptoed to the edge of declaring that same-sex marriage was a universal civil right but declined, ruling that each State should decide for itself. However, it would be wise for traditional-marriage defenders to understand that the battle is over.

You don’t have to have been Nostradamus to have known that the fight for same-sex marriage in the USA and in Europe has been over for twenty years or more.

Meanwhile, now that Proposition 8 has been declared unconstitutional, same-sex weddings in California will probably resume within a month:

Backers of the ban known as Proposition 8 have 25 days to ask the Supreme Court to reconsider its decision. A midlevel appeals court also must lift a hold it placed on the lower court order before the state can be free to issue marriage licenses to same-sex couples.

Still, state officials moved quickly to signal their approval. Gov. Jerry Brown, who refused to defend Proposition 8 as governor and in his previous job as attorney general, said he had directed the California Department of Public Health to start issuing licenses to gay couples as soon as the hold ordered by the 9th U.S. Circuit Court of Appeals is lifted.

Soon we'll again be witnessing scenes from marriages at City Hall. From 2004:

The line starts at the snack bar

Snakes its way past the gift store

Into the hallway

Clerk's office in the distance

After getting their license, many get married
right away in this magnificent setting

[Update - 6/29/13: Well, that was quick. Headline: Same-sex couples flock to SF for weekend weddings. ]

Worry About Tomorrow Tomorrow

Due to the requirements imposed on small businesses, Obamacare has been criticized as an impediment to job creation [update: large employers may be able to comply with Obamacare rules by using "bare bones" health plans that cover little hospitalization, if any.] However, the measure's job effects aren't totally negative [bold added]:

To implement President Obama's Affordable Care Act, San Mateo County will hire 25 people to help process the expected flood of new applications for new benefits....San Mateo County's Health Services Agency has been advised to brace for about 894 new applications per month above the 2,276 it currently receives for health benefits.

Further good news: half the annual labor cost of $3.6 million (that's an average of $144,000 per employee!) will be paid for by the Federal Government. The uncertain news: the jobs aren't expected to be permanent.

However, such an objection is unlikely to dissuade County managers from hiring. For decades California governments have believed in spending and hiring and worrying about tomorrow when tomorrow comes, and their recent actions (e.g., installing high-speed rail where most of the people don't live) show that little has changed.

A Crowded, Exciting Weekend

LA Times fire map updated on Saturday.

We departed at noon for the 300-mile drive south to Santa Barbara. We barely arrived on time for the pre-nuptial get-together with the families of our niece and her fiancé. Not to worry, we were one of the first out-of-towners to arrive.

The contingent coming from LA was delayed by the wildfires that closed the Pacific Coast Highway until 5 p.m.  Fortunately, there were no fires to greet us on the trip south, though the grass was often tall and dry and the winds strong.

Another group will be coming up on Saturday, May 4th, the day of the wedding, and Cinco de Mayo festivities have already started. It promises to be a crowded, exciting weekend; let's hope it will be memorable for only good reasons. © 2013 Stephen Yuen

Sorry, Bambi

Rancho San Antonio Park, Los Altos

Our impressions about nature are shaped at an early age. For city dwellers who have no connection or experience with hunting, it's hard to shake the idyllic image of Bambi. Wild animals are friendly, anthropomorphized beings, and the placid creatures that are seen in zoos do nothing to contradict that childhood conception.

We whose daily existence is lived far from the forest, i.e, urbanites and suburbanites, dream of Walden though few would actually live there.

Cougar near San Jose (SJMN photo)

The deer that are encountered in suburban parks know from experience that they have nothing to fear from humans. However, other animals that have begun to appear near human habitation are not so friendly.

The mountain lion (cougar):

Chris Wilmers, a mountain lion expert at UC Santa Cruz, has radio-collared 33 lions since 2008 between Big Basin Redwoods State Park and Mount Madonna County Park near Gilroy. He estimated that 50 to 100 lions live in the Santa Cruz Mountains.....The lion photographed weighs more than 100 pounds. Wilmers said it is a male from 4- to 10-years-old, and it looks healthy.

The feral pig:

Twenty-five years ago, spotty wild pig pockets were found in fewer than 20 different states. Now, they’re in 47 states [including California], with Florida, Texas, and a few others approaching crisis levels.

Wild pigs destroy the landscape and breed incessantly. Most alarmingly, they're very intelligent.

Pigs have been known to scope out traps for days before sending in the group's lowest ranking members to test for danger. And if a trap isn't built just right, the pigs will find a way out, either by climbing over each other or squeezing under the fencing.....feral pigs are quite elusive. Rarely seen during the day, they have learned to avoid being taken down by rifles or suckered into traps. [snip]

pigs have learned to break the floats in stock tanks to keep water flowing for their mud baths.

A single cat can take down a pig, but the latter have the smarts and the numbers. Despite what stock market experts say, the triumph of the pigs looks inevitable. © 2013 Stephen Yuen

Finding Their Place

Migrant Mother, Library of Congress Collection

Today's CBS Sunday Morning runs a piece on how the Library of Congress is adapting to the digital age. Among the millions of documents it could have selected, CBS included the 1936 photo Migrant Mother, described by the Library as "Destitute pea pickers in California. Mother of seven children. Age thirty-two. Nipomo, California."

42 years later, Florence Thompson was identified as the woman in the photo. Her difficult existence was captured in this Depression-era photo that depicted the face of "a 32-year-old parent who looks 50."

She and her family survived the Depression and the War and eventually settled in the farming community of Modesto. I was happy to hear how her story turned out. The Oklahoma migrants that John Steinbeck wrote about had very bleak prospects at the end of his Pulitzer-prize winning novel, but I like to think that they, too, managed to find their place in the golden land that was 20th-century California.

Florence Thompson (1903-1983) in 1979.

Not Your Stereotypical Homeless

A retired California couple of moderate means is on a "permanent" trip around the world:

we're senior gypsies. In early 2011 we sold our house in California and moved the few objects we wanted to keep into a 10-by-15-foot storage unit. Since then, we have lived in furnished apartments and houses in Mexico, Argentina, Florida, Turkey, France, Italy and England. In the next couple of months, we will live in Ireland and Morocco before returning briefly to the U.S. for the holidays.

70-year-old writer Lynne Martin and her husband Tim, 66, have figured out how to make the finances work. [bold added]

Serious number-crunching showed that selling our home in California would allow us to live comfortably almost anyplace in the world. Not having property taxes or a roof that needs fixing can pay for a lot of train rides.

A few specifics about money. Our financial adviser sends us about $6,000 a month, generated from investments. We also collect Social Security and a small pension. [snip]

Since we have eliminated homeownership, we have few bills to pay. We use an online bill-paying service, and we buy almost everything by credit card so we can rack up mileage rewards. One of our daughters receives the mail, which has dwindled to almost nothing.

A good Internet connection is essential. Our computers link us with family and friends, help us plan future travels, and are our source of entertainment in places where movies and television in English are elusive. Each of us has a laptop and an iPhone, and our Kindles house our library and travel books.

We have Medicare and supplemental plans, and when we return to the U.S., we see our doctors for annual checkups. We also have international health insurance covering medical emergencies and evacuations. The plan has a big deductible to help reduce our overhead, since our experiences with health-care providers abroad have been very positive.

The Martins' household budget in California was nearly $8,000 per month. They've been able to keep their expenses to less than that, even in the priciest cities.

WSJ graphic

Observations:

1) The Martins are by no means poor. Working backward from their $6,000 monthly stipend, they would need investment assets of $1.8 million, assuming that they're making withdrawals according to the four-percent rule ($1,800,000 x 4% x 1/12 = $6,000). Selling an average paid-up home in the Bay Area or Orange County would have produced 30-40% of their nest egg.

2) Good health, as well as comprehensive and inexpensive worldwide medical coverage, is key to the peripatetic lifestyle.

3) They are a fortunate couple to have no one dependent on them. The majority of people we know have someone---parents, siblings, children, or grandchildren---who rely on their continued presence and ministrations.

Yes, Lynne and Tim are indeed lucky. Through planning, hard work, and the willingness to take prudent risks they've showed that achieving one's dream is possible even if one begins late in life. Here's hoping that "the wheels [won't] fall off" for many, many years. © 2013 Stephen Yuen

Multistate Tax Quandary

Phil Mickelson's $7 million house in San Diego.

Last Sunday golfer Phil Mickelson committed the sports version of the Kinsley political gaffe ("A gaffe is when a politician tells the truth - some obvious truth he isn't supposed to say.") Phil Mickelson, a resident San Diegan, commented on the Federal and California tax hikes that are hitting high-income residents:

“I’m not exactly sure what I’m going to do yet,” said Mickelson, who tied for 37th at PGA West. “I’m not going to jump the gun, but there’s going to be some drastic changes for me, because I happen to be in that (tax) zone that has been targeted federally and by the state. It doesn’t work for me right now, so I’m going to have to make some changes.” [snip]

“I’ll probably go into it more next week,” he added, “but if you add up all the federal and you look at the disability and the unemployment and the Social Security and the state, my tax rate is at 62 to 63 percent. So I’ve got to make some decisions on what I’m going to do.”

Obviously, Phil has to be considering a move to a no-tax state like Florida, emulating Tiger Woods, Michelle Wie, and Venus and Serena Williams. It seems that one of the few remaining social taboos is for rich people to complain about their taxes, so it's not surprising that Phil stopped digging a deeper hole and promised no longer to talk about the subject.

Nevertheless, I'd like to add another word of sympathy, but for a problem that has received much less publicity than high tax rates: tax complexity at the state level. Professional golfers must pay taxes in each state where they win; a busy golfer must file dozens of tax returns, allocating winnings and expenses to each state. The states try to be "fair" by trying not to double-tax income, but somehow state tax boards always seem to decide gray areas in their own favor.

The real bonanza for high-tax states lies in being designated the state of residence, which gets assigned the intangible income (interest, dividends, royalties, etc.). A veteran superstar like Phil Mickelson or Tiger Woods has endorsement and investment income that greatly exceeds his annual golf winnings.

If Phil moves to Florida, say, but leaves a condo in California to visit his kids who may wish to finish school there, you can bet that California will ask for an accounting of days spent in Florida versus days spent in California and contest the domicile change. (For a good overview, see Hodgson Russ' article "The Multistate Tax Quandary for Professional Athletes".)

Phil Mickelson appears to be a good, successful family man who gives something back through charitable works but is spending more and more time worrying about the problems of wealth, which he can't talk about. No, we don't feel sorry for him, but we do sympathize. © 2013 Stephen Yuen

The Less-Trafficked Road

Amazon customers can pick up their deliveries at
some Radio Shack locations in the Bay Area.

The shopping center lots were full on Black Friday, so we headed to downtown San Mateo where there was only light traffic. We stopped at the 4th Avenue Radio Shack (disclosure: I own shares of RSH) and picked up some batteries and a $40 label-maker that was on sale for $10.

Radio Shack has been struggling like many other chains, and it's questionable whether it will survive the retail shake-out. One glimmer of hope is that Radio Shack can partner with companies who will view its 4,000+ North American locations as an exploitable asset. It's a dicey proposition, but perhaps the company's only path to survival.

Stubbornly Staying Put

Indefatigable California native and critic Victor Davis Hanson says he's not leaving because California has all the tools it needs to recover its past greatness:

The four-part solution for California is clear: don’t raise the state’s crushing taxes any higher; reform public-employee compensation; make use of ample natural resources; and stop the flow of illegal aliens. Just focus on those four areas—as California did so well in the past—and in time, the state will return to its bounty of a few decades ago. Many of us intend to stay and see that it does.

Too simple? Let's give it a try for a few years by concentrating on basic governmental services, e.g, education, transportation, and public safety, and by eliminating expensive trophy projects like $100 billion high-speed rail lines to nowhere.

Watch what animal spirits are unleashed. I hope I live long enough to see it.

Cruising to Re-Election

The former mayors of SF and Oakland in August

California Senator Dianne Feinstein is cruising to re-election and doesn't see any need to debate her Republican opponent:

she's heard nothing from her challenger, Elizabeth Emken, that she needed to debate. "There's just nothing constructive coming out of their campaign," said the four-term Democratic senator.

That's a hilarious construction--"nothing constructive", when the real reason is that there are many downsides and no upside in debating a little-known opponent. However, there are not many Republicans who are incensed about her pending victory. Dianne Feinstein is a Democrat whom they can work with.

Senator Feinstein has been known to break with the more extreme elements of her party, especially when it comes to national security. She chairs the Senate Select Committee on Intelligence, one of the least partisan committees in Congress. Whether her role is that of chairman or of ranking minority member, her continued presence should help Senators reach agreement on future issues that will arise in this sensitive area. She has my vote.

[Update: Note how Dianne Feinstein carefully chose her words on October 17th about the Obama Administration's changing story re Benghazi:

"I can tell you this, I think we do know what happened now. There’s no question but that it was a terrorist attack, there is no question but that the security was inadequate and I think that there is no question that we need to work on our intelligence."

“I think what happened was the director of intelligence, who is a very good individual, put out some speaking points on the initial intelligence assessment. I think that was possibly a mistake.”

She didn't give some Republicans the red meat they were looking for--particularly regarding Administration decision-makers' motivations--but she didn't excuse the Administration for the disastrous outcome either. A good politician or someone who's looking out for the national interest? Both, maybe, but if I had to pick one it would be the latter.] © 2012 Stephen Yuen

163rd Diocesan Convention

As Bay Area residents frolicked in the sunshine, 300 Episcopalians chose to spend their Saturday indoors at Grace Cathedral in San Francisco. It was the 163rd Convention of the Diocese of California.

(Historical footnote: the Diocese encompasses only seven Bay Area counties but has appropriated the "California" designation due to primogeniture. There are now other, larger Episcopal Dioceses in California, e.g., Los Angeles and San Diego.)

Bishop Marc Andrus led by example on his 56th birthday and presided over an uncontroversial agenda. Three resolutions passed by large margins:

1) Every meeting of every committee, no matter what its purpose, shall begin by asking the question, "How will what we are doing here affect or involve people living in poverty?"

2) Martin Luther King, Jr. Day will be a Day of Service for all members of the congregation and particularly for children and youth.

3) The Diocese declares its support of California Proposition 34, also known as the Anti-Death Penalty Initiative.

Fortunately this year, there were no discussions or proposals that upset Episcopalians who do not call themselves progressives. (Bishop Andrus has declared that he is in "the progressive wing of The Episcopal Church"; his advocacy of same-sex marriage--the official position of the church is that it will perform blessings over same-sex relationships--has resulted in a spat with the local Catholic archbishop.)

Two months ago this humble observer half-jokingly commented about church leadership:

Why don't they just say what they really believe? From each according to his ability, to each according to his needs.

Well, the Bishop did use Karl Marx's famous dictum in response to a question about wealth redistribution among the parishes and missions, and he said it as if he meant it. No wonder we're a dying denomination.

© 2012 Stephen Yuen

Making the Deadline

We mailed the 2011 tax returns to the Internal Revenue Service and Franchise Tax Board a few days before the final extension deadline of October 15th. (Some 2011 K-1 forms weren't received until August, and yes, we could have pushed ourselves to finish the task in September.)

Income was down a little, but the main reason each return has shrunk to about 40 pages each (from last year's 46 pp) is that simplification of our financial affairs has proceeded apace. We've consolidated accounts to a handful of financial institutions and have gotten rid of some small investments and ventures that were costly--more in time than money--to maintain. Cleaning up physical clutter can be a happiness booster; clearing financial clutter, less outwardly visible in the digital age, reduces stress.

With hardly a break we must needs turn our attention to 2012. The high probability that certain tax deductions will be eliminated has caused tax planners to recommend accelerating deductions, if possible, to 2012:

Some possible moves: accelerating state income- and property-tax payments; paying medical-insurance premiums or other deductible costs, if they are large enough to surmount the 7.5% hurdle; and making large purchases if you will be deducting state sales tax from your federal return, assuming Congress renews this break for 2012.

Adding to the confusion, tax planners are also advocating accelerating income to 2012 before rates rise. For most of us this means selling appreciated stock in 2012 (if we were planning on doing so anyway in the next few years and if we're lucky enough to own such stock).

Tax cuts enacted during the George W. Bush Administration are due to expire at the end of 2012. The current 15% tariff on capital gains could rise to 20% in 2013, barring an extension from Congress. Depending on who controls the White House and Congress after the election in November, rates could go even higher.

Another reason to sell stock now is that next year there will be an additional 3.8% "Medicare contribution" tax imposed on investment income--which includes capital gains--for high income taxpayers.

the maximum federal rate on long-term gains for 2013 and beyond will actually be 23.8% (versus the current 15%)....The additional 3.8% Medicare tax will not apply unless your adjusted gross income (AGI) exceeds: (1) $200,000 if you're unmarried, (2) $250,000 if you're a married joint-filer, or (3) $125,000 if you use married filing separate status.

The experts seem to be saying that we should accelerate income and deductions to this year, which is a little like stepping on the gas and brake pedals at the same time. Those simultaneous actions would wear out a car, and it's not surprising that confused suffering taxpayers feel worn out, too. © 2012 Stephen Yuen

State of Contradiction

Long-suffering California native Victor Davis Hanson captures its state of contradiction:

Open borders, redistributionist socialism, therapeutic and politicized public schools, and public-employee unions finally are proving a match even for Apple, Google, Facebook, the Napa Valley wine industry, Central Valley agribusiness, Hollywood, Cal Tech, Stanford, and Berkeley. In California, it is a day-by-day war between what nature and past generations have so generously bequeathed and what our bunch has so voraciously consumed.

On any given day, beautiful weather, the Pacific Coast, and the majestic Sierra Nevada are trumped by released felons, $5-a-gallon gas, and a 1970 infrastructure crumbling beneath a crowded 2012 state.

Decades of worsening conditions are apt to make anyone discouraged, especially those who, like Dr. Hanson, live in the Central Valley. However, we remain hopeful that what man can break, man can fix.

California's vast natural (e.g., the Monterey shale's energy reserves "could equal Saudi Arabia’s output for more than a decade") and human resources cannot be hamstrung forever by poor self-governance. As a former California governor said, we'll be back.