Losing Letterman

British PM Cameron, Danish PM Thorning-Schmidt,
with President and Mrs. Obama (Getty Images)

Five years after George Bush left office, David Letterman finally took a break from bashing the ex-President and commented on Barack Obama at the Nelson Mandela memorial:

Did you see that picture where the President was using an iPhone to take a selfie? And it was him and a guy from Great Britain and the woman in charge of Norway, or whatever Denmark? And I thought it was interesting---he knows how to operate the camera to take a picture but they can't figure out to operate the Obamacare website

1) As humor goes, it wasn't much funny, but David Letterman has to start somewhere.

2) If he's lost Letterman, he's in deep....trouble.

The Lonely Guy

Vanity Fair writer Todd Purdum on Barack Obama:

He may be the biggest presidential paradox since Thomas Jefferson, the slaveholder who wrote the Declaration of Independence: a community organizer who works alone.

The biggest Presidential failure in our lifetime was Richard Nixon, another lonely guy. According to political reporter Richard Reeves, Nixon wrote memos to himself throughout his Presidency:

Nixon waited until late at night to pen these memos to himself. He did so when he was alone in his office, alone in the Lincoln bedroom, alone at Camp David, or alone across the street in his monastic hideaway in the Old Executive Office building--always alone, almost always in the dark, and sometimes, even in August, with a fire blazing.

Like Richard Nixon, Barack Obama seems to prefer his own counsel. They are the rarest of political animals--two individuals who rose to the highest office without liking to be with other people. A penchant for solitude may not only cause failure but prevent solutions, especially if they involve compromise, from being devised.

We'll see. It's going to be a long three years. © 2013 Stephen Yuen

Three Weeks Later

From President Obama's October 1st remarks on the government shutdown and the Obamacare rollout:

starting today, you and your friends and your family and your co-workers can get covered too. Just visit healthcare.gov, and there, you can compare insurance plans side-by-side the same way you'd shop for a plane ticket on Kayak or a TV on Amazon. You enter some basic information, you'll be presented with a list of quality, affordable plans that are available in your area with clear descriptions of what each plan covers and what it will cost.

You'll find more choices, more competition and in many cases, lower prices. Most uninsured Americans will find that they can get covered for $100 or less. And you don't have to take my word for it, go on the website, healthcare.gov, check it out for yourself and then show it to your family and your friends and help them get covered just like mayors and churches and community groups and companies are already fanning out to do across the country.

And there's a hotline where you can apply over the phone and get help with the application. Or just get questions that you have answered by real people in 150 different languages. So let me give you that number. The number is 1-800-318-2596 -- 1-800-318-2596. Check out healthcare.gov, call that number, show your family and friends how to use it and we can get America covered once and for all so that the struggles that these folks have gone through and millions around the country have gone through for years finally get addressed.

Normally I would underline the phrases that events made ironic, but just imagine the whole passage as underlined.

From Miles and Years Away

A few comments about tonight's budget deal and the main source of contention, Obamacare:

There was no serious danger that the U.S. Government would default on its obligations. Too many powerful constituencies of both political parties would not have let it happen.

It was obvious from the beginning that Republicans would be blamed for the government shutdown:

Of the 124 stories broadcast on the ABC, NBC and CBS nightly newscasts about the shutdown from Oct. 1 through Oct. 15, the [Media Research Center] study found 41 blamed Republicans or conservatives for the impasse, 17 blamed both sides and none specifically blamed Democrats.

The good news for Republicans is that the 24/7 news cycle operates in their favor. By next week their missteps should largely be forgotten, and news coverage will begin in earnest on Obamacare's woes (website freezes, premium rate hikes, security flaws, lost applications, etc.).

If the Republicans learned anything from this episode, they will make concessions during the next round of debt-limit negotiations in January and agree to fund Obamacare to a limited extent--perhaps the original 2014 projections made by the CBO when the law was passed in 2009. Republicans will appear reasonable, while the drip-drip-drip of Obamacare bad news could last into the November elections.

Lest you think, dear reader, that I am rooting for the Patient Protection and Affordable Care Act to fail, the opposite is true. We are in the 55-to-65 cohort whose premiums will be thousands of dollars lower under the exchanges (in order to get the subsidy we have to manage our income down, which is easily arranged!).

It's just that anyone with any experience working in organizations could see this train wreck coming from miles, and years away. © 2013 Stephen Yuen

Syria: the Thinnest Reed

I didn't support Mr. Obama (twice), but he is the Commander-in-Chief, and the use of chemical weapons on innocent civilians by Bashar al-Assad was an atrocity, so I'm predisposed to support whatever the President decides to do about Syria, whether it be negotiations, threats of force, or actual use of force. The condition for me and most Americans has to be: whatever the plan, it should be well thought-out, explainable, and have reasonable prospects of success.

For an excellent orator, however, President Obama left many people confused by his speech on Tuesday:

I determined that it is in the national security interests of the United States to respond to the Assad regime’s use of chemical weapons through a targeted military strike. The purpose of this strike would be to deter Assad from using chemical weapons, to degrade his regime’s ability to use them, and to make clear to the world that we will not tolerate their use. [Comment: OK, chemical weapons are a big national security problem, a "targeted military strike" apparently is the answer.]

I will not put American boots on the ground in Syria. I will not pursue an open-ended action like Iraq or Afghanistan. I will not pursue a prolonged air campaign like Libya or Kosovo. This would be a targeted strike to achieve a clear objective: deterring the use of chemical weapons, and degrading Assad’s capabilities. [Comment: however, the U.S. military won't go all-in, there won't be boots on the ground or by inference lots of killing and damage.]

The United States military doesn’t do pinpricks. Even a limited strike will send a message to Assad that no other nation can deliver. I don't think we should remove another dictator with force -- we learned from Iraq that doing so makes us responsible for all that comes next. But a targeted strike can make Assad, or any other dictator, think twice before using chemical weapons. [Comment: on the other other hand, the U.S. attack won't be so pinprick-y small that it won't hurt. Certainly we don't want to remove Assad. Mr. Assad, we just want you "to think twice before using chemical weapons" next time.]

I have, therefore, asked the leaders of Congress to postpone a vote to authorize the use of force while we pursue this diplomatic path. I’m sending Secretary of State John Kerry to meet his Russian counterpart on Thursday, and I will continue my own discussions with President Putin. [Comment: a Congressional authorization would have strengthened his hand in negotiating a peaceful resolution, and everyone knows that. Even some Republicans were willing to go along because they know how the game is played. Instead, Kerry will go into the negotiations empty-handed.]

As in the case of Benghazi, your humble observer still holds out hope that these terrible events and America's seemingly feeble responses and pronouncements have a sensible explanation because there's a lot more going on than our government can share with us. But that's a thin, thin reed. © 2013 Stephen Yuen

Expectations

A Sunday parable on how to manage expectations [bold added]:

When he noticed how the guests picked the places of honor at the table, he told them this parable:

“When someone invites you to a wedding feast, do not take the place of honor, for a person more distinguished than you may have been invited. If so, the host who invited both of you will come and say to you, ‘Give this person your seat.’ Then, humiliated, you will have to take the least important place.

But when you are invited, take the lowest place, so that when your host comes, he will say to you, ‘Friend, move up to a better place.’ Then you will be honored in the presence of all the other guests.

For all those who exalt themselves will be humbled, and those who humble themselves will be exalted.” [Luke 14:7-11]

Flashback---how someone managed expectations in 2008:

I am absolutely certain that generations from now, we will be able to look back and tell our children that this was the moment when we began to provide care for the sick and good jobs to the jobless; this was the moment when the rise of the oceans began to slow and our planet began to heal; this was the moment when we ended a war and secured our nation and restored our image as the last, best hope on Earth.

The Greatest American Speech

It has been called the greatest American speech of the 20th century. Yesterday marked its 50th anniversary.

I first saw the newsfilm of "I Have a Dream" in its entirety in 1969, the year after Martin Luther King, Jr., was assassinated. In truth I wasn't ready to appreciate it in 1963 when I was a pre-teen.

Growing up in Hawaii my friends and I were all far removed from the civil rights movement, Mississippi and Alabama. Our class had one African-American student, a friendly guy and a terrific athlete (!). It didn't seem comprehensible that some people could hate our classmate because of the color of his skin. In retrospect, although he seemed to fit in with the multiracial student body, I have absolutely no idea what he really thought or felt. (It turned out that another black kid in our elementary school at that time did feel out of place.)

The greatest American speech surprised me with its power and, yes, beauty. Sure, I had read its text, but watching Dr. King and hearing his preacherly cadences calling forth the best in each listener filled this then-teenager with emotion. He and John F. Kennedy two years earlier had asked us to look to the mountaintop. Their dreams seemed impossible, but with these men leading us perhaps we had a chance to get there. In the wink of an eye they were both gone.

The Weight of the World

The conversation was very "Syria-s."

It doesn't prevent others from making fun.

David Letterman: "Look at those guys. Like Thanksgiving with your relatives...except for the flags! The problem is that they have nothing to say to one another because they've been bugging each other's phones."

Jay Leno: "[Putin] looks like every divorced guy at the Oakwood Apartments. 'Yeah, yeah, what do you want?'"

I Got It Almost Right

From November 8th, surveying the "superiority" of the big-data tools that the President used to demolish Governor Romney's campaign:

Holding the Presidency confers an enormous advantage. The incumbent party--whether Democrat or Republican--will have access to oceans of data not necessarily available to its opponent. It is nigh impossible to enforce privacy rules, especially since enforcement is done largely through self-policing.

The error was in thinking that the access to and misuse of big data applied to future campaigns.

The Fight Was Unfair

Most Americans believe in a fair fight, especially in politics. Though the United States population has grown by a factor of more than 100 since its founding, Americans hold to the ideal of the town hall: let everyone have their say, give people time to think and talk about the issues, vote (in secret, to avoid retaliation), then move on to the business of living.

That's one of the reasons that the use of the Internal Revenue Service to suppress conservative speech has resonated across the country. By refusing to grant conservative organizations exempt status before the election and by illegally leaking the names of conservative donors (thereby subjecting them to harassment), opposition voices were stilled. The fight was unfair.

Peggy Noonan:

Almost a month after the IRS story broke—a month after the high-profile scandal started to unravel after a botched spin operation that was meant to make the story go away—no one has been able to produce a liberal or progressive group that was targeted and thwarted by the agency's tax-exemption arm in the years leading up to the 2012 election.

President Obama may well have won re-election anyway. The partisan use of the enormous powers of the IRS guaranteed it.

The Sensibility of House Republicans

No, really, House Republicans may be acting sensibly:

House Republicans say they will not overreach on probing the Obama administration, having learned lessons from investigating the Monica Lewinsky scandal during the Clinton administration. [snip]

Impeachment is not something that has been bandied about around the House GOP leadership table, according to GOP leadership aides and a House Republican member who spoke on background.

Unless there is solid proof of high crimes and misdemeanors (using the people's definition, not lawyers' understanding) by the President, House Republicans should quash all mention of the I-word. Mr. Obama is still popular and could become an object of sympathy if there were a rush to start impeachment proceedings.

It's difficult to imagine that he would ever be as unpopular as his predecessor, but Mr. Obama may well descend to that level after three and a half more years of scandal and ineffectiveness, not to mention being the butt of late-night humor.

Thursday's Jay Leno:

This week will mark the 37th time House Republicans have tried to repeal Obamacare. If Republicans really want to do away with Obamacare they should endorse it as a "conservative non-profit" and let the IRS take it down!

A lot of critics are now comparing President Obama to President Nixon. The good news for Obama: at least he's no longer being compared to President Carter!

Six Months Later

A few days after President Obama's re-election your humble observer opined:

Now that the election's over we are likely, finally, to learn the truth about:

Benghazi

Obamacare's costs

End-of-year defense layoffs

FEMA's before-and-after performance on Hurricane Sandy

Unemployment statistics

Whether General Motors is really healthy

What the President meant when he said he would be "flexible" on missile defense

Six months later only Benghazi and Obamacare are still deemed to be important topics, but two are enough to serve the President's opponents; prolonged national conversations on either are unlikely to be helpful to the Administration's goals. A scandal that has seemingly come out of nowhere--also unhelpful, to say the least--is the IRS' targeting of "Tea Party" and "patriot" groups (actions suspected by conservatives over a year ago but ignored by the mainstream media).

Unfortunately for the President, none of the current set of problems can credibly be laid at the feet of obstinate Republicans or the Bush Administration. Welcome to your second term, Mr. President.

Incineration Over Incarceration

Quoth the NY Times:

Mr. Obama relies on his predecessor’s aggressive approach in one area to avoid Mr. Bush’s even more aggressive approach in others. By emphasizing drone strikes, Mr. Obama need not bother with the tricky issues of detention and interrogation because terrorists tracked down on his watch are generally incinerated from the sky, not captured and questioned.

To summarize the Times' world view,

Obama ===> drones ===> terrorists "incinerated from the sky" ===> "aggressive approach"

Bush ===> detention and interrogation ===> "more aggressive approach"

The terrorists are surely grateful that President Obama has a softer policy than cowboy George Bush--wouldn't you prefer incineration over incarceration, dear reader?

We Are All Corporations Now

Owners and advisors of small businesses are always monitoring the costs of expansion. Renting additional space and buying a new computer system are examples of familiar cost-benefit calculations that need to be performed.

Federal corporate income tax rates (Form 1120)

But there are many costs that accelerate with size. Examples are the San Francisco tax on payrolls larger than $150,000, higher Federal tax rates on higher corporate income (much like the rate schedule for individuals), or even mandated e-filing for eleven or more tax returns.

One number that is likely to influence decision-making is the 50-employee threshold for company-paid health insurance under the Patient Protection and Affordable Care Act, aka "Obamacare". (Failure to comply can result in fines of up to $2,000 per employee.)

We will bet our bottom dollar that there will be thousands of small businesses that will avoid having 50+ employees like the plague, not only because of the out-of-pocket health-care cost but also because of the regulatory headaches.

One IT entrepreneur foresees a dramatic restructuring of small business because of the PPACA:

"Going protean" offers a better strategy for many businesses. Owners of protean companies create a core of strategic employees who manage the big-picture elements of the enterprise—the culture, business model, product mix, vision, strategy, etc. This core then outsources the business tasks to other corporations. [snip]

It's not about replacing employees with contractors, but about replacing employees with corporations.

These new contracts will be a mix of large corporations, small businesses, micro-corporations and even nano-corporations (an individual doing business as a corporation). But to be a protean solution, it must involve a corporation-to-corporation relationship. Any substitute—e.g., a sole proprietorship—is only a time bomb because eventually the government will pressure you to turn any so-called 1099 contractors into employees.

The IRS is already aware of simple work-arounds, such as using temp agencies and part-time workers, to escape the 50-employee rule. It has threatened "anti-abuse" rules and penalties, the thrust of which will be to examine the substance, not the form, of working relationships between the hirer and the hired.

However, the "protean" corporate-to-corporate system that is forming before our eyes involves real changes in rights and responsibilities of all parties and is very likely to withstand legal challenges. Many of us, as owners of companies, will become our own bosses. And we will have President Obama to thank for setting us free. © 2013 Stephen Yuen

Cliff Notes

After November 6th the indices dropped 5% but since have recovered most of their losses.

It's a reasonable supposition that the November 6 election results were disappointing to the investors who hoped that a Romney victory would continue the favorable tax treatment afforded to long-term capital gains and dividends. Instead, avoidance of the "fiscal cliff" will now probably entail higher tax rates on capital gains (from November 11th: "the prospect of higher taxes on capital gains is prompting many to unload some of their winning stocks") and possibly much higher rates on dividends.

Unsurprisingly, the equity indices fell for the ten days following the election but have since rebounded. The likely causes of this brightening outlook are favorable noises emanating from both sides in Washington, plus signs that growth has not stalled in China.

Meanwhile, what is the small investor to do? One great feature of capital gains is that the timing of income recognition is largely under the control of the individual taxpayer. Barring situations where one has to sell, it's not unusual to hold well-chosen stocks for many years. The patient investor may be able to hold off realizing gains for four more years, when the Republicans stand an excellent chance of capturing not only the Presidency but Congress as well (remember how everyone was so sick of George W. Bush after eight years that the Democrats didn't really need a platform in 2008? I wouldn't bet against the country feeling the same way about Barack Obama and the Democratic Party in 2016.)

Another strategy is to manage one's financial affairs to keep income below the levels where higher rates kick in. For example, one spouse may now choose to quit a good-paying job to stay at home with the kids and fill the traditional role of the wife to an executive (your humble observer is personally acquainted with many professional women and men who have opted for less money, less stress, and more time with their families).  Staying home is not a new phenomenon, but higher tax rates may finally sway some on-the-edge dual-income couples.

For gains on capital assets that are not securities there is every indication that tax-planning deferral tools, such as Section 1031 exchanges, will continue in their present form. While the tax regime will be a bit more unfavorable, take heart, investors, history shows that you will figure out ways to adapt.  Which means, of course, that the higher receipts that the government will collect will be far short of what higher-tax advocates will expect, a surprise to no one but themselves. © 2012 Stephen Yuen

Why Does Senator Daniel Inouye Have Secret Service Protection?

Two old pros who worked on Watergate in 1974.

Answered via other questions and answers:

Q: who's next in the line of Presidential succession, after the Vice President and Speaker of the House?

A: The president pro tempore of the Senate.

Q: What does the president pro tempore do?

A: He* presides over the Senate in the absence of the Vice President, is the Senate's legal recipient of various reports, and serves on commissions and boards. (Obviously, the duties are largely ceremonial, but the office is third in line and it is in the Constitution.)

*Male singular pronoun used for convenience only.

Q: How is he elected?

A: "Since the mid-20th century, it has been traditional for the Senate to elect the senior member of the majority party as president pro tempore."

Q: Who is the current president pro tempore?

A. Daniel K. Inouye, 88-year-old Democratic Senator from Hawaii. We have posted about Medal of Honor recipient Senator Dan before (here and here).

Two sons of Hawaii grew up in the same middle-class neighborhood, albeit four decades apart, and are now important enough to be protected round-the-clock by the Secret Service. Last question: who would ever have believed it? © 2012 Stephen Yuen

Benghazi: We Don't Know Anything

After the 9/11 murder of four Americans in Benghazi, U.N. Ambassador Susan Rice went on all the Sunday talk shows to lay the blame on an obscure video. The immediate reaction of many viewers was incredulity. Not only was the Innocence of Muslims hardly seen by anyone, the abundance of anti-Islam materials that has arisen since 2001 makes it hard to see why this particular low-budget excrescence was the catalyst for the widespread violence that roiled the Middle East, not just Benghazi.

However, your humble observer could not accept the explanation of some Republicans either--that the video was (falsely) blamed because the Obama Administration was reluctant to admit that its foreign policy had failed. Both explanations are too easily discredited after a few days of Congressional hearings.

One can believe the worst of one man's motives, but surely not everyone in the CIA or the State and Defense Departments would fall on their sword for the President unless there were good national security reasons. For example, there have been rumors that assassinated ambassador Chris Stevens was linked to arms shipments to Syrian rebels, or that the CIA was running a secret prison in Benghazi.

After the David Petraeus love triangle story took everyone by surprise less than a week ago, then mushroomed into a love-hexagon over the past few days, one thing is certain. We don't know anything.

Now That the Election's Over

Now that the election's over we are likely, finally, to learn the truth about:

Benghazi

Obamacare's costs

End-of-year defense layoffs

FEMA's before-and-after performance on Hurricane Sandy

Unemployment statistics

Whether General Motors is really healthy

What the President meant when he said he would be "flexible" on missile defense

Your humble observer believes that the President will wind up unscathed on at least some of these issues, so this post is not a criticism of him.

The mainstream media turned a blind eye to these questions in the run-up to the election. Their neglect was a gross dereliction of its duty to help the electorate make informed choices.

Reporters sometimes have to choose between their professed responsibility to discover and disclose the truth (please, no sophistry about the subjectivity of knowledge) and their personal politics. CPAs tabulate inventory counts that could unexpectedly lower their clients' earnings. Scientists report the harmful side effects of experimental drugs and possibly negate millions of dollars and years of research. Even lawyers, who have a primary responsibility to their clients, have a duty to disclose material facts that could help the other side.

If the press had pursued these 2012 stories with even a fraction of the enthusiasm with which it pilloried the Bush Administration over Hurricane Katrina, Abu Ghraib, Guantanamo, and the 5.5% unemployment rate in 2004, then it would be deserving of the esteem with which we regard most of our venerable professions. After its performance in 2012, it's doubtful whether the press will ever recover, and we all will be the poorer. © 2012 Stephen Yuen

Big Data Wins the Biggest Prize

When Rush Limbaugh made fun of the Obama campaign dinner at Sarah Jessica Parker's townhouse, I laughed right along. It was the apotheosis of the Hollywood love-in for President Obama, ripe for mockery. It turns out that the Democrats were playing chess while the Republicans thought the game was checkers (the way things turned out a cute dog might have helped). Key to the President's re-election was

a massive data effort that helped Obama raise $1 billion, remade the process of targeting TV ads and created detailed models of swing-state voters that could be used to increase the effectiveness of everything from phone calls and door knocks to direct mailings and social media.

The dinner with Sarah, and its West Coast counterpart dinner with George Clooney, were not affectations but part of a well-thought-out strategy [bold added]:

For the general public, there was no way to know that the idea for the Parker contest had come from a data-mining discovery about some supporters: affection for contests, small dinners and celebrity. But from the beginning, campaign manager Jim Messina had promised a totally different, metric-driven kind of campaign in which politics was the goal but political instincts might not be the means. “We are going to measure every single thing in this campaign,” he said after taking the job. He hired an analytics department five times as large as that of the 2008 operation, with an official “chief scientist” for the Chicago headquarters named Rayid Ghani, who in a previous life crunched huge data sets to, among other things, maximize the efficiency of supermarket sales promotions.

Michael Scherer's article in Time is a fascinating read. Comments:

1) The Republicans undoubtedly will create, if they haven't done so already, a similar big-data operation.

2) The first important step, which began shortly after 2008, was the 18-month-long project to create a "mega" file that unified the many disparate Democratic databases. This means that work on 2016 has already begun (sigh).

3) Holding the Presidency confers an enormous advantage. The incumbent party--whether Democrat or Republican--will have access to oceans of data not necessarily available to its opponent. It is nigh impossible to enforce privacy rules, especially since enforcement is done largely through self-policing. [Flashback: Big Data is the new Plastics.]

Forecasting is Uncertain, Especially About the Future

The Election
Monday night's debate was the least disputatious of the three debates between President Obama and Governor Romney. The consensus seems to be that the President won the debate but not enough to change the minds of Romney supporters.

For what it's worth, your humble observer thinks that Mr. Obama may still eke out a win, but the likelihood is that Mitt Romney will be the next President, and a good chance that he will win by a significant margin. There is no possibility that President Obama will get even 300 electoral votes (he won 365 in 2008, and 270 are needed to win).

iPad Mini
Tuesday's announcement of the iPad Mini initially triggered disappointment because of its high price relative to the competition:

The iPad Mini tablet, which starts at $329, is a cousin to the original iPad, whose screen is about a third larger. But Apple's smaller tablet is priced well above Amazon.com Inc.'s Kindle Fire HD and Google Inc.'s Nexus 7—two tablets which are similar in size and some specs. Those devices cost $199 or $249 depending on the amount of memory.

Apple also announced upgrades to existing products that were understandably overlooked in the hoopla over the Mini. Macintoshes (Mac-minis, iMacs, and MacBooks) and the regular iPad all have become faster under the hood without a price increase. Our household already has ordered a couple of the new Mac offerings.

As for the iPad Mini, critics would do well to remember how the iPhone 4S took off after an underwhelming reception. It could become the hot new gaming platform or be just the right size for the distaff set--the iPhone screen is too small for many applications, yet the regular iPad is too big to fit in a handbag. Besides, Apple still has room to drop the price later to push sales.

World Series
Please, not another post about the Giants, you say, but after tonight's game how can we not comment? The Giants were heavy underdogs in Game 1 to Detroit and its otherworldly pitcher Justin Verlander.

Three home runs in one World Series game by third baseman Pablo Sandoval---a feat matched by only three other players (Babe Ruth, Reggie Jackson, and Albert Pujols) in history---and a superb performance by supposedly washed-up pitcher Barry Zito added compelling drama to a game that an 8-3 final score would normally belie. Some over-the-top sports reporters are completely reversing their original predictions and calling the Series "over" because the Giants beat the Tigers' ace in one game.

Whoa, the ball takes funny bounces, political sentiments can shift overnight, and tech dross can turn into gold and vice versa. Forecasting is uncertain, especially about the future. © 2012 Stephen Yuen