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Iran, Yemen rebels in conflict with regional coalition

Fighting between the Iranian-backed Houthis movement against the elected government of Yemen threatens to be the start of a long-feared wider conflict in the Middle East, with Iran and  its client groups supporting the Houthis side and Saudi Arabia, Egypt, Jordan, Morocco, Bahrain, Kuwait, Qatar and the United Arab Emirates assisting the government. Although not in the region, Pakistan and Sudan have supported the effort. Israel has allowed the use of its air space for Saudi air forces to conduct sorties—part of the mainstream Arab states “Operation Decisive Storm”– in Yemen. Russia, which has supplied Iran with nuclear technology and other military assistance, appears to be siding with Iran and the Houthis on the issue. Both nations have called for a halt to the Saudi coalition’s support for the Yemeni government.

Regional governments have long feared the increasing military power and nuclear potential of Iran, as well as that regime’s proclivity to support and profit from radical groups. Washington’s premature withdrawal of U.S. forces from Iraq, its failure to react militarily to the assassination of Ambassador Stevens, the failure to support the “red line” in Syria, the weak American response to ISIS, and the diminishing size of American armed forces in general have unleashed tensions in the Middle East and elsewhere.

A White House Statement https://www.whitehouse.gov/the-press-office/2015/03/25/statement-nsc-spokesperson-bernadette-meehan-situation-yemen delivered by NSC Spokesperson Bernadette Meehan noted:

“The United States strongly condemns ongoing military actions taken by the Houthis against the elected government of Yemen.  These actions have caused widespread instability and chaos that threaten the safety and well-being of all Yemeni citizens. The United States has been in close contact with President Hadi and our regional partners.  In response to the deteriorating security situation, Saudi Arabia, Gulf Cooperation Council (GCC) members, and others will undertake military action to defend Saudi Arabia’s border and to protect Yemen’s legitimate government.  As announced by GCC members earlier tonight, they are taking this action at the request of Yemeni President Abdo Rabbo Mansour Hadi.

“The United States coordinates closely with Saudi Arabia and our GCC partners on issues related to their security and our shared interests.  In support of GCC actions to defend against Houthi violence, President Obama has authorized the provision of logistical and intelligence support to GCC-led military operations.  While U.S. forces are not taking direct military action in Yemen in support of this effort, we are establishing a Joint Planning Cell with Saudi Arabia to coordinate U.S. military and intelligence support.

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“At the same time, the United States continues to closely monitor terrorist threats posed by al-Qa’ida in the Arabian Peninsula and will continue to take action as necessary to disrupt continuing, imminent threats to the United States and our citizens.

 

We strongly urge the Houthis to halt immediately their destabilizing military actions and return to negotiations as part of the political dialogue.  The international community has spoken clearly through the UN Security Council and in other fora that the violent takeover of Yemen by an armed faction is unacceptable and that a legitimate political transition – long sought by the Yemeni people – can be accomplished only through political negotiations and a consensus agreement among all of the parties.”

 

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What is bankrupting Washington?

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Obamacare’s new and increased taxes

As Americans, as families, individuals or small businesses, prepare their tax returns, the burden created by Obamacare becomes increasingly evident.  The Americans for Tax Reform has compiled a comprehensive list of the measure’s 20 new or increased tax hikes, listed by size.

$123 Billion: Surtax on Investment Income (Takes effect Jan. 2013): A new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single). This would result in the following top tax rates on investment income:

Capital Gains Dividends Other*
2012 15% 15% 35%
2013+ 23.8% 43.4% 43.4%

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*Other unearned income includes (for surtax purposes) gross income from interest, annuities, royalties, net rents, and passive income in partnerships and Subchapter-S corporations.  It does not include municipal bond interest or life insurance proceeds, since those do not add to gross income.  It does not include active trade or business income, fair market value sales of ownership in pass-through entities, or distributions from retirement plans.  The 3.8% surtax does not apply to non-resident aliens. (Bill: Reconciliation Act; Page: 87-93)

$86 Billion: Hike in Medicare Payroll Tax (Takes effect Jan. 2013): Current law and changes:

First $200,000
($250,000 Married)
Employer/Employee		 All Remaining Wages
Employer/Employee
Current Law 1.45%/1.45%
2.9% self-employed		 1.45%/1.45%
2.9% self-employed
Obamacare Tax Hike 1.45%/1.45%
2.9% self-employed		 1.45%/2.35%
3.8% self-employed

 

Bill: PPACA, Reconciliation Act; Page: 2000-2003; 87-93

 

$65 Billion: Individual Mandate Excise Tax and Employer Mandate Tax (Both taxes take effect Jan. 2014):

Individual: Anyone not buying “qualifying” health insurance as defined by Obama-appointed HHS bureaucrats must pay an income surtax according to the higher of the following

1 Adult 2 Adults 3+ Adults
2014 1% AGI/$95 1% AGI/$190 1% AGI/$285
2015 2% AGI/$325 2% AGI/$650 2% AGI/$975
2016 + 2.5% AGI/$695 2.5% AGI/$1390 2.5% AGI/$2085

 

Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and hardship cases (determined by HHS). Bill: PPACA; Page: 317-337

 

Employer: If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2000 for all full-time employees.  Applies to all employers with 50 or more employees. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3000. If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer). Bill: PPACA; Page: 345-346

(Combined score of individual and employer mandate tax penalty: $65 billion)

$60.1 Billion: Tax on Health Insurers (Takes effect Jan. 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year.  Phases in gradually until 2018.  Fully-imposed on firms with $50 million in profits. Bill: PPACA; Page: 1,986-1,993

$32 Billion: Excise Tax on Comprehensive Health Insurance Plans (Takes effect Jan. 2018): Starting in 2018, new 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family).  Higher threshold ($11,500 single/$29,450 family) for early retirees and high-risk professions.  CPI +1 percentage point indexed. Bill: PPACA; Page: 1,941-1,956

$23.6 Billion: “Black liquor” tax hike (Took effect in 2010) This is a tax increase on a type of bio-fuel. Bill: Reconciliation Act; Page: 105

$22.2 Billion: Tax on Innovator Drug Companies (Took effect in 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year. Bill: PPACA; Page: 1,971-1,980

$20 Billion: Tax on Medical Device Manufacturers (Takes effect Jan. 2013): Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax.  Exempts items retailing for <$100. Bill: PPACA; Page: 1,980-1,986

$15.2 Billion: High Medical Bills Tax (Takes effect Jan 1. 2013): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI).  The new provision imposes a threshold of 10 percent of AGI. Waived for 65+ taxpayers in 2013-2016 only. Bill: PPACA; Page: 1,994-1,995

$13.2 Billion: Flexible Spending Account Cap – aka “Special Needs Kids Tax” (Takes effect Jan. 2013): Imposes cap on FSAs of $2500 (now unlimited).  Indexed to inflation after 2013. There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.  There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education.  Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center(link is external)) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. Bill: PPACA; Page: 2,388-2,389

$5 Billion: Medicine Cabinet Tax (Took effect Jan. 2011): Americans no longer able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin). Bill: PPACA; Page: 1,957-1,959

$4.5 Billion: Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D (Takes effect Jan. 2013) Bill: PPACA; Page: 1,994

$4.5 Billion: Codification of the “economic substance doctrine” (Took effect in 2010): This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed. Bill: Reconciliation Act; Page: 108-113

$2.7 Billion: Tax on Indoor Tanning Services (Took effect July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons. Bill: PPACA; Page: 2,397-2,399

$1.4 Billion: HSA Withdrawal Tax Hike (Took effect Jan. 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent. Bill: PPACA; Page: 1,959

$0.6 Billion: $500,000 Annual Executive Compensation Limit for Health Insurance Executives (Takes effect Jan. 2013): Bill: PPACA; Page: 1,995-2,000

$0.4 Billion: Blue Cross/Blue Shield Tax Hike (Took effect in 2010): The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services. Bill: PPACA; Page: 2,004

$ Negligible: Excise Tax on Charitable Hospitals (Took effect in 2010): $50,000 per hospital if they fail to meet new “community health assessment needs,” “financial assistance,” and “billing and collection” rules set by HHS. Bill: PPACA; Page: 1,961-1,971

$ Negligible: Employer Reporting of Insurance on W-2 (Took effect in Jan. 2012): Preamble to taxing health benefits on individual tax returns. Bill: PPACA; Page: 1,957

 

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U.S. defense spending at crisis point

During the past several years, Washington’s response to the vast and growing threats from Russia, China, Iran, North Korea and Islamic terrorism has been, irrationally, to sharply reduce the defense budget.

Defense Secretary  Ashton B. Carter recently noted  that “DoD’s 10-year budget projections have absorbed more than $750 billion in cuts, or more than three-quarters of the trillion-dollar cuts that would be required if sequestration is allowed to run its course…DoD’s fiscal year 2016 budget is at a near-historic low, representing about 14 percent of total federal discretionary and nondiscretionary outlays.”

In 2010, the total defense budget was $757 billion.  The 2016 budget is approximately $585 billion. Although the President and Congress differ somewhat in the way the funding is provided, the figure for both is essentially similar, and is in keeping with the sequester.

Writing in the Wall Street Journal, Senator John McCain (R-Arizona) and Rep. Mac Thornberry (R-Texas) noted that “We believe that [we] cannot continue to [to defend the nation] within the caps imposed by the 2011 Budget Control Act [sequestration.] They blame both President Obama as well as Republicans who continue to abide by sequestration. “There is no national security basis for sequestration. Within the past year Russia has challenged the postwar order in Europe by invading and annexing the territory of another sovereign nation. A terrorist army that has proclaimed its desire to attack the United States and its allies now controls a vast swath of territory in the heart of the middle east. Iran continues its pursuit of nuclear weapons while expanding its malign influence throughout the region. And China has stepped up its coercive behavior in Asia, backed by its rapid military modernization…Military spending is not to blame for out-of-control deficits and debt.  It is now [at] the lowest [share of federal spending] since before World War 2.
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America’s nuclear arsenal, the only such force among the nuclear powers that has not undergone substantial modernization, has been cut from several thousand two decades ago to just several hundred today. Deployed war heads have been reduced from 9,000 twenty years ago to just 1,600 currently.  For the first time in history, Russia has more strategic nuclear firepower than the America, and a commanding ten to one advantage in tactical weapons.

Key parts of the U.S. defense establishment are at the breaking point, including the Air Force’s Drone fleet, as reported in the Daily Beast which reports that “overworked drone crews have had their leaves cancelled and suffered damage to their careers because they could not attend required professional military education courses.”

The U.S. Army will soon reach its lowest level since before World War 2, leaving a force smaller than North Korea’s. The Navy will be the smallest since World War I, and the Air Force will be at historic lows. The Marine Corps suffers drastic shortfalls in equipment, training and personnel. All this occurs while Russia and China build up their forces to unprecedented levels of size and capability.

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Democrat, Republican Party leaders: Out of Touch?

The American political environment may be reaching a mood similar to the 1850’s, when the Republican Party was born, and the Whig Party saw its demise. The policies and practices of the leadership of both Democrat and Republican organizations appear to be drifting away from the beliefs of their membership.

President Obama’s extreme left wing politics, his isolationist and pacifist foreign policy, tolerance towards the Moslem Brotherhood, thinly disguised race baiting, and his anti-U.S. worker advocacy of high taxes, amnesty for illegal immigrants and environmental radicalism disturbs many. Heir apparent Hillary Clinton, co-architect of the utterly failed “reset”with Russia and advocate of “identity” politics is essentially similar in her beliefs.

Several key components of the Democrat formula for electoral success are becoming alienated. Blue collar workers who traditionally tilt towards the Democrats are uncomfortably viewing a landscape in which unemployment remains at a crisis level. Mr. Obama’s hostility towards Israel is beginning to weaken support among Jewish voters. Women are beginning to look askance at the politicization of their children’s education, escalating food prices, and diminished health care.

While Mr. Obama’s popularity as the first black president remains high within inner city voters, his economic and immigration policies have resulted in astronomical rates of unemployment in the black community, as well as the same price hikes that have disturbed all. His personal appeal may not translate into continued overall enthusiasm for other Democrats in 2016.

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Republicans have succeeded when advocating the dominating concepts of strong national defense, low taxes, restrained spending, a strict interpretation of Constitutional rights and procedures, and a more traditional cultural outlook. Many view the GOP’s response to the unprecedented failures of the Obama Administration to be timid and inconsequential, and more concerned with avoiding criticism from the media than in pursuing its beliefs.

There is, indeed, an inexplicable split within the Republican Party between the most vigorous advocates for its traditional positions, frequently identified as theTea Party, and the GOP leadership. Rather than latch onto the enthusiasm of that movement, it has been kept at arms-length. A further split can be observed between those demanding that the dramatic new military threats from Russia, China, Iran and North Korea be met with significant increases in the U.S. defense budget, and those advocating less expensive financing of the Pentagon as part of an overall approach to lowering deficit spending.

Complex election laws make it unlikely that new nationwide parties will spring up. But the organizational and communications abilities derived from new technologies will increasingly allow insurgents to go “over the heads” of party leadership to appeal for support directly from the voters. That same capability will allow temporary coalitions to form in response to specific issues supported by party leaders but opposed by the rank-and-file. In 2000, an unusual coalition of defense hawks, human rights advocates, and union leaders came together unsuccessfully to oppose a trade deal with China, supported by both President Clinton and GOP leaders, that they correctly feared would adversely affect U.S. national security, individual Chinese rights, and the job security of American manufacturing workers. That same opposition could meet with more success today.

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The Sandwich Generation

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America’s vanishing manned space program

The debate over America’s human presence in space has begun.

Since the start of the Obama Administration, NASA’s emphasis has altered dramatically, as financial support for exploration and space operations, including human flight, has been slashed by 7.9%. Meanwhile, earth science, including both legitimate research as well as questionable endeavors primarily designed to bolster the President’s climate change agenda, experienced a 41% increase. A General Accounting Office study found that “NASA had not matched resources to requirements” for programs related to human space flight.

In addition to funding shifts, ideological changes were imposed as well. NASA chief Charles Bolden made a bizarre remark .  in 2010  that one of NASA’s chief goals was to reach out to Moslems.

Critics have not hidden their disdain for the course NASA has been given under the current White House. John L. Casey, a former White House space policy advisor, stated in a recent exclusive interview on the Vernuccio/Novak Report that NASA was engaging in “data doctoring” to support global warming theory advocates and essentially ignoring its core mission.

Human space flight was essentially removed from NASA’s short-term goals in 2010 when Mr. Obama cancelled the Constellation program,after prematurely ending the space shuttle program. The U.S. remains dependent on Russia to place astronauts in space. While underfunded work very slowly proceeds on plans for the future Orion crewed vehicle and the related Space Launch System, both are essentially updates on concepts originally designed in the late 1960’s and do not represent a significant path for a return to American preeminence in space. Neither of these efforts will actually be capable of putting astronauts in space, if ever, until after the Obama Administration leaves office.
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The White House counters criticism by stating their support for NASA’s manned space efforts, emphasizing its support ($438.8 increase requested) for development of commercially operated spacecraft, part of a modest $519 million hike in the agency’s overall budget. However, the Orion and Space Launch System programs, which are the only significant NASA efforts to restore America’s ability to put astronauts into space, would endure a combined $2.8 billion reduction in the 2016 budget.

House Science Committee Chair Lamar Smith (R-Texas), quoted in Spacenews, noted “The President’s words mean nothing if crucial priorities such as SLS and Orion aren’t given the funding they need in his budget request.”

Following the Republican capture of the Senate in the 2014 elections, Senator Ted Cruz (R-Tx) was named as chair of the Subcommittee on Space, Science, and Competitiveness. He is seeking to re-emphasize NASA’s original mission, and noted, at the start of hearings on NASA’s 2016 budget:

“As we begin the process of putting a road map together for the future of NASA there is one vital question that this committee should examine. Should NASA focus primarily inwards or outwards beyond lower-Earth orbit? Since the end of the last administration we have seen a disproportionate increase in the amount of federal funds that have been allocated to the Earth Science program at the expense of and compared to Exploration and Space Operations, Planetary Science, Heliophysics and Astrophysics which I believe are all rooted in exploration and should be central to the core mission of NASA.”

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Was the President Right About Voting Discrimination?

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US Economy Still Weak

Research by The Federal Reserve Bank of New York’s February 2015 Business Leaders Survey, which includes an economically vital area of the nation, “indicates that activity in the region’s service sector leveled off recently. The survey’s headline business activity index fell 15 points to 0.8. After rising to a level just above zero last month, the business climate index gave up those gains, signaling that, on balance, respondents viewed the business climate as worse than normal. …The prices paid index climbed 12 points to 51.5, pointing to steeper input price increases, while the prices received index dropped six points to 6.2, signifying a slower pace of selling price increases… After rising out of negative territory last month, the business climate index gave up its gains, falling nine points to -8.4, indicating that, on balance, firms viewed the business climate as worse than normal.”

Generation X, which is a key sector of the American economic picture, is also not doing well. According to the Federal Reserve of St. Louis, The average household debt of the 1970 Gen X cohort was $142,077 in the first quarter of 2014 (that is, approximately at age 44), while the average household debt of the 1956 baby-boomer cohort was $88,553, adjusted for inflation, in the first quarter of 2000 (when this cohort would also have been age 44). This represents about 60 percent more debt for the 1970 cohort compared to the 1956 cohort. Meanwhile, average real household income of the 1970 cohort was only about 5 percent higher than that of the 1956 cohort in the most recent data.
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 William C. Dudley, President and Chief Executive officer of the NY Fed, also delivered worrisome news.  “In 2010, aggregate outstanding student loan balances surpassed credit card indebtedness, and in 2013 eclipsed a trillion dollars.  During the historic household deleveraging that took place between 2008 and 2013, student debt bucked the trend, and was the only form of household credit that continued to increase each year.” The taxpayers are the final source on the hook for these loans, which, thanks to the continuously slow economy and the lack of suitable employment for college graduates, may present the next great economic bubble

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American Economy continues weakness

Research by The Federal Reserve Bank of New York’s February 2015 Business Leaders Survey, which includes an economically vital area of the nation, “indicates that activity in the region’s service sector leveled off recently. The survey’s headline business activity index fell 15 points to 0.8. After rising to a level just above zero last month, the business climate index gave up those gains, signaling that, on balance, respondents viewed the business climate as worse than normal. …The prices paid index climbed 12 points to 51.5, pointing to steeper input price increases, while the prices received index dropped six points to 6.2, signifying a slower pace of selling price increases… After rising out of negative territory last month, the business climate index gave up its gains, falling nine points to -8.4, indicating that, on balance, firms viewed the business climate as worse than normal.”

Generation X, which is a key sector of the American economic picture, is also not doing well. According to the Federal Reserve of St. Louis, The average household debt of the 1970 Gen X cohort was $142,077 in the first quarter of 2014 (that is, approximately at age 44), while the average household debt of the 1956 baby-boomer cohort was $88,553, adjusted for inflation, in the first quarter of 2000 (when this cohort would also have been age 44). This represents about 60 percent more debt for the 1970 cohort compared to the 1956 cohort. Meanwhile, average real household income of the 1970 cohort was only about 5 percent higher than that of the 1956 cohort in the most recent data.
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 William C. Dudley, President and Chief Executive officer of the NY Fed, also delivered worrisome news.  “In 2010, aggregate outstanding student loan balances surpassed credit card indebtedness, and in 2013 eclipsed a trillion dollars.  During the historic household deleveraging that took place between 2008 and 2013, student debt bucked the trend, and was the only form of household credit that continued to increase each year.” The taxpayers are the final source on the hook for these loans, which, thanks to the continuously slow economy and the lack of suitable employment for college graduates, may present the next great economic bubble