Wednesday, January 17, 2018

What Exactly Does The New Tax Law Do?

What exactly will the new tax law do?  We'll have to wait and see, I'm afraid.

A reader writes:
Anyway, I've seen you reference the new tax plan a couple of times in your writing, stating (and I'm paraphrasing) that it will just benefit the rich and encourage businesses to move out of the US. From all my research it does the exact opposite, providing the biggest relief to the middle class and encouraging businesses to stay in the US with a very competitive corporate tax rate compared to before. And that's not even mentioning the repatriation rate that encourages businesses to bring cash back from overseas.
Everyone has blind spots of course, but just wondering if you can expand on that if you have something to add, as maybe I'm missing something.
He has some good points.  If you listened to the Republicans, Donald Trump, and Fox News, the new tax law will put a chicken in every pot and a new car in every garage.   We will all be rich as Nazis, and factories will work overtime to make all the products that Americans will buy with all their newfound money.

Or maybe not.  Law have effects, both intentional and unintentional.  And already we are seeing some of these unintended effects.

The law has a lot of different features.  There is the corporate tax cut, the change in marginal rates, the change in the standard deduction, the cap in SALT deductions, the elimination of the Obamacare "penalty" and the proposed elimination of the so-called "death tax" or Gift and Estates tax, as it is properly called (which was dropped at the last minute).  So there are a lot of features, and some that are so minuscule that people aren't even aware of them - but they may affect certain people and groups of people.  And these effects may be intentional or unintentional, as we shall see.

The problem with our tax code is that it is complicated and uncomplicated at the same time.   We have a system of tiered marginal rates which apply to different income levels.  On top of this, we have exemptions (or had them, anyway), deductions (itemized), a standard deduction, and of course tax credits.  And then we have capital gains, which are taxed at different rates than "ordinary income" and taxed at two separate rates - long-term and short-term.

If you want to know what your tax bill will be for $50,000 of income, compared to $100,000 or $150,000, it isn't as easy as saying, "10%, 20%, and 30%, respectively" but rather you have to sit down and actually go through all the tax forms to calculate the tax due.   Simplification of the tax code has thus been a goal for many.   But there are many interest groups that want to keep special perks for certain behaviors and events - which may or may not make sense.   Tesla wants to keep a fat tax credit for their cars - as it sells more cars.   Others argue that these credits help develop an industry which may someday be predominate, and that it is in the nation's interest to insure it thrives.

Other consequences are harder to foresee.   For example, non-profit companies that donate "all proceeds to charity" as is written on the labels of Newman's Own products, may face hefty tax bills if they continue to donate all proceeds to charity after the owner dies.  This is an unintended consequence of a law designed to prevent people from using non-profit entities to skirt taxes in the long term.

So where do we begin?   Let's start with the Corporate tax cut.   Now, all you pony-tail and man-bun hippies holding signs saying "Corporations are evil, man!" can just go away now.  We are trying to analyze this rationally, and with as little political bias as possible.  And as we shall see, both Democrats and Republicans wanted a corporate tax cut - the only difference being how much.   And this tax cut is creating and will create unintended consequences as well.

To begin with, tax cuts are not a Republican thing.   Democrats have been in favor of tax cuts, including the granddaddy of them all, the Kennedy Tax cut of the early 1960's.  Back then, marginal rates were well over 50% and many argued (correctly) that this was a disincentive to working.  Why bother working an extra hour, when all it would profit you, after Federal, State, and local taxes, is a few bucks?   Coming off the 1958 recession, the Kennedy tax cut stimulated the economy and the 1960's were swinging as a result.   Well, until the oil embargo of 1973, anyway.

With regard to the corporate tax cut, people on both sides of the aisle have been in favor of this for years.  Obama proposed a cut to 28%, but it went nowhere with the do-nothing Congress who was more concerned with not letting Obama "win" than with getting something done.   As I have noted before, people have long argued that the corporate tax rates were too high and in effect, double-taxation.

If a corporation "played it straight" (as few do) and paid out all its profits as corporate dividends, it would have to pay taxes - at 35% on those dividends.   Individual shareholders could end up paying well over 30% in income tax, if they were in the higher brackets.  The net effect was an effective tax rate of 70% or more.   As a result, many companies were shunting excess money overseas and parking it in Treasury bills or corporate bonds.  Some say one unintended effect of the new bill could be a sell-off in bonds.

Trump proposed lowering the tax rate to 20% but a compromise was reached at 21%, to limit the amount of additional deficit in spending.   And here's the first unintended consequence of the tax code - increasing the national debt.   Or you could argue it was an intended effect as legislators knew all along what would happen.

Remember the debt clock?   Like clockwork (sorry) Republicans would drag this out whenever a Democrat was in power, and make ominous warnings about how the national debt was increasing at an alarming rate.  For some odd reason, when Republicans are in power, they don't talk much about the debt clock - and for good reason, too.   Turns out that Republicans love to spend as much as Democrats do.   But instead of "tax and spend" they are "deficit and spend" which could be really the same thing.

Just as companies can pay shareholders in a number of ways - by paying dividends, retaining earnings, or buying back stock - countries can tax their citizens in a number of ways.  You can tax income, sales, land, cars, possessions, capital gains, dividends, or whatever - at the Federal, State, or local levels.  And there are also "user fees" and other charges that act as taxes.

Or you can print more money.   Talk to anyone in Venezuela today about this.  If you print more money to meet your financial obligations, you create inflation.   Inflation decreases the value of every dollar (or bolivar or whatever) and as a result takes a little away from everyone - or a lot in some cases.   Wiemar Germany, after World War II printed money like mad to pay off foreign debts from the Versailles treaty.   People's savings were wiped out in a matter of months.  Similar events have happened in Chile and elsewhere.

So this is a real concern for me - or anyone else hoping to retire on their savings.   Inflation could wipe out our carefully laid plans, and so far, it appears that interest rates will be going up shortly (after artificially propping up the market for years) and inflation will follow suit.

But unintended consequences don't end there.  As I noted in an earlier posting, it was projected that the new tax law would reduce the value of corporate deductions, as well as corporate taxes, and some big banks, still deducting losses from the 2008 meltdown (remember that?) will show lower profits.  And today, Bank of America is showing just thatSo is Goldman.  Whether this is a one-time deal or something more pronounced, remains to be seen.  Some are saying it will affect BoA for one quarter but other banks, such as Citibank, far longer.

Others are saying that the plan - which ostensibly will allow corporations to "repatriate" money they have squirreled overseas - will do just the opposite.   21% sounds good, but it is still more than the 12.5% in Ireland, or even less than other jurisdictions.   What's more, a one-time "repatriation tax" may be a roadblock to this money flooding back into the States anytime soon.  What will actually happen?  We'll just have to wait and see.

But Bob, I heard that Wal-Mart is already handing out bonus checks of $1000 to each employee from the tax savings of this plan!   That is an interesting stunt on the part of Wal-Mart, but since they have yet to see these savings, they are really not handing them out.   What they are doing is a stunt, designed to get employees (and citizens in general) to connect some concrete event with the tax plan and thus be in favor of it.

That is the problem with tax policy.  The effects are so nuanced that few people see any difference in their paycheck from month to month.   It is only when you do your taxes at the end of the year that you really figure out what you owe, and even then, your life situation and income may have changed from year to year, so you really don't understand whether you've paid more or not.

Yes, there are some folks out there who look at their taxes in terms of their "refund check".   If the refund check is larger, then they think they paid less taxes.   But of course, the refund check only represents the difference between what was withheld and what was paid in taxes, and if you withheld more, you get more back, if taxes stay the same.   It illustrates how most people have no clue how taxes work and indeed, don't know what a marginal rate is, or what the difference between a tax credit and a tax deduction is.   And yes, a lot of people think you can deduct your way to wealth  - particularly people in brackets so low, they end up paying little or no taxes anyway, and deductions are of no use to them.

New RateNew Income Bracket|Old RateOld Income Bracket
10%Up to $19,050|10%Up to $19,050
As you can see, in the lowest tax bracket, there is no real tax cut.   But then again, people in this bracket end up paying little or no tax anyway, what with the standard deduction and exemptions of yesteryear.

Folks like me in the old 15% bracket might see a small break, but then again, I really pay little taxes these days, other than self-employment (social security and medicare) taxes, which I will pay for the last time in April of 2018.   So there isn't much in terms of savings for me.   It doesn't even really pay to itemize in this class, and in fact, with the new standard deduction, itemizing is going to be a thing of the past for a lot of middle-to-lower-income people.

Now, if you go up the chart, you see the juicy parts are where the higher incomes are.  Not only are rates dropped (except for the 35% bracket) the income levels are much higher now.   The stated goal of reducing the number of brackets went by the wayside in the sausage-making, apparently.

It is interesting how they did this, as they can claim, with a straight face that the largest cuts are in the lower brackets (dropping from 28% to 24% in one case).   But since the income numbers are also jiggered, it hides the effect on higher income people.

Taking deductions, credits, and other things aside,  if you made $1,000,000 in 2017 and 2018 (which is doing fantastically well, by the way - about 20 times the median income) your gross taxes in 2017 (before deductions, etc.) would be $340,144.20 - calculating marginal rates for each stage of income and adding them up.   Your gross taxes in 2018 (before deductions, etc.) would be $310,879.

So you can see, there is a huge savings - over 10% in fact - for people in the higher brackets.  And most of this is because the cutoff has been raised to $600,000 for the highest bracket while simultaneously lowering the marginal rate.  Marginal rates alone don't tell the story.

If we break out how much tax you pay in each step of the calculation, it looks weird.  The big savings is in the top bracket, but the 35% bracket shrinks so much in size, that you end up paying more in that range.  The main thing you see, though, is that folks making $50K a year aren't going to see much in the way of savings - while people making a million are going to see huge savings.

Tax paid for each marginal bracket, married couple, taxable income of $1,000,000
New RateNew Tax|Old RateOld Tax
By the way, these individual tax rate cuts expire in a decade, but the corporate tax cut is permanent.

But of course, this presupposes that someone making a million dollars a year doesn't have some sort of tax dodge.  And the oldest one in the books was to create a subchapter-S "pass-through" corporation and then try to pay yourself in capital gains - the so-called Romney rate of 25% or less - sometimes far less.

In the past you had to be a big Whale to do this - be able to afford an army of attorneys and accountants to file your taxes and end up in perpetual audit.   This is why Trump's claim of "I'm being audited" as an excuse not to release his taxes is so bogus.   Guys like him are pretty much audited every year.  His accountants play games and then they see what they can get away with at the IRS.

I noted before how my brother-in-law followed advice of an accountant and paid himself exclusively in dividends from his Subchapter-S corporation, rather than paying the 18% self-employment tax (which is on top of the marginal rates shown above).  His accountant ended up going to jail, and my brother-in-law realized too late that he didn't have the 40 quarters of income necessary to qualify for social security.  He scrambled to do this, before he retired, and will receive the minimum benefit under the law as a result.

Under the new law, people who own a subchapter-S corp - well, certain people, anyway - can report a portion (20% from what I hear) of their income as a return on capital, and thus get a lower capital gains tax rate.  This may favor some small businesses, but not others (some service providers may be exempt).   It is an interesting incidental feature of the law, one that Johnny Lunchbucket will not benefit from.

One thing that will change for us little people is the change in the standard deduction, exemptions, and the SALT deductions for State And Local income and property Taxes.   This could complicate things for many people, simplify them for others, and cause tax hikes for people in blue states and tax cuts in red ones.

Personal exemptions were designed to eliminate from the tax calculation, money you spend on supporting yourself and your kids and other dependents - that was the theory, anyway.   The new law eliminates these.   As a result, if you have ten children, you may see your taxes go up, as you lose this $4000+ deduction from your income (for each child/dependent, yourself and spouse!).

But at the same time, the standard deduction goes from $12,700 to $24,000 (married couple filing jointly) which means that for a lot of people, itemizing mortgage interest may no longer be worthwhile.   This may help offset the loss of the personal exemption, provided you were claiming fewer than three kids.   For many people, particularly those who itemized before, it may be a wash.

The law also caps SALT deductions at 10,000, which for folks living in places like New Jersey or New York, means a huge increase in taxable income.   People in some areas there are paying well over $1000 a month in property taxes, sometimes $2000 - plus State and local income taxes of up up 5%.   If these are capped at $10,000, some middle-to-upper income people may see an effective tax rise as well.

The law also abolishes the AMT - Alternative Minimum Tax which may have mixed and unintended consequences.   Some argue this will help the "blue state" high earners who have high tax bills.  The elimination of the AMT will also help upper income people.  The AMT was designed to prevent people from deducting their way to tax-freedom, by claiming so many deductions and credits as to make their declared income look tiny.   So I would have to label this one as a sop to the rich.

Some things the Republicans wanted didn't pass, apparently.  The elimination of the Gifts and Estate tax did not go through.  The GOP has been using this as a "talking point" for years now, convincing people who live in trailer parks that they will have to pay a "death tax" when they die.   The reality is, of course, there is  a $5M exemption from the gifts and estate tax, and certain exemptions for farmers and the like.   There are a number of ways around this tax (trusts, etc.) and only the very, very rich have to worry about paying it.

Another "minor" effect of this bill was to eliminate the Obamacare "penalty" tax for not having health insurance - or not having an Obamacare-compliant plan.   This will have a far greater effect than many expect.   As I noted before, Obamacare has a lot of problems, one being that folks in certain brackets get nailed for the full cost of Obamacare - with a rather sudden cutoff.   It is an unintended consequence of a law that was not well-thought-out and rushed through.  So you see why I am skeptical of a rushed GOP tax law - it will likely do similar things.

People making over $100,000 a year are faced with huge costs for health insurance.  My premiums, if not subsidized, would be over $20,000 a year.  I have to hope my income stays low, otherwise I would have to pay this.  For example, a small inheritance I received last year had some capital gains associated with it (from a trust).  Will this put me over the edge, cause me to lose my subsidy, and thus force me to not only pay tax on the inheritance, but also $20K for Obamacare?  If so, ouch.

Non-compliant health insurance plans are available - ones that do not allow for pre-existing conditions, for example (usually exempting claims for one year for pre-existing conditions).  This is basically what we had before Obamacare.  Now that the "fine" has been repealed, many healthy families may shop around for such lower-cost plans, leaving the sicker folks on Obamacare, which in turn will increase premiums even more dramatically.   This could lead to a collapse of the whole system, as people can no longer afford the premiums, and the government can no longer afford the subsidies.  Again, wait and see.

So, what do we conclude from all of this?  Beats the heck out of me.   We will have to see the dust settle before we know the intended and unintended effects of this bill.   My gut reaction is that the GOP tried to do too much, too quickly.  Sudden dramatic changes to our tax code are not healthy for the economy as it makes it hard to plan ahead, both for individuals and for corporations.

But the overall conclusion is that this helps the rich more than the middle class, is kind of inescapable.   But then again, when things up or down by flat rate, across the board, the rich make out better than the poor.   If the richest man in town makes $100,000 a year and the poorest makes $10,000 a year, and everyone gets a 10% raise, the richest man makes 10 times more in his raise than the poorest.   What's more the "income inequality gap" goes from $90,000 to $99,000 - which illustrates why, in part, income inequality will always be on the rise, unless punishing taxes are enacted (and I am not promoting that idea!).

This humorous story illustrates the effect of tax cuts "across the board":
Suppose that every day, ten men go out for lunch and the bill for all ten comes to $100.
If they paid their bill the way we pay our taxes, it would go something like this:
  • The first four men (the poorest) would pay nothing.
  • The fifth would pay $1.
  • The sixth would pay $3.
  • The seventh would pay $7.
  • The eighth would pay $12.
  • The ninth would pay $18.
  • The tenth man (the richest) would pay $59.

So, that's what they decided to do. 
The ten men ate lunch in the restaurant every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball. 
"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily lunch by $20.00."  So lunch for the ten men would now cost just $80. 
The group still wanted to pay their bill the way we pay our taxes.  So the first four men were unaffected.  They would still eat for free.  But what about the other six men?  How could they divide the $20 windfall so that everyone would get his fair share? 
They realized that $20 divided by six is $3.33.  But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to eat his lunch. 
So the bar owner suggested that it would be fair to reduce each man's bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

  • And so the fifth man, like the first four, now paid nothing (100% off).
  • The sixth now paid $2 instead of $3 (33% off).
  • The seventh now paid $5 instead of $7 (28% off).
  • The eighth now paid $9 instead of $12 (25% off).
  • The ninth now paid $14 instead of $18 (22% off).
  • The tenth now paid $49 instead of $59 (16% off).

Each of the six was better off than before.  And the first four continued to eat lunch for free.  But, once outside the bar, the men began to compare the amount they got off. 
The sixth man said, "I only got $1 off out of the $20 while the tenth man got $10 off!" 
"Yeah, that's right," exclaimed the fifth man.  "I only got $1 off, too.  It's unfair that he got ten times more benefit than me!" 
"That's true!" shouted the seventh man.  "Why should he get $10 off, when I got only $2?  The wealthy get all the breaks!" 
"Wait a minute," yelled the first four men in unison, "we didn't get anything at all.  This new tax system exploits the poor!" 
The nine men surrounded the tenth and told him they they were angry that he got so much off while they each got very little. 
The next day the tenth man didn't show up for lunch, so the nine sat down and had their lunchs without him.  But when it came time to pay the bill, they discovered something important.  They didn't have enough money amongst all of them for even half of the bill! 
And that is how our tax system works.  The people who already pay the highest taxes will naturally get the largest benefit from a tax reduction.  Tax them too much, attack them for being wealthy, and they just may not show up anymore.  In fact, they might start eating overseas, where the atmosphere is somewhat friendlier. 

There are some flaws in the story, of course.   Tax cuts are rarely "across the board" even, as the new GOP tax law illustrates.   But even if they were "even Steven" the largest breaks do always go to the richest, as they pay more in taxes (except for the very, very rich) and as a result, see the biggest savings.

I think the biggest concern for me, personally, is that inflation will wipe out any benefit of this tax cut.   The idea that we need to throw viagra at the raging boner of the current economy is somewhat flawed - it could end up exploding.   In times of financial hardship, a tax break or stimulus makes sense - much as Obama cut the Social Security tax during his tenure.  Even the people who passed this bill admit that it will not expand the economy to the point where tax collection will offset cuts in rates.  So increased deficits - and accelerating deficits - will be the result.

This in turn will lead to rising interest rates (which are already rising from essentially zero) and increased inflation over time.   Ultimately, this will be the higher "tax" that the little people will have to pay - and they will have to pay it.

When I was 18, inflation was running at 10% or more.  Mortgage rates were in the low teens.  Unemployment was double-digit.   High inflation  and "stagflation" are something you don't want to live through, let me tell you.   And the problem with inflation and the deficit, is that it has a snowball effect.   When interest rates skyrocket, the government has to pay more to service its debts as treasury rates go up.   This leads to more deficits and more debt and higher interest payments.

I approach 2018 cautiously optimistic.   We'll just have to see where it goes.  But in terms of a "huge tax cut" I will not personally benefit much from the new law.

Tuesday, January 16, 2018

Surveillance Nation

Russians are necessarily worse drivers than anyone else, they just have more cameras. 

People today like to whine about how their freedoms are being taken away.   But oddly enough, we live in an era of greater freedom than anytime before in the history of mankind.

Consider this:   When I was a kid, pornography was illegal.  Other than "soft core" porn like Playboy, X-rated magazines and videos could be seized if sent though the mail, and you could be charged with possession of porn - depending on which State or County you lived in.  Today, of course, it is all over the Internet and freely available to anyone, just about anywhere.  So long as everyone depicted is over the age of 18, it is perfectly legal to possess and view, and indeed, the courts have held this is your right.

Again, this was not the case, when I was a kid.   You could go to jail!

And speaking of sex, most of it was illegal.  Not only were homosexual acts outlawed, but many sexual acts even between consenting adults outside of marriage (or even inside!) was considered not only immoral, but illegal as well.  Even adultery was punishable by law.

Gambling was prohibited in 49 States.  You had to go to Nevada to gamble legally.  Today, you can gamble anywhere, and even the government is in on the game, selling lottery tickets.

Oh, and you can legally smoke pot in several states now, until Jeff Sessions lowers the boom.

So take that, Libertarians!   You live in an era of more freedom than ever.   The 55-mph speed limit was abolished, stores are open on Sundays (well, except liquor stores in part of the South) and "dirty dancing" is no longer forbidden.  What more do you want?

Of course, we have seen some retrenchment.   The voting age was lowered to 18, while the drinking age was raised to 21.   Despite all our new-found freedoms, we seem more namby-pamby than ever before.  George Carlin might have made waves with his "seven dirty words" back in 1972, but today, the FCC just doesn't give a damn about swearing.   Nevertheless, the media deems it necessary to censor out words like "s***hole" with little stars so our feelies won't be offended.   They are more afraid of conservative Christians starting a boycott than legal action from the government.   As I noted before, the media lives in a bizarre parallel universe where everything is Mayberry, RFD, and no one has sex or dirty thoughts.  Meanwhile, the rest of the country has discovered the Internet.  And we wonder why cable disconnects are up.

But that was not the point of this blog entry.  What was it?  I started writing it years ago, and only finished it today.   Oh, yes, surveillance.   It is interesting that today, people are more paranoid than ever about "privacy" and whine and complain long and loud about how security cameras and speed cameras are an assault on their Constitutional right to privacy.   People cite the fifth amendment as creating a "right to privacy" under the "penumbra" of the Constitution.   A "penumbra" is apparently some kind of umbrella.

But the fifth amendment doesn't really say anything about a right to privacy - at least with regard to your actions in public spaces.
No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.
Where is "privacy" mentioned here?  The idea that you cannot be compelled to testify against oneself has been bootstrapped (along with the 9th amendment, which is a catch-all) to include this new right. Certainly, no one in the 18th Century would have thought that the act of you walking down the street was somehow a protected right - and that no one had the right to record or make note of you doing so.

Today, well, we think otherwise.   Uncle Fred parks his Cadilliac with vanity tags "SEXYFRED" in front of the strip club.   A news truck, a security camera, or Google "street view" capture this piece of data, and Fred gets all bent out of shape - his privacy has been invaded!  Never mind that Uncle Fred has posted nude pictures of himself to a dozen dating and hookup sites - not to mention Craigslist.  He also has all sorts of intimate information about himself on Facebook and other social media sites.  We are obsessed with privacy, but at the same time, bare our souls to the world.

This "privacy penumbra" is one reason we don't have speed cameras in the United States.   Oh, sure, we have cameras that tell you your speed and admonish you for speeding.  But they don't take photos and send you tickets.   Red light cameras, for some reason are exempt from this privacy concern.   Apparently the "right" not to be killed in a T-bone collision trumps your right to keep secret from the world your shitty driving habits.

I for one, just don't get it.  It is not like the government is putting cameras on our bedroom, but rather on city streets.  And these tend to make me feel safer, even if they are a little creepy sometimes.  People claim that don't like "the government spying on me!" but in fact, the government really doesn't care that last Tuesday, you want to Wal-Mart at 2.45 PM and bought a box of waffle mix.  These are hardly State secrets.

If you are ashamed of something you are doing in your life, ask yourself why.   Uncle Fred certainly doesn't mind people knowing he goes to the strip club - that's why he proudly parks his Caddy out front.   It is only when someone snaps a photo of it - even as part of a background scene - that he gets upset.  Why is this?

Others say that if we allow this sort of surveillance, it will only get worse over time, and the government will be able to track our behaviors and stamp out political dissent.   They can see you walking into the building where the anti-surveillance society is meeting!   But then again, not really.   If you were really doing something illegal, then they can monitor your activities already - with or without a search warrant, depending on what they are looking at.   And if someone is planning on planting a bomb or gunning down concert-goers, well, I for one would be happy if the government was keeping an eye on them.

Hotels today are getting rid of the "do not disturb" signs in hotel rooms, and informing guests that housekeeping will need to enter the room at least once a day, whether you want them to or not.   This way, people cannot assemble an arsenal of guns or set up a meth lab or traffic humans - or whatever.  The hotel's rights trump your right to "privacy."

Of course, that is the whole damn point, isn't it?   "Privacy advocates" usually are a front for people doing illegal things.   For example, a young man is driving his girlfriend's rented car, with a trunk loaded up bricks of heroin.   He's a bad guy and should go to jail.   The question before the Supreme Court is, does a non-designated driver in a rental car have an expectation of privacy in the contents of the trunk?

It is an interesting question, as if someone stole my car and was pulled over before I could report it, could the Police be barred from searching the trunk and finding me there bound and gagged? (Good thing we own a hatchback!).   Or does the fact that the car is clearly not his negate his "right to privacy" in someone else's car?  How would the police know that the person had permission to use the car?   The idea that the Police will start "pulling over every rented car" as Justice Sotomayor stated, is a little far-fetched.  You still need "probable cause" under Ohio v. Terry to pull a car over.

But it illustrates the mental gymnastics that some Judges will resort to, to find new rights in the Constitution.   Rights that really don't provide any real benefit to the population, but provide relief to criminals and make the job of the Police that much harder.

No, I am not worried about being pulled over and searched as an unauthorized driver of a rental car.   Why?  Well, first of all, when I rent a car, I make sure I am an authorized driver - and don't let someone who isn't, drive the car.  Why?  Because if they wreck the car, I may not be covered, and now I have to buy the rental car company a new car.

But even if they searched my car, I am not upset or worried.  Why?  Because I don't have 98 bricks of heroin in my trunk and never will.   The "right to privacy" doesn't provide me with any additional rights, unless I am a criminal.  Why are we creating rights that affect only one class of people - the criminal class?

Like most people who have a presence on the Internet, my life is an open book.  I gain nothing from a "right to privacy" other than the knowledge that it will help some criminal who has victimized me, get away with his crime.

In a way, it is like this whole Bitcoin or crypto-currency nonsense.   There is no legitimate use for many of these currencies, but the criminal underworld does make use of them to traffic in drugs, weapons, and children.   What's not to like?   And people get bent out of shape when the government steps in to regulate these wild-West "exchanges" - as if some personal right of theirs is at risk.   And perhaps it is, if they are doing illegal things over the Internet.  But your right to buy a coffee drink with Bitcoin?   That isn't at risk here - it is just impractical as all get out.

Maybe we won't be able to "get away" with things in an era of security cameras on every lamppost.  But then again, what are you trying to get away with?   As I noted in the beginning of this post (aha! it does tie in!) we have more freedom today than ever before in the history of mankind.   You can do what you want, in this country, provided you are not victimizing someone else (except perhaps in the commercial sense).

I don't see how security cameras take away from that freedom, unless you are a criminal.

It's Economics, Stupid!

People from Norway aren't flocking to America, because they have a sound economy in their country.  People from "shithole" countries flock to countries where there is more economic opportunity.   Even and idiot should be able to figure this out.

The press is at it again - saying that Trump is a racist for calling African countries and Haiti "shithole" countries.   And the sad things is, many of them are - and the people who live there will be the first to tell you this.   Haiti shares an island with the Dominican Republic.  Halfway across the island is an imaginary line - the border.   If you are on one side, you are in a tropical paradise and tourist destination.   On the other side - abject poverty, corruption, disease, unsafe water, lack of hope, lack of opportunity - the working definition of a shithole country.

And many of the shithole countries of the world are in the shitter not because of external influences, but internal ones - corrupt governments that sock away the majority of the nation's wealth into numbered Swiss bank accounts, while their leaders send their children to British or Swiss boarding schools.   Meanwhile, the average annual income is measured in the hundreds of dollars

Some on the Left want to make it out that this is our fault - the fault of the United States.  But as Robert McNamara once remarked, we may have messed up governments in Central and South America, but "at least Africa, that's not our fault."

When you have governments run by religious extremists (or being attacked in civil wars by religious extremists) or run by petty dictators or even cannibals such as Idi Amin, it has little to do with the US - or at least our influence isn't as great as some make it out to be.

But getting back to the point, what amazes me is that the press misses the larger point.  Trump acting racist isn't "news" at all, but his inability to understand immigration and migration is - particularly when he is making immigration the keystone issue of his administration.

Folks from Norway are just pining to live like this...

His comment would seem to indicate that people want to come to the USA because it is such a keen and swell place to live - what with our freedom of religion, freedom of speech, and random mass-shootings (all guaranteed by the Constitution!).   Or maybe people just want to live here because of the Rock 'n Roll music, or a McDonald's and Starbucks on every corner.   I mean, of course, who wouldn't want to live here, right?

The reality is, no one tears up their roots and moves themselves and their families to a foreign country where they don't speak the language - often risking their lives in the process - just for the hell of it.  Economic conditions are what drives migration - and have since we fell out of trees.  Mankind has migrated across the globe in search of better food, shelter, and conditions.

People are coming here from "shithole" countries precisely because they were shitholes.  My ancestors didn't come over here from Ireland - steerage class - for funsies.   The potato famine meant starvation and death.   Suddenly, the "Emerald Isle" had lost its luster - and America seemed like a better alternative than starving.

So this is what irks me.  The media harps on this comment as being racist, as if that was some sort of revelation.   The real revelation is that Trump is far more ignorant than he appears to be - and that's saying a lot.   Thinking that people from Norway want to migrate here in droves is just delusional - or indeed any other Western country or country that has a vibrant economy or just, well, isn't a shithole.

The people knocking on the door aren't folks who are well-off, but those who are desperate.  Even and idiot could figure that out - Donald Trump apparently can't.

Monday, January 15, 2018

Laundry Room Makeover (The Wet Wall)

If you have one of these washing machine "drain boxes" in your wall, I would suggest you not use it as a drain for your washer.

I am in the middle of a laundry room makeover - and not by choice, either.   However, the plumbing in our house is nearly 50 years old, which is about its design life.   And over the years, people have modified the house, sometimes properly, sometimes not, with some mixed results.  And by the way, this is typical of any house that is more than a decade or two old.  Having owned nine houses and condos (!) over the years, I have seen this sort of nonsense again and again.   Even new construction has its share of hidden nightmares behind sheetrocked walls.  It is probably better you don't know.

Welcome to the mildew nightmare.  No wonder they call it a "wet wall"!

The laundry room was initially on the inside of the house, from what I can divine from my architecture archaeology.   In 1970 when the house was built, they had a laundry room off the kitchen, wallpapered in a kicky 1970's pattern with large yellow and orange daises on a white background.   It was the style at the time.

Then, sometime in the late 1970's or early 1980's, someone decided to move the laundry room into the garage and make a bar where the laundry room was.  They covered over the wallpaper with cheap press-board paneling in an eye-searing chartreuse/green.  Whoever did the work was none too careful.  The sheetrock was slapped on where the faucets were moved and the "drain box" for the washer was reversed to face the other side of the wall in the garage.   Since the washing machine and dryer were now on the other side of the wall (in the garage now) it wasn't too hard to move the plumbing and electrical.

The house went into the rental market for a couple of decades, and about 15 years ago was purchased and remodeled and sold to us.  The lime-green paneling was painted over in an oatmeal color (which was popular at the time - today they would have used grey, which is trendy) and the icemaker installed.  Fast-forward a dozen years and all these "remodeling" efforts are showing the wear and tear of a decade.  The appliances, once all-new, are now more than 2/3 the way through their design life - if not at the end.   I already had to replace the icemaker and the disposal.   The washer and dryer and dishwasher will be next.   I hope the A/C unit holds on for as long as possible.

Houses - what's not to like?  They are just a collection of expensive things that wear out and break over time - and the more complicated and expensive you make them, the more expensive it is to maintain them.  All you renters out there, consider that.   Your monthly housing expenses are a very finite number - and predictable.

Anyway, like any 50-year-old house, it has its share of issues.   Houses in the South generally don't have basements (particularly on a barrier island where you are 12 feet above sea level).   Everything is on a slab and the water and sewer lines are poured into the slab when it was built.   This can be a nightmare, as these lines can eventually corrode through and leak thousands of gallons of water - as happened to a friend of mine when he got a $1500 water bill one month.   The solution is to either jackhammer up the floor (no, thank you) or run pipes through the attic, where they probably should have gone in the first place.  So far, that hasn't happened to us, but we are about due for it.

About half the houses on the island have had their pipes replaced, so it is a conundrum as to whether to continue with our existing piping or use this as an excuse to overhaul that as well.   Like any other project, once you start "digging" into it, it can mushroom into a complete teardown and rebuild.

The big problem is the drain.  While most of the drain pipes are new PVC which run underground in a trench dug next to the house during the remodel, the drain pipe in the laundry room is old cast iron pipe, which tends to rust and form rough surfaces which catch lint from the washer and thus clog up.  These washer drain socks help somewhat in capturing the lint before it goes down the drain.  We have been using these for a decade now, and the drain, while slow, does drain.

Of course, it doesn't help if you let a non-woven spun fiber cloth go down the drain!   I was able to snake this out with my RIGID power-snake, but the drain is still slow.   And speaking of slow drains, one mistake we made when we first moved in was to use the stupid drain in the wall box like the one shown at the top of the page.   Washing machines, when they drain, dump an enormous amount of water at once - more than most drains can handle, much less a partially-clogged slow drain.   So the water overflowed and since the box was not properly sealed, water went down inside the wall, creating a mildew nightmare.

Again, houses, what's not to like?

Even if the "drain box" was properly sealed, it would have backed up and overflowed down the wall.  A far better choice, I think, is to have the washing machine drain into a laundry tub, where it can act as a buffer for the drain and prevent messy overflows.   And that's what we've been doing for the last decade or so.

But after the latest clogging incident, I felt I should finally break down and clean up the plumbing, eliminate the drain box, and get rid of the mildew and mold forming on the wall.  I had previously removed the sheetrock behind the washer and dryer to let the area air out - and sprayed it with chlorine bleach to kill the mold.

So, I have been tearing out the old sheetrock, and also removing layers of old lime-green paneling and daisy wallpaper.   I am going to run a new drain, I think, using PVC pipe, although this may mean jack-hammering up the sidewalk behind the house.   I am tired of living with slow drains that clog like clockwork.   The water lines, I will leave for now - we'll wait to see if they leak before replacing them.   I am going to hire the roto-rooter man to scope the line, now that it is all exposed, and also determine where it goes - under the slab or out back.

I drew a little plan on re-arranging the laundry room

And we are going to use this opportunity to do a "makeover" for the laundry room.  When the washer and dryer were moved to the garage, they moved the hot water heater from the corner to the middle of the wall - running CPVC pipe along the baseboard.  It is a real "pipe sampler" out there, with cast iron, PVC, CPVC, copper, galvanized steel and so on.  And all the shutoff valves are 50 years old and if you try to use them, they leak.  So we need to replace them.

And that's not even addressing the electrical issues.   The outlets were haphazardly wired (emphasis on "hazard" here) and one wire was just wrapped with electrical tape on one end and stuffed in the wall (!!).   The dryer outlet was blackened from arc-ing with the plug.  I have already replaced both.   We got our work cut out for us here.

My thinking is to move the washer, dryer, and beverage fridge along the back wall, move the hot water heater back to the corner, and install some wall cabinets for storage.  Since the washer and dryer are 12 years old, I am thinking of replacing them.   But what with?

I like the old top-loader washers - they were cheap ($250 or so) and reliable and easy to repair - and rarely needed repair.  But a funny thing has happened in the washing machine business.   The top-loaders are getting harder to come by, and the ones that remain are getting really pricey - like $450 or more.   And in the meantime, the front-loaders are coming down in price, to about $550 - which is a lot better than $1000 or so.   We had the front-loader type in New York, where we were on a well, and they do use less water.

But most require you use a special "High Efficiency" detergent, which means I can no longer use my favorite cheap Mexican detergent from Walmart.  If you don't use the special detergent (and in the amount specified) your clothes may have a soapy "mildew" smell, as the washer may have it as well - something that people have complained about long and loudly about front-loaders.   On the plus side, with front-loaders, you can put a countertop over the machines and have a space for folding laundry.   Or you can buy those stupid "drawers" that go underneath the machine - that cost as much as an old top loader once did!   And I am talking just a steel drawer, not one of these fancy "mini-washers" that goes underneath your washer (why did we need this?).

Oh, well, people are idiots and soon separated from their money.   Speaking of idiots and high efficiency detergent, the latest "fad" the kids are into - beside bitcoin, and it makes about as much sense - is to put detergent pods in their mouths.   It is idiotic, of course, but it does deftly illustrate that people, in the aggregate, are blithering idiots and will do anything for attention or because their peers are doing it.   This does no mean you should do it too.   Act rationally in an irrational world - and that means not eating soap.   Well, detergent, anyway - excuse me!

I may end up just putting the old appliances back and running them until they die - that would be the most cost-effective solution.  We could then make a decision on top- versus front-loaders, when the time comes - if ever.   Probably by then, the decision will be made for us - the only machines available will be front-loaders in red (?!?) or stainless steel.   The world is changing, I guess.  No country for old men with their top-loading washers.

So anyway, I have a lot of work to do.   In addition to the plumbing and sheetrock work and the new drain, I have to paint the floor.  Do I use that fancy epoxy paint with the little flecks in it, or just buy some grey basement paint which I have done in the past (it is cheap, easy to apply, and you can "freshen" it up with a new gallon rolled around in a matter of minutes, every few years)?  Or do I put in some sort of flooring material, like I did in the camper?  And the ceiling - the folks who "remodeled" sprayed the ceiling in the garage and either didn't prep it well or used an incompatible paint.  The net result is that the paint is coming off in sheets, all over the garage, and I have to figure out how to scape or sand the rest off, and paint over it, or just put another layer of sheetrock over it and start over.  Nothing is easy.

And lighting.  We want to get rid of the buzzing and flickering fluorescent lights and replace them with LED lighting which is not only more efficient, but brighter.

And to think, some reader thought I would have "nothing to do" in retirement!