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“It Was 20 (50) years ago today, Sgt. Peppers taught the band to play”

Hard to believe that 50 years ago on June 1, 1967, the Beatles Sgt. Peppers album was first released in the US. I remember going to Sam Goody (on 43rd and 3rd ave.) to buy it in early June and the racks were full of Sgt. Pepper albums. It almost seemed like it was the only album they were selling.

The release of Sgt. Pepper was a milestone for rock music. It was the first truly thematic rock album and many of the songs included were ground-breaking,  progressive rock entries. It spawned the beginning of album rock and numerous thematic albums such as Days of Future Passed by the Moody Blues later in 1967.

So herewith my review of the extraordinary and precedent setting Sgt. Pepper’s Lonely Hearts Club Band

Sgt. Pepper’s Lonely Hearts Club Band – The Beatles (June 1967) Side 1 – Sgt. Pepper’s Lonely Hearts Club Band, With A Little Help From My Friends, Lucy in the Sky With Diamonds, Getting Better, Fixing A Hole, She’s Leaving Home, Being for the Benefit of Mr. Kite. Side 2 – Within You Without You, When I’m Sixty-Four, Lovely Rita, Good Morning, Sgt. Pepper’s Lonely Hearts Club Band (reprise), A Day in the Life. 

Side 1 begins with the opening “Sgt. Pepper’s Lonely Hearts Club Band” setting the tone and theme for the album – about a fictitious band doing a concert. “Sgt. Pepper’s” heralds the beginning and the pattern throughout the album, the seamless blending of rock instruments and rock vocals with orchestration produced brilliantly by George Martin. It quickly segues into “With a Little Help From My Friends” as the fictitious Billy Shears (a.k.a. Ringo) delivers an excellent, upbeat song, definitely the best Ringo lead vocal during his Beatles career. The mood shifts suddenly as we move from the first two songs (composed by Paul), to John’s first entry, the psychedelic “Lucy in the Sky with Diamonds”, arguably the best track on the album. The psychedelic mood is altered quickly as Paul takes over with the lively “Getting Better”, where his optimism (“It’s getting better all the time”) is somewhat countered by John’s sarcasm and pessimism (“can’t get no worse”). “Fixing a Hole” is ushered in with harpsichord and is another very good composition. “She’s Leaving Home”, about a teenage runaway, uses orchestration to help cement its somber and sad mood and is one of Paul’s better vocals. The mood shifts suddenly as John (with an assist from Paul) finishes the side with a much more upbeat and superb entry, the psychedelic/carnival-like “Being for the Benefit of Mr. Kite”. Lacking a manually playable Calliope, George Martin assembled a sixty-foot tape loop of steam organs, cut it in one-foot lengths and randomly reassembled them to get the Calliope sound that dominates the song. It works extremely well and provides a fitting conclusion to Side 1.

Side 2 begins with a too long, albeit still a pretty good, Harrison composition “Within You Without You”. But even this cut is interesting because it is a rare pop song that uses Indian stringed instruments, the sitar and the drub, as well as the unique percussion sound of the tabia. Paul’s next composition “When I’m Sixty-Four” is a nice upbeat melody. The song changes the mood instantly with a tongue in cheek, day-to-day look at aging after Harrison’s somber and mystical “Within You Without You”. (I’ll admit that now that I am sixty-three that 64 no longer seems old to me!). The pace quickens with Paul’s next entry, the lively “Lovely Rita” a nice pop song which is greatly enhanced by a piano intro and piano ending, some great bass playing by Paul and the use of comb and paper to create an interesting high-pitched sound.

The rooster crowing at the beginning of the next song announces John’s “Good Morning” which increases the tempo and greatly benefits from an excellent lead guitar by Paul , the liberal use of a horn section (three saxophones, two trombones and a French horn) and the menagerie of barnyard animal sounds. The clucking chicken fades out and the first sharp chord of  “Sgt. Pepper’s Lonely Hearts Club Band (Reprise)” commences a short and very lively reprise which is even better than the opening track. The fading fake audience cheers are gradually replaced by piano notes leading us into the amazing and unique “A Day in the Life”. The song is actually a seamless merging of two songs, John’s ethereal dreamlike sounding “I read the news today oh boy….now they know how many holes it takes to fill the Albert Hall” with Paul’s shorter song about the hum drum of daily life  “Woke up got out of bed, dragged the comb across my head….”. And it works incredibly well. Excellent piano and keyboard work by John, Paul and George Martin as well as sounds of a full orchestra make this a musically unique song. The orchestra crescendo and the final eternal chord ending fading into nothingness make a fitting ending for what many critics consider the best song by the Beatles on their very best album.

 

“Start Spreading the News!”- My First Book “I’ve Got the Music in Me” is Out!

I’ve Got the Music in Me: A Fan’s View of 1960s and 1970s Rock and Pop Music:

 By Bruce Braine, Edited by John Lum, Cover Art by Maryanne Braine.

As some of you may have already seen on Facebook or heard about from me directly, my book on 60s and 70s rock and pop music went live on amazon.com on May 28th. I wanted to reach out to you in hopes that you would be interested in buying the e-book (only $3.33) or paperback $9.99 which is now both available on Amazon. (The paperback though more expensive has the great advantage of the excellent cover design done by my daughter Maryanne Braine). Of course, both versions have the great benefit of the extraordinary editing work done by my long time friend and professional editor/publisher John Lum.

Also, if you like the book, and I am pretty sure you will, please feel free to forward this note to your friends, colleagues or others who might be interested. As a self published book, I must rely on word of mouth/email etc. to get the word out about the book.  

 

To find the book on amazon either use this link

https://www.amazon.com/Ive-Got-Music-Me-1960s-ebook/dp/B071LRLF8M/ref=mt_kindle?_encoding=UTF8&me=

 

or simply go to books and put in the title or my name in the search bar.

 

Thank you all,

Bruce

 

“Please Mr. Custer, I Don’t Want to Go”

My e-book entitled “I’ve Got the Music in Me: A Fan’s View of 1960 and 1970 Rock and Pop Music” is coming out by the end of May. It will be very attractively priced on amazon at only $3 or so. In order to further entice you, I have included an excerpt from Part II of the book entitled “The Lists” which is a list of my favorite comedy songs that appeared on a single. Enjoy!

*****************

“Please Mr. Custer, I Don’t Want to Go”

Best Comedy Singles

The goal of music should not only be to entertain us or be interesting musically and lyrically, but in a few cases to make us laugh. Surprisingly, there are precious few songs that are truly funny. Great comedians seldom released singles and the rare ones that they did release were usually only okay (e.g., “Little Ole Man” by Bill Cosby, basically a cover of “Uptight” with Cosby’s lyrics). For example, two excellent, singing-comedy acts (The Smothers Brothers and Tom Lehrer) issued only one single between them.

Also, the two most successful “comedy” artists/musicians really didn’t do anything that was very funny (or at least not to me). This includes Ray Stevens, who is perhaps best known for his #1 hit “The Streak”, which wasn’t that funny or his two earlier top ten hits, “Gitarzan” and “Ahab the Arab”, which were equally unfunny. It also includes Dickie Goodman (and, in earlier singles, his partner Bill Buchanan) who pioneered the “break-in” records that strung together bits of then popular songs along with narration for comic effect. This began with “The Flying Saucer Pt. 1 and 2” back in 1956 and Goodman’s last successful single, “Mr. Jaws”, in 1975. Unfortunately, aside from the novelty of this approach in 1956, the humor just seems stupid to me.

Fortunately, there are a few exceptions to this rule and several singles succeeded largely because they were clever, or unique and at least elicited a chuckle even now. I expanded the list into the early ’80s to account for a couple of these. So in honor of the now more than 75-year-old Dr. Demento, who loved playing weird and bizarre and usually humorous songs on his weekly radio show, here is my Demented Double Dix in chronological order:

  1. “Jingle Bells” – The Singing Dogs (1955, 1971, 1972, 1973, 1983, 1984)– Yes, it is easy to get sick of this one around Christmastime, but the concept and execution are still pretty funny.
  1. “Beep, Beep” – The Playmates (#4 Dec. ’58) (“Hey Buddy how do I get this car out of second gear?”) – It is hard not to smile when I hear this song. It is a great car song.
  1. “Mr. Custer” – Larry Verne (#1 Oct. ’61) (“Please Mr. Custer, I don’t wanna go.”) – Verne’s song is a parody of the slew of war-related songs at the time that talked about the likes of Davy Crockett or the Battle of New Orleans.
  1. “Monster Mash” – Bobby “Boris” Pickett and the Crypt Kicker Five (#1 Oct. ’62) (“It was a graveyard smash.” )- The song was a great parody concept, no doubt even funnier when first released in the early 1960s during the music dance craze (e.g., “The Twist”, “The Locomotion”, etc.). It has gotten old over the years because of constant play but still a classic.
  1. “Hello Muddah/Hello Faddah – A Letter from Camp” – Allan Sherman (#2 Sep. ’63) (“Oh please don’t make me stay, I’ve been here ONE – WHOLE – DAY!”) –  This might be the most wickedly funny song ever. The lyrics are brilliant. “You remember Jeffrey Hardy, they’re about to organize a searching party”.
  1. “Martian Hop” – The Ran-dells (#16 Sep. ’63)– “We have just discovered an important note from space, the Martians plan to throw a dance for all the human race.” If you listen to this song, not only will you smile and chuckle, but you will probably want to dance, too.
  1. “Pretoria” – Smothers Brothers (1964) “We are marching to Pretoria.” I cheated on this one. This wasn’t a single, but my brother-in-law Peter would have killed me if I didn’t include at least one Smothers Brothers song. And this one is very funny!
  1. “New Math” – Tom Lehrer (1965) (“So you have 13 tens, so you take away 7 and that leaves five, well six actually.” ) While I am cheating, I included the brilliant singer-comedian Tom Lehrer with one of my favorites, “New Math” from his That Was the Year That Was album. Lehrer also had no singles probably because his albums sold very nicely and included many really funny songs (e.g., “Pollution”, “The Elements”, “The Vatican Rag”, to name just a few).
  1. “Leader of the Laundromat” – The Detergents (#19 Jan. ’65) (“My folks were always putting her down (down, down), because my laundry always came back brown.” ) – The ultimate parody song of the Shangrilas hit “Leader of the Pack”, it even sounds like it was recorded in a laundromat!
  1. “May the Bird of Paradise Fly Up Your Nose” – Little Jimmy Dickens (#5 Nov. ’65) (“One fine day as I was a-walkin’ down the street. Spied a beggar man with rags upon his feet. Took a penny from my pocket. In his tin cup I did drop it. I heard him say as I made my retreat ‘May the bird of paradise fly up your nose, may an elephant caress you with his toes’…”) – Perhaps with inspiration from Johnny Carson and Carnac the Magnificent, this country song took insults to a pretty funny level.
  1. “Wild Thing” – Senator Bobby (#20 Jan. ’67) (“Ah you move me, yes…press ahead Wild Thing.”) – A great Kennedy imitation by comedian Bill Minkin and some clever lines throughout make this a very funny song. The B-side is the same song except by Senator Everett Dirksen.
  1. “Here Comes the Judge” – Shorty Long (#8 July ’68) (“Can’t dance? That’ll be 90 days, 30 days for the boogaloo, 30 days to learn how to shing-a-ling, and 30 more for the Afro twist.” ) – Using the “here comes the judge” catchline from TV’s Rowan and Martin’s Laugh-In, Shorty Long developed a catchy and amusing song featuring the deep voice of the Spinners’ Pervis Jackson as the judge. Sadly, Shorty drowned in a boating accident one year later.
  1. “A Boy Named Sue” – Johnny Cash (#2 Aug. ’69) (“My name is Sue, how do you do! Now you gonna die.” )- This song is highlighted by Shel Silverstein’s clever lyrics and the recording is live in front of a delighted San Quentin prison audience. Silverstein, who is perhaps best known for his popular children’s books, also wrote several other excellent songs including “The Unicorn”. But when it came to “A Boy Named Sue” only Johnny Cash could do justice singing his brilliant lyrics such as “kicking and gouging in the mud and the blood and the beer”.
  1. “Alice’s Restaurant Massacree” – Arlo Guthrie (1967, charting later in a much shorter version “Alice’s Rock & Roll Restaurant” (#97 Dec. ’69)) (“You can get everything you want at Alice’s Restaurant.” )- Hard to exclude one of the funniest shaggy dog stories/songs ever even though it was never a single. The fact that it was 18 minutes long of course had a lot to do with it, but even so it was played constantly on progressive FM stations during the late 60s/early 70s.
  1. “Lola” – The Kinks (#9 Oct. ’70) (“Girls will be boys and boys will be girls. It’s a mixed up muddled up shook up world”). – Was it comedy, satire or were the Kinks simply way ahead of their time in 1970? Who can say, but my friends and I loved listening to it. Lola is representative of many excellent Kinks songs that range between biting satire and comedy.
  1. “Deteriorata” – National Lampoon (#91 Oct. ’72) (You are a fluke of the universe, you have no right to be here but whether you can hear it or not, the universe is laughing behind your back.”) – This is a very funny parody of Les Crane’s “Desiderata” with the opposite message! National Lampoon has a number of funny parodies, but this was the only one to actually chart on Billboard. My favorite might be “Magical Misery Tour”, a parody of John Lennon, which given that it used f-bombs every several words was not released as a single for an understandable reason (spelled FCC).
  1. “Junk Food Junkie” – Larry Groce (#9 Mar. ’76) (“In the daytime I’m Mr. Natural, just as healthy as I can be…but at night I’m a junk food junkie, good lord have pity on me.”) – Groce’s homage to “closet” junk food eaters (both figuratively AND literally) is superb and hysterical.
  1. “King Tut” – Steve Martin (#17 July ’78) (“Buried with a donkey, he’s my favorite honky.” ) – Nothing beats watching Steve Martin performing this song on SNL in 1978 dressed as an ancient Egyptian king, but the single is quite clever and timely as it coincided with the tour of the newly discovered King Tut treasures in the U.S.
  1. “Another One Rides the Bus” – Weird Al Yankovich (#104 in ’81) (“And another one on and another one off, another one rides the bus.” ) – The best of Weird Al’s many parody songs was this very clever takeoff of “Another One Bites the Dust” by Queen. It was Yankovich’s first song to make the charts (albeit “bubbling under” the top 100 Billboard charts at #104). It has the nice feature of being understated musically as well, with most of the music from Weird Al’s accordion.
  1. “Take Off” – Doug and Bob McKenzie (#16 Mar. ’82) – (“Take off to the great white north, take off, it’s a beauty way to go.”) – I always enjoy these two Canadians played by two Canadians in real life, Dave Thomas and Rick Moranis, both from Second City TV and later in a number of comic movie roles. Geddy Lee (lead vocalist of Rush) does a great job with the melody.

Honorable Mentions:

“Purple People Eater” – Sheb Wooley

“Snoopy vs. The Red Baron” – The Royal Guardsmen

Now “Politically Incorrect”, Honorable Mentions:

“Big Bruce” – Steve Greenburg

“Basketball Jones” – Cheech and Chong

“Yeah, I’m the Taxman”

With this years official tax due date of  April 18th just behind us, it is time for my annual tax blog. But as I purveyed my past blogs around tax time, I realized that I haven’t written an “annual” post in three years. So for now what is my “triennial”  post on taxes, I will focus on with the multitude of problems with the current system and why we must change it pretty radically. I am not naive on tax policy however, and the chances that anything close to the type of changes I am suggesting are minimal at best. Nonetheless, sometimes I like to dream.

The federal government collects money largely thru a system of personal income taxes and to a lesser extent corporate income taxes. In 2016, the government collected $3.3 Trillion in Taxes –almost $1.6 trillion thru personal income taxes,  $1.1 trillion thru payroll taxes (i.e. medicare and social security paid by employees and companies) and about $0.3 Trillion thru corporate income taxes with the balance of $0.3 trillion collected thru federal excise taxes and other taxes.

I won’t be focusing on corporate taxes as that is the most likely area to be reformed by Congress this year and frankly is not a major part (only about 10%) of our current tax picture. However, my main focus will be on personal income and payroll taxes which account for more than 80% of the total taxes collected by the government. However, the changes I am suggesting would replace all corporate taxes and personal taxes currently collected by the US government.

Why is our personal income tax system a problem?

  1. Federal income/payroll taxes provides a disincentive to “work” and for employers to hire U.S. workers – By taxing income, we are taxing the hundreds of millions of Americans who are working. This is particularly problematic for the lower-income worker who is often making only a bit more than welfare plus food stamps benefits because it discourages employment. (A single person making only $20,000 per year will pay about $2500 in taxes largely because of the mandatory FICA taxes of 7.65%). Studies abound about the importance of having a job to an individuals self-worth and the positive effects it can have on the family. But our current system actually financially discourages work which is obviously a big problem. More pernicious is that the payroll tax is also paid by the employer which discourages hiring and encourages more automation or outsourcing.
  2. Our Federal income tax system tax “savings” but not consumption – As a society one of the most important things we want to encourage is individuals saving for their retirements or for unexpected rainy days. More importantly, savings are the bedrock of capital that businesses need to expand and invest creating economic growth and jobs. However, our current system taxes savings by taxing interest, dividends and capital gains earned as well as eventually taxing all earnings in deferred tax accounts (e.g. IRA, 401K etc.). More importantly, we encourage consumption now because we don’t tax it at all. Partially as a result of this, we now are a nation of consumers and NOT savers with average savings of only about $40000 for those approaching retirement and only $9000 for all families. In contrast to our savings, our national debt has soared with total personal debt of $18.3 trillion almost as large as our US government debt. This personal debt burden is now more than double our personal debt burden in 2000 and TEN times our personal debt burden in 1980.
  3. Federal income and payroll taxes fail to tax the underground economy –  It is pretty obvious that income and payroll taxes miss the underground economy of illegal drugs, gambling and prostitution as well as legal professions such as maid, cleaning and other services which are often paid in cash and go undeclared. This underground economy is estimated to be not paying some $300-500 billion in taxes per year. In addition, the massive complexity of the tax code means that there are many knowing and more commonly unknowing tax cheats which cost the federal government significant tax revenues.
  4. Federal  tax deductions encourage home purchases and borrowing – The notion of home ownership is strong in the US and has a long history and individual home ownership is generally a good thing. However, by allowing deductions for property taxes and mortgage interest we significantly subsidize the cost of home ownership for many taxpayers. This has two negative effects: (1) it often encourages greater borrowing and the overconsumption of housing ( e.g. a bigger house than is truly affordable) and (2) it results in over-investment in the housing sector to the detriment of areas of our economy where investment would be more efficient (i.e. result in more economic growth and more jobs).
  5. Federal tax deductions for state and local taxes and tax-free interest for state and local governments encourage overspending by state and local governments –The largest itemized tax deductions for many tax payers are deductions for state and local taxes (both income and property). Also, state and municipal governments benefit from interest paid on their bonds being federal tax-free. The effect of these subsidies is to significantly subsidize state and local government spending and more state borrowing. Total state and local debt outstanding now totals $3.1 trillion some 10 times the amount of debt in 1980.
  6. High Marginal Tax Rates Discourage Small Business and Entrepreneurship  – Not surprisingly most small businesses and proprietorships pay individual taxes and with about a 50% marginal tax rate (when local and state taxes are factored in), it is not surprising that businesses are discouraged from expanding or for that matter even starting businesses since the venture or other capital needed is hampered by a low after-tax return on investment. Another effect of high marginal tax rates is to encourage tax deferred investment (401Ks and IRAs) and deferred income for the wealthiest tax payers. This actually reduces tax collections in the short run.
  7. The Current Tax Code is So Complicated that it Results in Much Wasted Spending –  According to the Tax Foundation the current federal tax code now totals MORE THAN 70,000 pages!!! The IRS estimates that the average individual tax payer spends about $120 per year to file taxes or a total of more than $18 billion per year across 175 million individual tax returns. Each individual taxpayer also spends about 8 hours on average preparing taxes. This is also a tremendous economic waste almost 1.3 billion hours (155 million tax filers x 8 hours) could have been spent on productive work, volunteering or leisure activities , were it not for our absurdly complex tax code. Valuing these foregone activities at a conservatively low $50 per hour (and arguably the number is higher as most of the tax preparation hours are spent by those in upper income brackets) means that there is an additional loss of almost $80 billion per year to the economy. In other words, just the costs of filing  for individual tax payers costs the US economy almost  $100 billion per year in wasted activity. And this doesn’t even include our corporate tax filing costs which are nearly as  significant.

The Trump Administration and Republicans in Congress promise to reform taxes. I believe that this will happen with respect to corporate income taxes, but it is lot less likely to happen with personal income taxes. Even if they do succeed, my fear is that it will only affect matters marginally. Certainly, reducing all the tax rates some will help (particularly IF deductions are phased out for the wealthy or capped to pay for the tax rate reductions). However, something much more fundamental is needed. We simply can’t afford as a nation to continue to operate with a tax code that is costing our economy hundreds of billions $ and maybe even trillions$ per year.

My favorite tax reform proposal to rectify these serious problems is something called the Fair Tax. See FairTax.org. I blogged about this proposal five years ago, but it seems more important than ever today. So with apologies to those who actually read my first blog post on taxes :), the remaining section is largely from that post in 2012.

The Fair Tax proposal represents a simple and effective way of raising tax revenues and having a system which is fair and positive for the economy.  To quote the website: “The FairTax is a national sales tax that treats every person equally and allows American businesses to thrive, while generating the same tax revenue as the current four-million-word-plus tax code. Under the FairTax, every person living in the United States pays a sales tax on purchases of new goods and services, excluding necessities due to the prebate”. Of particular note:

  •  Simplicity– The FairTax is a 23% national retail sales tax on all goods and services plus a prebate to offset the 23% tax rate on consumption up to the poverty level. This  eliminates ALL federal personal income, corporate income, gift, estate, capital gains, dividends, alternative minimum, Social Security, Medicare and self employment taxes. It is very simple and straightforward to collect and eliminates the incredibly complicated federal tax system we have in place today.
  • Revenue Neutral – The Fair Tax is estimated to be revenue neutral relative to the current set of federal taxes. However, with the economic benefits that it would unleash, it probably will result in even more tax revenue for the federal government being raised.
  • Efficiency—Compliance with the FairTax would be far better than under the current tax system due to its simplicity and its collection at the point of sale. (Something most states already do). In fact, even the $1-$2 trillion underground economy and others that don’t pay enough taxes (either knowingly or unknowingly) would be taxed fully as they would still consume goods and services. The costs of personal and corporate tax accountants, tax lawyers, HR Block, Turbo Tax and the IRS would disappear entirely and filling out your tax forms would no longer be necessary.
  • Great for the Economy and Jobs–By eliminating the large amount of unproductive activity associated the current tax code, resources are freed up to produce more goods and services more efficiently across the economy. In addition, the elimination of subsidies and penalties in the current tax code, will eliminate overconsumption which is also inefficient, and encourage savings and investment which are badly needed in our debt laden economy.  Net retail price increases in the first year of the tax should be relatively small because the 23% tax on prices will be mostly offset by the elimination in corporate and other business taxes (which are estimated by economists to account for about 20%+ of  retail prices today). The US will become the mecca for foreign investment and US companies will no longer produce as much offshore given the elimination of these embedded taxes on exports. This will mean many more jobs in the US and better paying jobs as well.
  • Fair and Progressive—The system provides a prebate in the form of monthly check equal to the national sales taxes paid on consumption at the poverty level for each family. This means that  the first approximately $30000 of spending for a family of four is completely tax-free and the effective tax rate for those that spend at or below the poverty level is zero. In addition, all used goods (e.g. used cars, used appliances, used furniture, used clothing, etc..) are completely tax exempt under the proposal. This means that many necessities to live are NOT taxed while discretionary items are taxed. Also, those who are frugal and save more, get taxed even less. This is very different from the system today where the working poor pay significantly more federal taxes (when payroll taxes are included) than under the FairTax.  Studies also demonstrate that spending on goods and services are generally proportional to income (e.g. someone earning twice as much usually spends twice as much) . Thus, the tax is progressive ( a higher effective rate is paid for those who earn and spend more).

In short, the FairTax would broaden the tax base, aid the economy, create more US jobs and help us out of our budget and debt crisis. In addition, it can be easily modified to make it even more progressive by increasing the prebate and overall tax rate to account for the lost revenues, if that it is ultimately what US taxpayers want.

The biggest problem with the FairTax is POLITICAL. The benefits of the proposal is to the US population and economy collectively. However,  the benefits of the current tax system are to a multitude of special interests ranging from higher education, wind and solar power manufacturers, oil and gas drillers, public employee unions, state and local governments, the medical industry, real estate brokers as well as lawyers and accountants that thrive on the current hopelessly complex system. Any attempt to change the current system, let alone completely eviscerate it will be met with strong resistance. Also, there will be many who won’t feel that the Fair Tax is progressive enough particularly when it comes to the very wealthy.

Accordingly, I would add either one of two provisions (or both) to the Fair Tax IF NEEDED to get consensus around the proposal. The first would be additional federal excise taxes on “bads” including all tobacco, alcohol content and sugar content. See my Post from 2012  “No Sugar Tonight” for the value of doing this on sugar. This could be used to supplement tax revenues and allow for a higher income for which there would be no effective taxes (by raising the probate) AND/OR to lower the fair tax rate of 23%.  Second, if it would help  would be a 10% earned income tax on joint filers with earned income of say over $400,000 per year (or whatever income level is deemed necessary for high income earners). This would be simple addition which would tax salary over this threshold and only require a relatively small number of filers.

I know the obstacles are considerable and I am clearly dreaming. But it doesn’t hurt to try. It’s a good idea whose time has come. It’s about time we changed a federal tax system that was born in the early 20th century and clearly has outlived its usefulness.

“Why do the birds keep on singing?…Don’t they know it’s the end of the world”

While the focus in DC these days is on health care reform (and the failure of Obama Care replacement bill), building walls with Mexico, travel bans on several majority Muslim countries, FBI investigation of Russian hacking/ attempted influence on the US elections, etc.. There is a FAR more important issue for which most Americans are blithely unaware.

The US debt time bomb is still ticking. In fact now it is ticking louder and faster, but is still silent to most Americans, Congress and the Presidency. The CBO released its ten-year budget projections in January based on the continuation of policies in place at the end of the Obama Administration:

  • The projections show the annual budget deficit growing once again from our current “low” levels of about $559 billion per year in 2017 to about $1 trillion in 2020 and $1.4 trillion in 2027.
  • The national  debt is currently $ 19.85 trillion or 106% of US GDP. (See usdebtclock.org if you really want to get depressed!). According to CBO figures, this debt burden will grow to approximately $23 trillion by 2022 and to about  $30 Trillion by the end of 2027 or a growth in our US debt of about 50% in the next decade. This means that the total US debt will more than triple in the 20 years between 2007 and 2027 ($30 Trillion vs. $9 trillion in US debt in 2007) and will have more than quintupled from 2000 to 2027 ( $30 Trillion vs. $5.6 Trillion in 2000).
  • The CBO projections are in my view very optimistic. They assume almost no increase in inflation from current 2% levels. They also assume that the interest on long-term treasury debt will only increase to about 3.5% in the next 10 years which is still well-below normal levels. This assumption is particularly important as federal outlays on just paying interest on debt are very likely to exceed $1 trillion per year ( I would estimate about $1.3 Trillion in 2027) and for the first time become the 3rd largest budget item for the federal government.  (After Social Security $1.7 Trillion and Medicare $1.4 Trillion in 2027).
  • The CBO projections assume about 2% per year growth in real GDP. While this is not generally considered optimistic, the prospects for a major recession in the next few years are pretty high. (e.g. a stock market with very high valuations, an economic recovery now in its 9th year) so even this projection could be optimistic.

Changes during the Trump administration are unlikely to improve matters much when it comes to the deficit and the debt:

  • With the failure by Congress to pass an Obama Care replacement bill, it seems unlikely that there will be much in the way of reductions in projected health care spending by the US government.  If anything, as the result of the current Obama care exchange system being economically unviable, there will need to be a fix, either by expanding Medicaid coverage or significantly increasing the scope and amount of subsidies in the current system. Either way, the result will be even more red ink in our government spending on health care in the coming decade.
  • The Trump corporate tax cuts “could” be positive in terms of “net” tax revenues, though it depends on the treatment of foreign earnings expropriated back to the US. and the import tax duties being contemplated. While a significant lowering in the corporate rate (as has been proposed) would increase earnings that are expropriated and raise overall tax revenues, it will still depend on how other current deductions and depreciation are treated as to whether the corporate tax reform will be a net positive or not. My own guesstimate is that it will end up being positive in the short run (though this revenue boost will likely be spent on an infrastructure bill ) , but neutral to somewhat negative in the longer term.
  • Personal income tax cuts will likely “at best” be revenue neutral. While the tax rate cuts could be paid for by significantly limiting or eliminating a number of itemized deductions, based on past experience with this process I think much curtailing of deductions is unlikely. Being able to deduct state and local taxes, property taxes and mortgage interest  have historically had strong support from most Americans, state and local governments, teachers unions, government worker unions and real estate lobbies. After the Obama care replacement debacle, it is more likely that tax rates are simply cut by Republicans, with only a few modest deduction curtailments, with overall net tax revenue decline.
  • Overall, economic growth will likely be enhanced but only moderately by both the corporate and personal income tax cuts. Historically, there is evidence that there is more economic growth after major tax cuts. (e.g. the Kennedy 1961, Reagan 1981 and Bush 2002 tax cuts all contributed to stronger growth in the economy). However, most economists and I would be very surprised that it would end up increasing growth to levels promised by Trump (e.g. 3-4% growth instead of the past 2% growth under the Obama administration). For one, the cuts in 1961, 1981 and 2002 came at the nadir of the economy during recessions, when cuts in taxes and net increases in disposable income allowed for the greatest consumer and capital spending surges. In contrast, tax cuts in 2017 or 2018 would come for economy no longer in recession, after seven years of albeit weak GDP growth.

Bottom line, I don’t see any current actions that will change the CBO dire forecast very much and if anything I think the situation will likely be even worse, when you factor the strong likelihood of a recession and perhaps a major depression in the next 3-5 years.  So you may be asking me now why should you care?

Here’s why:

  • The larger the national debt and the annual deficits, the greater the likelihood of rapid increases in interest rates and the fall of the stock market. Falling US stock and bond prices will result in a falling US dollar (as foreign investors who make up a substantial amount of stock and bond ownership in the US flee the markets). This in turn will trigger greater US inflation, which in turn will drive interest rates up further.
  • With rising interest costs for homes, cars and other consumer debt, as well as much higher inflation, consumers will see substantial reductions in their disposable incomes. This in turn will mean major reductions in discretionary spending. In addition even the wealthier part of the population will curtail spending significantly given the concerns about the economy (and their future wages and spending power).
  • Meanwhile, companies will find their borrowing costs soaring. Many who are highly leveraged will see their earnings fall dramatically. Lower earnings when coupled with falling revenues, particularly for consumer discretionary product companies will force layoffs and overall unemployment will rise rapidly. Higher unemployment will also reduce discretionary spending further.
  • Higher unemployment will result in large increases government spending (e.g. unemployment insurance, social welfare, food stamps, and Medicaid) which will only exacerbate the deficit and national debt further. Meanwhile the interest cost to service the debt will soar to at least $1 trillion per year and possibly $2 trillion depending on how high interest rates climb.
  • As during the much of the Obama Administration years, the Fed could resort to some money printing in order to help monetize the debt and keep interest rates down and the stock market up. But unlike the Obama years, this strategy will likely backfire because by then the markets will lack confidence in the value of owning US treasuries given the near $30 trillion in debt, a government struggling just to pay interest costs and no end in sight of large $1-2 Trillion annual deficits. In fact, money printing if significant enough will likely trigger even more inflation (as has  generally been the case historically).
  • Worldwide, the impacts of falling US stock market, major recession and higher interest rates and inflation, will dramatically impact European, Asian and developing economies. Some such as Japan, Europe and China have been running high deficits and increasing their money supplies to accommodate their debt. These countries in particular will face major challenges as US demand for their exports falls precipitously. In other words, the US economic depression will quickly grow into a worldwide depression with literally 100s of millions of people losing their jobs.

So what do we do to prevent this nightmare from coming true? Clearly, we must start doing something NOW to deal with our burgeoning deficit and debt to give the markets confidence that the US will eventually pay down some of its large federal debt, BEFORE the markets lose confidence in US treasuries and the stock market. I have in mind a multi-faceted strategy on tax reform, Social Security, Medicare/Medicaid and discretionary government spending, which I will post about in the coming months. In the meantime, if you don’t believe how serious our situation is, go to usdebtclock.org   and watch our debt reality in real-time.

 

“What’s Going On?”

While I blogged almost 2  weeks ago about the possibilities of some positive changes in America’s economic policies under a Trump Administration, I am not exactly encouraged with the way Trump has conducted policy in just his first eleven days. These missteps make me very worried as to how he will conduct policy going forward. The most egregious example is the recent executive order which suspended entry from 7 Middle Eastern countries for 90 days and for Syrian refugees indefinitely. The Wall Street Journal had an excellent editorial this morning which condemned the order.  See http://www.wsj.com/articles/trumps-refugee-bonfire-1485735021. I highly recommend that you read it as I could not have said it any better:

“President Trump seems determined to conduct a shock and awe campaign to fulfill his campaign promises as quickly as possible, while dealing with the consequences later. This may work for a pipeline approval, but the bonfire over his executive order on refugees shows that government by deliberate disruption can blow up in damaging ways.

Mr. Trump campaigned on a promise of “extreme vetting” for refugees from countries with a history of terrorism, and his focus on protecting Americans has popular support. But his refugee ban is so blunderbuss and broad, and so poorly explained and prepared for, that it has produced confusion and fear at airports, an immediate legal defeat, and political fury at home and abroad. Governing is more complicated than a campaign rally.”

The editorial goes on to point out that the order was rolled out late Friday with “barely an explanation to the public” or “apparently even for border agents or customs officials”. This included the green card screwup which led to green card holders “already with permanent legal residence” being detained for many hours at airports until the Administration finally clarified that they weren’t included in the order on Sunday morning. But more disturbing was the nature of the ban which though it was not a “Muslim ban” per se, did focus on 7 Muslim-majority nations and almost assured that it would be viewed in that light. The WSJ editorial notes:

“The U.S. is in a long war with jihadists that is as much ideological as military. The U.S. needs Muslim allies, while the jihadists want to portray America as the enemy of all Muslims. Overly broad orders send the wrong signal to millions of Muslims who aren’t jihadists but who might be vulnerable to recruitment if they conclude the U.S. is at war with Islam, rather than with Islamist radicals.”

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In my view, the Trump Administration should immediately replace the current executive order with an order that require a review and improvements of current vetting and screening processes over the next 90 days.  In the meantime, he should lift the entry bans and recognize that we already have a number of protections in place which won’t allow known terrorists or terrorist supporters from entering the U.S. unfettered. I am fairly convinced that we already have a pretty lengthy vetting process for Syrian refugees in place as well (see recent 60 Minutes story) but the 90 day review could also include improving our current vetting processes for Syrian refugees. These reviews would allow the Trump to fulfill his campaign promise but at the same time remove his “blunderbuss” executive order and perhaps salvage some respect from Muslim countries and the international community.

Having said this, I would be shocked if Trump does this. Historically, many Presidents have trouble admitting they have made a mistake, but someone as stubborn as Trump admitting he is wrong has, historically at least, been an impossibility.

Lets hope at least that Trump learns his lesson as he tackles other issues such as international trade, foreign affairs and the economy. Sharp elbows may be good in basketball pick-up games (or campaigns) when no one is calling the fouls, but not so good otherwise.

 

 

“Listen to the Rhythm of the Falling Rain”

It’s January in Columbus and as I write this it is been gray or rainy for what seems like the 20th consecutive day. ( I think I saw the sun this morning but I’m not sure as I may have forgotten what it looks like.) So to avoid having to blog about the new post-Trumpian world of “alternate facts”; “3-5 Million illegal votes” etc. etc., I thought it appropriate to blog about my favorite rain or stormy weather songs. To qualify for my list, the song must mention rain or stormy weather in the title. Also, I chose only one song per artist. So here is my list of my 30 favorites of the 1960s and 1970s in chronological order by first chart date. See if you remember any/all of these:

  1. “Raindrops” – Dee Clark May 1961 – “It must be raindrops, so many raindrops, it feels like raindrops falling from my eyes”
  2. “Cryin in the Rain” – Everly Brothers Jan. 1962 – “I’ll do my cryin in the rain”.
  3. “Rhythm of the Rain”–Cascades Jan. 1963“Listen to the rhythm of the falling rain, pitter, patter…Rain please tell me now does that seem fair, for her to steal my heart away when she don’t care”
  4. “Don’t let the Rain Come Down” – Serendipity Singers Feb. 1964“My roof’s got a hole in it and I might drown”
  5. “ Walking in the Rain” – Ronettes – Oct. 1964 And I’ll be certain he’s my guy, by the things he likes to do… like walking in the rain”
  6. “Baby the Rain Must Fall” – Glen Yarborough Mar. 1965 “Wherever my heart must lead me, baby I must go”
  7. “Lightin’ Strikes” – Lou Christie – Dec. 1965 – When I see lips beggin to be kissed, I can’t stop…Lightning striking again”. Lou couldn’t get enough of rain songs, as his follow up hit in the spring of 1966 was “Rhapsody in the Rain”.
  8. “Rainy Day Woman #12 & 35” – Bob Dylan – Apr. 1966 “Everybody must get stoned” – A “rainy’ song with neither a mention of “rain”, or any part of it’s title in the lyrics.
  9. “ Flowers Never Bend with the Rainfall” – Simon and Garfunkel – May 1966 So I continue to pretend, my life will never end, and flowers never bend with the rainfall”.
  10. “Rain” The Beatles – June 1966 “Rain, I don’t mind. Shine. The weather’s fine.”
  11. “Rain on the Roof”- Lovin Spoonful – Oct. 1966 Me and you and rain on the roof, caught up in a summer shower, maybe it will last for hours, waiting out the sun”
  12. “Tell it to the Rain” – Four Seasons – Dec. 1966 “Tell it to the rain, and the stars that shine above, that it is me you’re thinking of, and I’m your love.”
  13. “Don’t Let the Rain Come Down on Me” – The Critters – July 1967 –“Don’t let it wash away my memories”
  14. “Summer Rain” – Johnny Rivers – Nov. 1967 – “Summer rain taps on my window…” 
  15. “ The Rain, the Park, and the Other Things” – The Cowsills – Dec. 1967 “I saw her sitting in the rain. Raindrops falling on her…Flowers in her hair, flowers everywhere, I love the flower girl.”
  16. “ I Wish it Would Rain” – Temptations – Jan. 1968“Sunshine, blue skies please go away…I know to you it might sound strange, but I wish it would rain”.
  17. “Stormy” – Classics IV – Oct. 1968 – All of a sudden that old rain’s falling down, and my world is cloudy and gray. You’ve gone away. Oh stormy, bring back that sunny day.”
  18. “Raindrops Keep Fallin On My Head” B.J. Thomas – Nov. 1969 “But there is one thing I know, the blues they send to meet me, won’t defeat me.” I’ll admit I tired of this song, because of its excessive airplay. But any song featured in the movie “Butch Cassidy and the Sundance Kid” has to be on the list!
  19. “Who’ll Stop the Rain”- Creedence Clearwater Revival- Jan. 1970 “And I wonder, still I wonder, who’ll stop the rain”. CCR also had another rain song, which was nearly as good. “Have You Ever Seen the Rain?”
  20. “ Rainy Night in Georgia”- Brook Benton – Jan. 1970 “Heavy rain falling, seems I hear your voice calling ‘it’ s alright’ “
  21. “ Kentucky Rain” – Elvis Presley – Feb. 1970 – “So I’m walking in the rain, on this lonely Kentucky back road…Kentucky rain keeps pouring down.”  
  22. “Fire and Rain” – James Taylor – Sep. 1970 “I’ve seen fire and I’ve seen rain. I’ve seen sunny days I thought would never end…but I always thought I would see you one more time again”
  23. “Rainy Days and Mondays” – The Carpenters – May 1971 Hanging around, nothing to do but frown, rainy days and Mondays always get me down”
  24. “Here Comes that Rainy Day Feeling Again” – The Fortunes May 1971 “ And soon my tears will be falling like rain”
  25. “Riders on the Storm” – The Doors – July 1971“Riders on the storm…into this world were thrown like a dog without a bone, an actor out alone…. There’s a killer on the road, his brain is squirming like a toad…if you give this man a ride, sweet memory will die….” Ironically, this song first hit the top 100 on July 3, 1971 the day Jim Morrison died. It was also the Doors last successful single.
  26. “ In the Rain” – The Dramatics – Feb. 1972 – I’m gonna go outside… in the rain. It may sound crazy.”
  27. “ Let it Rain” – Eric Clapton – Sep. 1972 – “Let it rain, let your love rain down on me”
  28. “It Never Rains in Southern California” – Albert Hammond – Oct. 1972 “It never rains in California, but girl don’t they warn you, it pours, man it pours”
  29. “Love Reign O’er Me” – The Who – Dec. 1973 – “Only love can make it rain, like a sweat of lovebirds laying in the fields. Love rain on me.” – While this song doesn’t have rain or storms in the title, I made exception because the title is used interchangeably as “love rain over me” in the song. And like several others on the list the song begins with a rainstorm.
  30. “Fool in the Rain” – Led Zeppelin Dec. 1979 “And the storm that I thought would blow over, clouds the light of the love that I found, found” Led Zeppelin also recorded “The Rain Song”.

Honorable Mention: “It’s Raining Again” – Supertramp

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So what are your favorites/ what have I missed?