Restaurants in America During the COVID-19 Pandemic

WM, Special Revenue Measures, Restaurants in America During the COVID-19 Pandemic, September 25, 2020

On September 11th, my comments included the following statement: 

The current model for the virus is inadequate to dictate the necessary medical measures to prevent the worst-case scenario from occurring. Bureaucratic inertia in the CDC and medical establishment will not be overcome in time.

This is still the case. No one is asking about whether someone has been sneezing. A fever is a sign that the immune system is working. It is pre-fever transmission that is most worrisome. If the virus first lives in the nose, then sneezing it out after eating is particularly dangerous.

Meals in the home are the most likely time for virus spread, but eating indoors at a restaurant is likely the biggest offender for public spread – especially in those without alcoholic beverages. Hot food makes one sneeze, alcohol suppresses sneezing.

Instead of closing bars and opening restaurants, we need to open bars and close restaurants.

Doing this means that waiters and dishwashers are the hardest hit. If the restaurant does not serve take-out or delivery, the cook staff is also idle. Low wage workers who are idle are sent home more frequently than high wage workers. 

Many workers in restaurants are “off the books” so that getting aid to them is almost impossible. Some are undocumented, others are young people who think that not paying taxes is good for them. They are now finding out differently. That they are not on the work rolls means they cannot collect unemployment.

Low wage workers, documented or not, on books or not, will spend their money back into the economy quickly. Their highest expenses are rent and eating/drinking out. Many also eat for free at work. You cannot do so if work is closed (and in hot zones, work must be closed to stop the primary public vector).

Welfare reform dropped SNAP payments so that people on AFDC would not shift to Food Stamps to make up the difference. The unintended (and maybe intended) result is pushing people into low wage labor. If this had not occurred, it would be much easier to jump start the economy by simply increasing the Food Stamp benefit and adding a cash benefit as well. That option is still open, but it will have less of an effect.

The IRS is not a good vehicle for distributing money to restaurant workers. Federal assistance to individual restaurants (rather than chains or franchise operations) also misses those whose kitchens may have to close forever.

The answer must include money to the states for both benefits and administration. States should then give the money to workers and employers. This should occur with no questions asked regarding immigration status. Medicaid or Affordable Care Act coverage must also be expanded to include undocumented workers. Some cannot go home. It is hard to leave the United States these days. 

Ironically, many Americans living overseas fled home, thinking they would be safer. Instead, they leapt from the firing pan into the fire.

Job one is to control the spread of the virus by getting people who are sneezing out of circulation, even if they think they just have allergies or are reacting to a sinus clearing hot pepper in their food.

Job two is to give out money to displaced workers and businesses, especially those without documentation or a national presence. State government is best for that. A no-year appropriation is needed to do that. Grandstanding has no place in an emergency. We have had all too much of that lately.

Job three is to end panic. The medical establishment has not been good in rolling back measures that have nothing to do with virus spread. They do not want to be accused later, and for now do not want to cause harm by not being safe. Sadly, being to safe invites fear and fear is both the enemy of science and the cause of people avoiding medical attention because diagnosis has now become a death sentence in their minds. Bureaucratic CYA is not science.

Schools need to open without masks. Herd immunity comes from children who are more likely to shed anti-bodies than virus. We need to stop spraying everything. The science says that the virus is too fragile to survive on surfaces long enough to be a problem. 

The demand for extreme PPE must be quelled. By the time people have bad symptoms, their contagious period is probably over. Personally, I spread virus before the worst symptom occurred. No one who was with me afterwards got sick. Medical workers who did get sick likely caught the virus outside of work. They cannot infect people who are already sick, so the space suits can come off.

The takeaway is that bars can reopen, but restaurants cannot do so in hot zones. People will still spread disease in those areas where the virus has already done its damage, but they are likely to spread another type of coronavirus – the common cold. 

I tested positive for PAN-COVID, but not COVID-19, prior to a scheduled medical procedure in July (which was rescheduled for August). I had a cold – and not a bad cold. There were some respiratory symptoms, but no more than usual for any cold. In March, the real COVID put me on my back for two weeks. 

Many of the current positives outside the Midwest are likely from a new coronavirus, call it COVID-20, which is just a cold. We cannot live in fear forever. If we sneeze on each other, shake hands or share a hot or cold beverage, immunity will be strengthened more than harm caused.

If you have read my prior comments, you know I am no Trump apologist. I tell you truly, we need science to dispel fear as much as to keep safe.

Attachment - The Debt as Class Warfare

Visibility into how the national debt, held by both the public and the government at the household level, sheds light on why Social Security, rather than payments for interest on the public debt, are a concern of so many sponsored advocacy institutions across the political spectrum.

Direct household attribution exists through direct bond holdings, provided by Social Security payments and secondary financial instruments backed with debt assets. Using the Federal Reserve Consumer Finance Survey and federal worker and Social Security payment and tax information, we have calculated who owes and who owns the national debt by income quintile. Federal Reserve and Bank holdings are attributed based on household checking and savings account sizes.

Responsibility to repay the debt is attributed based on personal income tax collection. Payroll taxes create an asset for the payer, so they are not included in the calculation of who owes the debt. Calculations based on debt held when our study on the debt was published, distributed based on the latest data (2017) from the IRS Data Book show a ratio of $16.5 of debt for every dollar of income tax paid.

This table shows a summary level distribution of income, national debt and debt assets in three groupings based on share of Adjusted Gross Income received, rather than by number of households. This answers the perennial question of who is in the middle class.

The bottom 75% of taxpaying units hold few, if any, public debt assets in the form of Treasury Bonds or Securities or in accounts holding such assets. Their main national debt assets are held on their behalf by the Government. They are owed more debt than they owe through taxes.

The next highest 20% (the middle class), hold few bonds, a third of bond-backed financial assets and a quarter of government held retirement assets. 

The top 5% (roughly 8.5% of households) own the vast majority of non-government retirement holdings and collect (and roll-over) most net interest payments. This stratum owns very little of retirement assets held by the government, hence their interest in controlling these costs. Their excess liability over assets is mostly attributable to internationally held debt. Roughly $4 Trillion of this debt is held by institutions, with the rest held by individual bond holds, including debt held by members of this stratum in off-shore accounts.

Source: Settling (and Squaring) Accounts: Who Really Owes the National Debt? Who Owns It? available from Amazon.

Save our Social Security Now

 WM, Social Security, Save our Social Security Now, September 24, 2020

The reason for this hearing will be solved on January 20, 2021, or before if this committee acts to have any payroll tax holiday’s trust fund shortfall be credited back to the trust fund for later payment from the general obligation debt.

A payroll tax holiday gives money to those who are already working and is of no use to those who are not, especially in regions of the nation that must shut down due to not only higher infections, but higher hospitalizations and death rates. Most of the nation has weathered the storm. Rural America and especially the Midwest and the Great Plains have not, but are about to. God help us all, for this plague is coming at harvest time.

As Rahm Emmanuel once said, never let a serious crisis go to waste. We have a few ideas to improve Social Security in the short-term. The Subcommittee has received some of these before, but not all of them.

The first is a higher minimum wage, which will inflate wages and salaries for everyone below the executive level. Extreme executive compensation mostly comes from lower salaries and benefits for workers. Investors get little from such actions (nor do they suffer because of the reverse) because they reliably receive a normal profit from their investments, at least in terms of their industry. CEOs are overpaid; grossly so. They can afford the hit. 

Franchise owners like to think of themselves as CEOs. They are not. They are simply less well compensated middle management to whom risk has been shifted. Their franchisors will cut fees if they wish to keep coverage in those business areas. Likewise, greater economic activity will compensate for any lost profit (with or without price increases).

The important fact is that, if wage growth is considered inflation, the retired and disabled can be given not only a Cost of Living Adjustment, but also have their income history rebased for inflation. Even with Chained CPI, such an increase will take the financial pressure off of many such households, including mine. 

Higher benefits reduce the cost of other social services, such as Food Stamps, dual-eligible Medicaid and especially housing due to low benefit levels. It is a scandal that any retiree needs food or housing assistance. Such assistance should continue for SSI beneficiaries, whose benefit levels should also increase. 

All of this will take pressure off of state budgets. Federalizing Medicaid for the disabled and retirees who require long-term care will eliminate all such pressure, as would adoption of Medicare for All.

Higher wages will pay for higher benefit levels in the long-term, although in the short-term the Trust Fund may be drawn down a bit more quickly. This will either drive up the public debt a bit or require an increase in taxes. Taxes are scheduled to go up automatically in 2025, although this January 2021 may accelerate that schedule.

A more robust change that would ease poverty among beneficiaries is to recalculate how payroll taxes are credited, as well as income ceilings for the payroll tax. As the attachment with our usual tax reform plan states, employer contributions to the old age and survivors’ insurance fund can be credited on an equal dollar basis. 

A goods and services tax collected at invoice would fund this change (with corresponding increases in net income) or an employer-paid subtraction value added tax could keep net income constant for all but higher-income individuals. Higher salaries would be decreased to offset shifting from payroll to value added taxes. There is no ceiling on the latter. 

A more equitable crediting of employer levies allows for a floor for lower income workers without a loss of benefits, the elimination of the Earned Income Tax Credit and corresponding increases to the Child Credit, which could be distributed through subtraction VAT through higher wages rather than an April 15th bonus (remember, higher minimum wages are part of the package) and a lower ceiling on the employee contribution. The lower ceiling would decrease the amount paid to higher income retirees without adjusting, if not eliminating, bend points.

An invoice credit GST would have the added benefit of improving our balance of payments. Other OECD nations offset such taxes at the border. The United States exacts an unconstitutional export tax by not doing so as well.

There is a rumor that a GST would be a new thing. It is not. Firms and sole proprietors who collect sales taxes deduct the sales taxes which they pay to states. Not having a federal GST is an implicit transfer to state governments. A federal GST would adjust that transfer to give the federal government a share of such revenues, all the while lowering payroll tax revenue. Such a change would be progressive, because payroll taxes are worse on that score than a VAT.

An employer-paid subtraction VAT also allows personal accounts in Social Security to be created at some later date. These would also be credited on an equal dollar basis and should only be used to invest in employer voting and preferred shares (with or without using an Employee Stock Ownership Plan) and in an index fund with the same share types to protect the retirement of employees. In bankruptcy, the index fund would be among the first creditors paid, although it would pay out more to retirees and employees than it takes in when a business fails. Current employees would see a balance transfer rather than a distribution.

Until the employee-ownership sector is expanded, personal accounts paid to such funds would not be created. The way to expand such funds is also mentioned in the attachment, that is, an asset value tax. Briefly, an A-VAT would bring collection of capital gains taxes, as well as other income from capital (rent, interest, dividends) forward to point of sale. This would end the portion of the tax gap attributable to the wealthy. 

Employee-ownership would be increased if sales to ESOPs/COOPs and other broad-based retirement plans holding employer stock were zero rated, while marking sales after gift inheritance or option-exercise to market (rather than just appreciation). This incentive will jump start worker-ownership (and possibly cooperative purchasing of goods, financial and human services). Social Security would eventually be the insurance fund mentioned above. A backstop to employee-ownership as well as a separate income stream.

ERISA could be changed to allow retirees vote their shares (adding experience to the voting pool). Holdings in the insurance fund would be paid out to retirees and, upon the death of the worker, voting and preferred shares would be transferred to the insurance fund to fund a permanent annuity to survivors and to workers who have outlived their direct share payouts. Employees of non-participating companies would pay into and receive benefits from the insurance fund.

The end result of not letting this crisis go to waste is a secure retirement for everyone, but with much greater control of work by employees. Unions would come back in force, not to bargain against ownership, but to serve as a conduit for worker input to the operation of the employing firm, if such workers desire such representation. It adds a new meaning to organized labor, inoculating it from attacks by management. One of the great lost opportunities of the Chrysler bailout was not using unions for this purpose as part of the deal. Instead, influence went the other way toward management.

The last thing to consider is why Social Security is under attack. It is not just to subsidize Wall Street, although this is part of the deal. How the national debt, held by both the public and the government, at the household level, adds light to the discussion rather than heat.

Direct household attribution exists through direct bond holdings, expected income from federal retirement programs (especially Social Security) and through secondary financial instruments. Using the Federal Reserve Consumer Finance Survey and federal worker and Social Security payment and tax information, we have calculated who owes and who owns the national debt by income quintile.

Responsibility to repay the debt is attributed based on personal income tax collection. Payroll taxes create an asset for the payer, so they are not included in the calculation of who owes the debt. Calculations based on debt held when our study on the debt was published, distributed based on the latest data (2017) from the IRS Data Book show a ratio of $16.5 of debt for every dollar of income tax paid.

The following summary table shows a summary level distribution, using three income groupings rather than five. Boundaries between lower, middle and upper income are determined by dollars of Adjusted Gross Income received, rather than by number of households. This answers the perennial question of who is in the middle class.

This table also shows why the wealthy are more concerned with debt held by entitlement programs than market debt. It also shows everything one needs to know about Fiscal Policy in the U.S.

Note especially the ownership by class of bond holdings. The bottom 75% of taxpaying units hold no bonds at all. They do own the vast majority of federal retirement assets. The next highest 20% (the middle class), hold some, but not many of existing financial assets (Federal Reserve and Bank holdings are attributed based on household checking and savings account sizes). 

The top 5% (roughly 8.5% of households) own the vast majority of non-government retirement holdings and collect (and roll-over) most net interest payments. This allows them greater leverage over time. It explains why tax cuts are desired, even if they increase the national debt, as well as why workers have been losing ground for the past 55 years (when the Kennedy/Johnson tax cuts came into effect in 1965). As importantly, this income grouping owns very little of retirement assets held by the government.

There should now be no mystery about why so many studies are funded and testimony offered on the upcoming crisis in future entitlement spending, while there are few on interest payments.

The punchline is, he who pays the piper, calls the tune.

The numbers in the last column do not add up, because they do not include non-retirement trust funds or debt held overseas, $4.2 Trillion of which is held by official accounts. A large portion of the remaining foreign debt is held in tax havens by the world’s wealthy. Debt in official accounts enables international trade, which benefits the top 5% of income earners.

SCF asset ownership figures are not calculated in greater detail than the top quintile, however, both debt and asset holdings can be calculated using the Pareto rule, which was derived from household income information originally. The original rule was the 80% of costs or income is attributable to 20% of the accounts or households. That rule is now 90% to 10%. To go back to 80-20, increase the minimum wage to reasonable levels ($20 rather than $15).

This means that for every set of households, the bottom 90% receive half of the income and the top 10% receive the other half. This ratio is applicable for the top 1%’s share of the top 10%, the top 0.1% share of the top 1%, etc., all the way to the amount of income received by the top 1400 households, or the top 0.001%. Note that in this table, AGI is expressed in thousands of dollars, so add 3 zeros. The number of returns, however, is not so adjusted.

Attachment - Tax Reform, Center for Fiscal Equity, February 21, 2020

Income from sale of copies of the referenced study, which will benefit the Center for Fiscal Equity, are available from Amazon at https://www.amazon.com/dp/B08FRQFF8S   Abridged Collected Comments are available at https://www.amazon.com/dp/1728998751   They will be provided without cost should we be invited to meet with members and staff or as part of testimony before the committee.

CBO’s Updated Budget Outlook

Senate Budget, CBO’s Updated Budget Outlook, September 23, 2020

The Congressional Budget Office estimates are the gold standard in budget forecasting. In the near term, they hit the mark the closest. This year, however, their work is complicated by business closures, social distancing and a pandemic that is out of control.

The reason the pandemic is out of control is not mask wearing or young people at parties. People who rarely get sick do not spread the virus. To be an asymptomatic spreader, you must first be infected with stage one of the virus, which is a cold most people mistake for really bad hay fever. Because no one want to believe they have had Coronavirus due to the social stigma of having had it (people consider it to be a plague), few are willing to admit infection or the possibility of it.

Denial leads to infection of others, because there is an asymptomatic period between nasal symptoms and Sudden Acute Respiratory Syndrome #2. This is a misnomer – the symptoms occurred early (as stated) and, in the meantime, the virus has moved to the lower respiratory system, and from there, to the entire body. When symptoms come, an immune reaction has kicked in and spread is less likely.

Science is supposed to banish fear. With this pandemic, it multiplied the fear. The best preventative for SARS2 is to have colds prior to this pandemic and to be around children with colds. The second-best preventative is to get sick. Those under forty-five will hardly notice it as more than a cold, while those under 70 will rarely die. I had the disease. During the fatigue period coincident with SARS symptoms, I only wished for death or felt like I was already dead. I don’t recommend getting this once a vaccine is available, but few will be able to make the decision to wait. 

Worse, having had cold symptoms have been left off of the screening criteria for entering buildings, from the doctor’s office to the supermarket. The worst place to have nasal symptoms or ignore them is a restaurant. Some of us sneeze when we eat hot food. If we have the virus or someone else does, everyone does unless previously exposed. Eating with another person at home is another sure spreader. Not knowing or admitting that sneezes are the primary symptom and the tendency to rationalize being contagious away is why the spread is out of control. 

The desire to beat the virus with masks leads to optimistic models. Any model that does not assume 400,000 deaths or more is inadequate. A second shutdown, at least in some states, should also be included. The virus will go away sooner than later, likely before the vaccine is ready and the dead are buried.

Federal Housing Assistance Programs

 Senate Budget, Roundtable to Examine Federal Housing Assistance Programs

In 2003, my wife and I were blessed with our daughter, Catie. As she grew, and because we wanted to have more children, we were forced to look for something bigger than a one bedroom apartment. We had previously visited an Alexandria City Housing Fair, so we dug out the paperwork and started the application process for a subsidized mortgage. Because I was a stay at home Dad, we were within the guidelines for the low-income program. 

After looking at a few places, we got cold feet as housing prices were skyrocketing. We got back in because a staffer from the Alexandria Housing Office called and assured us that prices were not going to go down. I wish I had him on tape. We bought a nice condo for $257,000 (before fees) in 2005. You can probably guess the rest of the story. 

The next year, I went back to work temping as either an administrative professional (including a month at the National Low Income Housing Coalition in 2007) or as professional government contractor. While I was at the Department of Energy, she lost her job, but found a new one, then I lost mine and eventually landed at Graduate School USA until we lost both of our jobs and started getting UI on almost the same day. Needless to say, we did not pay the mortgage on a regular basis. By that time, the value of our unit was less than half of what we paid for it, so selling was not an option. 

A small inheritance from my mother’s passing allowed us to catch up and keep up payments until mid-2013, but when that money ran out, the financial and my health difficulties found us divorced in place. In November, we got a foreclosure notice and staved it off for almost a year by filing for bankruptcy. Still not willing (or able) to maintain payments, we converted to Chapter 7 and went our separate ways. 

At auction, the Alexandria Housing Office – who had lost their interest as the third mortgage holder, bought the property and flipped it for about $100,000 less than we paid originally. They came close to making back their investment and the first mortgage came close to being paid, but not the second (both from Virginia Housing Development Authority).

In 2008, the Troubled Asset Recovery Program was enacted, promising aid to homeowners. The next year, CNBC Rick Santelli had his “rant of the year” which put the kibosh on any aid to homeowners, although there was little appetite to provide it from the Larry Summers wing of Obama economic team anyway. They did, however, stay behind bailing out the holders of the bad paper. Had they done as originally promised and written down principle to market, we probably would have kept our home and still be married today. 

I am guessing that our story is not unique. My health challenges led to receipt of SSDI and assisted housing from Montgomery County. I have also been on the Section 8 waiting list for five years. My lottery number finally came up and, at last check, I was 7th in line for one of two units in Silver Spring. I should not have to be.

Federal Housing Assistance is required because incomes are too low. If the minimum wage had kept pace with inflation, SSDI payments would be adequate because wages would have been higher. They still can be. Simply enact a $15 minimum wage, then index it starting with when it was proposed by Senator Sanders in 2016. Use that increase to rebase benefit levels for the retired and disabled and few of us will need any kind of housing assistance.

If the child tax credit were increased to median income levels, made refundable and shifted to an offset against an employer-paid subtraction value added tax there would be no need for the mortgage interest deductions or family rental assistance. Unemployment Insurance beneficiaries would receive the tax credit in addition to benefits, as would workers whose skills were inadequate to keep a job at the new minimum wage. Instead, they would be paid that wage to gain the required skills, from ESL (no legal residence requirement) and GED to vocational or associates degree levels. 

There are those who think such assistance pays people to be poor. The only people who really believe this are those who want to keep a ready supply of low wage workers. These people are called CEOs. Everyone else gets a raise when the minimum wage goes up, franchisers will change prices and fees or lose business – so there is no small business excuse, and investors will get a normal profit – as always.

This is no exaggeration. No labor economist with a straight face will assert that any workers productive output is less than $20 per hour. When it is not, usually in the service industry, staff is sent home. When my marriage ended, I worked selling theater tickets. No one could go home and some were asked to stay when business was brisk, while people were sent home on weeknights. A lower wage would not have kept people at work, nor would a higher wage have led to understaffing during weekends when Kevin Hart had movie out.

There is no reason to have programs to support a second-tier economy if we are willing to pay decent wages. When doing so is a legal requirement, no one gains or loses competitive advantage from the higher wage. 

A child friendly wage, like the one proposed by the Catholic Church from Pope Leo XIII (Rerum Novarum) to Pope Pius XI (Casti Connubii, #119-122), to Benedict XVI (Caritas in Veritate) to Pope Francis’ upcoming encyclical is not possible in the free market. People with children would simply not be hired. Indeed, in the software industry, middle aged workers with children are often let go to be replaced with two recent graduates with more up-t0-date training. Such market failure demands public action along the lines I mention above. 

There are those who consider such aid to be socialism. I am sure that the great socialist, Milton Freidman, along with presidents from Ford to Trump, would beg to differ. The child tax credit has been increasing steadily, but not adequately. We can fix that with tax reform. Some childless workers and managers may have to accept lower wages, but everyone would have a decent quality of life. Work would pay, more people with money would spend more money. 

The CEO/Donor Class will raise a ruckus, but courage in Congress will show them to be paper tigers. Go big or retire to K Street (no one ever goes home).

There is a similar matter that needs mention – Fair Housing (especially considering recent campaign bloviating). In light of recent Supreme Court rulings including sexual orientation in sex for employment law – there is no reason to believe that this revised definition does not apply to every part of the Civil Rights Act – as well as the Fair Housing Act. 

Are civil penalties enough to force compliance? Experience shows that they do not. A former roommate, who got his Section 8 before I did, was exposed to possible discrimination couched in the language of credit. He complained to the Housing Office and the landlord caved in. This was only two years ago in liberal Montgomery County. The continued need for training by the Patricia Roberts Harris National Fair Housing Training Academy (where I also worked) is a less anecdotal.

When I was the Ward 3 Community Relations Representative in the D.C. Office of the Ombudsman, we were given a talk by the Solid Waste Management office. Their motto was that there is no better education than a ticket. This would be equally true in fair housing, as well as all other civil rights enforcement. It is time to quit talking about reform and to actually start doing it.

Consequences of Inaction on COVID Tax Legislation

WM Special Revenue, Consequences of Inaction on COVID Tax Legislation, September 11, 2020

While you were away, insanity seems to have become even more deeply rooted in the West Wing.

During the first two rounds, deals were made quickly and aid moved out the door – almost too quickly given the declining supply of labor used to produce goods and services. While there were instances of food price inflation, enough stored labor was in the pipleline in the form of goods to prevent what could have been a perfect economic storm of stagnation and hyperinflation.

The new White House Chief of Staff seems more attached to making a conservative political statement than governing. He is likely the one person who executive privilege is sure to cover and the least likely one to be swayed by this hearing. 

Hopefully, the Office of the Vice President will intervene on this matter before the situation for many families becomes dire. I am equally hopeful that Secretary Mnuchin and the Speaker can come to some agreement prior to the start of this hearing. Members have likely had enough of an earful to spur fast action.

My friends and associates who have been sidelined by this pandemic report that $1000 a week in assistance is probably too generous, but no additional entitlement creates scarcity. Such scarcity is cruel in an economy that has not fully reopened yet. Luckily for the economy, many people have been hoarding cash for a situation such as this. I am not sure if this is a good thing or a vote of no-confidence by the people of the United States in their government.

Reports are that the Speaker could agree with a total package in the middle of the House and Senate positions (although the other chamber’s majority could not reach consensus to pass a bill), but Mr. Meadows is blocking action. The unilateral action by the Administration is both unwise and unsustainable, but it is currently the game in town. Now that Congress has returned, the damage caused by such unilateral action can be easily repaired, provided that certain parties are left out of the next round of negotiations.

It is urgent that this occur. While the Centers for Disease Control now includes nasal symptoms on their approved list, this has not led to its use in active disease screening, nor has it impacted estimates of the time between exposure to serious SARS and fatigue symptoms from the current two-week model to the four weeks experienced by patients who recovered without hospitalization. 

As a result, some regions of the country opened up just as the virus arrived and others are blaming Memorial Day outings for exposures that likely occurred two weeks before through peer-to-peer rather than public transmission. Because nasal symptoms were not recognized as part of the virus, many transmissions were written off as seasonal allergies. This is still the case.

The Midwest is or soon will be reporting a vast increase in illness (not merely positive testing). This spike has nothing to do with Fraternity parties. 

The nation has unwittingly adopted the Sweden model for fighting the virus, while nations that did close down are reporting significant second waves.  The pandemic is still out of control, except in areas like New York where almost everyone who was vulnerable to infection and serious illness was exposed and either died or recovered. Until the CDC begins listening to patient, rather than provider, experience, control will not be achieved. A second shutdown is almost inevitable. 

Areas like New York, who have already seen the worst, should likely not be included in the next set of closures. With luck, such regions will provide the labor for goods and services to areas that have no choice but to shut down for real this time.

Transmission in the Sun Belt has slowed considerably, but higher death rates will be with them for a while. Much of the nation has no idea what is in store for them and is sure to react badly when they realize how bad this pandemic can be. The estimates that the number of deaths experienced to date will likely double is not far off, but is not conditional on mask wearing. It is too late to stop this pandemic from running its course. 

The current model for the virus is inadequate to dictate the necessary medical measures to prevent the worst-case scenario from occurring. Bureaucratic inertia in the CDC and medical establishment will not be overcome in time.

The task of the Congress, especially this Committee, is providing enough money to workers and their families who almost certainly will not be able to work, while not providing so much that others will resist going back, even though their region of the country has gotten through the worst of the pandemic and will likely not experience a second wave. 

The defacto $300 a week addition to benefits is close to what would be the sweet spot, but its uncertain execution complicates its usefulness. A $400 benefit temporary addition, along with higher long-term increases to the minimum wage, would provide both a stop gap and a high enough permanent benefit to close and reopen the economy on a better footing, as would a higher child tax credit, made refundable and paid with benefits.

A better long-term solution to the problems of unemployment (along with no-fault procedures) will make the system more robust for the next medical and/or economic crisis. As I commented to the Budget Committee at the beginning of the year, the fundamentals of the investment economy are not sound. 

There is too much leverage and speculation – some of which has worsened in the interim. Housing finance, especially for long-term single-family rental units, is a time bomb and the current crisis will ignite it without aid to families who rent these units. Combined with the yet unexploded crypto-currency bubble (which will only grow given current uncertainties), the underlying system needs permanent maintenance. 

Getting a short-term deal is the least of our worries.

The Caribbean Basin Trade Partnership Act

 WM Trade: The Caribbean Basin Trade Partnership Act, September 10, 2020

There are three major concerns on renewal of the Act. The first is timing. Action on this legislation should wait for a more competent partner in the Executive Branch, as well as a more compassionate majority in the other chamber. Additionally, long-term trade policy changes should wait until the pandemic has run its course in the Midwest.

The second concern is the unilateral nature of this program. It treats member nations as beneficiaries rather than partners. Any deal that is as lopsided as this one is an imposition, not a deal among partners.

Ideally, the “beneficiaries” will create an organization to negotiate bilaterally with the United States. This will get them a better deal and will flex the muscle that our nation used to go from 13 competing colonies to a single nation and now the dominant power on the planet.

The third concern is the requirement to use American raw materials, specifically yarn. Such a subsidy ranks right up there with the Mohair subsidy long decried as shameless pork. Certainly members can ignore the campaign donations and political reach of this industry in order to play fairly with some of our nearest neighbors.

The positive side, of course, is the imposition of labor standards. Such matters are never truly effective unless demanded from within. In the United States, the most glaring civil rights violations were corrected by legislation, which gave license to those who were looking for a reason to behave as they would have without the social pressure to continue segregation. In many sectors, however, few hearts were changed. The unrest from this past summer demonstrates this.

Any reexamination of this Act should also look at abuses imposed on our trading partners from this shore, including currency trading and banking structures.

Machines, Artificial Intelligence, & the Workforce

House Budget: Machines, Artificial Intelligence, & the Workforce: Recovering & Readying Our Economy for the Future, September 10, 2020

As a graduate assistant in 1985, I was given the task of investigating how AI would impact public administration. In those days, one could call MIT and get Marvin Minsky on the phone. This was also the topic of my Presidential Management Intern application essay and one of first topics I investigated as a PMI in the Air Force Cost Center. In those days, the World Wide Web was an DARPA project with no graphics, which I got a look at during my first temporary duty assignment to Space Division to shop for a library computer database for Center. I did not deliver the baby, but I was in the birthing room.

I was also assigned to be the Air Force Comptroller Liaison to the Cost Management System conceptual design for the factory of the future, as facilitated by Computer Aided Manufacturing – International, which is now known as Consortium for Advanced Manufacturing – International. The design product from our work was the book Cost Accounting for Today’s Advanced Manufacturing. 

The next phase of the project was a Systems Design. The latter was completed by the four original working groups based on the design, but was not totally integrated. Other duties kept me off the project, but I was able to get a copy of the documents, which I used as my Intern Research Project – an Air Force Users Guide. The Guide both detailed the CMS and cross walk it to Cost Management Control Systems Criteria. It was not classified and I have since published it on Amazon.

As far as I know, the systems design never went anywhere. The product was not fulling integrated between the committee silos and, because of regulatory and competition concerns, although it did evolve into Activity Accounting.

Expert systems, accounting systems and machine learning are as good or bad as the information that goes into them and depend as much upon the talents and objectives of the end users and developers. They can work beautifully as an online reference, provided the user is both talented and trained.  Management also must be able to use the results of the system.

Systems can make work easier, but as I learned both as a congressional intern with a rotation in the correspondence section and a frequent user from the other side, they are no substitute for good human decision-making. Automation can make things worse in that they can regularize error. In most cases, congressional offices receive simple viewpoints or requests rather than detailed analysis. When detailed analysis comes, the response is often the kind of form letter we all know and love. 

Having worked as a staff member or contractor doing agency responses to “congressionals,” I suspect that if agencies returned the same level of responsiveness to Congress that it provides to citizens with detailed proposals, there would be hearings and budget cuts. 

The fault is not the current automated correspondence system, it is the degree of freedom that legislative correspondents have in both answering responses and forwarding them to members and legislative staff for both input and response. I am quite certain that at some time in the future, a researcher will look at the Committee Print of these comments in the record and appreciate the irony intended.

Technology can only provide what the human system will allow, whether in manufacturing, sales or government service. The limitations of culture, particularly capitalism, limit what workers are allowed to do or the rewards they receive from expanding their responsibilities. 

Several quality improvement technologies have been tried. Dozens more will be tried in the future, but until compensation structures are flattened with increased shop floor responsibility, QC programs will simply be seen as the flavor of the week.

One technology which will greatly impact the workplace of the future is actual employee ownership and control, rather than simply training employees to understand financial statements. Upon request, I can provide more detail on how these would work.

Technology applications can certainly help manage production and distribution in our current crisis as some sections of the country open up while others must shut down. Cases, which will be followed by deaths, are beginning to explode in the Midwest. Not shutting down the entire nation, however, is a scientific and political decision – one that was managed incorrectly the last time it was attempted. It turns out that a virus which spreads by being sneezed on has a significant geographic component. The last shutdown was based on fear. Let us try science with the next.

Adding more funds to household budgets will be important, but adding too much money to a smaller labor supply will still have bad effects. Our current models are not attuned to estimate this possibility. Until the possibility of hyperstagflation is raised, it cannot be modeled. It needs to be.

The model for SARSCov2 is still for two weeks from exposure to major symptoms, largely because nasal symptoms are not included as part of disease progression prior to any asymptomatic transmission period. The experience of those who have had severe symptoms who have not required hospital intervention is of a four-week period from likely exposure to SARS or fatigue. An AI model may detect this, but only if the measurement parameters are correctly set. 

Garbage In, Garbage Out. 

The best prediction model is to take a per capita death rate somewhere between those experienced in New York and Massachusetts and apply it to every state. Until the CDC correctly specifies the symptoms of this pandemic, there is no way to stop its spread. Appealing to solidarity in public mask wearing will not prevent peer to peer transmission if everyone believes that their sneezes are allergies and not COVID-19. Because the public image of the virus is that of a plague, people do not want to believe they are sick. The problem is bad medicine, not fraternity parties.