John Boehner has now passed, if that is the appropriate term, Nancy Pelosi, in public opinion as the most ineffective and least well-liked member of either Congressional or Administration political leaders. Although Speaker Boehner is far from my most favorite politician – the term “favorite politician” being an oxymoron for me – the current disfavor with his actions and behavior is not entirely of his own making. It is, in fact, the result of a Republican party that seems to have forgotten – or wishes to ignore – both the role of government and the role of the Congress in making government work.

Again, I’m not going to blame the Republican party entirely, because the same attitude exists, if to somewhat lesser degree, among the Democratic Party. The fact that the attitude is less virulent among Democrats has nothing to do with virtue, but because, at this point in history, the Democrats embrace a wider constituency and have to look at a slightly wider range of alternatives in order to maintain what power they have, while the Republican Party has essentially divested itself of all who are fiscal and structural conservatives but who oppose the more fanatic aspects of the GOP true believers and certainly all moderates.

The result is that the GOP has become the “party of NO” – no tax increases, no abortion, no immigration, no gun control, no health care for the working poor, no corporate taxes, no unions, no equal economic rights for minorities and women, no gay marriage, not to mention denial of global warming and evolution. At the same time, much of the Democratic Party believes that almost any new government program is a good idea, particularly where the disadvantaged are concerned. Neither outlook is viable.

No matter how many poor and disadvantaged there are, even if we confiscated all the wealth and income of the top two percent, as I’ve pointed out before, it wouldn’t support government for a year. Government programs can’t expand, not unless other government programs are eliminated or curtailed. Right now, we can’t even fund the ones we have, but that’s because, in the past, both parties have agreed on taxes that were too low to support the programs that Congress had already created. Likewise, the mindset of denying reality that underlies much of the GOP agenda won’t work.

But Boehner is in an impossible position. The GOP essentially won’t compromise on taxes, and no compromise is possible without that. Obama has offered some compromise, but the GOP wouldn’t even accept Boehner’s alternative tax increase just on families making over one million dollars a year, let alone Obama’s compromise of $400,000 [incidentally, that’s just about the cut-off for the top one percent]. The fact that Boehner won’t even call the House into session unless the Senate acts, despite the fact that the House could take up an already Senate-passed bill and amend it, is another indication of his inability to pass anything remotely resembling a compromise and his unwillingness to admit it.

So… unless Obama caves in to the GOP, which looks unlikely, or the GOP looks at reality, which is equally unlikely in the next few days, going over the fiscal cliff looks most probable, although I, and most Americans, I suspect, would prefer less excitement.

Last Sunday, The New York Times had a front-page story on the problems faced by students from economically disadvantaged backgrounds. While the story highlighted the specific problems of three minority females, my wife the university professor sees the same problems played out by white students in a state university with a very small minority population. Despite an apparent proliferation of loan and aid programs for students of modest means or less, the graduation gap between economically poor students and those of more affluent means is now wider than it was thirty years ago. Although the graduation rates of most ethnic/economic subgroups have improved, the rates for those of means have improved far more than that of those from poorer backgrounds.

Why has this happened? There are a number of reasons, and the Times article, frankly, didn’t emphasize nearly enough some of the root causes. The principal reason, from what my wife and I see, is that the growth of tuition has outstripped the growth of available grants and scholarships. The reason for the growth of tuition at state universities is not, contrary to popular opinion, because of high salaries for full-time faculty, not at a time when most state institutions have been freezing salaries or holding raises to one or two percent, or reducing full-time professors and replacing them with part-time adjunct faculty, but because for almost a generation, state legislatures have been reducing the funding of their public institutions at the same time as enrollments have continued to increase. Higher enrollments require more buildings and larger classes, or more classes taught by less qualified instructors… and, most important, higher tuition.

At my wife’s university, and at all the public institutions in the state, funds for scholarships and grants, even federal grants, have not kept up with the cost of tuition. If colleges and universities offer full-tuition and room-and-board scholarships, then the number of available scholarships goes down as tuition rises. If they offer the same number of scholarships, then those scholarships no longer cover tuition and room-and-board. Either way, that means that economically disadvantaged students must either borrow funds or find part-time or full-time work. My wife has watched student after student become swamped with debt or spending so much time working that they cannot spend the time to study and to succeed academically. In addition, all too many have other problems created by their past, such as poor study habits and even worse judgment. More affluent students also have these problems, but they often have personal safety nets, such as parents who can support them while they waste too much time learning with bad study habits and behavior that detracts from academic success.

In addition, in many fields, merely taking classroom courses isn’t enough for future success. For example, in the hard sciences, students need to take laboratory courses, and those are invariably later in the day – and often students who work find themselves in an impossible situation. If they try to follow an educational path that would pay more in the future, they can’t work the hours they need to pay for that education, yet taking a more “standard” curricula ends up giving them a degree with a major in a field that is already glutted. The majority of students who succeed in music and the performing arts – and many do, despite the rhetoric – are those who not only take the classes, but who do all the extra activities, which include performing and rehearsing long hours, often without credit. This becomes almost impossible for students who are entirely self-supporting, except for the one or two that come along every few years who are truly brilliant and gifted, and even for them, it is close to impossible.

But each year the situation has become worse as the legislature funds less and less, and tuition climbs, and professors’ incomes are frozen, and more adjuncts are hired, and poorer students work longer and longer hours and get deeper and deeper in debt.

All of this doesn’t even take into account the fact that primary and secondary schools are failing to instill certain basic skills required for both academic and occupational success. When more than a third of all students graduating from secondary schools do not have the writing skills to compose – without electronic aids – a single coherent paragraph, and when the majority lack any semblance of analytical skills, it’s no wonder that students who are preoccupied with finding the money to even attend college are dropping out or failing in huge numbers.

But the great debate remains about how federal and state taxes are too high.

Years and years ago, back when I was actively involved in national politics, a scholar of politics made the observation that, “Where you stand on anything depends on where you sit.” The converse is also true, in that the positions one takes reveal the true nature of one’s views.

The “negotiations” surrounding the “fiscal cliff” illustrate the above point fairly clearly. The positions taken by each side do indeed reveal where each side sits, so to speak, and whom they represent, regardless of the window dressing of the rhetoric thrown out by each side. The Democrats are demanding that the “rich” pay more in taxes. Interestingly enough, their definition of “rich” includes all of what has historically called the upper middle class and even a fraction of the mid-middle class, i.e., moderately salaried two-earner families in high-cost-of-living cities. The definition of “rich” has been muddied over time by inflation, but consider that a family income of $42,000 in 1970 is equivalent to more than $250,000 today, yet in 1970, forty percent of all families made more than $42,000. Today, only 2% make more than $250,000. President Obama classifies those in the top 2% as the rich, but those in the ninety-ninth percentile have family incomes of between $250,000 and $350,000, and that one percent pays ten percent of all federal income taxes. Well-off certainly, but rich? All this does suggest that Obama and the Democrats, rhetoric aside, are out not only to soak the rich, but also to soak the upper middle class.

The Republicans, of course, aren’t exactly blameless. For all their rhetoric about controlling spending, they haven’t. In fact, they’ve more than helped it along, and then they’ve coped with the erosive power of inflation by simply pushing for lower tax rates. After all, in the end, what matters isn’t what you make, but what you keep. So, as inflation has decreased the purchasing power of the dollar, so that the real income of most families is only some 60% of what it would have been without inflation, federal income tax levels on the top ten percent, and especially on the top one percent, have been more than halved since the 1950s. The result? Although all income levels have suffered in loss of comparative purchasing power, the greatest burden has fallen on those in the middle two quintiles of income, what generally might be referred to as the working class, because their tax rates have not decreased as much as those with higher incomes, and because federal programs have tended to cover most of the impact on the very poorest. The Republicans’ “Plan B” was even more deceptive in that, while it would have protected the upper middle class from a tax increase, it not only did that, but it would have removed the few limitations that do exist on restricting tax exemptions for the very wealthy… and Boehner couldn’t even get the enough Republicans to support that.

When all the math and tax policies are considered, the politicians have been paying for federal programs through deficit spending that has reduced the purchasing power of all incomes, although, like it or not, those families in the lower 50% of income only pay 3% or so of federal income tax. The Democrats have done their best to shield the very poor, because programs such as food stamps are essentially indexed against inflation, and the Republicans have done their best to shield the very richest one percent, and continue to do so, even with the fiscal cliff looming, and everyone in between has taken a hit of some degree… and both Obama and Boehner are holding out in the fiscal cliff negotiations for the best deal they can get for the very rich and the very poor – and if they do come to an agreement, they’ll call it a benefit for the middle class.

According to not only a study cited in The World 2013 [published by The Economist], but to an array of other sources, there’s a growing gulf between what employers need in the way of skills and what the schools are producing. And contrary to popular and political opinion, or the latest pop/political fix of STEM [science, technology, and mathematics] education emphasis, the greatest problem is that students don’t have an adequate grasp of problem-solving skills or other basic skills [like an adequate command and understanding of their own language]… yet 70% of the students believe they do, and something like 70% of employers believe they don’t.

Based on what my wife the college professor has observed in recent years, and on studies in the field, over 80% of the students cannot take information presented to them and use that information to solve problems or come up with the answer requiring very basic reasoning. And according to their SAT/ACT test scores, these are bright students. Furthermore, most of them cannot retain information that they have heard, or read, even when told that retention of that information will be necessary. They have a slightly higher retention rate when the information is presented in visual/video format, but not a significantly higher retention rate. Their attention span is generally less than ten minutes for any given subject.

The percentage of undergraduate students with these difficulties varies, generally with the selectivity of the college or university, but between 25% and 40% [depending on the methodology used] of all those who receive an undergraduate degree are effectively functionally unable to communicate or receive written/text communication effectively.

Is this a totally new phenomenon? Unhappily, it’s not. Older college professors can recall students with these problems dating back at least thirty years. The problem is that, back then, there were fewer of them, because the more rigid secondary schools basically pushed a significant number of them away from higher education, and of those who did enter college, far fewer of them got degrees and graduated, simply because they couldn’t recall enough information to pass difficult courses.

There are several aspects of the problem that tend to get ignored in this era of “I can look anything up.” First is the fact that in order to be able to look up relevant information, one has to have enough of a knowledge base to know what to look up. Second, one has to have the underlying skills to know what to do with that information. Having the fastest thumbs on the planet and the greatest screen/eye-to-hand coordination equates to incredibly fast reaction times, but doesn’t equate to problem-solving skills.

As I have noted in the past, more than once, basic problem-solving and language/communication skills MUST be learned young. By the time students are 18 or so, their brain patterns are set. Second, no matter what anyone wants to believe, not every student can or can be motivated to learn these skills. Effective teaching on the primary level in particular can maximize the number who can, but not all can learn such skills. The idea behind No Child Left Behind is a politically popular delusion that is destroying effective education. People have different basic intelligence levels, and while some of that innate intelligence can be enhanced or depressed by environmental and social factors, only a small percentage of the population will ever function at the highest – or lowest – levels.

Trying to craft an educational system that “prepares” all students in the same fashion is an exercise in frustration, ineffectiveness, and wastefulness. But there is also an immense accompanying socio-political problem, and that is that, particularly in the United States, people tend to respect only a handful of skills – those of professional athletes, those of popular entertainers, and those who are rich and famous. These three groups amount to less than 1/10 of one percent of the population, and the chances of success in any of these areas are incredibly slender. There is little real respect, for all the lip service paid, for teachers, police officers, and others who hold society together, because lip service pales alongside the financial negligence. The professors at my wife’s university, for example, and for that matter at all the state universities in our state, have been frozen something like six times out of the last 18 years, and the few cost-of-living allowances have been on the nature of 1% to 2%. The salary levels for beginning teachers in our area, and likely in other areas as well, are less than $1,000 a year above the poverty level for a family of four… and most young teachers here are married. Very few doctors can afford either to be general practitioners or to practice in rural areas or many inner city areas because what they can earn won’t cover the cost of their educational loans… and their malpractice insurance.

Yet, in many areas, good-paying positions are unfilled… because young people can’t be bothered to be electricians, plumbers, air-conditioning technicians, high-tech welders… the list is significant… and all too many of the “schools” that profess to teach such trades are inadequate, and charge far too much.

Do I have a simple answer? No… I don’t, and I don’t believe that there is one… and because there isn’t, and because no one really wants to tackle complex issues any more in a culture where information, such as it is, is only one mouse-click away, I worry that it will be some time before the situation changes.

On the economic front, the Unites States faces a double problem – a huge continuing federal deficit and a weak economy, not to mention the fact that taxes will jump considerably in less than three weeks, and a number of federal income support payments will be cut off, unless the President and the Congress can work out something.

From what I see, almost no one is looking at the overall problem. They’re all concentrating on the symptoms, and each group is focusing on its particular interests and wants.

One of the questions that’s been raised is how can the economy be so weak when business and corporate profits are so high. Although industrial profit margins vary considerably from year to year, on average, regardless of how profit is calculated (on equity, sales, revenue etc.),the profit margins of the S&P 500 have more than doubled over the past thirty years, rising from around five percent to between eleven and fourteen percent. In 2012, corporate profits as a percentage of sales hit an all-time high, while the percentage of Americans working dropped to the lowest level in 30 years. Wages and salaries are now at the lowest percentage of gross domestic income (GDI) since statistics have been kept, and have dropped from the historic range of around 55% of GDI to just over 44%. That amounts to a massive shift in income away from workers to owners and businesses, roughly $1.5 trillion annually – and that’s money that’s not being taxed or spent at near the rate it would be if it went to workers.

Not only that, but the additional corporate profits aren’t funneling back into the economy, either through increased dividends or increased employment. All this results in significant loss [more accurately, a lack of growth] in federal tax revenue at the time when federal spending is increasing. Those who demand a corresponding decrease in federal spending seem to fail to understand that the vast majority of the increased federal spending has gone to prop up the economy in one way or another, either through increased joblessness benefits, food stamps, or the financial community bailouts. Without that additional federal spending we would be, not in a great recession, but in another great depression.

What the large corporations fail to acknowledge, as noted in the previous blog, is that their cost-cutting and “efficient” personnel management techniques, are contributing significantly to the problem. Since the United States is essentially at best a self-contained economic system, because we are not a net exporter of goods and services, but a net importer, we cannot sell massive amounts of goods abroad to compensate for domestic economic weaknesses. That means that when wages and salaries go down – or stagnate with a growing population – so does domestic demand for goods and services. That means companies strive for greater efficiencies, and those efficiencies come largely from “employee efficiencies.”

One of the fastest rising employee costs is health benefits, and the larger corporations have addressed this through automation, fewer employees per unit of output, and greater use of part-time employees who are not paid benefits. The Affordable Health Care Act attempted to address the growing number of Americans without health benefits, but the way in which it was finally passed appears to impact disproportionately, as many Republicans have noted, smaller businesses. In effect, large corporations, through their management practices, have effectively shifted their past health care costs onto small business and government (i.e., all taxpayers). This, unhappily, isn’t anything new. Business has always attempted to shift costs onto someone else, whether environmental, infrastructure, or social costs, and always trumpets “jobs” and “free enterprise” as a rationale for not paying for the costs it imposes on society.

At the same time, U.S. tax policies, particularly corporate tax policies, have only made the situation worse. Although the United States has the highest “official” statutory tax rate of any OECD/industrialized nation in the world at 35%, the effective corporate tax rate for U.S. corporations averaged 12.1% in 2011 – and that was lower than all but one nation out of the top 34 industrial nations. That 12.1% rate is the lowest effective rate for U.S. corporations in the last 40 years. How does this happen? Tax breaks, subsidies, and a tax structure that does not tax overseas profits until or unless those profits are transferred back to the U.S. – where they’ll likely face the 35% rate [since they’d already have been transferred if the corporations had any way to tax shelter them]. Well… if you can’t or won’t transfer those billions, if not trillions, of dollars in overseas profits back to the good old USA, what can you do with them? Build more facilities overseas, of course. Since business tax breaks and subsidies are largely legislated on a political basis, this also results in economic inefficiencies. All this doesn’t exactly help the U.S. economy… or American taxpayers.

Then there’s the financial sector, whose indiscretions, greed, and mass speculation created the economic crisis, and whose major players are still reaping multi-million and multi-billion dollar bonuses… and a significant portion of whose income is taxed at a lower rate than that of most middle-class wage earners.

So… what can be done?

Knowing that no policy-maker will ever have the nerve to suggest anything along the lines of what follows, I’ll still suggest a general framework that I believe would work, not that workability has a damned thing to do with political feasibility… but who knows… someone might actually get desperate enough to try some of these.

First, stop tying tax increases to political rhetoric. Instead of demanding a 4% increase on higher earners, just ask for 1%… and cap their personal deductions in the range of $35,000-$40,000, while eliminating the alternative minimum tax. What no one mentions is that these folks are already going to pay a 4% additional tax on all their investment income beginning in 2013, as required by the Affordable Health Care Act. Second, drop the statutory corporate tax rate to 13-15% — and repeal every single exemption and subsidy. Then allow them to send profits back to the US – but credit them with a dollar for dollar reduction in tax liability for every dollar paid to another country in income/profit taxes. Third, impose a sliding-scale part-time employee surtax on every corporation with more than 100 employees, that surtax being based on the number of part-time employees not receiving health benefits. Couple that with a sliding scale tax credit for small businesses [20 or fewer employees], allowing a credit of some additional percentage of health care insurance costs per employee. Fourth, and this is an idea floated by Eliot Spitzer, impose a transaction tax of between ¼ and ½ of one percent of the value of every financial transaction in the securities and commodities markets. This would raise at least $200 billion annually, and might actually recoup some of the costs that the financial sector dropped on everyone else. It also might reduce the millions of computerized speculative trades made to try to profit on second-to-second price changes. Fifth, tax all dividend, interest, bonuses, and carried interest income [and any other “preferred” income] at the statutory rates, but allow the current lower tax rate for dividend and interest income to remain for the first $50,000-$100,000 [indexed to inflation]. That way, those middle-class individuals who scrimped and saved for retirement wouldn’t be penalized for their thrift, but multi-millionaires wouldn’t be paying absurdly low rates on massive income.

Anyway… those are my suggestions, not, as I said, that anyone in Washington is likely to listen.