A Christmas Story for 2017

The year 2017 was a tough one for the United States of America, and a little rough for me too. But I have a story that I think will cheer you up a bit.

A couple of weeks ago I received a Christmas card and letter from one of my Burgess cousins which contained some news about his family, including the fact that he had a couple of grandchildren that I didn’t know about. After reading it I logged into my Ancestry.com account to add the new information to my online family tree.

Donald & Agnes Burgess
Donald & Agnes Burgess (Jeff Burgess)

While I was working on it I saw some notifications regarding new records the website had discovered about Donald Burgess, the grandfather I had in common with my cousin. I clicked on them and learned that our grandfather had been married to a woman named Nelle before he married our grandmother Agnes. This revelation was shocking to me because I’d never heard anything about it, and to my knowledge, neither had anybody else in our family.

I began digging around on the website and found more information. My grandfather had married Nelle in Michigan in March of 1925, but the public records also showed that Nelle had subsequently married another man there in January of 1926, so my grandfather and Nelle were together for just a few months. They additionally showed that Nelle gave birth to a son named Richard sometime in 1926. I wondered if my father had an uncle he’d never known about. But further research showed that Richard was her only child, and was born 11 months after Nelle had married her second husband. I also discovered that Richard was still alive and I was able to find his current living address in Michigan, with the help of Whitepages.com.

I sent Richard a letter last week asking him if he could tell me anything about my grandfather Donald, and why his mom and my grandfather split up. Richard is 90 years old so I was a little worried that my letter might cause a fatal shock if he wasn’t aware of his mom’s first marriage. But I wanted to know if my grandfather had been a bad guy, instead of the good guy I’d always thought him to be.

Yesterday I received an incoming phone call on my mobile phone from an unknown number in Michigan. I usually don’t answer unidentified numbers but this time I did and it was Richard responding to my letter. His mind was very sharp and he was eager to help me in any way he could. He told me that he didn’t know anything about my grandfather, other than his name. But he said that whenever my grandfather’s name came up in the presence of his grandmother she’d tell his mom that she should have stayed with my grandfather because “he was a nice guy” – unlike his father.

I then asked Richard about his father and he told me that he had never met him. He explained that his father had abandoned him and his mom when he was a baby, and that his mom had raised him on her own. He said that he only talked to his father once, when his father called him after he became an adult to ask him if he could meet his wife and see his children. He responded by telling his father to get screwed and that he didn’t want anything to do with him. Richard told me this in a practiced, businesslike manner, but I could tell there was deeply buried pain.

“So, you don’t know anything about your father?” I asked. No, he responded, other than his name, of course. But after some more prodding he recalled that he knew the first name of his dad’s father, and the town where his grandfather had raised his family.

We concluded our conversation by speculating about why my grandfather and his mother had split up. I told him that my grandfather had moved back to his hometown in Indiana in 1926 for a new job, and that by 1927 he had moved to Pittsburgh, Pennsylvania, for another job. I suggested that maybe they split up because his mother didn’t want to leave Michigan. He agreed that sounded like a strong possibility. I was glad that I could still consider my grandfather to be a good guy. I was 15 when he died and I have many fond memories of him, like when he snuck me my first taste of a cold beer.

I thanked Richard for calling me and he promised to let me know if he ever learned anything more about my grandfather. But after we said goodbye I couldn’t let go of his story. I wanted to know more about his dad. I logged back into Ancestry.com and began looking among the public records for his grandfather. He was relatively easy to find because he had unique name and had lived in a small town. As soon as I added Richard’s grandfather into my online family tree the website began notifying me of more records about him. They included accessible family trees for his family which had been built by other site users. I clicked on one of them and it included photos of his family members. I clicked on an icon of the photo of his grandfather and my browser loaded a scanned version of a high quality black and white close-up. The reality sank in that Richard had never known his grandfather, or seen this photo of him. And I wondered if his grandfather had ever know that Richard existed. (There was no mention of Richard in his family’s online trees.) Tears began to well up in my eyes. I kept digging in the family trees and came across another good photo of all of the family’s five children, taken when they were young adults, including Richard’s father.  Further research revealed that they had all passed. I realized that the photo could be the only thing Richard might ever have about his father, or the two aunts and two uncles he never knew.

I didn’t tell Richard about my online discoveries, but I downloaded the photo files and printed them off, along with copies of the obituaries for his grandparents. I couldn’t find an obituary for Richard’s father, but I learned that he eventually married another woman. They didn’t have any children but the marriage lasted so I printed a copy of his step-mother’s obituary too. This morning I sent them to Richard by Priority Mail. They’re supposed to get there this Saturday, the 23rd. On Sunday the 24th it will be his 91st birthday, and Monday is Christmas Day.

Update

On Christmas Day, 12/25/17, I received an email from Richard wherein he thanked me and said that he “greatly appreciated” the information I sent him about his father. His email had an attachment that was a scanned photo of his mother Nelle, taken when she was the young woman my grandfather had known.

Will Corporate Tax Cuts Really Reduce the U.S. Budget Deficit?

Mick Mulvaney
Mick Mulvaney (Wikipedia)

President Donald Trump and the Republican-led Congress are trying to pass federal tax reform legislation that could increase the U.S. government’s burgeoning debt by trillions of dollars. The federal government already owes more than $20 trillion, which is about $1 trillion more than the current annual U.S. gross domestic product (GDP). And the $666 billion budget deficit for the federal fiscal year that concluded in October was the sixth highest on record.

Most economists say the best way to reduce the budget deficit without hurting the economy is by gradually implementing a combination of carefully crafted spending cuts and tax increases. But Trump’s Director of the Office of Management and Budget (OMB), former Congressman Mick Mulvaney, says there’s no political will in Congress to make spending cuts, so the only way to reduce the deficit is to increase tax revenue by stimulating annual economic growth to at least 3% through tax cuts.

A reduction in corporate taxes is at the core of the Republican tax reform strategy. They claim that the U.S. economy is at an international competitive disadvantage because the 35% federal corporate tax rate that’s been in effect since 1933 is among the highest in the world. They say that lowering it would increase economic growth because corporations would repatriate some earnings from foreign countries and conduct more business in the U.S.

But there is little evidence that the proposed tax cuts will generate enough compensatory growth to pay for themselves. For example, if 25% of U.S. income goes to towards taxes, every $1 of tax cuts would have to generate more than $5 of increased economic activity. And history shows that previous Republican tax cuts failed to produce promised increases in tax revenue. During the Reagan administration in the 1980s the Republicans gave tax cuts to the wealthy that were supposed to generate growth and income that would “trickle down” to the middle and lower classes. Instead, their supply-side strategy significantly increased the national debt, shrank the middle class, increased unemployment, and accelerated income inequality. In other words, the wealthy people just kept most of the money. More recently, Arizona’s Republican Gov. Doug Ducey pushed state corporate tax cuts that have resulted in a $24 million shortfall in the state’s FY2018 budget which will likely grow to $80 million for FY2019, according to the state’s Joint Legislative Budget Committee.

Furthermore, while the statutory U.S. corporate tax rate is high, corporations can take expense deductions that make their effective tax rates lower. According to a 2017 Congressional Budget Office report, the U.S. effective corporate tax rate was only 18.6% in 2012. Also, corporations consider many factors when they make business decisions. A tax rate would be the deciding factor only if all other things were equal. And few corporations are willing to pass up the profitable privilege of doing business in the U.S., the world’s largest economy.

Some corporations, of course, would use the money they’d save from a reduction in corporate tax rates to invest in new production. But many would simply inflate their stock values by buying back stock, increasing dividend payments to their stockholders, or  they would pay of their executive officers to even more outrageous amounts. These things would contribute little to economic growth, as most stock dividends don’t go to middle or lower income class consumers, and wealthier CEOs would just accelerate growing income inequality.

The primary lesson from the failure of supply-side economics is that not all tax cuts are the same, and that real economic stimulus comes from reducing taxes for the U.S. economy’s primary consumers – the lower and middle income classes. Subsequently, supporters of the Republican tax reform effort, including President Trump, are selling it as a tax cut for the middle class. But the middle class tax cuts included among the various features in their reform proposals are very modest, and in the Senate’s version of the bill they would expire at the end of 2025.

The reason they are set expire is because Senate Republicans passed a budget resolution in October to protect their tax reform bill from a Democratic filibuster. As long as the bill doesn’t add more than $1.5 trillion to the deficit over the next ten years, Republicans will only need 51 votes to pass it in the Senate. In other words, they know that their proposed tax cuts will significantly increase the national debt, and they’d rather eliminate tax cuts to the middle class than corporate tax cuts to avoid exceeding their self-imposed arbitrary limit on the inevitable debt increase.

Another indicator that they don’t really believe their proposed tax cuts will pay for themselves is that Republican Sen. Bob Corker (R-Tenn.) has insisted that the final version of the bill contain a “trigger” that forces reconsideration of the tax cuts if it appears they are creating a big increase in the federal budget deficit.

The truth is that the Republican fixation on implementing tax cuts is a long-held political objective, not a proven economic tool. This if further revealed by House’s version of the bill which includes a provision to eliminate the estate tax, which would cost more than $172 billion in lost tax revenue over the next 10 years in order to benefit a relative handful of ultra rich families.

The proven Keynesian strategies of creating economic stimulus by lowering interest rates and increasing government spending aren’t available because they’re already exhausted. Interest rates have been at historically low levels for years in response to the Great Recession, and the federal debt has already reached historical highs.  So, instead of doing the hard work of compromising with Democrats to make sound budget deals, Republicans are trying to sell this tax reform bill as a magical panacea. They know that if it doesn’t work, their wealthy dark money campaign donors will still be happy with their lower taxes. Also, it will make it easier for them to cut funding for popular programs they don’t like, such as Social Security and Medicare.

In the meantime, the U.S. economy is doing quite well, and an argument can be made that there’s no immediate need for any tax cuts. The minimum economic growth rate that the Trump administration claims is necessary to shrink the budget deficit has already been achieved. The economy grew by 3.1% in the second quarter, and by 3% in the third quarter of this year. At the same time, unemployment was down to 4.1% in October, the lowest its been in more than 10 years. There are still some stubborn pockets of unemployment, but they are mostly the result of technological advances that have rendered some jobs obsolete, and the laid off workers don’t have the necessary skills to succeed in the new economy. And, by the way, recent corporate profits are at all-time historical highs.

The bottom line is that the Republican tax reform proposals look an awful lot like the failed supply-side “voodoo economics” of the Reagan administration. If Republicans really want to improve the economy, they should find a way to focus tax cuts on the middle and lower income classes, while investing in education, healthcare, public transportation, and affordable daycare. This strategy could increase the federal budge deficit too, if it isn’t accompanied by fair spending cuts combined with the elimination of tax loopholes and unnecessary subsidies. But it would have a much better chance of success. It would help Americans work themselves up from the bottom, instead of giving them false hope that some crumbs might trickle down from above.

Updates

On November 30, 2017, the Senate’s parliamentarian declared that the inclusion of the “trigger” provision demanded by Republican Sen. Bob Corker (R-Tenn.) would violate the special budget resolution rules the Republicans want to use to pass the tax bill without any Democratic support.

Late in the evening of December 1, 2017, Senate Republicans finally succeeded in passing their version of a tax reform bill. A conference committee must reconcile it with the version that was previously passed by the House before a final version can be sent to President Trump for his signature.

On December 22, 2017, President Donald Trump signed the $1.5 trillion tax cut bill, named the Tax Cuts and Jobs Act of 2017. It became effective January 1, 2018.

In July, 2018, the U.S. Treasury Department reported that the federal government recorded a $74.9 billion deficit in June, a month when the government often runs a surplus, as corporate taxes dropped sharply compared to a year ago. The government had a budget surplus in June in 52 of the past 64 years.

What Did The Tonto National Forest Do With The Money?

Roosevelt Lake, Arizona
Roosevelt Lake, Arizona (Jeff Burgess)

In 1996 the U.S. Bureau of Reclamation (BOR) completed a $430 million construction project to increase the height of Theodore Roosevelt Dam  by 77 feet to increase water storage in Theodore Roosevelt Lake and decrease the danger of catastrophic downstream flooding in the Phoenix metro area. The modifications to the dam, which is operated by the Salt River Project (SRP), were part of the larger Plan 6 alternative for the Regulatory Storage Division of the Central Arizona Project (CAP).

The approval of Plan 6 required the inclusion of a variety of environmental mitigation measures, including compensation for about 460 acres of Sonoran Desert riparian habitat and about 8,290 acres of upland desert habitat that would be flooded by the higher water levels at Roosevelt Lake.

The BOR’s 1990 Theodore Roosevelt Dam Modifications Environmental Assessment described how the BOR gave the Tonto National Forest, which manages most of the land surrounding Roosevelt Lake, money to create the Tonto Creek Riparian Unit. The Tonto used it to fence cattle out of lower Tonto Creek in the Tonto Basin, thereby resulting in a dramatic improvement in the condition of the stream’s desert riparian habitat.

The BOR also made about $650,000 available to the Tonto to accelerate the implementation of improved livestock grazing allotment management plans on 11 allotments around Roosevelt Lake. The stated purpose of the money was to “control access to the lake by livestock and reduce impacts to native vegetation associated with uncontrolled grazing.” The environmental impact statement (EIS) for the 1985 Tonto National Forest Plan had listed the condition of the Roosevelt Lake watershed as “unsatisfactory”. This was defined as “the vegetation protecting the soil surface has been removed to the point that accelerated erosion is occurring.” The grazing allotments identified as needing new management plans were the the 7/K, Roosevelt, Schoolhouse, Bar V Bar, Poison Springs, Sierra Ancha, A-Cross, Armer Mountain, Dutchwoman, Tonto Basin, and Del Shay allotments.

The Tonto began working on new management plans for these allotments in 1991. The plans, however, had skewed objectives. The 1992 environmental assessment (EA) of a new plan for the Roosevelt allotment, for example, failed to mention that its primary purpose was supposed to be mitigation for the loss of wildlife habitat. Instead, it said that “range improvements need to be relocated and the grazing system needs to be adjusted to offset the land lost to the higher lake level.”

In the spring of 1996 the forest’s Tonto Basin Ranger District initiated the Eastern Roosevelt Lake Watershed Analysis Area project. They prepared a draft EIS to analyze livestock management alternatives for five grazing allotments, including the Armer Mountain, A Cross, Dagger, Poison Springs and Sierra Ancha allotments. All of them, except the Dagger allotment, were among the 11 allotments for which the forest had received money from the BOR in order to implement new management plans.

But when the district ranger announced the final version of the project’s EIS in August of 1997, it was accompanied by decision notices for just three of the five allotments. Decisions for the Poison Springs and Sierra Ancha allotments were deferred. (The Poison Springs and Sierra Ancha allotments had the same grazing permittee and were managed together.)  The district ranger explained in her decision notice that a new management alternative had been identified for these two allotments, so the public would be given more time to submit further comments. Subsequently, in the spring of 1998 she issued a decision memo for the Poison Springs allotment. The memo called for rebuilding 1.5 miles of existing fence and and constructing 1.5 miles of new fence to prevent cattle from accessing the Salt River. This was a good thing, but that much fence work couldn’t have cost more than a few thousand dollars, and it fell far short of implementing a new allotment management plan. In fact, her memo explained that the decision notice for the implementation of a management plan for the Poison Springs/Sierra Ancha allotments was expected later that year. But it never happened.

The Tonto National Forest proposed new livestock management plans for the Poison Springs and Sierra Ancha allotments again in the summer of 2011 when it announced the initiation of the Salt River Allotments Vegetative Management project. Despite its name, this project was a grazing authorization project. Livestock grazing in all of the Tonto’s pastures along the Salt River in the Salt River Canyon Wilderness above Roosevelt Lake had been suspended several years earlier as part of a legal settlement to protect desert riparian habitat used by endangered species. The affected grazing permittees had been pressuring the forest to conduct NEPA analyses on their grazing allotments in order to get authorization to resume grazing along the river. In addition to the Poison Springs and Sierra Ancha allotments, the project included the Chrysotile, Haystack Butte, Dagger, Sedow, and Hicks-Pikes Peak allotments.

The Tonto released the project’s draft EIS in early 2013 and the preferred alternative proposed to allow livestock grazing to resume in the river pastures during the cool season, from November 15th to February 15th. This important change was presented in the draft EIS in a deceptive manner. The existing prohibition of grazing along the river described in the “current management” alternative was simply deleted from their preferred alternative, with no mention of its removal. There was just a short reference to an Appendix C added to the end of draft EIS wherein the details of this important difference were spelled out.

The draft EIS also explained that the Sierra Ancha allotment had been divided in 2009 between the adjacent Poison Springs and Dagger allotments. Its lower elevation pastures were incorporated into the Poison Springs allotment, and the upper pastures into the Dagger allotment. This meant the Dagger allotment had replaced the Sierra Ancha allotment on the list of 11 allotments for which the Tonto had received money from the BOR.

The descriptions in the draft EIS of the existing management situations on these allotments revealed that 5 of the Dagger allotment’s 11 pastures weren’t being grazed because they lacked water or had unprotected riparian areas. And 7 out of 17 pastures on the Poison Springs allotment, including its Klondike pasture, weren’t being grazed because they were in poor shape. The Tonto had ordered the removal of cattle from both of these allotments in 2000 due to a severe drought, and large portions of both allotments are Sonoran Desert, inherently unsuited for grazing.

The Tonto never issued a final EIS or any associated decision notices for the Salt River Allotments Vegetative Management project because in February of 2015 they announced they were abandoning it. Their retraction explained, “through discussions with term-grazing permittees, it was determined that if livestock were allowed to graze along river that neither Forest Service nor term-grazing permittees had time or money to conduct monitoring necessary to determine appropriateness of this proposed action along river corridor.”

The forest also said in their announcement that they would continue the implementation of new livestock management plans on these allotments, and comply with NEPA requirements by issuing individual  environmental assessments for each allotment, instead of using the more complicated EIS process for all of them.

The Tonto broke this promise in the spring of 2016, however, by implementing new “trial” management plans for the Sedow and Haystack Butte allotments without issuing public notices. The authorization letters increased permitted cattle numbers on the Sedow allotment by about 37% and on the Haystack Butte by about 49%. The trial periods were also arbitrarily extended beyond the normal 1 or 2 years to 5 years because of “varied southwest climatic conditions.” This was done during an ongoing long-term drought.

They broke their promise again in August of 2017 when the forest’s Tonto Basin Ranger District sent out a letter announcing their Klondike Water System Project for the Poison Springs allotment. It explained that they were going to install a water pump on a well located on an adjacent allotment that would send water through a new pipeline to a new 10,000 gallon storage tank on the Poison Springs allotment, where it would feed three new watering troughs, including two in the Klondike pasture. The total length of the water pipelines necessary to complete the project would exceed 3 miles.

The Tonto’s letter also explained that they were not going to complete an EA for this project. Instead, they were going to use a NEPA categorical exclusion to get the new livestock waters approved. The Forest Service’s categorical exclusion rules in the Forest Service Handbook, FSH 1909.15,32.2(9), state that categorical exclusions can be used for:

Implementation or modification of minor management practices to improve allotment condition or animal distribution when an allotment management plan is not yet in place.  Examples include but are not limited to:

(i) Rebuilding a fence to improve animal distribution;

(ii) Adding a stock watering facility to an existing water line; and

(iii) Spot seeding native species of grass or applying lime to maintain forage condition.

Obviously, the construction of a large new storage tank, miles of new water pipeline, and three new watering troughs doesn’t comply with the spirit of these rules. But a big difference between a decision resulting from an EIS or an EA, and one from a NEPA categorical exclusion, is that decisions resulting from categorical exclusions cannot be appealed by the public. Another difference is that the description of the agency’s proposal doesn’t have to include as much information. For this project, that meant the public had no idea who was going to pay the several hundred thousand dollars needed to finance it. According to the range analysis that was completed for the 2013 draft EIS, the Poison Springs allotment is only permitted for 102 head of cattle yearlong. If the cost of the new livestock watering system is $200,000, and that’s a conservative estimate, it works out to an investment of almost $2,000 a head. It’s a good bet that the U.S. taxpayers are picking up the tab in the form of an Environmental Quality Incentives Program (EQIP) grant.

The Tonto Basin District Ranger justified the construction of this expensive new livestock watering system by explaining that they had permitted grazing to resume on the allotment, and there weren’t any reliable watering sites in the Klondike pasture, so new ones were needed, “to deter livestock from concentrating at a few water sources.” But this pasture is comprised of Sonoran Desert and has a history of poor resource conditions due to overgrazing. An easy argument could be made that livestock shouldn’t have been allowed to resume grazing it in the first place. Furthermore, recent research published in Rangelands, a periodical of the Society for Range Management (SRM), titled Upland Water and Deferred Rotation Effects on Cattle Use in Riparian and Upland Areas  found that building upland livestock watering sites doesn’t improve natural resource conditions, it just facilitates more grazing on the uplands. In other words, the only thing this new livestock watering system will likely accomplish is to allow more cattle to graze on the Poison Springs allotment.

These livestock management issues could have been publicly analyzed if an EA had been completed for the Poison Springs allotment. According to the 2013 range analysis, the Tonto drafted a livestock management plan for the allotment in 1987 in response to chronically poor range conditions. But it wasn’t successfully implemented due to permittee noncompliance, and then the cattle were removed in 2000 due to the drought. As far as I know, a comprehensive NEPA process resulting in the successful implementation of an adequate livestock management plan has never been completed for this allotment. In other words, the Tonto used a NEPA categorical exclusion to implement a controversial decision on an allotment that’s never had a real management plan.

The 2013 range analysis also revealed that no NEPA analysis of any sort has ever been completed for the Dagger allotment. It explains that the allotment’s grazing permit was revoked for permittee noncompliance in the 1990s, and the allotment wasn’t grazed from 2000 until 2009. Then in 2009 grazing was resumed by a new permittee. But instead of finally conducting a NEPA analysis, the Tonto has relied on monitoring by the Reading the Range program of the University of Arizona’s Cooperative Extension Service. This program has certainly helped to improve range conditions on the Tonto, but it’s reports aren’t subject to public review unless they are  included in NEPA analyses. Furthermore, it focuses on monitoring the condition of livestock forage on the uplands, and not the more important issue of protecting desert riparian areas from cattle, as shown by its inability to provide the monitoring needed to permit grazing to resume along the Salt River.

The bottom line is that new allotment management plans with the primary objective of improving wildlife habitat weren’t implemented on all of the 11 allotments for which the Tonto National Forest received the money from the BOR.  In 2001 I was concerned about the Tonto’s lack of progress and sent a letter to the Phoenix office of the BOR asking them for a report on the results of the $650,000 they’d given the forest. But I never received any information, despite the fact that their Plan 6 promised that, “Reclamation will monitor the effects of the project and the success of all the mitigation efforts.”

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