Archive for April, 2011

Chiefs Pick WR Jonathan Baldwin

Friday, April 29th, 2011

Kansas City Chiefs Select WR Jonathan BaldwinWow. Good start for the Chiefs. They trade back, pick up a high third round pick, and fill one of their most glaring needs. How can you not like that?

And best of all? They didn’t draft a right offensive tackle in the first round.

Here’s what you need to know about Baldwin. He’s big — almost 6’5″ and 228 pounds. He can stretch the field. He’s fast — he runs a 4.5 40. He’s got great hands and is known for making spectacular catches. And he’s explosive, averaging more than 18 yards per catch in college. He will be a great complement to Dwayne Bowe and Tony Moeaki in the red zone. Matt Cassell should be a happy man today.

Some of the “experts” have labeled Baldwin with some potential character issues. We know how much importance general manager Scott Pioli puts on character. And if Pioli is satisfied with Baldwin’s character, then so am I. (Until proven differently.)

Some may also call Baldwin a “reach” to be taken late in the first round. There were two wide receivers with very high draft grades — A.J. Green and Julio Jones. They were among the first six taken in the draft. Then there was a whole group of receivers with similar grades expected to go in the second round. Baldwin was in this group. Most of the others were under six feet tall. Baldwin was the one that stood out to me as the freak athlete with size, speed and hands. He wasn’t likely to make it to the Chiefs pick in the second round. And the Chiefs obviously had the highest draft grade on him of all the remaining receivers.

Should give some kudos to Nick Wright at 610 Sports who talked about Baldwin as a great choice for the Chiefs prior to the draft. He was hoping that Baldwin would fall to the Chiefs with their second pick, but didn’t expect him to last that long on the board.

The Chiefs have three picks tonight — numbers 55 (round 2), 70 and 86 (round 3). Would like to see the Chiefs find an outside linebacker and interior offensive lineman tonight. GO CHIEFS!

Draft Time 2011

Tuesday, April 26th, 2011

Kansas City ChiefsI have a confession to make. I’m not excited about the NFL draft this year. I think my brain is still waiting for free agency. And I’m definitely behind in my research. So take this for what it’s worth. It seems that most mock drafts have the Chiefs selecting an offensive tackle in the first round. If they do, I’ll be shocked.

Let’s review the Chiefs’ biggest needs. And when you think of the team’s needs, don’t just focus on this year. Think about the next three years, and what contracts will be expiring among the current players. And what players are nearing the end of their careers.

1. Nose Tackle: This is where the lack of free agency makes this draft even more interesting than normal. Ron Edwards and Shaun Smith are both free agents. If the Chiefs played a game today, their starting nose tackle would probably be Anthony Toribio. Who? Exactly. Now the Chiefs might feel good that they’ll get Edwards and Smith signed, but there are no guarantees. And neither of them are long-term solutions at nose tackle. This is the biggest hole in a young and developing defensive unit.

2. Wide Receiver: Not only do the Chiefs have a big hole in the starting position opposite Dwayne Bowe, but I believe that Bowe has only one year left on his contract. If they lose Bowe next year, what do they have left? Not much.

3. Offensive Center / Guard: Starting center Casey Wiegmann is a free agent, and he’s 37 years old. Left guard Brian Waters is 34, and nearing the end of his career. The only guy on the roster that looks like a future replacement is Jon Asamoah. The Chiefs need at least one more projected starter for the future interior of their offensive line.

4. Cornerback: Starter Brandon Carr is a free agent, and is inconsistent. Rookie Javier Arenas is good in the slot, but does not project to be a starting cornerback. And you can never have enough good cornerbacks on your team.

You can argue that the team needs more talent at linebacker and at offensive tackle. I won’t argue that point. They do. I just don’t list either as one of their top four needs. Though that doesn’t mean that they won’t find value here with the 21st pick in the draft.

Now back to offensive tackle. When the Chiefs pick late in the first round, the available tackles will likely all be projected as right tackles, not left tackles. Why would you draft a right tackle in the first round when you clearly have other, more important needs? The Chiefs want to find the right fit for the person, the position in the draft, and team need.

So who will the Chiefs draft this year? I would love to see the Chiefs have the opportunity to draft center Mike Pouncey from Florida, who is widely regarded as the best interior offensive lineman available. Most mock drafts have him picked just a few spots in front of the Chiefs. He could slide to the Chiefs, but it’s not likely. The draft appears pretty deep along the defensive line, and I wouldn’t be shocked to see the Chiefs draft a pass rushing defensive end who they can move to the outside linebacker position opposite Tamba Hali. Late in the first round there’s usually good value for an inside linebacker, and I can imagine the Chiefs looking for some competition for Javon Belcher in the middle. And there are a couple of cornerbacks who are projected to go late in the first round. Corners often seem to go a little higher than they’re ranked, so keep on eye on players such as Aaron Williams and Brandon Harris. The general consensus is that their won’t be a wide receiver on the board worthy of picking when the Chiefs pick. So unless the Chiefs trade down, they’re not likely to grab a receiver with their first pick.

Prediction: If Pouncey is on the board, he’s our man. But that seems unlikely, and he’s the only interior offensive lineman worth taking with this pick. The Chiefs decide they don’t find enough value among the available wide receivers, nose tackles and outside linebackers. They try to trade down but can’t. Wanting a bigger cornerback to partner with Brandon Flowers, the Chiefs pick Aaron Williams from Texas. He’s got good size, and is good against the run and the pass. Does anybody know if he’s a team captain?

Eat The Rich Video

Friday, April 15th, 2011

In my last post I pulled data from our history to illustrate how even very high tax rates on the rich do not lead to larger tax revenues compared to GDP. We’re tried it and it doesn’t work.

Another argument I’ve heard from the far left is that our country is not broke. We have plenty of money. It’s just that all of the money is being hoarded by the few at the expense of the many. I am open to the discussion that a large portion of our wealth is held by just a few people. And we badly need tax reform in this country. No, not just reform. We need a tax overhaul. But that discussion will wait for another day. Today we need to discuss this myth that if only we could take all this money from the rich we could afford our current level of spending. We could afford health care, Social Security, Medicare, Medicaid and much more. If you believe economists like Paul Krugman, we could afford to exponentially expand the government to take care of even more people if only the rich didn’t have all of our money.

You must watch this video from conservative Bill Whittle:

YouTube Preview Image

Now I haven’t fact checked every piece of information in here, but it’s certainly inline with the data I know about our wealth, our resources, the size of our federal government, and tax collections. I did some googling to see if I could find articles about the inaccuracy of this information. I didn’t find any.

Matter of fact, here’s an article from Walter E. Williams, a professor of economics from George Mason University discussing the facts in this video.

On a personal note, I do have one issue with this video. I’m not big into political correctness, but why is it OK to bash fat people? We can’t make fun of Jews or Muslims. We can’t make derogatory comments about blacks or Hispanics. As Kobe found out, we can’t use gay slurs in regards to officials. So how come it’s OK in our country to bash fat people? Whittle could have made this same argument without the personal comments about Michael Moore.

And thanks to Bruce for sending me a link to this video.

Why Tax Increases Won’t Fix Our Budget Problems

Wednesday, April 13th, 2011

I’ve had a number of conversations recently about tax policy and our federal deficits. I have many friends who would have liked to have seen the Bush tax cuts expire on the rich. It was estimated that this would generate $700-800 billion over the next ten years, not including any economic repercussions from the tax increases. The math is pretty easy on this one. That’s $70-80 billion per year (we’ll pretend as if there are no economic effects from the tax increases). And with a projected deficit this year of approximately $1.65 trillion, that extra revenue from the increased taxes on the rich means we still have a $1.57 trillion deficit this year.

Matter of fact, if you increase the top tax bracket from 35% (the current marginal tax rate on the highest income earners) to 100%, you still cannot collect enough in tax revenues to run a balanced budget.

The math doesn’t work. You cannot increase taxes and solve our nation’s budget crisis. But that’s just part of the story.

As I mentioned in my last post, too often we ignore history. Too many people believe that tax rates determine tax revenues. They do not. Proof? How’s this:

Tax Revenue as Percentage of GDP

This table shows the top marginal tax rates since the mid-’40s (the tax rate paid by the “rich”). Tax rates have been as high as 94%, and as low as 28%. And the table shows total tax revenues collected by the federal government as a percentage of GDP.

During this time, tax revenues have remained extremely stable as a percentage of GDP — varying from a low of 14.4% to a high of 20.6%. So no matter how high we have made the tax rates, or how low, we still have not collected much more than 20% of GDP. Ever.

Maybe the rich should pay a higher percentage than they do today to be “fair”. That’s a discussion for another day. The point today is that no matter what tax rate you pick, you don’t ever collect much more than 20% of GDP through taxes. And on average you collect less.

Why? That’s an easier answer than you might expect. Higher taxes are a disincentive to work. Let’s say we reverted to the tax rates of 1970, where the “rich” were paying a marginal rate of 71.75%. And let’s say you’re earning $250,000. For every extra dollar you earn, you have to pay almost 72 cents to the federal government. Then kick in a little more to your state government. Why would you waste your time earning more money? If you’re a small business, such as an S-corp or an LLC, and the company profits are reported on your personal taxes, why would you want to grow your business? What’s the incentive? It’s no longer money, because the government is taking almost every additional dollar of profit you make. Why would you create more jobs? Create new products? Once you hit $250k, it’s time to kick back and head to the beach. High tax rates kill productivity, creativity, and economic activity.

Federal Spending
Do you know how big the federal government is compared to GDP? How about one more table (I almost excluded 1945 because the war spending made this a statistical outlier, though I found it interesting so I left it in):

Federal Expenditures as Percentage of GDP

This table shows total GDP in billions of dollars. And the percentage of GDP that was spent by the federal government. Think of it as the relative size of the government compared to the economy.

Historically the size of our government has been less than 20% of GDP until about 1970. From 1970 until the mid-’90s we were in the low 20s. It’s no coincidence that the last budget surplus we had seen was in 1969. It wasn’t until the mid-’90s when we restrained government spending that government expenditures fell below 20% of GDP. The result? Budget surpluses from 1998-2001.

Now let me state the obvious. If our government spends more than about 20% of GDP, we will have a budget deficit. If we spend less than 20% of GDP, there’s a good chance we’ll run a budget surplus.

How have we done the last couple of years?
2009: Government expenditures were 25% of GDP.
2010: Government expenditures were 23.8% of GDP.
2011 (estimated): Government expenditures will be 25.3% of GDP.

And in these three years alone we will have added approximately $4.35 trillion to our national debt.

Our government doesn’t have a tax revenue problem. It has a spending problem.

Source: these numbers are from the White House’s website.

Revisiting Ross Perot and the ’90s — Learning From History

Friday, April 8th, 2011

I’m going to take a quick detour from economics, to talk about, the economy. Too often we forget about our past. We can learn a lot just by looking back.

During the ’80s, President Reagan was spending lots of money building up our military. And a democratically controlled Congress was spending lots of money on everything else. By the early ’90s we were drowning in debt, deficits, a struggling economy, and unemployment was pushing 8%. Sound familiar?

Ross PerotMuch of the 1992 presidential election campaigns were focused on these issues. As then Governor Bill Clinton so eloquently described, “It’s the economy, stupid.” And who can forget Ross Perot and his famous charts? As a third party candidate and founder of the Reform Party, Perot garnered almost 19% of the popular vote with his simple themes. For Perot, the math was simple. To get out from under the deficits and debts, we must increase taxes, and decrease spending. He also talked about tax reform, and entitlement reform, as necessary steps for fixing our economy.

In ’92 we elected Bill Clinton, who came into office having won only 43% of the popular vote. Dick Morris has often told the story about how Clinton wanted to work with the republicans to pass bipartisan legislation. But the democrats in Congress told him no. That this was their chance to pass their agenda. After two years, the people were fed up, and voted in a new Congress filled with the likes of Newt Gingrich and his fiscal conservatives.

It was the fiscal conservatives in Congress and Bill Clinton who created the prosperity of the late ’90s. How did they do it? They constrained government growth. They passed pro-business legislation. And they tackled entitlement reform — in this case, welfare reform.

The result? Unemployment dropped to its lowest rates since the ’60s. And budget deficits became budget surpluses for the first time since the ’60s.

So how does this compare to today? We have surpassed $14 trillion in national debt. We have a projected budget deficit this year alone of more than $1.6 trillion. And unemployment remains well above 8%.

The president says that he’s concerned about our debt and our deficits. He went so far as to put together a bipartisan debt commission headed up by Alan Simpson and Erskine Bowles. Much like Ross Perot in the ’90s, the debt commission has recommended budget cuts, tax increases, tax reform and entitlement reform.

President Obama has completely ignored the recommendations of his own commission. He has provided us with a long-term budget plan that will double our national debt. And today, Congress can’t agree on a few billion in cuts. We’re still negotiating over the 2011 budget because the democrats never bothered to pass a budget LAST year when they controlled both houses in Congress and the White House!

So how do we fix our problems? Constrain government growth (cut spending). Develop pro-business legislation, which should include repealing ObamaCare. Entitlement reform. And tax reform. Sound familiar? It’s worked before.

Enter the Paul Ryan budget plan. I have not read it yet, and am not endorsing it. But he is on the right path from what I have seen.

Much like the left did during the ’90s over welfare reform, liberals will demonize the right over entitlement reform. A member of Bill Clinton’s staff, Peter Edelman, resigned under protest over welfare reform, decrying that it would throw a million children into poverty. On the contrary, within five years, child poverty declined by more than 2.5 million. Welfare reform is now championed by the left as a great accomplishment under Clinton.

Similarly, expect the left to accuse Ryan of throwing the poor and elderly under the bus with his “extreme” budget cuts and entitlement reform. It’s already started. It will get loud. It will get messy. But entitlement reform is necessary if we want to fix our short-term and our long-term economic problems. We can’t cut enough “discretionary” spending to dent the deficits. We need smart, long-term solutions. And we need them now.