Nose Tackle Dontari Poe (First Round): The “story” here is that this is a high risk high reward pick that fills the Chiefs biggest need. Sam Mellinger wrote such a story in the KC Star (read it here). Poe exploded onto the national scene with a great workout at the combine. (Athlon Sports said that Poe had the “best performance at the combine”. This is an awesome read if you want to get excited about Poe.) But as the analysts started breaking down his play, they saw a guy who didn’t impact the game despite his physical abilities. The experts say this is boom or bust, with many already predicting bust. But this is the easy story. Not necessarily the real story.

The Chiefs had rated Poe as the best nose tackle prospect in the draft before the combine (if you believe general manager Scott Pioli). They saw a kid who did everything he was asked to do by his coaches. Who played almost every snap on defense, rotating between several positions along the line. A kid who played as hard at the end of a blowout loss, which Memphis experienced on multiple occasions, as he did at the beginning of a game. High risk high reward? Boom or bust? What if Poe solidifies the middle of the Chiefs’ defensive line and is a six year starter but never makes a Pro Bowl? What is he then? A good solid pick.

I have no prediction here. There are few true nose tackles available in the draft. And virtually none of them EVER have Poe’s physical abilities. He’s got a VERY high ceiling. Let’s just hope he comes close to his full potential.

Offensive Guard Jeff Allen (Second Round): I like it that the Chiefs continue to beef up their offensive line. Allen played tackle in college, but projects as a guard in the pros. He’s played both left and right tackle, so he has experience with footwork from both sides of the line. I was always skeptical about the Chiefs undersized line with Ryan Lilja and Casey Wiegmann in the middle. This year we’ll see Rodney Hudson (second round pick last year) take over for the retired Wiegmann. And with this as the final year on Lilja’s contract, I think we’ll likely see Allen starting at left guard next year. If not sooner.

Offensive Tackle Donald Stephenson (Third Round): The Chiefs needed a tackle who could backup on both sides of the line. He’s a bit of a project, but has the potential to eventually be a starter in the league.

Wide Receiver Devon Wylie (Fourth Round): Everybody is looking for the next Wes Welker. The Chiefs needed a receiver with speed who could stretch the field. Wylie’s fast, is built to play the slot, and has skills as a returner. My guess is that the Chiefs will move Dexter McCluster to the backfield full time and take him out of the mix as a wide receiver. Wylie will have a chance at earning some playing time this year.

Defensive Back DeQuan Menzie (Fifth Round): This is an interesting pick. He took over for Javier Arenas at Alabama a couple years ago. He played what Alabama calls the “star” position where he has to read and react. He’s smart, got cover skills, and will probably be asked to convert to safety for the Chiefs.

Running Back Cyrus Gray (Sixth Round): Similar in size to Jamaal Charles but maybe a little thicker. Decent speed and very productive at Texas A&M. Catches the ball well. Adds good depth at the position, which the Chiefs needed.

Defense Lineman Jerome Long (Seventh Round): Has the right build to play defensive end in the Chiefs’ 3-4 defense, though will probably need to add a little bulk. A project. Unless he has a monster camp, hard to see him making the roster. More likely a developmental player on the practice squad.

Wide Receiver Junior Hemingway (Seventh Round): I like this pick. Didn’t put up great numbers in college, but that’s mostly because of Michigan’s offense. In recent years we’ve seen a number of wide receivers taken late in the draft become very effective players in the NFL. Will probably need to unseat special team’s contributor Terrance Copper to find a spot on the roster.

Overall I like the draft. When Scott Pioli got here, the weakest positions groups were the offensive  and defensive lines. I’m not sure if they’re fixed yet, but they continue to get better. The Chiefs will continue to look for some more depth through free agency and undrafted free agents. Expert the Chiefs to still fill a couple more holes in the back of their roster.

Free Agency
Before we talk draft, we have to quickly cover the Chiefs pickups in free agency. Kansas City entered the off-season with some glaring holes on their roster. Putting aside how many feel about Matt Cassel as the starting quarterback, the Chiefs needed a right tackle, depth at running back, a backup quarterback, depth at tight end, a starting nose tackle and a starting cornerback. For the most part, mission accomplished!

The Chiefs signed cornerback Standord Routt to replace Brandon Carr, who departed in free agency. It had been a surprise to me that the Chiefs made virtually no attempt to retain Carr or work out a long-term contract with him last year. But the Chiefs knew what they had, and there must have been something they didn’t like about Carr. Hard for me to analyze this change, but there’s very little drop off from Carr to Routt in my opinion. Maybe a small step back. Maybe not.

The Chiefs signed running back Peyton Hillis to replace Thomas Jones. Jones had little left in the tank. There were a couple backs I liked better in free agency, in particular Michael Bush. Hillis has worked with our new offensive coordinator Brian Daboll. Seems like a good fit, and Hillis has something to prove. A definite upgrade.

After the failure of the Tyler Palko experiment, the Chiefs wanted a backup quarterback with experience. They’ve signed Brady Quinn. Personally, I think this is an interesting signing. For a first round pick, Quinn has gotten very little opportunity to play in the NFL. He’s only started 12 games — not even a full season. Hard to know if he isn’t very good, or just hasn’t gotten the right opportunity. Cleveland was a bad team during his years with the Browns. Hard to blame all of that on Quinn. Certainly an upgrade over Palko. And if Cassel struggles through the first half of the season, I think we could see a quarterback change. Not a prediction. Just a possibility.

Chiefs signed tight end Kevin Boss to replace the departing Leonard Pope. Pope was a good blocker, but not a great receiver. I like Boss. He upgrades the position. Should be a nice pairing with a healthy Tony Moeaki.

And the Chiefs best signing was that of free agent right tackle Eric Winston. A significant upgrade to Barry Richardson.

Still a hole at nose tackle. My guess is that if the Chiefs don’t draft a nose tackle high in the draft, that they’ve got veteran Kelly Gregg sitting out there willing to come back for one more season.

Now The Draft
Having filled their most glaring needs puts Scott Pioli and the Chiefs in a great position entering the draft. They can focus on best player available instead of position of need. The Chiefs could lineup today and field a very competitive team.

What do the Chiefs need most? Here are the positions I believe need to be upgraded.

Defensive Line: This is the worst position group on the team. We’ve been drafting defensive linemen for years. And at best we have a mediocre defensive line. You can’t let past failures stop you from upgrading this unit. In particular, the Chiefs need a starting nose tackle. And possibly a replacement for Tyson Jackson.

Running Back: While I love Jamaal Charles and like Peyton Hillis, I’ll be surprised if the Chiefs don’t draft a running back. Probably in one of the middle rounds.

Tight End: With Moeki’s history of injuries, I’d draft another tight end. I love what the Patriots were able to accomplish with Rob Gronkowski and Aaron Hernandez.

The Chiefs could certainly use depth along the offensive line, at safety and possibly even at quarterback.

Draft Predictions
As you scour the Internet for mock drafts, there are three names you see associated with the Chiefs over and over again. (The Star put together this list of experts and their predictions for the Chiefs.)

Linebacker Luke Kuechly from Boston College: This seems to be the most popular pick among the experts. And I like everything I’ve heard about him. Typically, I wouldn’t want to draft an inside linebacker this early, but if the Chiefs believe he’s a Pro Bowl caliber linebacker, they should have him on their radar. One note of warning: when it comes to their inside linebackers, the Chiefs look for very specific abilities. They use the two inside linebackers differently. This will greatly depend on whether or not they see Kuechly as the right fit for the position currently filled by Javon Belcher. I don’t know the answer to this.

Nose tackle Dontari Poe from Memphis: Poe has shot up the draft boards. He’s big and athletic. And he fills a position of need. But he doesn’t sound like the right fit to me. I’ve heard a number of experts say that he didn’t perform that well in college. That he got pushed around a lot. Pioli puts a lot of emphasis on college production. I’ll be surprised if this is the Chiefs pick.

Offensive guard David DeCastro from Stanford: He’s as highly rated as any guard in the draft for many years. I just don’t like drafting offensive linemen, other than left tackles, this early. You can draft very good guards in the next two rounds. I wouldn’t be completely unhappy with this pick, just surprised if it happens.

A number of writers and experts have discussed what could happen if quarterback Ryan Tannehill falls to the Chiefs at number 11. And it could absolutely happen. I would just hate this pick. Tannehill seems like a good kid. And maybe he’ll be a good NFL quarterback someday. But he’s a project. There are other quarterbacks I’d rather see the Chiefs take in a later round.

One guy who could slide down to the Chiefs is running back Trent Richardson. Teams have been reluctant to take running backs in the top ten in recent years. Most teams have gone to running back by committee. Good running backs can be found in the middle rounds of the draft. I’m not predicting it. But this would be interesting. I’d take him.

Players to Watch
My philosophy is that you only draft elite positions high in the draft such as quarterback, left tackle, pass rushers, cornerbacks and wide receivers. The exception is when you have a guy like Eric Berry who projects as one of the best at his position in many years. Typically I would not draft safeties, middle linebackers, interior offensive linemen, tight ends or even running backs this high.

I have nothing to base this on except a gut feeling. If defensive tackle Fletcher Cox from Mississippi State falls to the Chiefs, I would think this could be the pick. And it’s possible. The Chiefs like productive players out of the SEC. And he’s considered one of the best defensive linemen in the draft.

I’ve also read good things about defensive end Quinton Coples from North Carolina who might be an interesting pick at 11.

If the Chiefs don’t like what they see at their pick and are able to trade down, here are a couple names for you. Alabama linebacker Dont’a Hightower and defensive tackle Michael Brockers from LSU. Two more SEC players who could be available a little later in the first round and fit in with the Chiefs. I would certainly consider DeCastro an option later in the first round as well.

One more thought then I’ll wrap up for the day. Should the Chiefs draft a quarterback? Unless they’re in love with Tannehill, which I hope they’re not, then certainly not in the first round. It’s hard to say what the Chiefs think of Ricky Stanzi, who the Chiefs drafted in the fifth round last year. I think that Boise State quarterback Kellen Moore would be an interesting project. He’s a winner. He played a lot of football as a four year starter. He’s a coaches son. He’s bright, and he’s a leader. He’s drawn a few comparisons to Drew Brees. And he’ll probably be available in the fourth round if the Chiefs are interested.

(Article updated 4:11pm 4-26-12.)

1. The Redskins have reportedly made a block buster trade with the Rams to move up into the second spot in the draft. I never thought that Manning to the Redskins made much sense. Manning will want to play for a team that’s ready to contend immediately. That’s not Washington. People have talked a lot about what Manning wants and doesn’t want. Most of it is nothing more than speculation, but two thoughts probably carry some actual weight. All else being equal, it makes sense that Manning prefers to stay in the AFC. And he would probably prefer NOT to be in the same division as his brother (the NFC East).

2. The Jets have reached a new deal with quarterback Mark Sanchez. I never thought the Jets would be in play for Manning, but the speculation can end on this one, too.

It looks to me like it will come down to the Arizona Cardinals, Denver Broncos, Miami Dolphins or Kansas City Chiefs. I think there’s a slim chance that the Seattle Seahawks could enter the Manning Sweepstakes. I don’t see another team that makes sense. Maybe we’ll all be surprised.

There will be many rumors the next few days. I wouldn’t waste much time on them. For instance, yesterday, it was reported that the Chiefs had already offered Manning a contract. This doesn’t even make any sense. The Chiefs have not met with Manning. Peyton will narrow down his list. He will interview the teams. They will interview him. And Manning will make a decision as to what is the best situation for him.

Whatever happens, please don’t let Manning pick the Broncos!

I had planned to write a post this fall detailing how the game has evolved over the years. It truly is the era of the quarterback. I have been watching the NFL for nearly 40 years, and never has this been more true than it is today. The rules of the game have been tilted in favor of the offense for years. But what is truly amazing to me are the number of truly incredible quarterbacks in the NFL right now. I’m not sure we’ve ever watched this level of play from so many quarterbacks in the league at the same time.

In the past you could always point to the game managers who had won Super Bowls. Brad Johnson. Trent Dilfer. Mark Rypien. Jeff Hostetler. Doug Williams.

But if you put together a list of the last 20 Super Bowls, every quarterback who has won, with the exception of Johnson and Dilfer, have been elite quarterbacks. Or at least, quarterbacks capable of playing at an elite level. The list includes: Eli Manning, Aaron Rodgers, Drew Brees, Ben Roethlisberger, Peyton Manning, Tom Brady, Kurt Warner, John Elway, Brett Favre, Troy Aikman and Steve Young.

Elite quarterbacks, though I would personally describe Roethlisberger and Eli Manning as very good quarterbacks capable of playing at an elite level. And I say that because I think these two quarterbacks have lacked the consistency to truly be considered elite quarterbacks. My bar is high.

Matt Cassell? Capable of being a good to very good game manager. Elite? Unfortunately, no.

If I had written this a couple of months ago, my recommendation would have been that the Chiefs needed to do whatever it takes to move up to draft Robert Griffin III. But after finishing the season with seven wins, the Chiefs have no shot from where they sit at pick eleven. You would have to move up to the second spot in the draft where St. Louis is eager to trade down. And there’s no way the Chiefs can leap over the Browns, Redskins and Dolphins who all need quarterbacks. And the price would be too high.

Enter the Peyton Manning Sweepstakes!

I could sit here and list a dozen reasons why signing Manning makes a lot of sense for the Chiefs. And how there’s really very little downside to it. The good news is that the Chiefs already understand this. Reports are that a dozen or so teams have contacted Manning’s agent Tom Condon. This may or may not be true. What is true is that there are probably only three or four teams that are truly positioned to land Manning. And the Chiefs are one of them.

At this point we can only sit and wait.

On the Feb. 12, 2012, edition of CNN’s State of the Union with Candy Crowley, the host said to Lew, “I want to read for our viewers something (from) Sen. Harry Reid, the Democratic majority leader in the U.S. Senate, who said, we do not need to bring a budget to the floor this year. It’s done. We don’t need to do it, talking about last year’s two-year agreement and saying that, you know, … it’s already done.”

Lew responded, “Well, let’s be clear. What Sen. Reid is talking about is a fairly narrow point. In order for the Senate to do its annual work on appropriation bills, they need to pass a certain piece of legislation which sets a limit. They did that last year. That’s what he’s talking about. He’s not saying that they shouldn’t pass a budget. But we also need to be honest. You can’t pass a budget in the Senate of the United States without 60 votes, and you can’t get 60 votes without bipartisan support. So unless Republicans are willing to work with Democrats in the Senate, Harry Reid is not going to be able to get a budget passed. And I think he was reflecting the reality that that could be a challenge.”

Here’s the exchange from “Meet the Press” (this transcription comes from Real Clear Politics):

David Gregory, moderator of “Meet the Press” on NBC: Here’s a stat that a lot of people may not know but is pretty striking: The number of days since Senate Democrats passed a budget is 1,019. Can you just explain as a former Budget Director, how do you fund the government when there’s no budget?

Jack Lew, Obama’s Chief of Staff: Well, one of the things about the United States Senate that I think the American people realized is that it takes 60, not 50 votes to pass something. And there has been Republican opposition to anything that Senate Democrats have tried to do. So it is a challenge in the United States Senate to pass legislation when there’s not that willingness to work together.

Congress didn’t do a great job last year. It drove right to the edge of the cliff on occasion after occasion. I actually think it’s unfair to blame the United States Senate for that. A lot of that was because of the extreme conservative approach taken by House Republicans.

Gregory: Your party controls the Senate, does it not?

Lew: Yeah, but the positions that ended up tying the Congress in knots came out of the House, came out of the Tea Party wing in the House.

I’m not sure if I’m more shocked by Lew’s statement, or the fact that Gregory didn’t call him on it. It only takes a simple majority to pass a budget in the Senate. It can not be filibustered by the minority party.

From Politifact who gave his statement a “False”:

On the specific question he was asked — about the congressional budget resolution — Lew said you need 60 votes to pass it. That’s flatly wrong.

From the Washington Post who awarded Lew with “Four Pinocchios”:

We might be tempted to think Lew misspoke, except that he said virtually the same thing, on two different shows, when he was specifically asked about the failure of Senate Democrats to pass a budget resolution. He even prefaced his comment on CNN by citing the “need to be honest.”

He could have tried to argue, as some Democrats do, that the debt-ceiling deal last year in effect was a budget resolution. Or he could have spoken more broadly about gridlock in the Senate, after acknowledging a traditional budget resolution had not been passed. Instead, the former budget director twice choose to use highly misleading language that blamed Republicans for the failure of the Democratic leadership.

We wavered between three and four Pinocchios, in part because the budget resolution is only a blueprint, not a law, but ultimately decided a two-time budget director really should know better.

It’s been a personal pet peeve of mine that the Democrats in the Senate have failed to present a budget in more than 1,000 days. It’s also difficult to believe that as the budget director under both Clinton and Obama, that Lew didn’t know exactly what he was saying. The problem is that you reach way more people on CNN and NBC with the lie than you ever will with organizations like PolitiFact and the Washington Post calling him on it.

I’m sure you’ve already heard a variation of this from the White House many times.

The new jobs report came out this week and unemployment has fallen to 8.3%. From CNN: “Employers added 243,000 jobs in January, the Labor Department reported Friday, marking a pick-up in hiring from December, when the economy added 203,000 jobs. Meanwhile, the unemployment rate fell to 8.3%. That is the lowest since February 2009.”

On the surface, these look like good numbers for the economy, and great news for President Obama’s reelection campaign.

Unfortunately, this only tells part of the story.

When you see the number of jobs created, keep in mind that we need a monthly increase in the total number of jobs of about 100,000 just to keep pace with the growing population. And for instance, if 20,000 jobs are eliminated, then we need an increase of 120,000 new jobs just to keep the status quo. That’s more than one million new jobs per year.

(NOTE: I’ve seen many variations of these numbers over the years, and I’m unsure what the exact number of new jobs are that we need to create on a monthly basis. I’ve seen estimates anywhere from 85,000 to 150,000 new jobs needed per month. For today’s post, the exact number is not the point. We must create a lot of jobs just to MAINTAIN the current unemployment rate due to the growing population.)

But how does the unemployment rate drop from 8.5% to 8.3% when the economy creates 243,000 jobs? It can’t. The math doesn’t work. Unless the size of the workforce decreases. This may be one of the most important and least reported employment numbers by the media.

And this is one of the most significant problems we face today.

(Click on image to enlarge.)

The labor force expands in two ways. One, the population grows. And two, the percentage of Americans who consider themselves part of the workforce increases. This graph shows the labor force participation rate in the United States. In the ’80s and ’90s, the percentage of the population who considered themselves part of the workforce increased. For the last ten years we’ve seen these numbers continue to decline other than a short period preceding this most recent recession. Over the last couple of years, these numbers have been plummeting.

Americans are fleeing the workforce in droves. President Obama only needs a few million more people to leave the workforce to get his unemployment numbers under 8%.

Reagan Recession vs Obama Recession
Unemployment is a trailing indicator of the economy. The economy gets bad, and months later you see unemployment numbers rising. The economy gets better, and months later you see unemployment numbers going down. At least, this is what typically happens.

Following the Reagan recession, unemployment topped out at 10.8% late in 1982. Following the Obama recession, unemployment topped out at 10.2% in early 2011. The duration and depth of these two recessions are very similar. In each case, the recession was officially over months earlier. It takes several months to get to the peak unemployment numbers following a recession.

Keep in mind the chart above where labor force participation was increasing in the ’80s compared to what we see today. And here’s where we start to see some significant differences in the numbers behind the numbers.

From IBD: “To get a better sense of how bad Obama’s recovery is, consider this: Under Obama, real GDP has climbed a total of just 6% in the two-and-a-half years since the recession ended in June 2009. By comparison, real GDP had grown 16% by this point in the Reagan recovery, after the very deep and painful 1981-82 recession. Had Obama’s recovery been as powerful as Reagan’s, the economic pie would be $1.2 trillion bigger today. And had job growth under Obama kept pace with job growth during the Reagan recovery, there would be 10 million — yes 10 million — more people with jobs today.” (I added the bold.)

So during the Reagan recovery, the unemployment rate dropped despite the fact that the workforce increased by millions of workers.

And during the Obama recover, the unemployment rate has dropped because millions of workers have left the workforce.

IBD goes on to explain:

So what’s different? The presidents’ policies.

Reagan enacted sweeping and permanent tax cuts, aggressively eliminated or reduced regulations, reined in domestic spending, and championed the private sector.

Obama’s approach has been the opposite — a huge increase in regulations; meager, targeted and temporary tax cuts; a massive increase in size and scope of the federal government; and a barrage of invective against businessmen and the wealthy. Obama has bashed Reagan’s approach, saying that cutting taxes and regulations “has never worked” to spur growth.

The article in IBD was written before the new unemployment numbers came out. But here’s a recent article by one of my favorite writers, James Pethokoukis. Here’s the meat of his post:

1. If the size of the U.S. labor force as a share of the total population was the same as it was when Barack Obama took office—65.7 percent then vs. 63.7 percent today—the U-3 unemployment rate would be 11.0 percent.

2. But let’s not go all the way back to January 2009. In January 2011, the unemployment rate was 9.1 percent with a participation rate of 64.2 percent. If that were the participation rate today, the unemployment rate would be 8.9 percent, instead of 8.3 percent. As an analysis from Hamilton Place Strategies concludes, “Most of the shift of the past year is due not to the improvement in the labor market, but the continued drop in participation in the labor force.”

3. Now, to be fair, some of the decline in the participation rate is aging Baby Boomers dropping out of the labor force. But taking that into account still doesn’t get us very far, as HPS notes: “Demographic projections expect that participation rate to be at 65.3 percent. If that full participation rate is the goal, our economy is “missing” 3.8 million workers, up from the 3.4 million we noted in the white paper. The unemployment rate in that context has not budged at 10.4 percent.”

4. Then there’s the broader, U-6 measure of unemployment which includes the discouraged plus part-timers who wish they had full time work. That unemployment rate is still a sky-high 15.1 percent.

5. If the participation rate does level off at its current rate, according to HPS, the economy would need to generate 231,000 jobs per month to get below 8 percent unemployment by Election Day.

One more comment and we’ll move on. When the economy does actually begin to make some real improvement, disenfranchised workers will again start looking for jobs. It’s possible that a stronger economy will actually begin to drive up the unemployment numbers because of a higher percentage of people engaged in the workforce. Not much good news in any of these numbers.

People are talking about taxes. And specifically talking about Mitt Romney’s tax rate. There’s a lot of misunderstanding and misinformation out there about taxes. Take this graphic for example:

Mitt Romney finally released his tax returns this week, and we found out that he paid an effective tax rate of 13.9%. The Internet and the media have been buzzing. I was watching MSNBC and the anchors were gleefully discussing the unfairness of Romney paying only about 15% of his earnings in taxes. After all, teachers and others in the middle class have to pay more than this!

But do they really?

I did a quick Google and it appears the average teacher’s salary in Kansas is somewhere around $40,000. That does indeed put the teacher in the 25% tax bracket as the image above shows. So the teacher must be paying $10,000 in income taxes! (For the mathematically challenged, that’s 25% of $40,000.)

But no. That’s not how income taxes are computed.

First of all, income tax rates are really marginal tax rates. We currently have six tax brackets (see Wikipedia). Income tax is computed for your income through each tax bracket up to your last dollar earned. It’s confusing. Here’s an example:

For this example, we’re going to assume the teacher is single and without children. Under today’s rates, a tax payer who makes $40,000 pays 10% of their first $8,500 of income (the first bracket), plus 15% of the next $26,000 (the second bracket), and then 25% of the remaining $5,500 (the third bracket). Well that’s still $6,125 in taxes — an effective income tax rate of 15.3%! That’s still higher than what Romney is paying!

Except the teacher isn’t paying $6,125 either. At this income level, the teacher automatically takes a $5,800 “standard deduction” and a $3,700 “personal exemption”. This takes the teacher’s taxable income down to $30,500. Go through the math and the teacher is not paying $4,150 in income taxes — an effective tax rate of 10.375%. That’s assuming no other deductions or credits.

Hhhmm. That’s now lower than Romney’s effective tax rate.

But wait! Great news! The teacher has a baby! Yay! (For my math I’m going to assume the teacher is still single. Don’t judge.)

As the head of the household, the teacher’s “standard deduction” jumps from $5,800 to $8,500. (I think I’m understanding this correctly, but if I’m wrong on the standard deduction, shoot the IRS, not me.) Plus the mom now receives a $1,000 child tax credit. Tax credits are much better than tax deductions. Tax deductions reduce your taxable income. But tax credits actually reduce the total taxes owed.

So the teacher’s taxable income is now $27,800. Do the math and you end up with $3,745 in taxes minus the $1,000 child tax credit equals $2,745 in income taxes — an effective tax rate of 6.8%.

Does the teacher own a home? Deduct the mortgage interest. Make some charitable donations? Deduct that too. And there’s more.

I hope you get my point. When Romney pays a tax rate of 13.9%, he’s paying a higher tax rate than most of us. According to the Tax Policy Center, the average effective income tax rates of U.S. households is 8.2% (as of 2010). Nearly half of all U.S. households pay no income tax at all.

But we do pay taxes. Payroll taxes. Gas taxes. Sin taxes. Property taxes… We can talk about tax burden another time.

But Mitt Pays Less Than Other Rich People!
Yes he does. And there are reasons for this. I’m not defending the tax code, only explaining it.

Capital gains are taxed differently than regular income for several reasons.

Rich people have options for what to do with their money. And what we’ve found is that as we lower the capital gains tax rate, rich people engage in MORE activity that is subject to the capital gains tax. When the capital gains tax rate was lowered (first under Clinton from 28% to 20%, then under Bush from 20% to 15%), it created an increase in activity each time that actually generated MORE tax revenue for the federal government. When the capital gains rate was increased in 1980, tax receipts decreased.

Some people, including President Obama, believe that the capital gains tax rate should be increased to be more fair. But keep in mind, this will decrease tax revenues, and enlarge our deficits. That means less money to spend on education, the environment, shovel-ready jobs, whatever. (I discussed this in a previous post here.) All in the name of the rich paying their fair share.

Much of this income has already been taxed, and many economists believe it shouldn’t be taxed at all. I’m going to borrow this next bit from James Pethokoukis. He explains it well:

The capital gains tax is a double tax. For instance, corporate profits are taxed first as income and then a second time when they are distributed to shareholders as dividends. And capital gains from investments are not inflation adjusted, so taxes are often paid on illusory profits.

We shouldn’t tax what we want more of. And the real problem with the capital gains tax isn’t the rate or how it is structured, but what is taxed: gains on investments, which are savings put to work. Economists of all stripes have been saying Americans have consumed too much and invested too little over the past decade. So why would we want to tax investment even heavier, as the Obamacrats want to do?

Indeed, we shouldn’t want to tax capital at all. As an AEI study on consumption taxes explains: “The income tax’s penalty on saving is an undesirable distortion of consumer choice. It also causes less capital to be accumulated in the United States. The reduction in capital accumulation reduces labor productivity and lowers real wages throughout the economy, depressing the standard of living of future generations. Some studies have found that a switch to consumption taxation would increase the size of the U.S. economy by as much as 9 percent in the long run, although other studies estimate smaller gains.”

So the main reason people want to keep taxing capital—or even tax it more heavily—is one of theology rather than sound economics. As the Concise Encyclopedia of Economics puts it: “Strange as it may sound, most economists would agree that having zero taxes on capital income is theoretically the best thing to do. But many reject putting this theory into practice because they think that too much of the benefit would go to the ‘wrong’ people, namely high-income households and the wealthy.” That’s right, the desire to make sure the wealthy like Romney “pay their fair share” is desired by class warriors even if it make everyone poorer than they otherwise would be.

Take it away, JFK (in his Special Message to the Congress on Tax Reduction and Reform from Jan. 24, 1963): “The tax on capital gains directly affects investment decisions, the mobility and flow of risk capital from static to more dynamic situations, the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential growth of the economy.”

Bottom line: Americans should pay taxes on their wages only, not on any income from saving. The right capital gains tax rate is zero, for everybody. Might a few rich people like Romney pay less in taxes? Maybe. But the result would be a stronger economy, more jobs, and higher incomes for all Americans.

I’m not advocating lower rates for capital gains. That’s not my point. Just trying to put a little reason behind the madness. A little fact behind the fiction.

Just a few thoughts on the Chiefs.

Beating the Packers
Interim head coach Romeo Crennel deserves a lot of credit for the Chiefs beating the Packers this past weekend. The defense has been inconsistent, but has shown glimpses of excellence this season. I wasn’t overly surprised that our defense played well against the Packers, who were missing their top wide receiver, their best running back, and were banged up along the offensive line.

The big surprise was the play of the Chiefs’ offense. They were effective, efficient, and dominated the time of possession. I have defended Todd Haley often, but there’s no denying that the offense looked it’s best with offensive coordinator Bill Muir and Jim Zorn putting together the offense without Haley’s interference. If you’ve never watched the Bill Muir interviews on the Chiefs’ website, you’re missing out. He’s a great guy and a good interview. This week he was asked about the offense’s efficiency. From the Star:

The Chiefs had one of their best offensive games of the year, piling up a season-high 438 yards in a 19-14 win over Green Bay.

Offensive coordinator Bill Muir suggested this was because the Chiefs were led for the first time by interim head coach Romeo Crennel rather than Todd Haley, who was fired earlier in the week. Muir didn’t mention Haley by name, but when asked about these observations, he said, “If you thought it appeared that, then it probably was.

“Romeo delegates authority and expects the people who are given authority to do their job. He’s hands-on and he knows what he wants. As long as he’s getting it, he’s pretty calm. If he’s not getting it, then the calmness disappears in a hurry.”

The offense had good balance. The play calling was good. The line protected quarterback Kyle Orton and gave him time to make his reads. The Chiefs were able to get the plays in quickly to Orton, who got to the line with plenty of time to read the defense, call out protections, and adjust his receivers. That’s something we haven’t seen all season.

The Future at Quarterback
Not only have I defended Todd Haley, I’ve often defended Matt Cassel. I still believe that Cassel is a good quarterback. He’s just not a great quarterback. If you believe that you can only win a Super Bowl with an elite quarterback, then the Chiefs are in trouble. And for those now clamoring for the Chiefs to keep Kyle Orton and cut Cassel, be careful what you wish for. I’ve watched Orton enough the last couple of years to know this — Kyle Orton is Matt Cassel. Their career numbers are virtually identical. They are decent quarterbacks who can manage the game when things are going well. Orton may be a little more accurate down the field than Cassel, but he’s just as likely to melt down and throw three INTs in a game.

My problem with playing Orton now is that we learn nothing about rookie Ricky Stanzi. And if you believe that the Chiefs need an elite quarterback, with every win we get further away from being able to draft Robert Griffin III.

The Next Head Coach
The best news we have about the head coaching search is that people have stopped talking about Josh McDaniels! The public support has swung considerably to Crennel. But once again, be careful what you wish for. Even if he wins the next two games and somehow manages to get the Chiefs into the playoffs, he would still be down my list of candidates.

My biggest concern is that Crennel is Wade Phillips. Phillips has repeatedly proven to be one of the best defensive coordinators in the NFL. And he’s repeatedly shown that he’s not up to the task as a head coach. And my second biggest concern is Crennel’s age. Pioli should be looking for a guy who can be the head coach for the next ten years. At 64 years old, can you really see Crennel as the long-term answer in Kansas City?

Now having said that, he wouldn’t be an awful choice. I just hope he’s not the first choice.

While there’s no evidence that Bill Cowher wants to return to coaching, I hope that Pioli at least makes that call. And if not Cowher, there’s still Jon Gruden and Jeff Fisher out there. Both have been successful head coaches (more successful than Crennel was in Cleveland where he went 24-40), and are young enough to be a long-term fit in Kansas City.

I like the thought of Gruden a lot. He was the last head coach to win the Super Bowl without an elite quarterback (Brad Johnson). Bill Muir was the offensive coordinator when Gruden took the Bucs to the Super Bowl. And you would think that Crennel would be willing to stay on as defensive coordinator under Gruden. The Chiefs don’t need to start over, and Gruden could keep quite a bit of the staff in place.

Their are a number of rumors that the Chiefs and Fisher are close to finishing up a deal. While I think Fisher is a good choice, my concern is that the Chiefs will have to start over with new coordinators. Since Matt Cassel has been here, he’s already had four offensive coordinators. The Chiefs need consistency. But more than anything, the Chiefs need the right head coach. I’d take Fisher over Crennel.

But now let’s take Gruden and Fisher off the table. Where do the Chiefs go now? I think that leaves Iowa head coach Kirk Ferentz or Romeo Crennel. I do not want to see the Chiefs take a flyer on an unproven coordinator when there are better, safer options available.

The Players Want Crennel
It certainly appears that Crennel is the top choice among the players, but this should be expected. Players don’t like change, and Crennel is a player’s coach. The players also wanted Gunther Cunningham when Schottenheimer left. And the players lead a revolt that got John Mackovic fired and Frank Gansz promoted. How did that work out?

CORRECTION: I misidentified Marv Levy as the coach who had been fired, when it was in fact John Mackovic. I have corrected it above.

You would think that the Chiefs will have to at least consider drafting a quarterback in the first round of the draft this year. And Todd Haley has (had) one year left on his contract. If Pioli believes in Matt Cassel, then he can allow Haley to coach the team through the final year of his contract before making a final decision on extending Haley’s contract or replacing him. But if the Chiefs draft a quarterback, you can’t let Haley dangle with just one year left. You either have to fire him at the end of the season, or extend his contract. It wouldn’t be fair to tell Haley he’s coaching for his job, and then hand him a rookie quarterback.

But on Monday, Pioli fired Haley.

Is it fair? From a coaching standpoint, probably not. Haley made mistakes this year, but there were circumstances well beyond his control. I’ve read many of the local and the national articles about Pioli’s decision, but I want to take this from a different perspective. The perspective of an employer.

I seem to be in the minority, but I like Todd Haley. I think he’s a good coach. Is he good enough to coach a team to the Super Bowl? Maybe. With the right team. But I don’t think Haley’s coaching ability had anything to do with why he was fired.

I have employed and managed hundreds of people. And one lesson I learned the hard way was that when you have an employee who is the wrong fit for your organization, the sooner you replace that employee, the better. There were rumors that Pioli wanted to fire Haley last year. Then there were rumors that Pioli would have fired Haley if the Chiefs had lost to the Colts and started the season 1-4. I tend to take rumors with a grain of salt. Many rumors are untrue and unfounded. But in hindsight, I think we can now assume they were true.

It’s clear that Pioli and Haley had a dysfunctional working relationship. And it’s likely that Pioli had come to the conclusion long ago that Haley was the wrong fit for the Chiefs. Or at least, the wrong fit to work for Pioli. But how do you fire a coach that just won the AFC West? That would have been a tough sell to Chiefs fans. Pioli decided he had to wait until he had “public justification” for the firing of Haley. And he finally got it with the loss to the Jets. The Chiefs could no longer pretend that they still had a shot at the playoffs. And Haley was fired.

I think the jury is still out on whether or not Scott Pioli can lead the Chiefs to the Super Bowl. There are some glaring holes on this roster, and Pioli is responsible. Some have even speculated that Pioli sabotaged the roster so that he could justifiably fire Haley. I don’t believe that for a minute. But that doesn’t mean that Pioli made all of the same decisions that he would have made if he had full support of his head coach. Only Pioli can look in the mirror and decide if he did everything possible to make this season a success.

And while I tend to like Haley more than I like Pioli, I might have come to the same conclusion and fired Haley. It’s great to have fire and passion. I like that in a head coach. But I don’t like disrespect. A heated discussion between Haley and Matt Cassel doesn’t bother me at all. But some of the public arguments between Haley and his assistants bothered me a lot. Those discussions should be behind closed doors, and should always be respectful. As a business owner, I would never undermine one of my managers by berating them in front of other employees. (Actually, I don’t think I ever berated an employee.) Haley not only berated his assistants, he seemed to relish that atmosphere. He wanted the confrontations, and obviously believed them to be beneficial to the team. I’m guessing Pioli came to a different conclusion.

One more comment and we’ll move on. I listened to the press conference with Scott Pioli and owner Clark Hunt. I’ve been surprised that I haven’t seen this comment anywhere else. On multiple occasions, Hunt said that he wanted a team that the fans could be proud of. I’m guessing that Hunt was not proud to have Haley as the face of the franchise.

The Next Head Coach
Chiefs fans are clamoring for Bill Cowher. I would love it, but I don’t see it happening. I’m not sure that Cowher has the desire to coach again. I do hope that Pioli at least makes the call. So if not Cowher, then who?

Personally, I would be very enthused by either Jon Gruden or Jeff Fisher. Gruden has a good job with ESPN, and it’s unclear if he wants to return to coaching. That leaves Fisher as probably the hottest available coach on the market. I will be very surprised if he doesn’t take a job somewhere this year. There are already openings in Kansas City, Jacksonville and Miami. And I think it’s likely that San Diego and possibly St. Louis will be in the market for a new head coach.

But let’s make a case for Gruden. The Chiefs are certainly in better shape today than they were a few years ago. This is a good job to walk into. Pioli does not need to blow this thing up and start over. He will probably try to keep as much continuity as possible. Gruden is an offensive minded coach. And who was his offensive coordinator when he was with the Bucs and won a Super Bowl? Bill Muir. Gruden called the plays, but Muir was his offensive coordinator. And I think it’s likely Romeo Crennel would be willing to stay on as defensive coordinator under Gruden. He’s been out of football for a couple years now. If he wants back in,  this would be an excellent opportunity. And remember, Gruden won a Super Bowl with Brad Johnson at quarterback. Pioli might be thinking that if Gruden can do it with Johnson, then he can do it with Cassel.

One thing I find interesting is that there isn’t a lot of buzz around the league about the offensive and defensive coordinators. Typically there are a few “hot” names out there. Not this year.

My biggest hope? Do NOT hire Josh McDaniels. Lots of people have been linking McDaniels to Pioli, and I think it’s very possible that Pioli would have hired McDaniels three years ago if Denver hadn’t gotten to him first. I think this would be a huge mistake. And Pioli can’t afford to make another mistake.

People have also been linking Pioli to Iowa head coach Kirk Ferentz. I don’t have any strong feelings either way about Ferentz. There have been a number of high profile college coaches who couldn’t cut in the NFL, but if you look at it objectively, MOST head coaches don’t make it in the NFL. Ultimately, most head coaches are fired within three-to-five years. And look at Jim Harbaugh. In his first season with San Francisco, he’s got the 49ers winning the NFC West.

Unless Pioli has his eye on a coordinator, this is something that could get wrapped up soon. There are strong candidates who are currently out of football. There’s no reason to wait.

But as usual, it’s rarely that simple. I have a few takes on what’s happened to the Chiefs this year, but today I’m going to focus on just one of them. How important is your best player?

It’s easy to get tunnel vision when looking at your team. Let’s step outside of Kansas City for a moment. For years the discussion in the NFL has been: who is the best quarterback in the league, Peyton Manning or Tom Brady? Over the last ten seasons, Manning and Brady have represented the AFC in the Super Bowl six times with four wins between them. They’re leaders. They put up great stats. And they do nothing but win big games.

But beyond these two quarterbacks, most have considered Indianapolis and New England to be among the best franchises in the league. Bill Polian has built the Colts into perennial winners and one of the most dominant teams in the NFL. From 1999-2010, the Colts have a regular season record of 138-54.

And in New England, Bill Belichick has done much the same. With four Super Bowl appearances and three wins, Belichick is widely considered the best coach in football. From 2001-2010, the Patriots have a regular season record of 121-39, which includes 2007 when the team went 16-0. The Patriots are the only team other than the Dolphins to finish a regular season undefeated.

Manning and Brady have not only been consistent winners, they’ve remained remarkably durable. Schottenheimer used to say that a player’s best ability was availability. And when you’re talking about an elite quarterback, nothing could be more true. But what happens when you take away a team’s best player?

In 2008 we got a glimpse of what the Patriots look like without Tom Brady. The Chiefs knocked Brady out for the season in their first game. In came their backup Matt Cassel. A kid who shouldn’t even have been in the league. Cassel was a backup quarterback at USC, never starting a game or playing meaningful minutes for the Trojans. How did he do? The Patriots finished the season 11-5, and Cassel played very well.

And now in 2011, we’re getting a look at the Colts without Peyton Manning. The Colts are 0-11, and could quite possibly finish 0-16. They’re that bad. Quite a turnaround from a team that won the AFC South last year and finished 10-6.

What’s the lesson to be learned? New England surrounded their backup quarterback with enough talent to be successful. Indianapolis did not. If anything, this has only reinforced what an incredible quarterback Peyton Manning has been.

Now, back to Kansas City. The Chiefs lost their best player, Jamaal Charles, early in the season. And while Charles is not a quarterback, he was the engine that drove the offense. Before the season began, I had this to say:

Last year the offensive line was receiving a lot of praise for the Chiefs #1 rushing attack. I credit Jamaal Charles much more than I do the line.

I strongly believe that the loss of Jamaal Charles, combined with a less than average offensive line, has completely derailed the Chiefs’ season. Yes, there are other factors as well. But the Chiefs have shown they cannot consistently run the ball behind this offensive line without Charles. And Matt Cassel has been under constant pressure all year. He’s had no time to find his receivers. The running game has struggled. The passing game has struggled. And the Chiefs have found it very difficult to score any points. As Len Dawson likes to say, it starts up front with the big guys.

Kansas City fans are ready to run Cassel out of town. But surround him with the right players and he can be productive as he’s proven in 2008 with the Patriots (11-5 record) and 2010 with the Chiefs (10-6 record). Cassel is not Manning. He cannot lift the team on his shoulders. He needs a strong supporting cast, and without Charles running the ball, the Chiefs don’t have the cast to be productive on offense.

It’s amazing what the loss of one player can do. Just look at Indianapolis.