Driving the Yeomans

Mrs Yeoman Farmer and I were on our way home to Northern Virginia from the Tridentine High Mass at Old St. Mary’s in Washington, DC. It was the fall of 1996, and the future Homeschooled Farm Boy (then a baby) was napping in his car seat as we cruised through the District of Columbia on Interstate 395. I’d just pulled onto the freeway, and traffic was fairly heavy for a Sunday evening; I’d spent so much time wrenching my head around looking for an opening in traffic at the end of the on-ramp, I hadn’t noticed any speed limit signs. But this was a freeway, so I figured the speed limit would be at least 55 MPH — and that’s about what the other cars were moving at. So I settled in, and did my best to stay with the pack.

A moment or two later, we came around a bend and I spotted a police car on the right shoulder. Glancing at the speedometer, I confirmed I was still going 55, so didn’t bother getting nervous or slowing down. Until, that is, I looked in the rear view mirror and saw him pulling onto the roadway with his lights flashing. The next thing I knew, he was right behind me and chirping his siren. I began looking for a safe place to pull over, and soon both of our cars were on the right shoulder.

The officer, who happened to be black, approached my window and asked if I knew why I’d been stopped; I replied that I honestly had no idea. He informed me that I’d been driving 56 in a 45 MPH zone, and that he’d like my license and registration and proof of insurance.

Forty-five?” I asked, incredulous, as I dug around for the documentation. “I honestly thought it was 55, because it was a freeway. That’s why I didn’t slow down when I saw you.”

“Well, it was posted at 45,” he said, taking my documents and retreating to his patrol car.

As the officer did who-knows-what, I fumed aloud to MYF about how ridiculous the whole thing was. I was going 55 on a freeway and wasn’t passing anybody! And he pulls me over! She agreed, but there wasn’t much else she could say. HFB was waking up and fussing, and she soon had her hands full getting him calmed back down.

The cop eventually returned from his patrol car with my documents — and a ticket for some amount of money that was about to disrupt our fragile, tight-as-a-drum finances, especially once my insurance rates jumped as a result. I was irritated, but had enough presence of mind to suppress my irritation, take a deep breath, and wait until he’d left before saying anything negative. Even then, I simply muttered something to my wife about probably having been stopped because we had Virginia license plates. MYF made a comment about how unfair the whole thing was, and we were soon back in traffic making our way home. And, yes, I noticed that the first speed limit sign we passed read “45 MPH.” I kept the car in the right lane, the speedometer needle at 45, and fumed in silence as we drove.

The story does have a happy ending: I mailed in the ticket with a written explanation/appeal, but no payment. We moved across the country a few weeks later, and I managed to keep my mail correspondence with the DC Metro Police going long enough for my ticket to get totally lost in the District’s bureaucracy. We never paid the fine, and the ticket was never reported to our insurance company.

The incident eventually faded from my mind, and I didn’t think about it for years — until last week’s story about Professor Henry Gates’ run-in with the Cambridge (MA) police. When officers showed up at his house investigating a reported break-in, all he had to do was give a calm explanation as to why he and his limo driver had had to force the front door open, and produce picture identification with his home address. Instead, he followed the officers outside and began ranting to the whole neighborhood about “this is what happens to black men in America.”

Actually, I thought, this is what happens when you have a chip on your shoulder, lose your temper, and taunt the police.

From everything we’ve read and seen about the incident, it seems clear to both MYF and myself that the individual with the “racial narrative” in his head was the Harvard professor; Officer Crowley seems to have conducted himself with the utmost professionalism. Our only complaint about the arrest is that the Cambridge police dismissed the disorderly conduct charges.

Let’s return to 1996, and the shoulder of I-395. As upset as I was about a perceived injustice, the fact remains that the officer had a good reason for pulling me over. I didn’t agree, and was understandably angry about the traffic stop, but had the self-control to remain calm and wait for my opportunity to “tell it to the judge” and let the system work. But let’s suppose that instead, I’d had the same sort of “racial narrative” in my head that Professor Gates evidently carries around with him. I most likely would have jumped from my car and accused the D.C. cop of having pulled me over because I was a white guy with out-of-state plates in a heavily black city — and that he was giving me a ticket only because he was angry that I’d married a black woman. That he was probably trying to prove he had some power over me.

Those of you who know me know that I don’t see the world through the prism I just described. But had I said and done those things, and had I refused the officer’s instructions to return to my vehicle, the cop would’ve been completely within his rights to have arrested me for disorderly conduct. And my wife would’ve been completely within her rights to have not spoken with me for the next six weeks.

That seems clear enough to us. What MYF and I find particularly troubling about the Gates story is the sharp divide in the way most blacks and whites have reacted to the basic details of the case — and in the way black and white perceptions of and assumptions about the police diverge so sharply. As a recent Rasmussen poll finds:

Seventy-three percent (73%) of African-American voters believe that most blacks receive unfair treatment from the police. Just 21% of white voters share that view. Thirty-two percent (32%) of black voters say that most policemen are racist, but 52% disagree. Among white voters, just seven percent (7%) believe that most policemen are racist and 71% say they are not.

I’m not so naive as to pretend that race doesn’t play a role in police work. As recently as this year, my father-in-law was visiting my brother-in-law’s family in a large East Coast city with a history of ethnic tension. On two separate occasions, while out for a walk on the streets of his son’s upper-middle-class, heavily white neighborhood, my father-in-law was stopped and questioned by the local police about what he was doing. My father-in-law knew perfectly well that he was being questioned because he was black, and therefore looked out of place in that neighborhood. But he was friendly and cooperative, answered the officers’ questions politely, and came away reporting that he’d had “a really nice conversation” with one of the cops. He didn’t point fingers, didn’t make accusations about how “black men in America” are treated, and didn’t raise his voice. He treated the officer with respect, and was treated with respect in return.

Treating people with respect, and not constantly looking at the world through the prism of race, are pretty simple lessons, really, and ones that MYF and I have been teaching our kids. Too bad the President of the United States passed up an opportunity to be truly “post racial” and to have made this same point when asked about the incident in his recent press conference.

As for MYF, this is what she told me:

“I am incensed at Gates’ behavior toward the police, I’m infuriated by the President’s and the professor’s race-baiting, and I’m embarrassed that both of them are giving blacks a bad name.”

And there is nothing more I can add to that.

AIG Mess

With every member of Congress now posturing and trying to outdo one another in expressing outrage over retention bonuses paid to AIG executives, it didn’t surprise me to receive an email tonight from Senator Debbie Stabenow. I guess I got on her mailing list last fall, when I wrote asking her to oppose the $800 billion financial bailout (which she did, and for which I give her enormous credit).

Anyway, this is the text of the message she sent tonight:

This morning, Senator Stabenow went to the Senate floor to speak about the outrageous bonuses being lavished on employees at AIG. She spoke about the outrageous double standard between Wall Street and America’s automakers, who have submitted their management plans to the auto task force and are renegotiating contracts with their workers, who have already taken cuts. Our families are struggling, and those who got us into this mess should not be rewarded for their failure.

Here is the link to Senator Stabenow’s speech:

http://www.youtube.com/watch?v=5Td2ya5z1Y8

I do agree with the Senator that those who got us into this mess should not be rewarded for their failure — and, as I said above, I credit Senator Stabenow for opposing the original TARP legislation, out of whose funds AIG was bailed out. That said, this was my reply to Senator Stabenow:

Didn’t you vote for the “stimulus” bill which included an amendment explicitly protecting these bonuses? I’m assuming you were not aware of that amendment, given the short amount of time available to review the conference report. But had you been aware of that amendment, would you have voted differently on the bill?

Naturally, every member of Congress will now purport to oppose that provision. But just how much do they really mean what they say? Given that the amendment was indeed part of the final stimulus bill, do they oppose the bonuses enough to have voted against the stimulus?

My larger question, directed at the Senator’s colleagues (including the current President), who did vote for TARP and are now expressing outrage, is this: If you really wanted fundamental change in the way these financial institutions do business, including the way they compensate their employees who “got us into this mess,” shouldn’t you have let those institutions fail and be liquidated? Or at least written your mandated compensation changes in to the original bailout agreement? By continuing to prop them up with $173 billion of no-strings-attached taxpayer dollars, why are you surprised that they continue to operate their business as they have in the past?

Personally, I’m more outraged by the $173 billion that was “loaned” or otherwise entrusted to this failed monstrosity than I am by the way that company spent $165 million compensating the employees which the government’s bailout package enabled them to retain.

Prairie Fire

No doubt many of you have already seen the video of Rick Santelli’s “Rant of the Year” on CNBC yesterday morning. The thing has gone completely viral, getting hundreds of thousands of views on the web — not to mention getting played all over talk radio yesterday. Santelli, who is a floor reporter at the Chicago Board of Trade, is discussing the President’s recent housing bailout proposal:

Based on what I’m hearing and picking up, I think it’s fair to say that Santelli’s rant is igniting what may grow into a prairie fire of backlash against housing bailouts (no matter what these bailouts are euphamistically called). While the floor traders who applaud him in the video may not be a representative cross-section of the American public, the sentiments he expresses (and the sentiments they are cheering) most certainly are. It’s dawning on people that — the President’s assurances aside — those who made some of the most irresponsible decisions about housing, and who contributed the most to the current difficulties, are about to get shielded from the consequences of their choices. It’s as if the old story of the Grasshopper and the Ant has been updated, and the grasshopper is poised to end up with the ant’s house.

I can only share our own family’s experience, but I don’t think we’re atypical. We lived in rental housing, and then a mobile home, the first few years we were married. With Mrs Yeoman Farmer home full time, we lived on what I could earn working part-time for a research firm and part-time as a graduate teaching assistant. We had one car. Extra money we could scrape together went toward paying off MYF’s law school loans and saving for the down payment on a house.

In early 1999, MYF (now five or six months pregnant with our second child), had had enough of living in a mobile home in the San Fernando Valley. She insisted we find something with a yard, where our firstborn (then aged two-and-a-half) could burn off more of his toddler energy. I began searching housing listings, and contacting Realtors, but everything in the area seemed priced far beyond our reach. Our bank confirmed this, telling me we qualified for a mortgage of no more than $130,000. There was nothing with a yard in any SF Valley neighborhood for less than $200,000 at that time.

Someone suggested we widen our scope, and look at the Antelope Valley communities of Lancaster and Palmdale. We quickly discovered that this extreme north, high desert portion of Los Angeles County was one of the few remaining enclaves of affordable housing within 75 miles of the UCLA campus. As we began working with a realtor, we learned the reason for all the good deals (and this is very important): there had been a housing boom throughout the 1980s, which peaked around 1990. Prices had skyrocketed, and then supply outstripped demand. In the early-to-mid 1990s, prices tumbled. People got underwater on their mortgages, and many homeowners walked away (does this sound familiar?). Banks foreclosed. And now, lots of those foreclosed homes were on the market at prices that even families like ours could afford.

Like I said, the bank pre-approved us for a $130,000 mortgage. We saw lots of really nice houses in the $110-$120k range, and thought about buying one. And then we thought some more…especially about our monthly payments. So we looked some more, and found that $65k was roughly the tipping point: even in the Antelope Valley, houses under that figure were either (1) in bad neighborhoods or (2) in need of more work than I could perform.

We ended up buying a 1400sf, 4 bed, 2 bath, foreclosed tract house for $72,000. When it had been built, in 1990, it had sold for about $115k. Apart from being filled with foreclosed “cookie-cutter” stucco homes on slab foundations, and on the northern edge of civilization, the neighborhood wasn’t bad. Our yard wasn’t huge, but it was a yard. And the house was in excellent shape, so we were able to move in the week after Baby #2 was born.

If memory serves, we made a 5% down payment, so had to pay PMI, but we got a 15 year fixed mortgage so we could build equity faster. I think our monthly payment was less than $600. But there were two important things our bank made us do before we could get that mortgage: (1) prove my income, by submitting tax returns and pay stubs, and (2) clear up a blemish on MYF’s credit report. We had taken very good care of our credit, paying everything on time and paying off our credit cards in full every month. But way back in law school, MYF and her roommates had been in a dispute with their landlord; the landlord had lied and deceived them about the terms of the rental contract, and while the students were away for the summer got a court to issue a default judgment against them. MYF was not even aware of this judgment; the first she learned of it was when, eight years later, our bank pulled her credit report to approve the mortgage. The amount owed wasn’t huge, but our bank would not lend to us until we resolved it. MYF tracked down the collection agency to whom the judgment had been turned over, we paid what they wanted, and got the credit report cleared up. And only then were able to get our mortgage.

We made every mortgage payment on time, maintained our excellent credit, and watched as the neighborhood filled up (and housing prices slowly increased). In the spring of 2001, for various reasons, we decided to make our move to the country and become Yeoman Farmers. We were able to sell our house for about $110,000. After deducting what we spent on new carpets and paint, and real estate commissions, and moving expenses, we walked away with just enough cash to put a 20% down payment on our Illinois property. Again we opted for a 15 year fixed mortgage, to build equity faster. Again, we took good care of our credit. And as a result, when we decided to move to Michigan a year and a half ago, we were able to do so.

All of this behavior I have described is called “playing by the rules.” Nothing that we did was particularly heroic or extraordinary. None of it required luck, or special consideration. I’d contend that there are tens of millions of families in this country with experiences more or less like ours: we saved, started with what we could, and with patience got to where we wanted to be. We didn’t splurge and buy more house than we could comfortably afford, even when the bank offered it. We had to prove our income. We had to clean up our credit. And it infuriates me that so many others got away with doing otherwise for so long.

To the banks and financial institutions which made loans without verifying income, or demanding good credit, I say: you deserve to fail, and responsible lenders like ours deserve to fill the vacuum that your demise leaves in the marketplace.

To those who bought more house than they could comfortably afford, and treated their houses like virtual ATMs (cashing out equity to put in swimming pools and dream kitchens): you do not deserve to stay in those houses. Your houses need to go back on the market at reasonable prices that purchasers are willing to pay. Many of those houses will become homes for families like ours was, circa 1999, who would otherwise be locked out of the market if governments were to prop up those inflated prices by trying to provide people like you with the “soft landing” to which you are not entitled.

And, above all, to Rick Santelli, I say: Thank you, sir, for giving us a voice! And if you do decide to have that “Chicago Tea Party” this summer, I will make sure I have a reason for being in town.

TurboTax Tim

As of a week or two ago, I wasn’t going to publish a post about Tim Geithner, the new President’s nominee for Secretary of the Treasury. It annoyed me that Geithner had neglected to pay some taxes in past years, but the initial consensus seemed to be that Geithner had made an “honest” mistake or “common” mistake. (Rush Limbaugh put together a very funny montage of at least a dozen mainstream media commentators all using these same words.)

The more I have read and heard this week, however, the more I’ve wondered just how “honest” or “common” this mistake really was. And the longer his hearings continued, the more troubled I’ve grown about seeing this man entrusted with the massive new authority and discretion that has been granted to the Treasury secretary in recent months. Given the appalling lack of transparency that has accompanied the TARP program thus far, the Treasury secretary must be more than a person with a brilliant intellect or financial understanding. Now, more than ever, that position must be filled with an individual of unquestioned honesty and integrity, who has never tried to evade the law for personal gain. The more I learn about the circumstances surrounding Geithner’s tax returns, the harder it is to imagine entrusting him with that authority.

What was the nature of Geithner’s “honest” mistake? Because his employer, the International Monetary Fund (IMF) was a foreign entity, the employer did not withhold payroll taxes (the “FICA” you see on your paycheck) for the IRS. Unlike employees of American firms, Geithner and his American colleagues got to keep their entire paychecks. But those FICA taxes still needed to be paid. Geithner’s explanation is that when he entered his W-2 form into Turbo Tax, the software didn’t compute the FICA taxes due — only the income taxes. He paid what Turbo Tax said he owed, and the discrepancy wasn’t caught until he was audited a few years later. The auditor realized the FICA taxes had never been paid, and Geithner was charged (and paid) the appropriate amount. A good early overview of the story can be found here.

Of course, it turns out that there is more to the story. The IMF clearly explained the FICA withholding issue to its employees— in writing. And instructed them that they needed to pay the FICA taxes when they filed their 1040. And had each American employee sign a statement affirming that he had satisfied his tax obligations. Does this sound “honest” to you? Read this report and decide for yourself:

The IMF did not withhold state and federal income taxes or self-employment taxes — Social Security and Medicare — from its employees’ paychecks. But the IMF took great care to explain to those employees, in detail and frequently, what their tax responsibilities were. First, each employee was given the IMF Employee Tax Manual. Then, employees were given quarterly wage statements for the specific purpose of calculating taxes. Then, they were given year-end wage statements. And then, each IMF employee was required to file what was known as an Annual Tax Allowance Request. Geithner received all those documents.

The tax allowance has turned out to be a key part of the Geithner situation. This is how it worked. IMF employees were expected to pay their taxes out of their own money. But the IMF then gave them an extra allowance, known as a “gross-up,” to cover those tax payments. This was done in the Annual Tax Allowance Request, in which the employee filled out some basic information — marital status, dependent children, etc. — and the IMF then estimated the amount of taxes the employee would owe and gave the employee a corresponding allowance.

At the end of the tax allowance form were the words, “I hereby certify that all the information contained herein is true to the best of my knowledge and belief and that I will pay the taxes for which I have received tax allowance payments from the Fund.” Geithner signed the form. He accepted the allowance payment. He didn’t pay the tax. For several years in a row.

Question 18 that the Senate Finance Committee submitted to Geithner puts all this together: You provided the Finance Committee with statements from the IMF breaking your tax allowance down into amounts for “Federal Tax Allowance,”” State Tax Allowance,” and “SE Tax Allowance.” These statements show that your tax allowance was deposited into a checking account. You also provided the Committee with copies of checks made out to State and Federal revenue authorities for the exact same amounts as noted on the statement from the IMF for make state and federal estimated tax payments. Did you ever question what your “SE Tax Allowance” was for? When you were writing checks to cover the “Federal Tax Allowance” and “State Tax Allowance,” did you ever think “SE Tax Allowance” was given to you to pay a tax you owed?

Read Geithner’s answer and decide for yourself whether you believe him…and, if you do believe him, whether he is the “financial genius” who is the only man qualified to run the Treasury Department today: Looking back now, it is clear to me that the IMF statements to which you refer should have prompted me to realize that it was necessary for me to file a form SE and pay selfemployment taxes. I did not realize this and regret the error.

This story has a particular resonance for me because I am self-employed and have considerable experience preparing my own tax returns. Coincidentally, I have also been using Turbo Tax, and think it is outstanding. Over the years, I have become familiar with the various reportings that my clients are supposed to make to the IRS, using Form 1099, and the taxes I must pay — even when the client, for whatever reason, fails to report the income to the IRS. I still have a moral obligation to pay those taxes, and have always paid those taxes, even when the IRS doesn’t know about the income.

And that’s what is so frustrating about the Geithner situation, and why it has struck such a chord with all of us who are self-employed and have diligently reported and paid taxes on all of our income. Given all the warnings and notices that Geithner’s employer gave him, it seems he simply couldn’t have not known he owed the FICA taxes. It’s hard to escape the conclusion that he saw an opportunity to keep for himself tens of thousands of dollars, banking on the odds that he wouldn’t be audited. Does this sound like the sort of man who ought to be entrusted with overseeing the IRS — not to mention being entrusted with disbursing hundreds of billions of dollars’ worth of TARP funds?

I don’t expect perfection or sanctity from our government officials, but there ought to be some threshold of behavior which, once crossed, disqualifies a person from receiving the public trust. Would we tolerate an Agriculture Secretary nominee who had illegally obtained food stamps for his family four separate times, even if he reimbursed the program once he was caught? Or a state insurance commissioner who padded four different casualty insurance claims, even if he later reimbursed the insurance companies once he decided to run for insurance commissioner?

Where?

The new President, on his first full day in office, has announced a halt to the military commissions at Guantánamo Bay. And according to the same New York Times story:

Later this week, the new administration is expected to issue an executive order that is to start what could be a long process of closing the detention camp, where about 245 detainees remain.

What is yet unsaid, and what will likely be a key point of discussion over the next year, is just where those 245 detainees will be moved. Discussions on NPR focused on that issue, with commentators explaining that due to the highly dangerous nature of the detainees, no community in the mainland USA will want to house the Gitmo detainees in their local prisons.

Which got me thinking: remember Yucca Mountain? That’s the super-secure repository in the Nevada mountains, which according to most objective scientific reports is the safest location in which nuclear waste can be stored for the long term. And yet despite the extreme cost and safety measures taken to build the Yucca Mountain facility, Nevada’s elected officials have managed for years to block its opening.

Does anyone think that the NIMBY sentiments will be any less intense when the time comes to relocate Gitmo detainees to mainland prisons? Or that public officials in targeted areas will fight with any less intensity than Nevada’s have done.

Like it or not, Guantanamo has one big plus going for it: it’s not in anybody’s back yard except Fidel Castro’s.

My prediction is that we see some modifications made to the existing Guantanamo facilities, or the detainees relocated to some other overseas facility, before we see them set foot in any American’s back yard.

Acting Barack

A caller to a talk radio program earlier this week made an interesting point, and one I had not previously considered. She was an older, well-spoken black woman (the VP-elect would probably describe her as “articulate”), who told the conservative host that she agreed with both Presidential candidates on certain issues, but had ended up voting for Barack Obama. She was calling to share a personal observation: that, in the wake of election day, “doing well in school” had suddenly become a lot more important to a lot more black kids in her area. Teachers have been reporting fewer discipline problems. Kids are paying more attention in class and to their schoolwork.

In too many predominantly-black schools, kids who are bright and want to do well are denigrated by their peers for “acting white.” This leads to a perverse and ingrained culture that encourages delinquency and underachievement. (Mrs Yeoman Farmer and her siblings attended predominantly-white Catholic schools, so they did not encounter this problem.) If Barack Obama’s election helps turn this situation on its head, and academic success becomes regarded as “acting Barack” (I just made that phrase up), I’d say that is a tremendous cause for celebration.

I should emphasize that I still believe these election results, on balance, are not as good for the country as a whole (or for blacks in particular) as the alternative outcome would have been. But as much as I would prefer not to have Barack Obama as my president, the fact is … he will be. And if/when his presidency produces good fruit, I will be among the first to acknowledge it.

In the meantime, I’d be very curious to hear from any of you out there who are educators or otherwise connected to urban public schools. Are you detecting a post-November 4th difference in black kids’ attitudes toward education and academic success?

That Lottery Pick

An interesting rumor began circulating in the last couple of days: on election night, the Illinois Lottery “Pick Three” numbers were 6-6-6. Within hours, I’d heard the same thing from two different friends. As this sounded too coincidental to be true, I took a closer look.

It turned out to be extremely easy to investigate. The Illinois lottery publishes all of its results online, and you can search all the way back to 1980. With a couple of clicks, I determined that none of the draws on Tuesday November 4th included a combination of 6-6-6. Here are all of that day’s picks:

11/04/2008 Evening Pick 3 8-4-5
11/04/2008 Evening Pick 4 2-7-2-0
11/04/2008 Little Lotto 02-09-21-29-30
11/04/2008 Mega Millions 10-21-23-41-55[09]
11/04/2008 Midday Pick 3 6-0-5
11/04/2008 Midday Pick 4 9-3-8-2

But take a look at the evening pick of the very next day, after Barack Obama’s election:

11/05/2008 Evening Pick 3 6-6-6

Naturally, many will read some kind of significance into this. As for me, I do think it’s interesting — but I’m far more interested in probability than in numerology.

As the three lottery balls are drawn independently, the odds of getting three sixes (or any other three numbers) are .1x.1x.1, or one in a thousand. Indeed, this calculation matches the odds posted on the Illinois Lottery’s website. So far this year, there have been 1160 Pick 3 or Pick 4 drawings (the only games, as far as I can tell, with balls between 0 and 9 drawn independently). By the laws of probability, there should have been only one or two 6-6-6 combinations drawn this year. In fact, there have been five. (Nov 5th, Oct 23rd, March 22nd, and Jan 16th on the Pick 3, and July 5th as part of a Pick 4.) In other words, this combination isn’t as rare as you’d expect. And besides November 5, none of those other dates even comes close to corresponding with significant Obama milestones or primary victories, or good debate performances.

Further evidence that 6-6-6 isn’t as unusual as you’d expect: In all of last year, there were 1364 Pick 3 or Pick 4 drawings; 6-6-6 occurred three times (again, more than the laws of probability would predict).

There will always be those who read significance into the occurrance of certain numbers. Remember the kooks who said Ronald Wilson Reagan was the antichrist, because each of his three names contained six letters? In the current case, I’m more inclined to believe that the state lottery is the province of the devil than to believe that the November 5th Evening Pick 3 signals that Barack Obama is the antichrist.

But if, on January 20th of next year, one of our goats gives birth to a kid with seven heads and ten horns, I’ll make sure I publish the news here.