Is the TSA trying to kill air travel?

You’d better allow extra time at the airport.

In this morning’s news, we are told that our TSA screeners will be lavishing extra attention on a long list of items that have nothing in common except batteries. In fact, be prepared to drag everything battery powered out of your carry on bag: not just the laptop computer, but also the camera, the flash for your camera, CD player, cell phone, any radio more complicated than AM/FM, and even the remote key-fob for your car. In short, every single person in the security line will have at least one thing that requires additional scrutiny by your friendly screener. What a fabulous opportunity for thievery! A cornucopia of electronic gadgets, some of them quite pricey, temporarily separated from the direct scrutiny of a traveler who is really more concerned with getting his shoes back on. Lets not forget that although your friendly TSA screener is now a federal employee, he is not required to pass a civil service exam. Indeed, he is not even required to have a high school diploma. Furthermore, “airports wouldn’t put up with waits that last more than 10 minutes, the standard the government has set for its screeners.” So, the screener, who may or may not actually be able to read the manual of any of the devices in question (even if you happened to carry such paperwork), will be rapidly sorting through vast piles of gizmos with the goal of sorting you into the “get out of my way now” line to the terminal and the “wait here for in depth screening by someone who will assume you are a terrorist until you prove otherwise” line. He does not care when your flight takes off. He does not care that you are clearly on your way to an important meeting, or clearly on the way to see your grandchildren. He does not care that the gadget he is mangling or outright confiscating is perfectly normal and perhaps required for your livelihood. Screening silliness has spawned a plethora of anecdotes and websites.

Ask around. You undoubtedly know someone who has an airport screener story.

Business travelers should not put up with this. Indeed, they can’t afford to put up with it. A 3 hour flight already means losing an executive all day. And what if his luggage is lost, or destroyed during the “inspection” process? What if his company issued laptop computer is stolen while in the security line? What if the revolutionary device he was going to demonstrate to his important client is confiscated? What if he is arrested for questioning let alone protesting any of the indignities he suffers at the hands of the TSA? Businesses will be doing a lot more teleconferencing, driving to relatively close locations, and chartering private flights to more remote locations.

That leaves the leisure traveler as effectively the sole market for commercial air travel. They don’t pay full price for flights. They plan months ahead and scan for ultra-cheap flights, bringing down per-seat revenue in the process. Not being frequent fliers, they are more likely to not understand screening rules, to accidentally attempt to bring banned items on flights, and more likely to raise a stink (and get arrested) when such items are confiscated. The leisure traveler may start to think the cross-country road trips of their youth are more appealing than ever. The more wealthy leisure traveler may consider charter flights, just like he takes for work. Some very small very wealthy minority may even decide to learn to fly small airplanes themselves.

Both scenarios bode ill for commercial air travel as we know it. Even the former CEO of American Airlines said the industry is in big trouble “if the system we end up with is so onerous and so difficult that air travel, while obviously more secure, becomes more trouble for the average person than it is worth.” The airlines are already in financial trouble. The “jobless recovery” is not resulting in increased demand for air travel. More smaller planes in the air is not safer than fewer large planes in the air. The only good news is that any effort to create a national air transit carrier will be met with derision.

Testing Mulligan

Don’t blink, or you might miss the fact that not only do we have teachers who cannot pass basic English proficiency tests, sometimes even their bosses fail the tests. In fact, the Superintendent of Schools in Lawrence, Massachusetts has failed the test 3 times. His excuses include lack of preparation, the fact that English is his second language, and that “nobody” looks at the rules of grammar and punctuation on a regular basis except English teachers. He went on to call the test “stupid.”

I can understand the idea that maybe the first time he took the test, he could have been blind-sided by depth of contest. That is no excuse for the second and third failures. The “ESL” tactic is an insult to anyone who came to this country and learned to speak and read the language. It should be considered an insult to anyone whose grandfather came to this country for a better life. The fact of the matter is that good English skills are the cornerstone to getting a decent job, although you would never know it to look at Mr. Laboy’s $156,560 annual salary. As for the rules of grammar and punctuation, one is forced to wonder if Mr. Laboy ever writes memos. Does he rely on a word processor to correct his grammar? I might have sympathy if he is having trouble remembering the exact formatting of a footnote according to Turabian, but I would not be surprised if the problems are more mundane. Their, there, or they’re? s or ‘s? How do you decide whether to use a colon or a semi-colon? You don’t need to be an English teacher to know these things. All things taken together, this is nothing less than an indictment of the Superintendent’s own education.

If we were hearing that a large percentage of teachers given this test were failing, we might indeed  conclude that the test was “stupid” — I mean “not a valid measurement of skills and knowledge.” But we are talking about a district with 22 schools and over a thousand teachers where a mere 24 teachers failed the test. Those sound like pretty good numbers.

Competent teachers are important. Nobody will publicly say they disagree. Unfortunately, there seems to be a difference of opinion regarding what that means. It certainly means more than “having completed educational coursework and possessing a teaching certificate.” If we are to improve the education of our children, we must start with teachers who can read and write English correctly. Our teachers should have a firm grasp of concepts and facts in other basic subjects, such as math and science. How can we set this standard without equally competent administrators?

We all know that America’s continued general prosperity hinges on people: people who can do the important research or the future; people who know how to get things done in an increasingly complicated world; people who simply know how things work. That starts with teaching our children, and that in turn depends on our schools. Do not accept incompetence. Indeed, do not even accept mediocrity.

A Tax on the Castle

This morning I picked up the newspaper and was just
shocked to see this quote in oversized letters on the front
page:

“I am a senior and I
am on retirement (income) and Social Security, and I thought that homes, as they
got older, usually went down (in taxable
value).”

I was flabbergasted! Has
this person not noticed housing prices going up both in her neighborhood and the
nation at large, with talk of a potential housing bubble? Has she not noticed the assessment
notices from the county each year? Can she possibly not be aware that housing
prices and tax assessments have at least some passing relationship? Have we not
been told since we were old enough to pay attention that a house is not merely a dwelling, not only our
castle, it is an investment, a cornerstone of our financial
planning, a colossal tax break, and the most important asset most of us are
likely to ever possess?

A related story on the front page tells us that in
the last year “the average value of resale homes jumped an unprecedented 10
percent.” This rise is not typical, but it’s still impressive. That’s pretty
darn good in an environment where the long bond is earning less than 5% and the S&P 500 has risen about 7% in the last year.
Housing has been a bright spot in a dull economy
in many parts of the country.

Even
considering this performance, I am of the opinion that a primary home is not
always
an asset and not always a good investment. I am furthermore not alone in this
opinion. The issue of whether your home is an
asset or a liability depends on many factors, some of which are unique to your
situation. Here are some issues you should consider when deciding where the
family home fits in the family
finances.

What are you
really paying?
No, not just the accepted
offer price, the amount of money you
will pay
over the term of your mortgage. If you take a 30 year
mortgage, even a low interest rate like 5.5% will leave you paying twice the
mortgage amount. Do you really think your house will be worth twice your
purchase price when the mortgage is paid off? Be honest. Before you start
shouting that all the interest you pay is all tax deductible, you should know
that is only completely true if you are not subject to AMT. Furthermore, your deduction will only save
you the amount of interest you paid
times
your tax rate.
Paying $12,000 and in the 28%
tax bracket? Your $12000 expense will only save you $3360. A mere $280 per
month. I certainly would not buy a bigger house just for a bigger tax
break.

Have you considered
the incidental expenses?
Incidental expenses
include a raft of bills and hassles that come with homeownership. Many of these
things apartment dwellers only pay in an incremental, pass-through fashion
instead of a big bill. The list includes all maintenance, such as repairing
roofs, painting, replacing carpet and appliances, mucking out gutters, mowing
the lawn, keeping the water softener full of salt, checking the air
conditioning, and keeping the common areas clean. The list also includes
non-maintenance items such as property taxes, homeowner association dues,
utility bills, and even helping resolve problems with the
neighbors.

How does buying a
house compare to the alternatives?
If the
cost of renting the size dwelling you need is comparable to the cost of buying
in your area once you have considered incidental expenses, then buying is
probably the way to go. When this even close to the case, the mortgage interest
deduction actually does some good. Furthermore, equity is a pretty good thing.
However, don’t make yourself “house-poor,” don’t justify spending a lot more
each month to get the equity and the deduction, don’t tell yourself the house
surely will go up in value unless you have looked at the facts. Be sure to take
into account special situations, such as knowing you are going to get a job
transfer or wanting to be in a particular school district.

How important is
liquidity?
A house is a tough asset when it
comes to using your equity. There are really only two ways to get money out of
your primary residence: mortgage it (again) or sell it. If you mortgage it, you
have another bill and are paying more interest — depending on your equity level
and your tax status, it might not even be the deductible kind. Furthermore,
mortgage paperwork is time consuming, and there will be closing fees associated
with the new mortgage. If you sell it, you have to find a new place to live.
That is an expensive pain in the butt. If you think you may need to lay hands on
your money in a hurry, a house is not the best place to
invest.

Is this particular
house a good investment?
Is it reasonable to
think it will go up in value? How is the neighborhood doing: improving or
declining or maybe just stable? Are people in the neighborhood families planning
to stay around, or transient executives, or older people planning on moving to a
more retirement friendly area? Is the house or the neighborhood historical?
Are there some obvious improvements you could make that will increase the
house’s value? Are there tax implications beyond mortgage income deductions and
property taxes? Do not forget to consider your timeframe. Planning to live in a
house 5 years is different from planning to live in a house 20 years. Don’t
forget any value you may extract simply by living there and enjoying it. On the
other hand, do not overvalue that experience.

I am not saying you shouldn’t buy a
house. I am saying you should consider whether it is really in your best
interests to do so.