Episode 36: Total Eclipse of the Heart
This week witnessed a national holiday, a Presidential inauguration, and a slew of Executive Orders by President Joe Biden. Today also marks the first anniversary of President Trump’s comments to CNBC regarding coronavirus: “We have it totally under control. It’s one person coming in from China, and we have it under control. It’s going to be just fine.” Twelve months later, we have 25 million Americans infected and over 420,000 deaths, more lives than we lost in World War II.
Inauguration
Chief Justice Roberts swore in Joe Biden as the 46th President of the United States. This year’s inauguration was without the crowds and typical fanfare. It was a felicitous decision by organizers given the events of January 6th and ongoing chatter about violence and opposition to a peaceful transition of power. However, this vital ritual every four years has occurred 59 consecutive times and through wars, depression, and now a pandemic. In his acceptance speech, Biden declared six national crises in the country: coronavirus, climate change, growing inequality, racism, and America’s global standing and an attack on truth and democracy. Lady Gaga, J-Lo, and Garth performed at the event, but the day’s star was youth poet laureate, Amanda Gorman. She wrote and recited a five-minute poem called “The Hill We Climb.” Like Biden, Gorman has a speech impediment, and it helped draw her to poetry.
President Trump did not attend the inauguration, marking the first time in 150 years that an outgoing President did not participate in his successor’s swearing. However, Trump did leave a note for President Biden, which the new administration described as “generous.” President Trump flew Air Force one for a final time to Mar-a-Lago, his permanent home in Florida. For many Trump supporters, especially those who anticipated some form of divine intervention that would overturn the election results, this week was a total eclipse of the heart.
Trump Impeachment
Outgoing Senate Majority Leader Mitch McConnell made a speech on the Senate floor accusing President Trump of inciting the January 6th attack on the US Capitol. He said “the mob was fed lies” and “provoked by the President and other powerful people.” House Speaker Nancy Pelosi said today that she would send the article of impeachment against Donald Trump to the Senate on Monday, triggering the start of the former President’s trial on a charge of “incitement of insurrection.” In Trump’s defense, Senate Republicans argue that it is pointless and potentially unconstitutional to try a President after he has left office. If Trump is convicted, the Senate could vote to bar him from holding office ever again.
Joe Biden Presidency
The Biden presidency starts with some enormous challenges. The pandemic is raging at its peak; the economy is sluggish with 900,000 new unemployment claims and 15.9 million relying on some form of federal benefits. Race relations are strained. Domestic extremist groups are emboldened, organized, and heavily armed, from ANTIFA to right-wing militia. These groups mounted attacks in 42 states in the last six years, more than Islamic fundamentalists. Plus, 70% of Republicans believe Joe Biden stole the election.
In the first 100 days of power, President Biden would be wise to brush up on a Russian story regarding former Soviet premier Nikita Khrushchev who wrote two letters for his successor, Leonid Brezhnev. Khrushchev suggested the first time Brezhnev got in a jam that he should open the first letter. Brezhnev encountered his first challenging situation, and he opened the first letter, which read, “Blame everything on me.” It worked. Brezhnev met his second challenging situation, and he opened the second letter, which read, “Sit down, Leonid. Write two letters.” The point being there is a honeymoon window and a short period when Biden can (and will) blame every misstep on the previous administration, but the shelf life for that scapegoat will be brief.
Biden has his first Cabinet confirmation. The Senate approved Avril Haines as Director of National Intelligence. The former CIA deputy director is now the first woman in history to serve as the DNI, which oversees 17 agencies and directly advises the President. Lloyd Austin, a retired four-star Army general, was confirmed by the Senate this afternoon, making him the first Black defense secretary in US history.
Joe Biden now has complete and sole authority over the US nuclear arsenal as outlined in the Constitution. For foreign and military matters, the US Constitution deliberately enshrined a shared powers system between the executive and legislative branches. Article I gives Congress the power to declare war, raise and support armies, and provide and maintain navies. Article II reserves the role of commander-in-chief of the Army and the Navy for the President’s office. The Constitution is silent on nuclear matters for obvious reasons. Still, the President’s Commander-in-Chief authority has extended control over nuclear use, based on Harry Truman’s nuclear launch decision in 1945.
The ‘nuclear football’ contains equipment to authenticate the President’s orders and launch a nuclear strike. The ‘football’ does not automatically hold a button or code to launch a nuclear weapon but instead has the equipment to order and authenticate a strike. There are at least three identical footballs. One follows the President, one follows the Vice President, and one traditionally is set aside for the designated survivor at events like State of the Union. Additionally, the President must carry a plastic card known as the “biscuit” with him at all times. The biscuit contains alphanumeric codes that are used to identify the President. There are safeguards in place in the event an unstable President wanted to launch a nuclear attack. The President has the sole authority to launch, but he cannot do it alone. Moreover, for an attack to be legal, the order must (1) have a legitimate target, (2) be a clear military objective, and (3) use proportional force.
The White House now has a new occupant. While President Biden has postponed making significant changes to the grounds, he did make some subtle changes to the Oval Office, including bringing back Bill Clinton’s drapes. Further, the entire 54,900 square foot White House, which includes the East and West Wings, staterooms, and family residence, went through deep cleaning. The total bill is reportedly $500,000, which I can only assume mostly went to cleaning Bill Clinton’s drapes.
COVID
Correction from last week: I reported a COVID death in LA County happens every six seconds and meant to say a new COVID infection is every six seconds.)
President Biden is taking a very different approach to coronavirus than the previous administration. While Trump left most pandemic plans to states, President Biden is taking a more hands-on approach that he says is “based on science, not politics.” The first week in the office President Joe Biden signed 30 Executive Orders, mostly focused on COVID measures and attempts to support a struggling economy. Yesterday, he introduced a 200-page “wartime” COVID strategy. He also set grim expectations that another 100,000 Americans will likely die from COVID during his first six weeks in office. One of Biden’s Executive Orders requires masks to be worn on all federal property to send a message to the American public about the importance of wearing masks. However, Biden violated his mandate the day he signed the order when he was seen on camera maskless and crowding for pictures with his mask-free family at the Lincoln Memorial. Press Secretary Jen Psaki justified Biden’s actions by explaining that the President was “celebrating.” Uh, ok, good to know.
Race and America:
This topic is complicated and challenging, and I realize many people are tired of having it. However, good leaders tackle difficult subjects head-on. It’s impossible to cover this adequately in one newsletter, so I am going to do a three-part series centered around three questions:
Where do things stand today?
Why does this topic matter?
How do we make progress?
The Balance Sheet when it comes to race in America is mixed. On the one hand, we have made meaningful progress since the Civil Rights Act of 1964. Mindsets have shifted the last fifty years, and barriers lifted in critical areas like education, employment, and social integration. Symbolically, the country celebrated Barak Obama’s election as the first black President in 2008 (and re-election in 2012), a feat once thought impossible. In almost every economic category, blacks have been gaining. Median family income (in inflation-adjusted dollars) is up from $22,000 in 1963 to more than $40,000 today. The Black poverty rate dropped from more than 40% in the 1960s to 24% before the pandemic (compared with 11% for Whites). The Black unemployment rate (ages 16 and over) fell every year from 2010 (16.5%) to pre-pandemic 2020 (6.1%). The 6.1% unemployment rate is the lowest level on record by the US Bureau of Labor Statistics, tracking back to 1972. We should all be proud of this social and economic progress.
However, the other truth is Blacks continue to face cumulative barriers to wealth building due to discrimination, poverty, and a dearth of social connections that perpetuate economic inequality. In 2016, the median white family had more than ten times the median black family’s wealth. And the problem is getting worse this century. The US’s racial wealth gap has grown at a compound annual growth rate of 3% between 2003 and 2018. The 2019 US Census reveals that Blacks make up 13.4% of the US population. (Whites are 76.3%, Hispanics 18.5%, and Asians 5.9% of the population.) While black Americans make up 13% of the US population, they make up 40% of the homeless population. Sixteen states are home to 65% of black residents in the country. These states perform below the national average on all performance categories, including economic opportunity, employment, healthcare access, healthcare quality, and broadband access.
A McKinsey report breaks down the “components of wealth generation for a family” as follows:
Community (the collection of public and private assets in a given community)
Family wealth (the net value of a family’s pool of financial and non-financial assets)
Family income (the cash flow a family receives from entrepreneurship or participation in the labor market)
Family savings (the tools and benefits a family can access to turn income into savings)
A key driver of wealth is at the community level. Communities with high levels of economic activity and rich social networks tend to produce more affluent families. That same effect often works against Blacks. It’s hard to ignore or dispute that Slavery was the genesis of this country’s racial wealth gap. Still, there are more recent factors at play. The National Housing Act of 1934 played a contributing role in structural and socioeconomic segregation. This legislation limited black families’ housing options to low-quality neighborhoods. Most Black families have remained in these neighborhoods due to a lack of affordable alternatives and binding social connections. Black families are up to 4.6 times more likely than White and Hispanic families to live in concentrated poverty areas at the neighborhood level. Black families also start with lower wealth levels: only 23% of black families receive an inheritance vs. 50% of white families. And the size of an inheritance disproportionately favors Whites. At the median, an inheritance increases wealth for White families by more than $100,000 and only $4,000 for Black families. These factors help explain why Whites have increased wealth over the last several decades and how Blacks remain trapped at the bottom of the wealth distribution.
Education is at the core of many of today’s wealth disparities. A family can increase its earning potential by attaining more education. However, Black families (even affluent ones) tend to live in more impoverished neighborhoods for the reasons mentioned above. Education options in these neighborhoods are often low quality, with children struggling to get basic needs met (45% of black children attend high-poverty schools in which 75% of students are eligible for free or reduced-price lunch). Consequently, it’s sad but not surprising that only 24% of the black population over 25 holds a bachelor’s degree or higher, ten percentage points lower than the comparable white population. And studies show that even when Blacks “overachieve” and go on to graduate college, their wealth drops because they are more likely than white college graduates to support their parents financially. Furthermore, black families are 1.3 times more likely than white families to have student debt, and they have balances that are 1.7 times higher than those of white families. Cumulatively, this translates into the reality that black borrowers are 2.3 times more likely than white borrowers to default on student loans.
Of course, income is the most tangible barometer for wealth creation, and Blacks face significant headwinds compared to their White counterparts. For those who don’t believe systemic racism exists, you can’t ignore the following facts. Black workers made 14.9% less than their white workers, according to the Economic Policy Institute’s (EPI) Wage Report. This gap has grown significantly, up from 10.2% in 2002. And obtaining an education, even advanced degrees, doesn’t close the gap. The EPI report found that white workers are paid more than Black and Hispanic workers at every education level, except for no high school diploma. (Of course, the other wage inequality is gender. The average woman in the US earned 81.6 cents to every dollar men made in 2019; employers paid Black women just 62 cents for the same job performed by males).
One piece of good news for black families is the increasing participation in the stock market. As of 2016, 67% of black Americans with incomes of at least $50,000 invested in the stock market, compared with 86% of white Americans. Still, a typical black family has significantly less saved for retirement than a white family. People of color nearing retirement age have average savings of $30,000, around 25% of white households’ average amount.
The upshot is when it comes to race in America, we have made meaningful progress, but problems persist. The data is undeniable, and there’s no way to logically and rationally look at the statistics and conclude Blacks and Whites are starting life’s race at the same starting point. Whites have a distinct advantage, and that advantage grows at various life markers. The bigger question is, “who cares?” Why does this topic matter? This question rarely gets discussed because it’s uncomfortable and ugly. Yes, there is a moral component to it. I think most Americans would say that fairness is part of our value system. Our Declaration of Independence states that “we hold these truths to be self-evident, that all men are created equal, that their Creator endows them with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness.” However, the moral argument is the easy answer, and it’s incomplete. Next newsletter, I will look at why progress on race should matter to all Americans.
Other News:
Microsoft and General Motors announced they would enter a strategic partnership to expedite the commercialization of autonomous vehicles. Microsoft and Honda have invested more than $2 billion in GM’s autonomous vehicle subsidiary Cruise. GM acquired Cruise for $1 billion in 2016, and the company’s workforce has grown from 40 employees to 2,000. Cruise will integrate Microsoft Azure’s cloud computing service into its self-driving technology and intends to introduce a robotaxi service.
The National Rifle Association (NRA) filed for bankruptcy. Last summer, the New York AG filed a lawsuit accusing the NRA leadership of financial mismanagement and tax fraud. The lawsuit claims that the NRA executives diverted funds for themselves and family and friends, which led to $63 million in losses. In its Chapter 11 filing, the NRA said it plans to leave New York State and register as a Texas nonprofit.
Jeff Bezos’ Blue Origin plans to launch its first commercial passengers into orbit as early as April. The aerospace company plans to launch tourists, scientists, and professional astronauts on short trips over West Texas, purportedly for $200,000 a seat. I wonder if that price includes beer and peanuts?
Baseball legend Hank Aaron also known as “Hammering Hank,” died today at 86. Aaron broke Babe ruth’s career home run record in 1974 before ending his career with 755 home runs. Barry Bonds surpassed Aaron’s career total in 2007. Aaron’s death follows seven other baseball Hall of Famers in 2020 and two more—Tommy Lasorda and Don Sutton—already this year.
I. Below are the articles I found interesting the past week:
It’s time for a new approach to racial equality
MLK Jr.’s life, words a great guide for entrepreneurs
Donald Trump faces an array of legal trouble when he leaves office
Why do we still distrust women leaders?
30+ films you need to watch about race in America
12 things to do instead of picking up your phone
I recommend taking 45 minutes to listen to this tribute to MLK, Jon Meacham's 'It Was Said' podcast.
II. Stats that made me go WOW!
- The racial wealth gap between black and white families contributes to intergenerational economic peril: almost 70% of middle-class black children are likely to fall out of the middle class as adults.
- Lives lost from COVID are disproportionately Black lives. The coronavirus mortality rate for Black Americans is at least double that of White Americans. The Federal Reserve Bank of New York found that more than 40% of Black-owned businesses in the US closed between February and April 2020, versus about 17% of white-owned companies. Over three months, the number of Black company owners dropped by 440,000.
- According to the online survey company Chartbeat, Americans burned 173 million hours reading about Trump (and other stuff) on their phones over the last four years — more than twice as much time as they spent reading about him on their laptops or desktops. Those same 173 million hours would have been enough time to clean all of our beaches of plastic debris.
- Here is a link to the 2021 tax calendar for small business owners
III. Name that Tune!
As I write this email, I am listening to “Total Eclipse of the Heart” by Bonnie Tyler.
Bonnie Tyler is a Welsh singer known for her distinctive and husky voice. Her musical influences were Janis Joplin, Tina Turner, and Aretha Franklin.
The song “Total Eclipse of the Heart” was released in 1983 and became Tyler’s biggest career hit, topping the UK Singles Chart and spending four weeks at the top of Billboard’s hottest singles. The song is allegedly about two people who share an intense, passionate love for each other, but their relationship is toxic and destructive. Tyler was nominated for a Grammy Award for Best Female Pop Vocal Performance, but the award that year went to Irene Cara’s “Flashdance, What a Feeling.” Worldwide, the single has sales exceeding six million copies. Tyler married in 1973 but never had children, miscarrying at age 39. She and her husband are active in real estate and own farmland in Portugal and New Zealand, 22 houses in Berkshire and London, and 65 stables offering horse boarding services.
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