Is Obama Our Worst President or Just the Weakest?

March 24, 2011

G’Day!

While I did not vote for Obama, I did have great hope for his presidency. Even though I believed him to be too inexperienced and unqualified to be President, his slogan, “Yes we can!” combined with his soaring rhetoric was inspiring and motivating. Unfortunately, my initial fears have been realized. Perhaps Anna Pukas said it best in her recent article, “Barack Obama: The Weakest President in History?” when she described him as “INEFFECTUAL, invisible, unable to honour pledges and now blamed for letting Gaddafi off the hook. Why Obama’s gone from ‘Yes we can’ to ‘Er, maybe we shouldn’t…” To Anna Pukas’ observations, I would add aloof, elitist, and indecisive.

It is actually too early to tell if the outcomes from the legislation of the Obama government will make him our worst President but current and future implications for the massive increase in big government socialism, continuing fiscal catastrophe, unsustainable levels of debt, and diminished international respect for the United States around the world, clearly make him a contender. More worrying is the apparent weakness and inability of President Obama to accept leadership and responsibility for the direction of our country. His ambivalence as a leader and his priority with the “perks” instead of the responsibilities of his office are unprecedented in our current time of crisis. In issue after issue he has withdrawn from the actual decision-making process and, during his first two years in office, deferred to Congress or leaders in other countries to set our government’s goals and priorities. Besides golf (60+ times since taking office, I’m retired and haven’t been able to play that much), political speeches, extensive travel, and a totally unearned Nobel Peace Prize, he has largely been an observer on domestic and international issues. Professor Peter Morici recently indicated on national television, Obama appears to be more interested in “Presidential Tourism” than in dealing with the critical issues facing our nation. Virtually all Presidents in at least the last century have been strong leaders. Some of their actions have been right and some have been wrong but they were willing to take responsibility and actually lead our country. Perhaps Harry Truman expressed it best when he said, “The Buck Stops Here!” With Obama, “The Buck Starts Here!”

We were warned by Hillary Clinton during the Democratic Primary Campaign that Obama, while in the Illinois legislature, declined to take a position on issues by voting “Present” (neither yes nor no) 129 times. While in his partial term in the US Senate, he missed roll call 314 times (24%). These should have been indications of his personal lack of commitment and inability to take a position on legislation. Since becoming President, Obama has essentially been a pitchman for the Democrats, notably the unions, and has punted important domestic decisions (Stimulus, Healthcare, Financial Reform, Federal Budgets, and National Debt) to the Democratically-controlled House and Senate and international decisions to the State Department and foreign leaders. With foreign leaders he has been persistently weak and apologetic concerning America’s historical role in fighting for and defending freedom, democracy and US international interests. He has consistently been indecisive and ambivalent in dealing with China, Russia, Iran, the Middle East, and now Libya.

In responding to the current Libyan crisis, he has dithered and deferred to the leadership of Britain, France, and the Arab League and has now bypassed Congress (perhaps illegally) and subordinated US national interests to the UN Security Council for the current military actions. All this while he and his entire family engaged in “Presidential Tourism” to South and Central America. At the time of this writing, our US policy on Libya is a confused mess. Obama has no clear long-term objectives and he has still not addressed the nation or properly communicated to Congress a coherent government plan. Astonishingly, Obama’s currently stated goal for Libya is to WITHDRAW US military authority over the actions in Libya, pass command to “somebody else”, and voluntarily abandon American leadership in a time of international crisis. He appears to be willing to give command and control over our military to unknown foreign powers “to be determined”! This is another example of Obama’s avoidance of responsibility and lack of strength. Unfortunately, his weakness as a leader and lack of belief in the greatness, strength, and historical contribution of America in the world, has undermined our international stature in the world and created a power vacuum that other nations are trying to fill. Even our long-time allies have been embarrassed by his deference and obeisance to the leaders of problem nations. Remember Obama “bowing” to the King of Saudi Arabia and cancelling President Bush’s Anti-ballistic-missile Defense Shield for Central Europe when challenged by Russia. These are not the actions of the President of the World’s greatest nation.

I don’t know if Obama will turn out to be our worst President but he doesn’t look good and the future of our country is in peril on many fronts, especially our fiscal and debt crises and our foreign policy. I do believe that what little political conviction he has is directed toward expanding socialist government, reducing personal freedoms, and exercising more control over our lives (see “Big Government IS Our Problem!”). This is not good! I am also very sorry to say that I believe that Obama IS our weakest President in at least the last century and has not demonstrated the personal strength to handle the conflicts and confrontations that are a necessary consequence of the domestic and international issues confronting America. This is very unfortunate given the variety of crises we face. Fortunately, the November elections gave control of the House of Representatives to the Republicans. This, at minimum, will halt the growth of collectivist government for the next two years.

Our nation was founded on constitutionally protected principles of individual freedoms, free markets, and limited government. Let’s stop the rot, get back to our roots, and reverse the trend as soon as possible.

The Old Guy PhD

 


Is Our Government Broken?

March 16, 2011

G’Day!

Yes, our government is currently broken and it needs to GET TO WORK! The events taking place in our national government and some states do not represent the principles of elected representative government upon which America was founded. We elected our officials to serve the needs of the people, not the desires of their political party, big business, or unions.

President Obama, both Democrat and Republican Congressional Representatives and Senators (with minor exceptions) are not currently working for the long-term benefit of America. Nearly all are posturing and working for what they perceive as the good of their political party and personal reelection. Citizens have common sense and know that we have fiscal and debt crises that are too large and unsustainable. We must get our State and Federal Governments in order.

Our overall national debt is currently $14.2 trillion and growing. It is nearly the size of our annual GDP.  Disturbingly, over $1 trillion of this debt is held by China, not our most reliable or friendly partner. Our fiscal deficit in 2008 was $0.459 trillion, by 2010 it nearly tripled to $1.3 trillion, and the expected deficit in 2011 is $1.7 trillion. Additionally, we currently have unfunded “entitlement” liabilities for Social Security of $14.8 trillion, Prescription Drugs of $19.6 trillion, & Medicare of $78.1 trillion. This is a total current obligation for future generations of $112.5 trillion, nearly 8 times our total annual output and just over $1.0 MILLION per current taxpayer. This is madness and is crippling our economy and economic growth.

We actually have NO FEDERAL BUDGET for 2011! Obama’s unapproved 2011 “budget” is expected to reach $3.7 trillion this year. This amounts to $10.1 BILLION PER DAY. In the current congressional debate concerning raising the debt ceiling, Democrats have offered  “real” cuts for the remainder of the fiscal year of $10 billion (1 day’s spending) and the Republicans are offering approximately $60 billion (only 6 day’s spending). Neither proposal even remotely addresses the magnitude of our problem. If agreement can’t be reached in Congress, the Federal Government may be forced to shut down. Frankly, except for national security and some essential services, this might actually be a good thing. Our government is too big, too irresponsible, and too self-oriented. Can you imagine what the Founding Fathers would think of what is happening in our government today? A temporary shut down might force us to be more responsible and self-reliant, as the founders of our nation and our Constitution intended.

As noted, the magnitude of our nation’s financial problem is enormous, increasing, and untenable! So what is our government doing to correct the crisis? Last year, the Democrats, who controlled the Administration, the Senate, and the House of Representatives, failed to even pass a Federal Budget for fiscal 2011. They were, however, able to compound our future fiscal and debt problems by passing a massive and unpopular healthcare bill and a financial reform bill, both of which further increase the size of government, with more regulations and control over important sectors of our lives. This legislation further erodes our liberties and free-market economy. Do we really want to become a collectivist country with the government dictating our lives?

For his part, President Obama has virtually abdicated all leadership in this crisis by proposing a new budget for next year projecting spending of another $3.7 trillion and an addition to the deficit of $1.6 trillion. Over the next 10 years the new Obama budget proposal is expected to produce a further cumulative deficit of $7.2 trillion, bringing our overall national debt to approximately $22 trillion. President Obama is spending (pun intended) his time travelling, golfing, and giving political speeches; and his proposed budget is an embarrassment given the magnitude of our country’s ongoing financial problems.

In Congress only the Republicans are even attempting to deal with the fiscal and debt problem and so far they are dealing with trivial, not real spending or fiscal reform (although it is promised). The Democrats are essentially ignoring the problem and blocking even the inconsequential cuts proposed by Republicans for the remainder of this year (see above). When real leadership is essential, Obama and Congress have abdicated their responsibility to the nation and chosen posturing and rhetoric over work and accomplishment for the American people.

At the State level a few Governors are trying to deal with similar budget issues, but some Democrats have deserted their State Houses and fled their elected responsibilities (see “State Democrats Shun Democratic Process!”). Unions are sponsoring demonstrations in several states, which are disrupting our democratic processes and interfering with the ability of our democratically elected representatives (when present) to perform their legislative duties. This is a travesty and is not the way our democracy is intended to work.

Yes, our government is currently broken and it’s time to get to work. What should they be doing? First, after quickly resolving the ridiculous political stalemate over the debt limit and budget for the rest of this year, they should NOT make the fiscal situation worse and the government’s out-of-control spending and inefficiencies should be eliminated as soon as possible. The GAO report “Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue” has already identified unnecessary duplication, overlap, or fragmentation existing across our Federal Government totaling BILLIONS of dollars in ANNUAL SAVINGS. This is a good place to start.

Second, they should employ proven strategic management techniques. Any basic management course indicates that solving problems and capturing opportunities requires: setting long-term goals, reviewing historical performance to identify strengths and weaknesses, identifying and prioritizing alternative “comprehensive” solutions, acting on the best “comprehensive” solutions, and measuring and correcting course to improve performance. Our government needs to follow this agenda. The Bowles-Simpson, Co-Chairs Draft Report, “National Commission on Fiscal Responsibility”, is a reasonable draft proposal for identifying and establishing these goals and actions (some painful) to resolve the long-term financial crisis we face as a nation. It addresses all areas of government including its size, spending, and revenues and suggests major reform in income taxation and entitlement programs. This is also a good place to start. To date, neither President Obama nor Congress appears to be seriously considering the information and recommendations in either report.

“Big Government is Our Problem”! Let’s fix it and put our country back on a solid foundation with individual freedom, free markets, sound fiscal and monetary policy, economic growth, and limited government!

The Old Guy PhD

 


Are Public-Sector Unions Destroying Democratic Government?

March 11, 2011

G’Day!

The fiscal and debt crisis facing many of the 50 states and the bankruptcy of General Motors have highlighted the critical role public and private-sector unions have in our ability to compete globally and in the functioning and long term solvency of our state and federal governments. The demonstrations in Wisconsin and similar events in Indiana, Rhode Island, New Jersey, and Ohio, not to mention the budget crisis in New York and California, are emphasizing the magnitude of the controversy and crisis facing our governments over well-intended but overly generous and unsupportable public-sector union benefit packages. Unlike the private sector, public-sector workers are paid by taxpayers, currently receive benefits and wages that are above the average paid for similar work in the private sector, and have greater job security. Without significant change and fiscal sanity restored, many states will ultimately face one or a combination of undesirable choices: raising taxes on business and/or the general population, cutting services, reducing salaries and benefits of public-sector workers, or declaring bankruptcy and starting over.

Originating in Europe, unions transferred to the USA in the 19th and especially the 20th century.  They began in the private sector with legitimate goals of fair pay, better & safer working conditions, and fair bargaining for labor contracts. In the private sector unions work because in a competitive free-market there is an objective economic outcome, which, when successful, maintains profit for the owners and appropriate wages and working conditions for the employees. If owners are too greedy, good employees will leave and the firm will fail. If employees are too greedy, costs will be uncompetitive and the firm will fail. Under either situation both owners and employees will lose, so both parties have incentive to balance their demands so that the firm succeeds. It was the excessive bargaining power of the unions combined with increasing competition that led to many private U.S. firms’ bankruptcies (think General Motors and the Airlines) and that ultimately led to a decline in private-sector unions. Private-sector union membership peaked in 1953 at 25.5% of the labor force and has declined steadily afterwards. I support private-sector unions in a competitive, free-market economy as long as they are “open shop”, represent “right to work” conditions, have “secret balloting” for elections, and are not biased by legislation.

Public-sector unions did not exist until the late 1950s, when, Robert Wagner, Mayor of New York City, in an appeal for votes (an omen of things to come), signed an executive order authorizing the city workers to unionize. Other Democrat-led local and state governments followed his lead and President Kennedy, also by executive order, authorized federal workers to form unions in 1962. Prior to this, public-sector workers were expected to earn less than private-sector workers in return for job security and service to the public. Even union leaders recognized at that time that collective bargaining by government workers was biased in favor of workers, unfair, and inappropriate.

Public-sector unions do not represent the conditions necessary for fair and balanced negotiations with elected government representatives. Government jobs do not have a competitive market (governments and essential services don’t compete), don’t have an objective economic outcome that forces compromise (governments don’t go bankrupt, yet), and the taxpayer owners are represented by temporary agents who negotiate for wages and benefits with workers who vote them into office. The contracts from these negotiations endure permanently into the future long after the elected politicians negotiating for the taxpayers have departed. There is clear bias when short-term reelection partially depends on the votes of these employees. This process is further biased where public-sector unions are large and have full  “Collective Bargaining” rights, as is currently the case in 26 states.

Because wages and benefits to public-sector workers come from taxpayers, ALL taxpayers in total are funding these contracts AND union dues. A portion of these union dues is recycled into the election and lobbying process as political support for union favored candidates and laws (like the current “Employee Free Choice Act”, which is union biased and should be killed). In 2007-08 unions spent $165 million on elections and proposed legislation. Andy Stern of the SEIU bragged that the union spent $60 million to get Obama elected. Not surprisingly, the majority of these recycled union funds go to support the Democratic Party and no wonder that Democratic Senators in Wisconsin and Indiana have fled their states and elected responsibilities in support of union protests against proposed limits on union power and benefits.

Do the public-sector unions really have a legitimate complaint? Are they underpaid? Are their benefits unfair? Is their job security worse than the private sector? The obvious answer to all these questions is, “Hell No!” The US Bureau of Labor Statistics for 2009 indicates that unionized public-sector workers have a 31% advantage in wages and a 68% advantage in benefits over nonunionized workers (with a much larger advantage in defined-benefit pensions and health insurance) and their job security is almost assured, especially in education. Public-sector union members generally contribute little or nothing for their healthcare and pensions and in many cases can retire at a significantly earlier age than private sector workers. And remember, taxpayers are the source of their wages and benefits. I ask the questions, “Does the service and value provided by public-sector workers justify their higher-level of pay and benefits over the private sector?” If not, why are we, the taxpayers, paying it?

The chart above represents the trend in public vs. private-sector union workers since 1973. It illustrates that union membership in the private sector has declined by over 50% from approximately 15 million to 7.1 million to approximately 8% of the workforce. During this period public-sector membership has increased by over 150% from approximately 3 million to 7.6 million and represents more union members than the competitive private sector for the first time in history. This growth in government workers and spending must stop and proper priorities set on what we can fiscally afford as a nation. Our government cannot do every “desirable” project. Endless growth in State and Federal Governments promoted by unions is increasing regulations, increasing the size and cost of government, stifling economic growth and innovation, and restricting private sector job expansion. We, the people not the government, must accept primary responsibility for our families, our neighborhoods, our country, and ourselves.

So what should we do? First and most important, where it still exists, collective bargaining for the public sector, which should have never been permitted, should be ended, the proper balance between taxpayers and government workers restored, and its undemocratic and prejudiced influence in the electoral and negotiating process halted. Second, effective immediately, all new hires into public-sector employment should have a new retirement age consistent with those in the private sector, revised pension and healthcare contracts in which they must contribute appropriately to their health and pension plans, pension plans that are based on defined-contribution not defined-benefit, wages based on performance not longevity, and where it exists, “tenure” should be abolished. Third, existing retirement contracts for long-term government employees approaching retirement age (to be determined but within approximately 10 years of retirement) should be honored, but they should be required to begin contributing to their healthcare and pension plans as above. Fourth, employees with longer than approximately 10 years to retirement age should also begin contributing and have their retirement phased-in as appropriate to match the new retirement age.

These major recommendations are admittedly oversimplified for brevity and will differ by State and between State and Federal workers depending on existing contracts. However, they will significantly reduce the current and long-term fiscal crises facing our state and federal governments. Other non-union related issues and recommendations will be the subjects of a future post.

The near-monopoly stranglehold public-sector unions have over large portions of our state and federal governments must be broken or the unsustainable budget and debt problems will continue to erode and potentially destroy our democratic institutions of government. Public-sector workers must be compensated like private sector workers based on value-added.

It’s time to curb public-sector unions, return power to the taxpayers, and restore fiscal sanity to our government.

The Old Guy PhD


How to Solve Healthcare Part II

March 3, 2011

G’Day!

In “How to Solve Healthcare Part I”, I addressed the simpler ways free-market alternatives to “Obamacare” could be used to solve some of the healthcare issues we face as a nation. These issues were identified as: 1) cost reduction, 2) coverage for “pre-existing conditions”, 3) patient choice in doctor selection & treatment, 4) portability of existing coverage in relocation, 5) coverage for catastrophic events, 6) tort reform, and 7) coverage for those involuntarily uninsured because of need. This post will address the more complicated issue of the separation of the patient from the payment and insurance coverage process through employer-based insurance programs. Coverage specifically for catastrophic events will be the subject of a future post.

Since WW II, the healthcare industry has become “layered” with various institutions, which have resulted in financial and personal separation of the patient from his or her doctor, treatment, and payments. Between the doctor and patient payment system, we now have insurance companies, health maintenance organizations, accounting firms, and employers. Some of these institutions are justified specializations that reduce cost or help manage risks. The inclusion of employers in the system is not one of them, is unnecessary, and has created its own set of issues. If fully implemented, “Obamacare” will add a new layer of government to this already complex process. As indicated in Part I, more government control over healthcare products and pricing will ultimately lead to higher not lower costs, fewer choices, higher taxes, more debt, and less competition. Perhaps the best indication of forthcoming problems with “Obamacare” is that the Obama administration has already granted delayed implementation “waivers”, because of higher cost and reduced-benefit concerns, to nearly 1,000 unions and major companies.

Employer-based healthcare plans and other “fringe-benefit” programs expanded significantly during WW II as a reaction to government “Wage Controls” and currently comprise nearly 60% of health insurance coverage in America.  Because of government-controlled wages, employer-sponsored healthcare was created to provide valuable services to employees without violating arbitrary wage limits. These employer-based plans have persisted long after wage controls were removed. Since 1954 these employer-paid insurance benefits were no longer considered taxable income to the employee but are a deductible business expense for the firm, which further complicates the issue. The practical effects of this approach have been to insulate the individual patient from the financial implications of doctor choice, medical fees, tests, consultation, and treatment. In addition, individual freedom of choice has been replaced by limited “standard packages” or “one-size-fits-all” from which employees must choose. The alleged benefit for employees is cheaper cost, supposedly resulting from a larger company insurance pool and standardization. In this regard, it should be noted that the “packages” for unions (especially public-sector unions) and for management employees are frequently better than those offered to general employees.

If the employer “layer” was removed from healthcare and current business insurance costs paid directly to the employees as increased wages (with the same tax deductibility provision available to business), the healthcare insurance choices could be made by individuals based on their own cost/benefit analysis and financial choices for doctors and treatment would become more transparent. Coverage would be personalized to the needs of the actual consumer, not the desires of the employer. Because of the impersonal separation of the consumer from actual healthcare costs (other than a small “copay”) individuals generally consider these costs low or negligible and tend to overuse the system. Insurance coverage for separate and smaller employer pools should cost MORE NOT LESS than a larger nationwide competitive pool of all citizens, in which all individuals would have freedom of choice over the plans and costs that fit their personal needs. Why should personal choices for healthcare insurance be different from choices for auto, life, or other forms of insurance simply because of a 60-year old system designed to circumvent temporary government wage controls for WW II? Give back freedom of choice to the individual.

Removing the employer from the system, along with nationwide competition (see Part I) could also solve the “portability” issue of coverage during relocation or loss/change of job and retirement because the employee would own the insurance policy, not the company. Why shouldn’t healthcare insurance for the individual and his or her family be fully portable, like car insurance or life insurance?

Transition to personal-based vs. employer-based insurance could be accomplished by requiring employers to give employees the choice between continuing existing company-paid plans or receiving the company-paid contributions as tax-free employee compensation, as they are categorized under current tax law. This would allow freedom of choice to individuals and gradual adjustment to the new alternative. Besides freedom of choice, the “portability” advantage of personal-based insurance noted above would be another important consideration in the choosing between the two alternatives.

Employers have no reason to be another layer in the healthcare process, add no apparent value, and have created additional problems. If individuals are given the freedom to make their own cost/benefit choices in a free market with nationwide competition, individuals will have more alternatives and will be more aware of their actual healthcare costs. This should result in more responsible use of the system. Individual freedom to control their own healthcare insurance choices and the resulting additional financial transparency should result in more and better personal decisions and lower costs.

Individual freedom of choice, in a free and competitive market with temporary safety nets only for those truly in need, is a better healthcare solution.

The Old Guy PhD