‘Twas the Night Before Christmas #2

December 14, 2013

G’Day!

Time for some humor–again with apologies to Clement Moore & Democrats.

 

 ‘Twas the Night Before Christmas!

1    ‘Twas the night before Christmas, when all thro’ my house,

2   Not a creature was resting, not even a mouse;

3   The Stockings were hung by the Chimney with hope,

4   That in 2014, we’d be able to cope;

5   Sebelius was panicked, and feared for her job,

6   While Obamacare problems, stirred up the mob,

7   With no health insurance, or work through the land,

8   We added our assets, to see how much on hand.

9   When out on the lawn there arose such a clatter,

10   I sprang from depression to see what was the matter.

11  Away to the window I flew like a flash,

12  Tore open the shutters, and threw up the sash.

13  The moon on the breast of the new fallen snow,

14  Gave the lustre of mid-day to deficits below;

15  When, what to my desperate eyes should appear,

16  But a government golf cart, and eight progressive Reindeer,

17  With the President driving, so lively and quick,

18  I knew in a moment it must be a trick.

19  More rapid than eagles his supporters they came,

20 And he whistled, and shouted, and call’d them by name:

21    “Now Media! Now Wall Street! now Unions! and Wa’ Post!

22   “On Holder! on Carney! on Jarrett! and ‘Spend Most’!

23   “To the top of the Debt! To the top of the wall!

24   “Now Tax it all! Tax it all! Tax away all!”

25    As vague promises before the wild subsidies fly,

26    When they meet with an obstacle, mount to the sky;

27    So up to the heavens, the deficits they flew,

28    With the cart full of Regulations – and Executive Orders too:

29    And then in a twinkling, I heard on the roof

30   The laughing and gnashing of each little tooth.

31    As I drew in my head, and was turning around,

32   Down came Obama with a bag and a bound:

33   He was dress’d all in debts, from his head to his foot,

34   And his promises were stained with ‘misstatements’ and soot;

35    A bundle of taxes were hung on his back,

36    And he look’d like a peddler just opening his pack:

37    His promises – how many! His failures – how crippling,

38    His cheeks were like roses, his fingers were gripling;

39    His droll mouth was drawn up in a grin,

40    As he planned to build, bigger government again;

41     The bill for Obamacare he held tight in his teeth,

42    And joy encircled his head like a wreath.

43    He had a big smile, and blamed everyone else,

44    For all his disasters, all but himself:

45    He was happy and laughing, a right socialist old elf,

46    And I cringed when I saw him, in spite of myself;

47    A smile on his lips, and a twist of his ear,

48    Soon gave me to know, I had something to fear.

49    He spoke not a word, for him a big task,

50    And took all of value; then took off his mask,

51    And laying his golf club aside of his nose,

52    And taking my assets, up the chimney he rose.

53    He sprang to his golf cart, to his team gave a toot,

54    And away they all flew, after taking the loot:

55    And I heard him proclaim, as he drove by my eye;

56    Thanks for your help, kiss your healthcare and free markets goodbye!

 

Seriously, Merry Christmas & Happy New Year to everyone! Hopefully, 2014 will be better!

The Old Guy PhD


Decision Time in America – Which Future do You Want?

October 28, 2012

G’Day!

On November 6 we will face an election that will decide our nation’s course for many years. This election will be the most important election in our lives and will decide not only our immediate future but also the future for our children and grandchildren. After 3 ½ years of the Obama Administration, the Senate Democrats, and over a year of campaigning, our choices have never been more clear. At stake is the success or failure of our economy, the relationship between our government and ourselves, federal fiscal and debt solvency, taxation levels, America’s role in the world, and the legacy we are endowing to future generations.

The key issue we must face is which Presidential Candidate and political party offers the best opportunity for economic & job growth, wealth creation, supportable social safety nets & entitlements, sustainable National Debt, and a higher standard of living for the American people. It is vital that each of us take the time and make the effort to understand the potential consequences for our culture, our freedoms, and the potential survival of our country from these two widely different visions of government’s role in our society and vote accordingly.

Choice 1

Fundamentally, Romney/Ryan and the Republican Party support smaller government, free market capitalism, a strong national security, and individual liberty. They believe in the Constitution as written by the Founding Fathers, individual & business freedoms, private property rights, sound fiscal and monetary policies, lower taxes for business and individuals, a government limited to the powers granted in the Constitution, and equality of opportunities for all citizens.

Specifically in this election, Romney/Ryan and Republicans support overturning government run Obamacare, which significantly increases healthcare costs, adds central bureaucratic control over healthcare, and erodes our freedom of choice in the doctor/patient relationship. They support overturning the Dodd-Frank financial legislation, which has stagnated our financial industry and economic growth and adds layers of still to be written rules and regulations and additional costs over banking. As protection from mounting problems in the Middle East, Romney/Ryan and Republicans support the construction of the Keystone Pipeline and the opening of public lands and offshore exploration for expanding and achieving North American energy independence.

Republicans further believe in a clear and resolute Foreign Policy supported by a strong economy and military and free trade with other nations. They believe that a reasonable but not unlimited social safety net is desirable for those truly in need and welfare as a temporary situation with the objective of being a transition to independence. Romney/Ryan advocate major tax reform by lowering the rates and broadening the base for individuals and businesses in order to promote economic growth. They further advocate major entitlement reform to bring the Federal Budget into balance, while insuring that Social Security, Medicare, and Medicaid will be sustainable for future generations.

Regarding the economy, Republicans believe that prosperity and job growth is derived from entrepreneurial business activity free from excessive government interference and is advanced by minimizing regulations, having lower taxes, and maximizing freedoms and opportunities. Individual and business success is praised, honored, and rewarded. Free markets determine winners and losers and wealth is distributed based on objective “achievement” through persistence, intelligence, and hard work.

Choice 2

Primarily, Obama/Biden and the Democrat Party support bigger (unlimited?) government, centrally planned European-style neo-socialism, reduced national defense, and bureaucratic control of individual and business freedoms. They believe in a “living” Constitution to be interpreted and modified by the judicial system as desired, control over private property use, and unsustainable fiscal policy and National Debt. They advocate open-ended entitlements, welfare, and government spending, higher taxes on businesses and individuals but especially the successful “rich”, and forced wealth transfer to achieve “fairness”. Opportunities for success (or failure) will be largely determined by central government administrators.

Specifically in this election, Obama/Biden and Democrats approve of and are committed to retaining government run Obamacare and Dodd-Frank financial legislation. They have no practical national energy plan and are against the Keystone Pipeline, offshore exploration, and expansion of fossil fuel development on public land. As is well documented, Obama currently favors “Green Energy” as the alternative to fossil fuels and, through the Environmental Protection Agency (EPA), Department of Energy (DOE), has used billions of taxpayer money to subsidize and support his belief. Through the EPA and DOE, The Obama Administration is waging a “War on Coal”, which is preventing the country from exploiting a cheap and plentiful fuel source and will result in the loss of thousands of jobs in the Coal Industry. All of this makes America weaker and more dependent on foreign energy from the troubled Middle East Area.

For nearly four years Obama has followed a Foreign Policy of appeasement, apology, and withdrawal emphasized by planned reductions in the military and controlled trade with other nations. Obama and Democrats believe in regulated and even hostile control over businesses and the use of Administrative Executive Power (especially EPA, DOE, Department of Health & Human Services (HHS), and Department of Labor (DOL)) as desired to accomplish this. They believe in and have encouraged entitlement expansion and welfare dependency supported by a $6 Trillion increase in the National Debt in four years.

Obama/Biden and Democrats believe that economic and job growth is derived from central government planning not free markets, high taxes on successful individuals & companies, and taxpayer funding through grants and subsidies to bureaucratically selected companies and industries. Individual and business success is envied, derided, and penalized through regulations and wealth transfer. The government determines winners and losers based on administrative subjectivity and wealth is redistributed based on an arbitrary determination of “fairness”.

For months we have heard impressive speeches from our President promising more of the same “Hope and Change” supported by increasing government restrictions (Obamacare, Dodd-Frank, the EPA, the DOE, etc.), unsustainable entitlements, higher taxes on the “Rich”, and ballooning National Debt. But no volume of skillful oratory by the President can disguise the fact that Obama and the Democrats have no new ideas for the next four years and Romney/Ryan and the Republicans do. Romney has articulated clearly his 5-Point Plan to get America back on track to a prosperous growing economy with job opportunities for those who want to work: 1) Energy Independence, 2) Free Trade, 3) a Balanced Budget, 4) Improved Education, and 5) Tax Reform to support Small Businesses. While no one party or individual is perfect or will solve all problems we must select the alternative that provides our best opportunity to save our country from financial disaster and economic chaos that uncontrolled government deficits represent. The survival of our great nation depends on making the right choice.

OK, it’s decision time! Which future do you want? Please take the time and make the effort to study the alternatives, the potential outcomes from each, consider what is at stake for yourself, your children, and our great country, and vote wisely. The choice will be yours on November 6th.

The Old Guy PhD


The Presidential Debates – Romney Wins Round One!

October 4, 2012

G’Day!

Finally the American people were able to see both the real Romney and the real Obama on the same stage, at the same time, unfiltered by spokespersons or the biased Liberal Media. The debate was informative and enlightening and a huge victory for Presidential Candidate Romney.

Romney was enthusiastic and passionate, decisive, well prepared, well organized, and armed with better specifics of both his own proposals and those of Obama. Romney was more confident and professional in his delivery, firm but friendly in responding to the questions of the moderator, Jim Lehrer, and those of Obama, and quick to stand up for his principles and to correct the misinformation presented by the President. Romney stood solidly in favor the basic tenets established by our Founding Fathers in The Declaration of Independence, The Constitution, and The Bill of Rights. The most significant of which is a government limited to protecting national security, individual freedoms, private property rights, free markets, and providing fair and impartial justice. In his debate remarks Romney laid out a five part path to future growth and prosperity: Energy Independence, Free Trade, a Balanced Budget, Improved Education, and Tax Reform. I’m in – are you?

On the other hand, Obama was not well prepared, poorly organized (even rambling at times), and appeared uncomfortable in the setting and especially with Romney’s challenges and corrections of his misinformation. He was lackluster, hesitant, and vague in his presentation, repeatedly relying on the familiar “bumper sticker” slogans used during his campaign – “fair shot, fair share, same rules”, “failed policies of the past”, “saved us from the biggest recession since the Great Depression”, etc. How many times do we have to listen to this misinformation? During the debate President Obama looked bored, did not seem to want to be there, and became increasingly uneasy. Obama has not been seriously challenged since the primary against Hillary Clinton and even then the Liberal Press “had his back” as they have persisted in doing since his election. When everyone around you, including most of the Press, fawns over your very presence and you win the Nobel Peace Prize for actually doing nothing other than being elected, it is difficult, especially without a “teleprompter” or agents to spin the issues on your behalf, to be publicly challenged by an opponent who is equally or better educated, has far more experience, and has high religious and moral standards. It makes you wonder just how capable Obama is in serious negotiations with other world leaders? Obama did make it clear again that he believes Big Government, higher taxes, more regulations, less personal freedoms, and more spending are the answer to our economic, fiscal, and debt problems. Do you?

As stated in my last article, “The November Election-A National Intelligence Test for America!”, this election IS the clearest choice between two different visions for America: sound fiscal policy vs. unsustainable fiscal policy, less government vs. more government, more individual and business freedom vs. less individual and business freedom, lower taxes vs. higher taxes, free market capitalism vs. centrally controlled neo-socialism, stronger national defense vs. weaker national defense, private doctor-based healthcare vs. central government mandated healthcare, strong foreign policy vs. weak and apologetic foreign policy, and, perhaps most importantly, more support for The Constitution vs. less support for The Constitution. These are the real issues from the debate and which we will be voting for or against in November. Do not make the mistake of letting Obama’s campaign rhetoric and a prejudiced Liberal Media systematically brainwash and deceive you into failing to think for yourself and to vote for what is right for our county.

As I have stated in previous articles, our nation was established on the fundamental principle that government is the servant of the people, not vice versa. It’s time to take back our country. Vote in November!

The Old Guy PhD


Wake Up America – Obama is Hazardous to Your Health (& Wealth)!

March 31, 2012

G’Day!

Not only is Obama hazardous to your health and wealth, he is even more hazardous to our Constitution, our personal freedoms, our national defense, our foreign policy, our economic growth, our energy independence, and our very fiscal survival as a country. If Obama and the Democrats are left unchecked (pun intended), our capitalist freedom-loving nation, that has been a model for the world for over two centuries, could become a centrally mandated, entitlement state of mostly parasites living off the productive endeavors of fewer and fewer successful hard-working citizens. At worst, America could turn into a failed bankrupt state. Given the apparent Obama agenda of dictated economic equality and oppressive federal government control over all aspects of our social, economic, and personal lives, the freedoms and opportunities for the hard working Americans will continue to be eroded through increasing regulations, restrictions, and taxes. It appears that Obama’s intent is to engage the nation in “class warfare” in order to make us all equally poor and dependent on the federal government for our survival. Unfortunately, it sounds a lot like communism to me. As “The Economist” headlined in February: “Over-regulated America: The home of laissez-faire is being suffocated by excessive and badly written regulation”. Regrettably, this appears to be true!!

Regarding health, all I need to say is “Obamacare”. Approximately two-thirds of the country doesn’t want it. It has and will continue to increase both healthcare and business costs and will inhibit job and economic growth. It will penalize medical innovation, decrease incentives for doctors, and increase direct and indirect taxes for those who actually pay them. It is a massive increase in government’s intrusion in our lives and will ultimately result in government-rationed healthcare including end-of-life decisions by bureaucrats. Hopefully, the Supreme Court will correctly declare the act unconstitutional and we can return to a logical and rational free-market based system with reasonable government support for the truly needy. I lived in Europe for approximately ten years and can assure you even our current system, which can be improved, is far better than “Obamacare”.

Obama is clearly an “elitist” who does not support our Constitution. The Constitution is the foundation of our individual liberties and places strict limits on federal government power. Obama appears to believe that he and his administration are smarter than our Founding Fathers and are more qualified than Congress or the people to make decisions and rules controlling our lives and our economy. Obama’s agenda is found throughout his administration and especially in his policies for Energy, Environment, Labor, Defense, and the Department of Justice, not to mention his appropriately named “Czars”. Look at the damage these federal bureaucracies have done during his brief term in office. Obama is trying to force his socialist agenda of an all-powerful federal government on the American people. He is even trying to bypass Congress with excessive use of executive power through administrative mandates. This is not the way our Founding Fathers intended the three branches of our government to function and is not good for our country.

Obama’s financial and economic policies have been and continue to be an accelerating train wreck for America. Suffice it to say that in only three years he has increased our national debt by over $1 trillion every year and in total by $5 trillion to more than $15 trillion (+50%), so much for electing a Community Organizer to run the country. Over the last year I have written many articles about how totally unsustainable and incomprehensible his financial and fiscal policies are. His Presidential budgets and the Dodd-Frank regulations are obvious examples of bad proposals and legislation. President Obama may be charming but he is a disaster for the future of our nation.

How many of you really believe Obama’s National Defense and Foreign Policies over the last three years have been favorable? Do you believe our country is safer and that our influence throughout the world has improved under Obama’s guidance? Do you feel that ignoring European desires, especially Poland and the Czech Republic, and caving in to Russia’s demands to eliminate the European missile defense shield has made Europe or the United States more secure? Has this concession to Russia resulted in any change in Russia’s willingness to cooperate with us on Iran, Syria, the Israel-Palestinian conflict or any important foreign issue? Has the abrupt withdrawal of armed forces from Iraq caused the Iraqi to experience less internal hostilities and regard us more favorably than before? Has the ill-advised announcement of a specific timetable for unilateral withdrawal from Afghanistan improved our relations with the Afghan government and the Taliban or resulted in a reduction of hostilities? Has his policy regarding Israel improved or worsened their conflict with the Palestinians in the West Bank? Have the unilateral defense cuts, including cancelling of the NASA Space Program with the immediate lost of thousands of highly trained technology jobs improved our ability to defend ourselves or compete scientifically in space with China, Russia, Iran, or even North Korea? Have our relations with China and Pakistan improved under Obama? And finally, how is the containment of Iran’s nuclear program going? Are these the policies you want continued by our government? I know that I do not.

Regarding Energy, the arbitrary Energy Department and EPA restrictions on fossil energy use, exploration, and development have made us more dependent on foreign energy sources from unstable regions of the world and increase our energy costs. Does the stoppage of the Keystone Pipeline from Canada and the associated loss of desperately needed domestic jobs make any sense to anyone other than radical environmentalists? Will the newly released emission standards on coal-fired power plants kill the coal industry and result in thousands of lost jobs. These administrative mandates will result in higher gas prices, higher energy prices, lower employment and less economic growth at a time when our country is struggling to recover. Obama and his administration should realize that our nation and the world will be dependent on fossil fuel energy for years and probably decades. We have abundant domestic sources of oil, natural gas, and coal available if our government would let us develop and use them. And, if we do not, the security of America will be in jeopardy and we will be at the mercy of unstable nations that do not like us. I for one am totally mystified. What is Obama thinking? I do not want to believe that Obama intentionally wants to destroy our country but his policies are certainly trending in this direction. This is not good.

As I said in last month’s article, “The growth of Western Civilization and especially the United States was fuelled by the expansion of individual liberties, property rights, and a free market capitalist society. Our nation was established on the fundamental principle that government is the servant of the people, not that the people are the servants of the government. It’s time to take back our country and return to the individual liberties, free markets, economic growth, and limited government we have long enjoyed.” WAKE UP AMERICA!

The Old Guy PhD


Debt Crisis – Whatever happened to Bowles-Simpson?

November 10, 2011

G’Day!

The bipartisan Debt Reduction Commission co-chaired by Democrat Erskine Bowles and Republican Alan Simpson completed and submitted to President Obama in February a rational and comprehensive approach to our country’s fiscal and debt crises. I posted articles praising the work of the co-chairs and the commission members on April 1, April 16, and July 22. (See “Bowles & Simpson Have it Right!”, “Obama Ignores Bowles-Simpson Debt Reduction Commission – Again!”, and “Debt Reduction: Bowles & Simpson Have it Right – Redux!”) To date, President Obama, the Democrats and the Republicans in the House and Senate have fundamentally ignored their proposal. Why their recommendations have been ignored by our government, and especially by the President, who established the commission, is a “puzzlement”?

The final Co-Chair’s proposal, “The Moment of Truth”, included both long and short-term government actions to resolve our fiscal and debt crises, contains nearly $4 trillion in debt reduction over 10 years, and was approved by eleven (61%) of the eighteen bipartisan members of the commission. As stated in Guiding Principle #2 of the draft report, “The Problem is REAL – the Solution is Painful – There’s no Easy Way Out – Everything Must Be On the Table – and Washington Must Lead”. Their proposal is comprehensive. It includes cuts and caps on discretionary spending and revenue enhancements through major tax reform to broaden the tax base, simplify the code, reduce tax rates, and cap revenue at 21% of GDP. It reduces spending for entitlements including healthcare and social security and eventually caps total spending at 21% of GDP. The proposed plan stabilizes the debt by 2014, reduces debt to 60% of GDP by 2024 and 40% by 2037. What’s not to like??

As noted above, it is a mystery to me why this proposal, developed and approved with bipartisan support, was shelved by Obama and ignored by Congress since it was formally delivered to the President nine months ago. While these are difficult and trying times, we should expect and demand that our President and Congress put partisan bickering and reelection concerns aside and act for the benefit of the American People. Time spent on campaign fundraising does not reduce our debt or improve job creation and economic growth. We deserve rational behavior from our elected representatives and should demand the compromise and cooperation necessary to correct our economic problems and return our great nation to a path of growth and prosperity. Admittedly, the Co-Chair’s proposal is controversial. It is also realistic, responsible, comprehensive, and should be receiving the immediate and serious attention of our President, Congress, and currently the “Super-Committee” (who are looking for a mere $1.2 trillion over ten years).

Every sensible citizen knows America has an unsustainable debt crisis that, if not corrected quickly, will lead to financial and economic disaster for our country. Socialism does not work. Greece is not a role model for government in America. Our current government is too large, too oppressive and is out of control. Economic growth is based on opportunities not restrictions and lower tax rates not higher regulations. Escalating government spending must be halted and its intrusion in our lives and businesses reversed. Tax reform to broaden the tax base, simplify the code, lower rates (especially corporate), and increase revenues is essential. Our government MUST be business friendly and promote the entrepreneurial spirit necessary for economic growth and global competitiveness. We need to bring back the constitutional freedoms and personal liberties that led us to be the greatest nation on earth. The Bowles-Simpson proposal is a good start.

The Old Guy PhD


Government Imposed Uncertainties Hurt Economic Growth!

July 7, 2011

G’Day!

In nearly every analysis or survey of why business and financial institutions are not currently hiring or investing in America, the primary reason given is “uncertainties”. While dealing with economic uncertainties is a normal part of business decisions, the Obama Administration and Democrats in Congress have created additional administrative and legislative uncertainties that are unnecessary and detrimental to growth. Removal, or at minimum temporary suspension, of these government obstacles to investment, growth, and job creation would allow business and financial institutions to get America moving again.

Summarized below are the current government-sponsored complications that are discouraging job creation, capital investment, and the economic growth that we would expect from business during a normal expansion. I apologize in advance for its length but the issues are important and merit nominal analysis. Please review the information below and ask yourself, “If I were a business manager or a banker, would I risk my own money to expand, startup a new business, or make loans in this restrictive and uncertain regulatory environment?”

Fiscal Deficit & Debt Crisis: These two related issues are by far our greatest overall national risk! Fortunately we have a very comprehensive, rational, and bipartisan solution available, which was initially sponsored by President Obama. It is the Bowles-Simpson Debt Reduction Commission Report, “The Moment of Truth”. Unfortunately, President Obama and Congress have ignored this proposal since its completion. I have extensively discussed and still support this positive and bipartisan solution, (see “Bowles & Simpson Have it Right!” “Obama Ignores Bowles-Simpson Debt Reduction Commission – Again?” and “Is Obama Really Serious about Debt Reduction?”). The commission’s report, which was approved by a majority of 61% of the bipartisan members, has languished in obscurity since it was completed and presented to President Obama early this year. The recommendations from the commission cover all the necessary aspects of an implementable comprehensive solution to the our fiscal and debt crises including significant tax reform, reductions in discretionary and defense spending, and entitlement reforms including Social Security. For reasons that are a mystery to me, neither Congress nor the President appears to be considering this report in their current discussions. The President and the Democrats are not only totally ignoring a rational solution but have been fighting for months to avoid even minimal reductions from the inflated federal budget spending of the last 2-3 years. How can anyone expect financial institutions or business firms to act positively with these uncertainties hanging over them?

Taxes: As repeatedly discussed in previous articles, both corporate and individual income tax reform is essential for economic growth and investment in our country (see “Fiscal & Debt Crises – Tax Reform Essential!”). We need to raise additional federal revenues by lowering tax rates (especially corporate tax rates), eliminating loopholes, subsidies, and unnecessary “tax expenditures”, broadening the tax base to include more taxpayers, and simplifying the tax code. Currently at 35%, corporate tax rates in America are among the highest in the developed world (corporate taxes in China are 25%, Russia 20%, Germany 15%, and Ireland 12.5%) and foreign profits are penalized if returned to the US. This is ridiculous and encourages job creation and investment overseas, not in the US!

Regarding broadening the tax base, over 51% of US families currently pay no income taxes but receive the benefits paid by taxes from the rest of us, especially the much maligned “wealthy” (who already pay 76% of total income tax revenues). The current Obama proposal is to add more taxes on the “Rich” by rescinding the “Bush Tax Cuts” sooner than they are scheduled to expire. Simple math demonstrates that the “Rich” don’t have enough income to pay for the current and projected Obama deficits. This is nothing but political demagoguery and class warfare in preparation for the next election and is neither rational nor a serious solution to our long-term government overspending problems. If we are to solve our deficit and debt crises, broadening the tax base can and must be accomplished.

In “Fiscal & Debt Crises – Tax Reform Essential!” noted above, I have outlined three overall reform alternatives: 1) Retain but simplify our current “Progressive tax system, 2) Adopt a “Flat Tax” (one tax rate for all), and/or 3) Adopt a “Fair Tax” (a consumption or “VAT” tax). I personally prefer implementation of the “Fair Tax” either alone or in conjunction with one of the other two alternatives.  However, any one or a rational combination of these alternatives will accomplish the necessary tax reform goals and stimulate economic growth. All have detailed proposals available to our government, which are currently being ignored. The current extension of the “Bush Tax Cuts” expires at the end of 2012. Would you hire new employees or invest in your business, if you didn’t know what your taxes would be in eighteen months?

Obamacare: Virtually all independent analysis indicates that implementation of the 2000+ pages of Obamacare will ADD not reduce healthcare costs and will probably result in a single payer government-controlled healthcare system with restricted options and limited services. Small businesses, the job growth engine of our economy, are particularly at risk. At last count, approximately 1450 organizations, including many unions, have been given Obama Administration waivers against required implementation of Obamacare because of the higher costs it demands. Equally importantly, no one really knows all the implications, costs, or unintended consequences of the legislation because the Obama Administration is still writing the rules. In two separate articles, I suggested market-based solutions to our healthcare issues, “How to Solve Healthcare Part I” and “How to Solve Healthcare Part II”. I lived and worked in England for the better part of ten years and can assure you government-run healthcare is costly (through taxation), inefficient, slow, and limited in providing medical services. Think long and hard before you support such a system in the US. Again, if you were a business manager and were faced with the higher costs, more administration, and uncertainties associated about healthcare rules that are still being written by the administration, would you add to your payroll costs by hiring new employees?

Dodd-Frank Financial Regulation: Like Obamacare, this legislation is lengthy, complicated and potentially expensive for the financial services industry and ultimately consumers. No one really knows all the implications or additional regulations of the legislation because they are still being written by the administration and will create many unintended consequences for consumers and the industry. The Act is perhaps the most significant change in financial regulation since FDR. It represents major changes to all financial regulatory agencies and affects most of the nation’s financial industry. Major new agencies have been created: Financial Stability Oversight Council, the Office of Financial Research, and the Bureau of Consumer Financial Protection. Perhaps the most controversial provision is the creation of the potentially big and expensive “Bureau of Consumer Financial Protection” within the Federal Reserve System (FRS). Very importantly, even though the new Bureau is placed within the FRS, it operates INDEPENDENTLY. The FRS is PROHIBITED from interfering with matters before the Director, directing any employee of the Bureau, modifying the functions and responsibilities of the Bureau or impeding an order of the Bureau. With virtually unlimited power and authority to act independently, without oversight, the agency can do whatever it deems appropriate supposedly to protect consumers! WOW! Have we become a potential police state regarding “consumer protection”! What ever happened to “Caveat Emptor” (let the buyer beware) and personal responsibility? Is the government going to protect us from everything and if so, how? How many new public-sector union employees will this take? What will it cost? Ultimately, businesses and consumers will end up paying for this new unlimited-power bureau with sweeping authority to do “whatever it deems appropriate to protect consumers”. This is a scary development and creates endless uncertainties as the bureau writes its new regulations. More government madness and not good for job creation (except in the government)!

Additionally, the “Durbin Amendment” gives the power to regulate debit card interchange fees (prices) to the FRS. Effectively this eliminates free markets for debit cards and allows price fixing by the FRS, which was acted on by the FRS this week!

This is not a good trend for freedoms or free markets and bodes poorly for the other uncertain regulations to follow. If you were a banker faced with these uncertainties and risks, what would you do?

Energy & Environmental Policy: An intelligent national energy policy is vital to support economic growth and minimize the very real and present dangers of disruptions in our essential imports of foreign supplies. This policy must include and recognize America’s economic necessities, national security concerns, and the time required and costs necessary for conversion from any current source to any new technologies without creating growth constrains. It must include ALL possible sources of domestic energy generation including fossil fuels (oil, natural gas, coal), nuclear, as well as green energy sources (wind, solar, biotech).

Obama has no apparent energy policy other than promoting the green energy sources to ostensibly support his “global warming” environmental agenda. This action is happening at a time when more and more evidence is challenging and refuting not only “global warming” theory but also CO2 as a causative agent, and at a time when energy demands and prices for fossil fuels are increasing with NO serious alternatives in sight for decades! Further, the dependency and risks from imports of fossil fuels to the US are staggering and the economic and national security consequences of a stoppage of these imports would be catastrophic for our nation. Obama’s administration is actively working against virtually every effort to explore and develop domestic sources of fossil fuels. Offshore drilling in the continental shelf and interior of the US is being severely restricted even though thousands (perhaps hundreds of thousands) of good jobs could be created by actively pursuing known domestic reserves. Specifically, exploration and development of fossil fuel sources are being stifled by a lack of permits from the Administration and delays forced on development by environmentalists such as the EPA’s recent stoppage of Shell Oil’s permit to drill and develop a 27 billion barrel reserve in the Arctic Ocean off the coast of Alaska. (see “Obama Administration Attacks American Business Again!”)

The EPA is also trying to circumvent Congress’ refusal to pass “Cap and Trade” legislation by “backdooring” the regulations as new rules issued directly from the agency. Also, the EPA has proposed two new “clean coal” regulations regarding the use of coal in power plants that may result in “hundreds of thousands of coal industry jobs lost” and an estimated increase in the cost of coal produced electrical power by 11-23%. It is further estimated by a trade group that, in addition to the above jobs lost, the new regulations will cost the coal industry approximately $180 billion. For information, coal-fired power plants account for approximately half America’s energy supply.

I am not opposed to environmental protection or pursuit of green energy sources but, like many, am not convinced that global warming is actually occurring, and if so, is caused by humans or CO2. A rational and balanced national energy policy is needed. Restricting our domestic economy growth at a time of increasing global competition and increasing our dependency on foreign imports from a very volatile area of the world for the sake of a still unproven theory does not seem to me to be wise. It only creates more costs and uncertainties for our country and harms job growth, especially in the energy sector.

Pro-Union, Anti-Business Activism: The pro-union anti-business biases of the current administration are well documented and are detrimental to job creation, capital investment, and economic growth in America. Obama’s endless campaign speeches to unions, the stream of union activists to the White House, and repeated class warfare attacks on the “wealthy” are sufficient evidence of these biases.

Perhaps the most flagrant current example is the National Labor Relations Board’s (NLRB) anti-business, anti-free market, and pro-union (not pro-labor) socialist attack on the Boeing Corporation and “Right-to-Work” States (see “Attack on American Business by Obama “packed” NLRB!” and “Obama “packed” NLRB Continues Attack on Boeing & Free Markets!”). Under Obama, the NLRB has become a pro-union activist body and is now deliberately attacking job creation and investment in America by attempting to stop Boeing, America’s #1 exporter, from final implementation of the firm’s new “Dreamliner” factory in Charleston, South Carolina. South Carolina is one of 22 “Right-to-Work” States, which don’t require (or prevent) hiring union workers. To date, Boeing has already invested approximately $1 billion and hired approximately 1000 workers in South Carolina. Boeing directly employs over 160,000 workers, and is indirectly responsible for approximately another 1.2 million jobs. Apparently to the NLRB, the only “good” American jobs are union jobs.

For years during and subsequent to the Bush Presidency, union activists and Democrats in Congress have prevented the passage of Free Trade Agreements with South Korea, Columbia, and Panama, which are favorable to American business, American exports, American consumers, and will create American jobs. The unions have delayed passage because imported goods coming into the country at lower prices will displace some workers. Really! This is the global free market at work, expands economic growth, creates wealth and jobs, and benefits all consumers who are provided with more product choices at cheaper prices. Finally, this week the Senate is holding hearings on these bills and hopefully, after years of delays and economic losses, will be passed and signed by the President. Just another uncertainty caused by government interference in the marketplace that has hurt job growth and consumers.

With these pro-union anti-business biases at the very top of our political leadership and government, is it any wonder that business is hesitant to hire and banks to loan?

Conclusion: Government needs to get out of the way! (see “Big Government IS Our Problem”) The above issues and the uncertainties they have imposed on our economy are indications of where Obama’s and the Democrat’s policies are leading us. Socialism and central planning don’t work – just ask the former Soviet Union or India. Free markets and individual freedoms do work! Obama is increasingly turning our nation into a centrally-controlled socialist welfare state with significant pro-union, anti-business biases and uncertainties that hurt us all. These policies are not the foundation of freedoms upon which our country was created and which made America great. It’s time to return to individual liberties, free markets, sound fiscal and monetary policy, and limited government. It is time to take back our country!

The Old Guy PhD

 


Bowles & Simpson Have it Right!

April 1, 2011

G’Day!

In my previous posts, “Big Government IS Our Problem” and “Is Our Government Broken”, I laid out the current and projected fiscal and debt problems facing our nation and argued that significant contraction in government spending is immediately essential. Also essential is tax reform. Our taxes MUST be simplified, the tax base broadened, and tax rates reduced (especially business taxes), if we are to be able to compete in a global economy.

The Debt Reduction Commission’s “Co-Chair’s Proposal” released in December 2010 by the Co-Chairs, Democrat Erskine Bowles and Republican Alan Simpson and submitted to the President in February 2011, is an excellent and understandable overview of the recommendations, which, with minor modification, were approved by 11 of the 18 bipartisan members (61% approval) in December 2010. Unfortunately, the final vote fell short of the 14 votes necessary for the “Supermajority” needed to directly submit the recommendations to Congress. While the Co-Chair’s Draft Proposal differs slightly from the final report submitted to the President, it is worth reviewing for its importance, focus, clarity, and brevity. They have done an excellent job and their proposal deserves the immediate attention of the President and Congress. While no one will be fully happy with all of the commission’s proposals, rational behavior combined with cooperation and compromise by our elected government is necessary if we are to remain a solvent and great nation. The time for government to act is NOW!

The bipartisan Debt Reduction Commission worked from April – December 2010 to develop and present overall comprehensive recommendations to solve our country’s short and long term fiscal and debt crises. They have done their work well. The report addresses all the necessary areas required to resolve the issues including setting out ten (10) objectives, “Guiding Principles and Values”, beginning with “#1-We have a patriotic duty to come together on a plan that will make America better off tomorrow than it is today”; and “#2-The Problem is REAL – the Solution is Painful – There’s no Easy Way Out – Everything Must Be On the Table – and Washington Must Lead”. The other 8 can be read by clicking the link in paragraph above. After establishing the Guiding Principles, the following comprehensive “Five Part Plan” is recommended:

  1. Enact tough discretionary spending caps and provide $200 billion in illustrative domestic and defense savings in 2015.
  2. Pass tax reform that dramatically reduces rates, simplifies the code, broadens the base, and reduces the deficit.
  3. Address the “Doc Fix” not through deficit spending but through savings from payment reforms, cost-sharing, and malpractice reform, and long-term measures to control health care cost growth.
  4. Achieve mandatory savings from farm subsidies, military and civil service retirement.
  5. Ensure Social Security solvency for the next 75 years while reducing poverty among seniors.

Implementation of the comprehensive Five Part Plan is projected to achieve nearly $4 trillion in deficit reduction through 2020, in addition to other specific improvements in debt and budget reductions summarized below:

  • Achieves nearly $4 trillion in deficit reduction through 2020: 50+ specific ways to cut outdated programs and strengthen competitiveness by making Washington cut and invest, not borrow and spend.
  • Reduces the deficit to 2.2% of GDP by 2015, exceeding President’s goal of primary balance (about 3% of GDP).
  • Reduces tax rates, abolishes the AMT, and cuts backdoor spending in the tax code.
  • Caps revenue at or below 21% of GDP and gets spending down to 22% and eventually to 21%.
  • Stabilizes debt by 2014 and reduces debt to 60% of GDP by 2024 and 40% by 2037.
  • Ensures lasting Social Security solvency, prevents projected 22% cuts in 2037, reduces elderly poverty, and distributes burden fairly.

The proposal outlines how to achieve the above results through specific recommended actions to improve revenues through “Comprehensive Tax Reform” alternatives, to reduce spending through “Discretionary Budget Options” including Defense cuts, reductions for entitlement programs through “Mandatory Budget Options” for healthcare and “Reforming Social Security”. All of these reforms: taxation, government spending, entitlements for healthcare and social security, are essential to a comprehensive solution for our country’s problems and all must be addressed if we are to succeed.

The Co-Chair’s Proposal is controversial but responsible, realistic, and deserves the serious consideration of the President and Congress, who are currently engaged in irrelevant political bickering over trivial spending cuts instead of the substantive fiscal and debt problems we face. Congress and the President should get together, agree on or revise as appropriate the “Guiding Principles and Values” above, and start to work for the American people and our country. Political posturing for re-election is NOT a valid course of action.

Currently, neither the Congress nor the President is addressing our fiscal and debt crises with any sense of urgency. The President and the Democrats are not only totally ignoring the problem but are fighting to avoid even minimal reductions from the inflated budget spending of the last 2-3 years. Federal Budget inflation nearly tripled our federal deficit from $0.459 trillion in 2008 to $1.3 trillion in 2010 and is expected to increase again to $1.7 trillion this fiscal year. Obama’s recent budget proposal for 2012 continues spending at $3.7 trillion and the deficit at $1.6 trillion. Additionally, Obama’s new budget projects a further cumulative deficit of $7.2 trillion for the next ten years – bringing our debt to approximately $22 trillion! This is not leadership; it is madness! Only the Republicans are even attempting to address the issue and, to date, their proposals are woefully inadequate. To be fair, the House Republicans through Representative Paul Ryan are promising to present a comprehensive budget in April that does address the looming long-term catastrophe we face. I hope they deliver.

Given the magnitude of our fiscal and debt problems, the current congressional squabbling is an inappropriate distraction from solving the overall crises facing our nation! Without an agreement on debt limits and/or spending cuts by April 8, our government may shut down. As noted in “Is Our Government Broken”, except for national security and some essential services, shutting down might actually be a good thing. Our government is too big, too irresponsible, and too self-centered. Can’t our Congress or Administration do math?

Where is President Obama’s leadership in all of this? Actually, at the time of this writing he’s currently travelling again and making speeches at a Democratic Party Fundraiser – big surprise. As usual, when leadership and responsibility for our country are required, Obama is absent. Last week with a national debt deadline imminent, Congress took a week off rather than stay in session to attempt to resolve the current national debt limit issue. Brilliant! Our elected representatives need to make financial solvency and economic growth a priority and get to work NOW!

We are on unsustainable fiscal and debt crises that, if not corrected quickly, will lead to potential financial and economic disaster for our country. Our government is oppressive and out of control, its growth must be stopped, and its intrusion in our lives and businesses reversed. We MUST maintain the entrepreneurial spirit necessary for economic growth and global competitiveness. We need to bring back the constitutional freedoms and personal liberties that led us to become the greatest nation on earth. Our government should immediately take up the Bowles-Simpson Co-Chairs’ Proposal.

The Old Guy PhD

 


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