Archive for May 2011

Houses, Schools, and Hospitals

May 31, 2011

Americans are waking up with an ugly headache.  They know their heads are hurting but they are not sure why.  Everywhere a little piece of what they knew as the ”American Dream” is tarnishing if not outrightly disappearing.

Houses have always been expensive relative to a potential homeowners means.  At the height of the housing bubble, houses were even more expensive but for some difficult to understand reason, banks were throwing money at prospective homeowners.  For many the American dream of home ownership was possible for artificial and unsustainable reasons.

A college education has occupied a similar place.  Ever since the GI Bill of Rights, Americans have approached college education as sort of a right and essential element in finding a good job.  Scholarships and low cost loans extended the number of Americans who could afford college.  Now suddenly, loans have become expensive and State and Federal support directly to the colleges and universities has sharply decreased.  A college education is suddenly outside a lot of people’s reach.

Hospitals (and doctors and medicines) have long been readily available.  Illnesses while life threatening were not feared as financial disasters mainly because so many people had excellent employer provided health care insurance coverage.  With unemployment at 9+% and many employers reducing their piece of the premium, Americans are waking up to the fact that health care is expensive.

Housing, schools, and hospitals are expensive.  What a news flash.  Why is there that reaction?

In truth, all three are more expensive than they were a year or two ago.  This increase has been magnified, however, because American’s earning power (and potential future earning power) has slipped. Combining these trends, Americans are now finding homes, schools, and hospitals very expensive.

This is not a political problem.  This is an economic fact.  Making them more affordable could be a political issue depending upon how inclusive one wants the solutions to be. Doing nothing will ration homes, schools, and hospitals to the wealthier segment of the population.  Creating jobs, assuming they are good jobs is essential but not sufficient.

Houses, schools, and hospitals all have waste systematically built in.  The big question is how can these extra costs be extracted now?

How can a prospective home owner save 20% down when they are earning $30,000 a year or less? How is it possible that some universities cost $60,000 a year while other State supported universities in-state tuition cost $12,000?  How is it that one can go to the emergency room with a serious illness and incur a bill of $50,000 while someone else can be admitted and have their insurance company pay?

So, no matter which political party you favor, and no matter what solution that party proposes, unless they clearly identify why things cost what they do and what one must earn in order to afford them, you will be listening to a demagogue whose solutions will have little or no chance of making the American dream more accessible.

Modern Role of Government

May 30, 2011

The conversation between America’s conservative and liberal sides seems more like two trains passing each other in opposite directions.  The words can be heated and passionate, but not heard or acknowledged by either side.  The meeting of minds is lost in translation.

I often wonder why young people can boast that they are conservative.  They do not seem old enough to have been personally burned or disillusioned by government work.  They accept fully the notion that laissez faire is the solution to a growing economy.  History books do not seem at all necessary.  And frankly if one starts out conservative, to what philosophy does one mature into?

The liberal side has its peculiarities too.  If economic or social problems are identified, the answer is new government policies or programs to fix.  Understanding root cause does not seem to matter.  Nothing is ever dismantled or eliminated in liberal thinking.

There are plenty of examples of unwanted consequences of laissez faire…  The great depression following 1929, and the near depression following the financial sector implosion of 2008 are two vidid cases where loose regulation lead to problems and doing too little to fix them lead to severe economic collapse, not economic growth.

By the same token, over regulation and too many government policies and programs can also straight jacket an economy.  The answer, obviously, is finding a balance.

Modern government must be seen as a vehicle where conservatives and liberals can formulate balanced programs.  Profit incentive still motivates and greed still hides behind every corner.

A balanced, fact based approach that contemplates all the players is key.  Lets urge our politicians to see it that way  (even though corporate citizens may give the politicians more money).


Governor Perry to the Rescue?

May 28, 2011

The GOP establishment is worried.  The current field of Presidential nomination hopefuls does not warm the dark spots in their hearts.  And this is quite understandable.

While Tim Pawlenty and Mitt Romney are well qualified politicians with proven executive experience, both lack a broad public appeal.  And Romney’s a Mormon, you know.

The rest of the field prompts the proverbial, “who’s that?

The prospects of Michele Bachman or Sarah Palin entering the race is also scary.  What if one of them won?  It would be a second term for President Obama with plenty of money left over.

Jon Huntsman is also rumored to be considering.  He is far more charismatic than Romney and has no record of being a flip-flopper on key issues.  But he is starting as “Jon who”, and the real issues is, can he raise the amounts of money that will be needed?

Governor Rick Perry looks appealing to big GOP money.  He reminds people of the other Texan Governor, George W Bush.  Under Karl Rove’s tender care, “W” was elected.  Why not again?

While “W” was a dismal President and someone who has left a record of failure on all fronts, maybe Perry would be different.  For my money, “W” was one too many Bushes.  And, if Perry is Karl Rove’s friend, then he’s no friend of mine.  What about you?


Which Is Worse?

May 27, 2011

The public display of national leadership by both the Republican and Democratic parties is something out of B-Movie (or worse) genre.  Both parties have taken positions versus the national debt that are hard to explain.  Neither has chosen to address the $14 Trillion.

What, you say.  What then is the Ryan plan?

The Ryan plan is about the deficit.  Or said differently, just not making the debt grow as fast as it would otherwise.  The Democrats have put nothing forward since there were no details in President Obama’a speech.  Obama’s plan was even less aggressive than Ryan’s.  So much for the deficit and the debt.

It is somewhat understandable (politically) why the Democrats are so silent.  Any comprehensive plan to fix the deficit and to take a bite out of the debt must involve sacrifices by all Americans.  What could be more American than shared sacrifices?

The Republicans (Ryan plan) think all Americans except the wealthiest should make sacrifices.  The Democrats, on the other hand, will lead all Americans to a sacrifice by doing nothing.  Sooner or later, the current financial house of cards will collapse.  When that occurs, lenders will demand sharp changes in the US’ spending and taxing habits.  The food fight will really be on then.

The 2012 election, of course, is on everyone’s mind.  The Ryan plan has already cost the Republicans one House seat.  It may very well cost the GOP several more.  Doing nothing seems to be the safer position for a politician.  It is not a good position for a citizen.

So mark your calendar.   The year 2013 is the year there will be action on the deficit and debt.  This is the first year of either President Obama’s second term or the first of a yet to be decided Republican.  Only in this first year, House members feel safe enough to actually legislate (before having to run for office again).

This speaks volumes.  A President gets two years out of eight to actually try to put into law campaign promises.  With over a trillion dollars deficit and $14 trillion in debt, this does not seem like a good work schedule.

So you choose.  Which is worse?

Libyan End Game

May 26, 2011

Too many cooks in the kitchen?  That’s the question before the house.  How should NATO proceed in Libya?  Or, better said, is it possible for NATO to proceed?

Most western governments would be quite pleased with a Libya, free of terrorists inclinations and deeply into pumping and shipping oil.  If that were to come without much social or economic reform, so be it.  The West’s concern for Libya is very shallow although deep where oil is drilled.

President Obama has played a careful wait and see approach.  He deftly handed off leadership to the Europeans under the NATO umbrella.  Unfortunately, a united Europe there is not.

Realities have also intervened.  Kardaffi has not picked up his marbles and just left town.  Common sense would have predicted that too.  How can anyone expect someone who would be arrested outside his own country, rendered penny-less, and either executed or put in jail for life to willingly leave the country?

The NATO command ought to sit down.  The nations behind NATO ought to step forward.  They could start with half an apple.  Recognize and assist the rebels in setting up “Free Libya” which would be separate country.  What’s left of old Libya could be sanctioned but left alone militarily (as long as it stays within some boarders).

The end game is one of attrition.  With sanctions on Old Libya, it will become weaker and less able to feed its people.  At some point the Old Libyan population will replace Kardaffi and move on with life.

At this point the circular argument begins to be seen.  Is the future to be two Libyas?   Again, what exactly does the West expect to take place in Libya?  How exactly would the people of Libya see change?  Why should anyone expect a new united and democratic country to emerge?

The most fundamental question, why did anyone get involved in the first place?

Kathy Hochul, What’s Really Wrong With Ryan’s Plan ?

May 25, 2011

The election yesterday of Democrat Kathy Hochul in NY’s 26th District is being hailed a defeat of Representative Paul Ryan’s budget proposal.  In Ryan’s plan, Medicare is changed to a voucher based entitlement.  Hochul won in a highly Republican district by campaigning on a pledge to not change Medicare.

Disingenuous is a word that comes to mind.  Uniformed or plain dumb also work if you believe Hochul really meant what she campaigned for.  Medicare is going bust and must be changed in some way.  Period.

Hochul’s opponent deserves some recognition too.  She was obtuse to the politics of Medicare and her endorsement of Ryan’s plan has brought her the deserved rebuke she has earned.  Ryan’s plan, although courageous is opening a discussion, was mean and short sighted in its scope.  Dumping the responsibility of paying for senior health care on those least able to pay is simply mean spirited.  Thinking that increasing personal payments will fix the problem is short sighted.

To fix Medicare, health care must be fixed first nationwide.  It must be fixed for employer’s who are becoming uncompetitive paying for health care insurance premiums.  It must be fixed for those paying premiums themselves.  And it must be fixed for those who receive employer provided health care but are seeing their portion increasing and shrinking their overall pay check every week.

You can bet that Democrats will be deaf, dumb, and blind with respect to Medicare changes until the next election has passed.   The basic problems of health care is its seemingly out of control rising annual cost.   Any serious revision will be difficult to explain.  An election season is not the time for these types of discussions.

Oh, yes any serious revision of health care will also mean the end of companies like Aetna and Cigna as we now know them.  For profit health insurance is a non-starter.  This will mean wholesale loss of jobs and destruction of capital (stock market value for these companies).  Next, fixing health care will mean that doctors, hospitals and drug companies must take a haircut.  Lastly, there must be some alternate method of rationing (you won’t hear that word from any politician) health care.  Presently the US rations health care on ones ability to pay.  In other words rich get care, others get less or none.

I wonder whether the US is ready for that discussion.  Medicare can not be fixed unless the overall US health care system is revamped.

Why Obama

May 24, 2011

The Supreme Court yesterday voted 5-4 to affirm a California lower court ruling that State jails were seriously over crowded.  Citing “cruel and unusual punishment”, the Supreme Court ruled the California prison system needed to be cut by 46,000 over the next two years.

The Court’s opinion followed familiar lines.  This time, however, Justice Kennedy voted with the progressives.  Justice Scalia dissented and called the decision “the most radical injunction issued by a court in our nation’s history”.  This is the same Scalia who voted to call a corporation a person and that the Constitution allowed anyone to bear any number of guns (all types) that they wished.  From muskets to AK-47’s, its all the same to Scalia.

Why Obama?

Justices Roberts, Alito, Thomas, and Scalia vote in lock step.  If there is to be another Supreme Court opening, a Republican President will almost certainly pick someone who votes like these four.  If for no other reason, it is important to return President Obama to office in 2012.

The closeness of the Supreme Court decision is perplexing.  Over crowding to the degree present in California, eliminates any chance of rehabilitation.  Eventually these individuals are released and model citizens they are not.

Two points to ponder.  (1) Why does California not just build more prisons?  (2) On an even larger scale, why is it that America has 4% of the world’s population and 25% of the world’s prison population?