As we head over the so-called fiscal cliff, there are actually very few things that are certain. No, I do not think that it is certain that we are headed for a major recession as a result. If we were, I think that the President and Congress would be working for a solution. If 2010 taught us anything, it is this; economic problems almost certainly will cost Washington politicians their jobs. However, we have just enough political inexperience in Washington for this to be dangerous. We have enough people who don't know when and how to compromise. Or perhaps this is a calculated move.
Taxes will go up in just a couple of days, and there will be many in the GOP who will say, "I never voted for a tax increase." They will blame the other party. But in reality, they refused to compromise and as a result, passed a large tax increase on everyone. Sooner or later Americans will wise up to this reality. But for now, it seems that the extremists in both parties will win the day.
I remember the advice that one sociology professor told me in college. Politicians do not get elected to solve problems. They get elected because problems exist, but if they actually solve problems, they will never be elected again.
For example, many people will tell you that George HW Bush lost in 1992 because people were sick of Reagan-era policies. That is probably not the case. Look at the GOP today. Reagan is a demigod. Why not continue to support his second in command. The problem was that the Cold War ended. Bush no longer had the Cold War and the fear of the Soviet Empire as a plank in his platform. He lost some of the support in his party and the Reagan Democrats because of it.
Perhaps the best thing that the GOP can do is to allow Obama some successes. It will weaken the eventual democratic nominee in 2016. Perhaps the worst thing for the GOP is for Obama to speak at the Democratic Convention in 2016 telling America that Hillary needs to finish the work that he was unable to get done while he was in office.
Another thing that would benefit the GOP is for Obama's policies to fail so badly that no one in their right mind would vote democrat. They want to be able to say, "I told you so." They want to say, "don't like what America has become?" You voted for this in 2012. History shows that this strategy may backfire.
From a pure definition standpoint, the Great Depression ended before Roosevelt ever won. But America has not recovered in 1932. The economy was growing, but America had not yet recovered.
America had not recovered by 1936. Roosevelt won again.
America had not recovered by 1940. Roosevelt won again, and had a new problem. The specter of war. Sure, the US did not officially enter the Second World War by the fall on 1940, but the British and the Soviets were fighting the Nazi's by themselves and it was not looking good. It would only be a war time build up that would put the US back to 1920s employment levels. From October 1929 to December 1941 Americans had trouble finding work for 147 months, and the democrats won the day because the problem was never really solved.
I have to think that if the GOP is going to win the White House in 2016, that one of the problems that exists today will have to be solved. Success can change the political climate just as much as failure can.
One fiscal cliff story that I find far-fetched is the threat of $8 per gallon milk. If that does happen it won't last long.
In economics, I learned about something called an equilibrium price. It is the price that an item will sell for if there is no interference from the government, including taxes. It is where supply and demand meet. My hunch is that the equilibrium price for milk is much lower than $8 per gallon.
Here is what could happen if government subsidies for milk run out.
Retail giants like Wal-Mart will be free to use their marketing power over suppliers to push the price down. They are not free to do so now. In fact, Wal-Mart and others may sell Milk for a loss in order to take advantage of impulse buying on high mark-up items.
If the price from Milk goes up, farmers who sell their cows for meat may get into the dairy business. Farmers who produce grade-B milk (Milk not sold directly to consumers but used as ingredients for other food processing) may get into the grade-A business. If people can make money from dairy farming, more people may chose it for a living. And finally, milk will be imported from Mexico, Canada and other nearby countries for sale in the US.
In other words, supply will meet demand. In the long run, who knows, milk may cost less.
Government farm programs, such as farm subsidies do not make the price of milk go up, they support an artificially high price.
But one thing about economics is certain. If there is a surplus, the price is too high. Last I checked, there was a surplus of dairy products in the US. If my understanding of economics is correct, prices will go down because of the fiscal cliff, not up.
Falling prices are usually not a good thing. That leads to higher deficits and higher unemployment. A deflationary economy leads to a depression.
There is one other thing on my mind this morning.
In my wanderings yesterday, I was delayed by a traffic accident outside a gun dealer. (I was not involved, but the road was blocked for emergency vehicles.) Many who believe in defending themselves with assault rifles were trying to purchase weapons and ammunition while they believed they still could. Gun dealers are making a financial "killing" by the threat of more gun control legislation.
Schools are soft targets for violence because there are very few people at schools are able to defend themselves. They always will be. Gun control laws will not change that fact. Trained and experienced armed guards and safe rooms are probably the best answer. This might be a good place to put retired police officers and military men/women who are really to young to retire to work. There are no easy solutions. Training and arming teachers is not a good idea. A bunch of inexperienced people using deadly force is never a good idea. There will be collateral damage and lawsuits as a result.
Gun control laws are what I would term as "feel good" legislation. Members of Congress who vote for it will be able to tell their constituency that they have done something, meaning they have passed a law, but in reality have done nothing.
Sunday, December 30, 2012
Monday, December 3, 2012
On Gun Control and Suicide
Bob Costas on Sunday Night Football has opened up the gun control can of worms again. He said that Jovan Belcher would still be alive today if he did not have a gun. Using his
Guns are often blamed for violence in our society. Advocates of gun control have good data to back them up. About 60% of suicides and 54% of homicides are performed with handguns. 55% of all handgun deaths are suicide, 45% of all handgun deaths are homicide. 10% of gun deaths are either accidental or justifiable. It is very easy to draw the conclusion that handguns are the cause of so much death in our society.
But the real debate is no whether handguns are the cause of the violence or just the tool. And what is the root cause of the violence. Do people have violence sewn into their souls and the guns are just the tools? If they did not have access to guns, would they chose something else?
Let's take the Jovan Belcher incident in Kansas City this week. If he wanted to take his own life, and the life of his girlfriend, he could have done the deed in several different ways. He could have driven his car over a bridge, for example, as there are many in the Kansas City area over the Missouri River. Needless to continue to list all of the options out, but if someone is determined to take their own life, there are many ways to do it.
Suicide is complicated. It is a mystery; even to the experts. What would cause a person to take their own life is the great unknown. But it is becoming epidemic in some professions. One of those professions is American Gridiron Football. Belcher is the latest high profile suicide in the NFL family. The most prominent was hall of fame linebacker Junior Seau last summer.
The trouble with suicide, you can't talk to those who succeed.
Even with murder, one does not know what causes people to snap and become more violent. If that was understood, more could be done to prevent it.
It is real easy to blame the tool that was used in any crime or tragedy, but to say that there would be fewer suicides if there were more limited access to guns is, for lack of a better term, jumping the gun. Hand guns are to suicide and murder as the Internet is to pornography. It is a tool that makes the job a little bit more convenient. Focusing on the tool does not solve the problem. People who have anger issues will find something else to use.
Guns are often blamed for violence in our society. Advocates of gun control have good data to back them up. About 60% of suicides and 54% of homicides are performed with handguns. 55% of all handgun deaths are suicide, 45% of all handgun deaths are homicide. 10% of gun deaths are either accidental or justifiable. It is very easy to draw the conclusion that handguns are the cause of so much death in our society.
But the real debate is no whether handguns are the cause of the violence or just the tool. And what is the root cause of the violence. Do people have violence sewn into their souls and the guns are just the tools? If they did not have access to guns, would they chose something else?
Let's take the Jovan Belcher incident in Kansas City this week. If he wanted to take his own life, and the life of his girlfriend, he could have done the deed in several different ways. He could have driven his car over a bridge, for example, as there are many in the Kansas City area over the Missouri River. Needless to continue to list all of the options out, but if someone is determined to take their own life, there are many ways to do it.
Suicide is complicated. It is a mystery; even to the experts. What would cause a person to take their own life is the great unknown. But it is becoming epidemic in some professions. One of those professions is American Gridiron Football. Belcher is the latest high profile suicide in the NFL family. The most prominent was hall of fame linebacker Junior Seau last summer.
The trouble with suicide, you can't talk to those who succeed.
Even with murder, one does not know what causes people to snap and become more violent. If that was understood, more could be done to prevent it.
It is real easy to blame the tool that was used in any crime or tragedy, but to say that there would be fewer suicides if there were more limited access to guns is, for lack of a better term, jumping the gun. Hand guns are to suicide and murder as the Internet is to pornography. It is a tool that makes the job a little bit more convenient. Focusing on the tool does not solve the problem. People who have anger issues will find something else to use.
Friday, November 9, 2012
3 Non-Romeny Gaffes that could have cost him the election in Ohio.
Romney made plenty of his own mistakes in his run for the White House. Mostly, his ground game did not match Obama's, but there were three mistakes that really cost Romney the women's vote. But these were not his gaffes. According to one blogger, it was the moderate Republican women who did not turn out for Romney, not just the conservative women.
What turned women off? How about these costly stands?
1. Rick Santorum's comments about birth control. This was not just a single gaffe, this is Santorum's personal belief. Santorum did not win the nomination, but this is his repeated stance. It became a real issue when Santorum, for a brief period of time, because the GOP front runner. There are many, even staunch conservative women, who are turned off by stances such as this. These issues were known by Republicans long before Santorum ever considered running president, which was most costly of all. In Ohio, Santorum finished a close second to Romney in the primary election there. Think Ohio women forgot about all of that?
2. Todd Akin's Legitimate Rape Comments. These insensitive and uneducated comments shed a bad light, not just on the Missouri US Senate Race, but on the entire national Republican party. Even though he later said his comments were insensitive, he affirmed that he was still opposed to abortion after rape, which is an extreme position. In the final analysis, it probably was not the back breaker in that race, but could have been the difference in a state where the female vote could have changed the election, like Ohio. Yes, this happened in Missouri, but this gaffe was heard round the world, even in Ohio.
3. Richard Murdock's comments about pregnancy after rape. Murdock, the Tea Party candidate who unseated Dick Lugar in the primaries, said that pregancy after rape is something that "God Intended." That brings up another question, did God intend the rape? Another comment about a very sensitive issue for women that was just insensitive. This may have re-affirmed, on a national level, that Republicans were insensitive about women's issues. It may not have been the difference in Indiana, where Romney won and Murdock lost, but in states like Ohio and Florida, it may have cost the GOP the White House.
Overall, what happened in Indiana is a lesson that I will address in another blog. It's an important one to learn, but obviously, the fiscal conservative who unseated Dick Lugar was not properly vetted by the Tea Party group that backed him before running for office.
Again, I caution about painting with broad strokes. Each Republican woman who voted for Obama or stayed home on election day has her own reason for doing so. But certainly insensitive comments about birth control and rape certainly did not help in the long run.
What turned women off? How about these costly stands?
1. Rick Santorum's comments about birth control. This was not just a single gaffe, this is Santorum's personal belief. Santorum did not win the nomination, but this is his repeated stance. It became a real issue when Santorum, for a brief period of time, because the GOP front runner. There are many, even staunch conservative women, who are turned off by stances such as this. These issues were known by Republicans long before Santorum ever considered running president, which was most costly of all. In Ohio, Santorum finished a close second to Romney in the primary election there. Think Ohio women forgot about all of that?
2. Todd Akin's Legitimate Rape Comments. These insensitive and uneducated comments shed a bad light, not just on the Missouri US Senate Race, but on the entire national Republican party. Even though he later said his comments were insensitive, he affirmed that he was still opposed to abortion after rape, which is an extreme position. In the final analysis, it probably was not the back breaker in that race, but could have been the difference in a state where the female vote could have changed the election, like Ohio. Yes, this happened in Missouri, but this gaffe was heard round the world, even in Ohio.
3. Richard Murdock's comments about pregnancy after rape. Murdock, the Tea Party candidate who unseated Dick Lugar in the primaries, said that pregancy after rape is something that "God Intended." That brings up another question, did God intend the rape? Another comment about a very sensitive issue for women that was just insensitive. This may have re-affirmed, on a national level, that Republicans were insensitive about women's issues. It may not have been the difference in Indiana, where Romney won and Murdock lost, but in states like Ohio and Florida, it may have cost the GOP the White House.
Overall, what happened in Indiana is a lesson that I will address in another blog. It's an important one to learn, but obviously, the fiscal conservative who unseated Dick Lugar was not properly vetted by the Tea Party group that backed him before running for office.
Again, I caution about painting with broad strokes. Each Republican woman who voted for Obama or stayed home on election day has her own reason for doing so. But certainly insensitive comments about birth control and rape certainly did not help in the long run.
Does the GOP need to moderate their platform, or just the tone.
It is clear the the minority vote on election night did not go the way of the GOP and that some loyal conservatives stayed home and did not vote.
While some are calling for change, they can't agree on what change needs to be made. Many are saying that if we had a more conservative candidate at the top of the ticket, then more hardy GOP turnout could have one the election. Others are saying that more moderate views would win more Hispanics, more women and more young people to the GOP.
I think the GOP is in a bigger quandary. There are not enough Hispanics that vote to make up for the conservatives that would be alienated from the party. Some women will never become republicans, and since we are having fewer and fewer babies, and the GOP is not cool enough for people who haven't lived long enough to know themselves. We have to bring more people into the fold without alienating the people that are here.
The Republicans should not change who they are, but should change the TONE. Our 7th-day Adventist Friends have some good advice that I think the whole party should hear and heed. I will use the example of immigration reform.
We are not talking about compromise, moderating platforms nor changing who we are. We are talking about taking the high road and a tone that will lead to problem resolution.
Here are the bad steps to conflict resolution.
1. Name-callling. Avoid the use of racial slurs, for example. Even the use of terms like illegal alien are offensive to some. The reason why this is bad is because it transforms the discussion into a personal attack. What should we call people who have broken the law and crossed the border without documentation, then? Call them by name. They also prefer the term "undocumented immigrant." Let's go with that because it is respectful.
2. Becoming hysterical. The first person to get angry in a conflict will lose. The statement, "what part of illegal don't you understand?" is an anger statement.
3. Becoming historical. Each immigrant comes to the US for a different reason. Let Democrats try to categorize and pigeon-hole people because that is what they are best at. We are best at solving problems. Let's focus on solutions, not on history. Sorry Newt.
4. Overgeneralizing. Again, we can let the other party do that. That is the main weakness of the Arizona immigration bill, it tends to overgeneralize the problem. Not everyone who crosses our southern border does so for ________.
5. Silent Treatment/Ignoring. We are not going to woo Hispanic voters if we ignore the problems that they care about. We have to show that we are willing to listen to all sides and put forth a workable resolution.
6. Becoming physically abusive. This almost goes without saying.
The right way to solve problems.
1. Define the problem. Here is how I define the immigration problem. "Ever have a party and an uninvited guest showed up? Did they spoil the party? No. But what if the whole neighborhood shows up? Do you have enough to take care of everybody? No." The problem is this, we are simply looking for a way to ensure that there is enough to go around.
2. Listen intently and with an open mind. Not everyone that crosses the border came here for the same reason. Some come to escape problems. Some come to earn money. Some come to be with family. Some come to break the law. What can we do to help? Maybe the solution is to help them make things better at home. We won't know unless we talk.
3. Ask clarifying questions. It helps both sides feel better about the solution to the problem.
4. Restate what the other person has said. That person will then know you have listened.
5. Do not interrupt.
6. Treat others with respect.
Read more at the following address:
http://www.adventistworld.org/article/1298/resources/english/issue-2012-1008/speaking-your-mind-without-losing-it
While some are calling for change, they can't agree on what change needs to be made. Many are saying that if we had a more conservative candidate at the top of the ticket, then more hardy GOP turnout could have one the election. Others are saying that more moderate views would win more Hispanics, more women and more young people to the GOP.
I think the GOP is in a bigger quandary. There are not enough Hispanics that vote to make up for the conservatives that would be alienated from the party. Some women will never become republicans, and since we are having fewer and fewer babies, and the GOP is not cool enough for people who haven't lived long enough to know themselves. We have to bring more people into the fold without alienating the people that are here.
The Republicans should not change who they are, but should change the TONE. Our 7th-day Adventist Friends have some good advice that I think the whole party should hear and heed. I will use the example of immigration reform.
We are not talking about compromise, moderating platforms nor changing who we are. We are talking about taking the high road and a tone that will lead to problem resolution.
Here are the bad steps to conflict resolution.
1. Name-callling. Avoid the use of racial slurs, for example. Even the use of terms like illegal alien are offensive to some. The reason why this is bad is because it transforms the discussion into a personal attack. What should we call people who have broken the law and crossed the border without documentation, then? Call them by name. They also prefer the term "undocumented immigrant." Let's go with that because it is respectful.
2. Becoming hysterical. The first person to get angry in a conflict will lose. The statement, "what part of illegal don't you understand?" is an anger statement.
3. Becoming historical. Each immigrant comes to the US for a different reason. Let Democrats try to categorize and pigeon-hole people because that is what they are best at. We are best at solving problems. Let's focus on solutions, not on history. Sorry Newt.
4. Overgeneralizing. Again, we can let the other party do that. That is the main weakness of the Arizona immigration bill, it tends to overgeneralize the problem. Not everyone who crosses our southern border does so for ________.
5. Silent Treatment/Ignoring. We are not going to woo Hispanic voters if we ignore the problems that they care about. We have to show that we are willing to listen to all sides and put forth a workable resolution.
6. Becoming physically abusive. This almost goes without saying.
The right way to solve problems.
1. Define the problem. Here is how I define the immigration problem. "Ever have a party and an uninvited guest showed up? Did they spoil the party? No. But what if the whole neighborhood shows up? Do you have enough to take care of everybody? No." The problem is this, we are simply looking for a way to ensure that there is enough to go around.
2. Listen intently and with an open mind. Not everyone that crosses the border came here for the same reason. Some come to escape problems. Some come to earn money. Some come to be with family. Some come to break the law. What can we do to help? Maybe the solution is to help them make things better at home. We won't know unless we talk.
3. Ask clarifying questions. It helps both sides feel better about the solution to the problem.
4. Restate what the other person has said. That person will then know you have listened.
5. Do not interrupt.
6. Treat others with respect.
Read more at the following address:
http://www.adventistworld.org/article/1298/resources/english/issue-2012-1008/speaking-your-mind-without-losing-it
Thursday, November 8, 2012
The Second Term Curse
Almost every president that has served 2 terms has had more trouble in the second term. It may be no different for Obama. It happened to Woodrow Wilson almost every president. Many second term agendas have gone by the wayside because of the Second Term Curse. Here is what has happened in the 2nd term to each president in their second term in one word. Only Coolidge, Theodore Roosevelt and Monroe seemed to avoid it. Even George Washington had his. I think that Obama will get his, and his legacy will be defined by how well he handles it. Look at Bill Clinton, for example. Each word has a link to the Wikipedia article about the scandal.
GW Bush--Katrina
Clinton--Monica
Reagan--Contra
Nixon--Watergate
Johnson--Vietnam
Eisenhower--Health
Truman--Korea
Roosevelt--Court
Coolidge--None
Wilson--War
Roosevelt--None
McKinley--Buffalo
Cleveland--Silver
Grant--Many
Lincoln--Booth
Jackson--Debt
Monroe--None
Madison--Bonus
Jefferson--Embargo
Washington--Whiskey
If you do not want to go to Wikipedia, scroll down...
Side Note:
In this Blogger's opinion, Grant was by far the worst president to win a second term in office.
GW Bush--The aftermath of Hurricane Katrina turned Bush into a lame duck.
Clinton--The Monica Lewinsky Affair got him impeached.
Reagan--The Iran-Contra scandal.
Nixon--The coverup of the break in at the Watergate offices of the DNC. Dick tried to protect his "plumbers" and had to resign.
Johnson--The Vietnam War.
Eisenhower--Ike tried to hide is heart troubles from the public. The President is now expected to disclose health problems.
Truman--War broke out in Korea, didn't result in a decisive victory. Truman fired McArthur.
Roosevelt--Roosevelt tried to stack the Supreme Court after some of his programs were declared unconstitutional.
Coolidge--None
Wilson--It wasn't the war that did Wilson in, it was selling the peace treaty and the League of Nations to an America that wanted to return to isolationism.
Roosevelt--None
McKinley--McKinley met an assassin in Buffalo.
Cleveland--Had to deal with a panic and recession in his second term.
Grant--US Grant was the most scandal-plagued president in history, bar none.
Lincoln--John Wilkes Booth shot Lincoln in the head while he was at the Theater.
Jackson--High public debt and speculation led on a major depression.
Monroe--None
Madison--He vetoed the popular Bonus bill that would have channeled profits from a national bank to the treasury for capital projects.
Jefferson--The embargo act of 1907 led to the War of 1812.
Washington--When Western Pennsylvania farmers refused to pay taxes on whiskey grain, Washington sent in the militia.
GW Bush--Katrina
Clinton--Monica
Reagan--Contra
Nixon--Watergate
Johnson--Vietnam
Eisenhower--Health
Truman--Korea
Roosevelt--Court
Coolidge--None
Wilson--War
Roosevelt--None
McKinley--Buffalo
Cleveland--Silver
Grant--Many
Lincoln--Booth
Jackson--Debt
Monroe--None
Madison--Bonus
Jefferson--Embargo
Washington--Whiskey
If you do not want to go to Wikipedia, scroll down...
Side Note:
In this Blogger's opinion, Grant was by far the worst president to win a second term in office.
GW Bush--The aftermath of Hurricane Katrina turned Bush into a lame duck.
Clinton--The Monica Lewinsky Affair got him impeached.
Reagan--The Iran-Contra scandal.
Nixon--The coverup of the break in at the Watergate offices of the DNC. Dick tried to protect his "plumbers" and had to resign.
Johnson--The Vietnam War.
Eisenhower--Ike tried to hide is heart troubles from the public. The President is now expected to disclose health problems.
Truman--War broke out in Korea, didn't result in a decisive victory. Truman fired McArthur.
Roosevelt--Roosevelt tried to stack the Supreme Court after some of his programs were declared unconstitutional.
Coolidge--None
Wilson--It wasn't the war that did Wilson in, it was selling the peace treaty and the League of Nations to an America that wanted to return to isolationism.
Roosevelt--None
McKinley--McKinley met an assassin in Buffalo.
Cleveland--Had to deal with a panic and recession in his second term.
Grant--US Grant was the most scandal-plagued president in history, bar none.
Lincoln--John Wilkes Booth shot Lincoln in the head while he was at the Theater.
Jackson--High public debt and speculation led on a major depression.
Monroe--None
Madison--He vetoed the popular Bonus bill that would have channeled profits from a national bank to the treasury for capital projects.
Jefferson--The embargo act of 1907 led to the War of 1812.
Washington--When Western Pennsylvania farmers refused to pay taxes on whiskey grain, Washington sent in the militia.
The Next LDS Candidate
Mitt Romney lost and historically the first person from a new religion to run for the White House will lose, the second one always wins. John F. Kennedy and Richard Nixon are prime examples. Kennedy was the 2nd Roman Catholic to become a major party candidate after Al Smith. Nixon was the first Quaker to become president. He failed the first time he was on top of the ticket, but succeeded the second time.
Here is a list of who the next LDS presidential candidate could rise to the top of their party's ticket.
Democrats:
Nevada Senator Harry Reid
New Mexico Senator Tom Udall
Republicans:
Former Utah Governor Jon Huntsman
Utah Governor Gary Herbert
Idaho Senator Mike Crapo
Utah Senator Mike Lee
Nevada Senator Dean Heller
Arizona Senator Elect Jeff Flake
Utah Congressman Jason Chaffetz
Utah Congressman Elect Chris Stewart
Idaho Congressman Raul Labrador
This is not the complete list of Latter-day Saints in high office. I left out those over 60, except for governors and senators. Those in the House will likely need to move to one of these offices before seeking the presidency, so those on this list are relatively young.
The ones that I would have this list that I would have the highest hopes for are Flake, Chaffetz and Labrador, but I would not expect either of these men to rise to the top of the ticket until after 2020.
Here is a list of who the next LDS presidential candidate could rise to the top of their party's ticket.
Democrats:
Nevada Senator Harry Reid
New Mexico Senator Tom Udall
Republicans:
Former Utah Governor Jon Huntsman
Utah Governor Gary Herbert
Idaho Senator Mike Crapo
Utah Senator Mike Lee
Nevada Senator Dean Heller
Arizona Senator Elect Jeff Flake
Utah Congressman Jason Chaffetz
Utah Congressman Elect Chris Stewart
Idaho Congressman Raul Labrador
This is not the complete list of Latter-day Saints in high office. I left out those over 60, except for governors and senators. Those in the House will likely need to move to one of these offices before seeking the presidency, so those on this list are relatively young.
The ones that I would have this list that I would have the highest hopes for are Flake, Chaffetz and Labrador, but I would not expect either of these men to rise to the top of the ticket until after 2020.
Wednesday, November 7, 2012
GOP frontrunner for 2016.
After reading through all of the exit polls and all of the reaction for the radio talk show conservatives, I am willing to cristen Floria Senator Marco Rubio as the GOP frontrunner for 2016. I think after all is said and done, he is the only one that comes out like a knight in shining armor that is associated with the Republican Campaign. Everyone else had a hand in Romney's defeat like Chris Christie or didn't do all that could have been expected to help Romney to victory like Paul Ryan.
Tuesday, November 6, 2012
7 Reasons Why Obama Won...7 Ways the GOP can improve
1. We did not know the real Mitt Romney. It took too long for us to get the know him. We only began to find out after the first presidential debate.
2. Hurricane Sandy stalled Romney's momentum in key states.
3. The rhetoric of the Republican party does not translate to how it will improve the lives of many Americans. The GOP rhetoric is too strong, particularly on immigration and birth control and how to repeal or reform Obamacare.
4. The Tea Party and their refusal to back Romney in the Presidential Primaries cost the Romney Campaign too much time, energy and money. If the GOP had settled on a candidate earlier, they would have had a much earlier start at Romney vs. Obama. They treated the primary election as if it were an open-year election, when they needed to settle on a candidate early. The GOP forgot Reagan's 11th commandment...not to speak ill of thy fellow Republican.
5. Many in the GOP and in the Tea Party in particular do not fully appreciate how truly difficult it is in any election to defeat an incumbent. They were too focused, early on, on defeating Romney because he was not their style of conservative.
6. Romney did not woo enough women.
7. Minorities overwhelmingly supported Obama.
Five matters of advice for the GOP to win in 2014 and 2016.
1. Put all effort into winning back the Senate in 2014. If Sarah Palin wants to be a force in national politics again she can begin by running herself to defeat Sean Parnell in Alaska in the US Senate. Buy the end of 2013, the GOP needs to identify a winning candidate in each Senate Race.
2. Do not challenge any GOP incumbent in Congress in 2014 no matter how moderate they are. A moderate Republican is better than any liberal. Do not challenge the GOP within the party until the party is in firm control of both houses in Congress. Only contest open seats.
3. Settle on a Presidential contender early in 2016. Do not punish states that want to vote in their presidential primary early. The earlier the GOP can settle on a presidential candidate, the better. Maybe all states that have not otherwise voted should vote on Super Tuesday.
4. Tone down the Rhetoric. Show how GOP policies benefit the average American, especially those who earn less than 50,000. No one cares how much national debt is per person there is until they realize how it impacts them today and now. Don't just talk about the future, talk about today. That is why many people will say, "the Republicans care about my boss, not about me."
5. Take stock in how difficult it truly is to defeat an incumbent. GOP members need to be more generous with their political contributions and need to be less contentious with themselves.
6. Work to elect more conservative women to office. They do exist.
7. Work to elect more conservative minorities to office. They also exist.
The GOP will win over minorities and women if more are in office.
The bottom line, Republicans need to show that they care about people. This election should be a wake up call to the GOP. Tone it down, or we will continue to lose. We can still show that we care about the economy, about the deficit and about strong moral values. We simply need to be less extreme about it. It's not always about what you say, it's about how you say it.
This was the most telling statistic from the exit polls...
Which ONE of these four candidate qualities mattered most in deciding how you voted for president? (CHECK ONLY ONE) |
Total | Obama | Romney | |
|---|---|---|---|---|
Shares my values | 27% | 42% | 55% | |
Is a strong leader | 18% | 38% | 61% | |
Cares about people like me | 21% | 82% | 17% | |
Has a vision for the future | 29% | 45% | 53% |
Monday, November 5, 2012
Predictions for 2013...
If Obama wins...
Obama wins in the electoral college, but loses the popular vote. There is a strong chance that this will happen. The GOP will claim that the split denies the president a political mandate. This is what was done to Bush in 2000 and the GOP will claim that it is only fair play. Congress prepares for another two years of gridlock as the GOP makes a move to capture the US Senate in 2014.
In the meantime, the economy will go into recession by the 3rd quarter and the tax increases and automatic spending cuts that will hit in the beginning of 2013 will be to blame. Many government contractors, who expected lifetime work, will be laid off. Cities near military bases and other large government institutions will be hardest hit. Congress will never agree on how to roll back the tax increases and the Democrats in the Senate will push to keep increases on high wage earners.
The House will investigate and want answers to Bengazi, but the popular right-wing press will push to raise charges of impeachment on President Obama. Secretary of State Hillary Clinton, and Secratary of Defense William Peneta will resign to protect the president. But charges of impeachment will never be leveled and some in the GOP will use the incompetence of Joe Biden as a defense.
Many in the GOP will blame Newt Gingrich and Rick Santorum and the Tea Party for the Obama victory because they forced Romney to use up too much money and energy in the primary election cycle. Romney will never again run for public office and will instead become the president of his alma mater, Brigham Young University. New Jersey Governor Chris Christie will become the front runner for the GOP nomination in 2016.
If Romney wins
The Democrats will use the close victory of Romney as an excuse to deny him a political mandate, but there will be a little less contention in Congress. Democrats in the Senate will be divided as some will be from states that Romney won and will try to appear to work with the President to please their constituency. But there will still be some deadlock in Congress.
The GOP will try to roll back some of the tax increases and spending cuts that are in place for early in 2013. But will have to increase the debt limit to do so. This will split the GOP when you think that they would unite under a GOP president. As such, the GOP will lose ground in both houses in 2014.
The GOP will not be able to roll back Obamacare due to a fillerbuster from the Democratic controlled Senate, and unable to untie will have to settle for further healthcare reform.
The economy will head into recession in the 4th quarter of 2013.
Romney's 2016 election chances could be dim. If he is unable to unite his party, he will receive a strong challenge from a Tea Party governor. The recession will improve the chances that a democratic challenger will prevail, even if we are in recovery. Romney, if he wins, therefore, will have two main challenges. First, will be to unite his party so that he does not get an in-party challenge from someone like Sarah Palin in 2016. Second, will be the coming economic challenges and the roadblock that the democratic-controlled Senate will give him.
Conclusion
In short, if Obama wins the Tea Party is weakened as they will be blamed for the Romney loss and the tax increases and spending cuts that lead to the 2013 recession, but the GOP ends up stronger. If Romney wins, the Democratic party is strong and the Tea Party continues to tear apart the GOP.
If Obama wins the Dem ticket? New York Governor Andrew Cuomo with former Washington Governor Christie Gregoire.
GOP Ticket? New Jersey Governor Chris Christie with South Carolina Governor Nikki Haley.
Obama wins in the electoral college, but loses the popular vote. There is a strong chance that this will happen. The GOP will claim that the split denies the president a political mandate. This is what was done to Bush in 2000 and the GOP will claim that it is only fair play. Congress prepares for another two years of gridlock as the GOP makes a move to capture the US Senate in 2014.
In the meantime, the economy will go into recession by the 3rd quarter and the tax increases and automatic spending cuts that will hit in the beginning of 2013 will be to blame. Many government contractors, who expected lifetime work, will be laid off. Cities near military bases and other large government institutions will be hardest hit. Congress will never agree on how to roll back the tax increases and the Democrats in the Senate will push to keep increases on high wage earners.
The House will investigate and want answers to Bengazi, but the popular right-wing press will push to raise charges of impeachment on President Obama. Secretary of State Hillary Clinton, and Secratary of Defense William Peneta will resign to protect the president. But charges of impeachment will never be leveled and some in the GOP will use the incompetence of Joe Biden as a defense.
Many in the GOP will blame Newt Gingrich and Rick Santorum and the Tea Party for the Obama victory because they forced Romney to use up too much money and energy in the primary election cycle. Romney will never again run for public office and will instead become the president of his alma mater, Brigham Young University. New Jersey Governor Chris Christie will become the front runner for the GOP nomination in 2016.
If Romney wins
The Democrats will use the close victory of Romney as an excuse to deny him a political mandate, but there will be a little less contention in Congress. Democrats in the Senate will be divided as some will be from states that Romney won and will try to appear to work with the President to please their constituency. But there will still be some deadlock in Congress.
The GOP will try to roll back some of the tax increases and spending cuts that are in place for early in 2013. But will have to increase the debt limit to do so. This will split the GOP when you think that they would unite under a GOP president. As such, the GOP will lose ground in both houses in 2014.
The GOP will not be able to roll back Obamacare due to a fillerbuster from the Democratic controlled Senate, and unable to untie will have to settle for further healthcare reform.
The economy will head into recession in the 4th quarter of 2013.
Romney's 2016 election chances could be dim. If he is unable to unite his party, he will receive a strong challenge from a Tea Party governor. The recession will improve the chances that a democratic challenger will prevail, even if we are in recovery. Romney, if he wins, therefore, will have two main challenges. First, will be to unite his party so that he does not get an in-party challenge from someone like Sarah Palin in 2016. Second, will be the coming economic challenges and the roadblock that the democratic-controlled Senate will give him.
Conclusion
In short, if Obama wins the Tea Party is weakened as they will be blamed for the Romney loss and the tax increases and spending cuts that lead to the 2013 recession, but the GOP ends up stronger. If Romney wins, the Democratic party is strong and the Tea Party continues to tear apart the GOP.
If Obama wins the Dem ticket? New York Governor Andrew Cuomo with former Washington Governor Christie Gregoire.
GOP Ticket? New Jersey Governor Chris Christie with South Carolina Governor Nikki Haley.
Wednesday, October 10, 2012
Time for Big Bird to Retire? Probably not.
It is really time for Big Bird and Elmo to retire? In last week's first Presidential Debate, Mitt Romney said that he loves Big Bird, but he would cut public funding for PBS. Is that really fair?
For the record, about 1/100th of the Federal Budget is spent on PBS. The Corporation for Public Broadcasting, which funds PBS and NPR get about 281 million from Congress. 210 million go directly to the individual stations. 71 million goes to PBS directly. Not much of that 71 million goes to produce episodes of Sesame Street. Overall, the CPB gets about 12% of it's revenue from Congress. 88% comes from other sources.
PBS in the budget or not, cutting PBS will not save the US Tax Payer a lot of money. Chances are, if every American will look under his or her couch cushions, we will find enough money to keep PBS operating. It is more akin to your favorite sports bar taking down 1 TV to save electricity. Every little bit helps, but this alone will not do the trick. It will not even come close.
The real problem, if the CPB is dismissed, is the amount of money that goes directly to your local stations. Now, those of us who watch PBS regularly will occasionally have our favorite shows and concerts interrupted with pledge drives. We, as individuals, often directly support our favorite PBS stations through our own pledges.
That is likely where most of the money your local PBS station needs to operate comes from, directly from your pledges. But every little bit helps, and whatever comes from Congress helps keep some of those stations on the air.
Here is the problem with Federal Funding. Getting overloaded on the monthly budgets happens the way it does for you and for me. A dollar here and a dollar there adds up to hundreds each month. A library fine, a late fee for a credit card payment. New wiper blades. Too much of that and one is in the red. When the Public Deficit is as high as it is, every little bit that can be cut helps.
PBS can likely get by without Federal Funding. Even if PBS goes away, Big Bird will find a new home on either Nickelodeon or on the Disney Channel or some other station that caters to youngsters. It will not be difficult at all. Sesame Street is a brand that sells, and would make a valuable commercial property. Other PBS shows will have to find ways to enter America's living rooms, and many will. Sesame Street does not need public dollars to survive. Some other shows do. Many that are produced locally and shown locally would not hit the airwaves without public dollars.
There is one other service that PBS provides. Experience. Most PBS stations are run out of local colleges and universities. Many who work behind the scenes in TV and Radio get their start at PBS and NPR stations. Yes, there are other ways to break into the biz. Many people start directly at commercial TV and Radio stations. It is very hard to buy experience; without PBS, a channel that is used to get students from the classroom to an actual paying job will be lost. Even if federal dollars are cut, the practical experience that many young people get working for PBS and NPR stations is worth trying to keep these stations going.
Sure, we can kill the CPB if we wish to. But let's keep the valuable training ground going. Let's find another way...even if PBS stations have to begin showing, gulp, commercials.
For the record, about 1/100th of the Federal Budget is spent on PBS. The Corporation for Public Broadcasting, which funds PBS and NPR get about 281 million from Congress. 210 million go directly to the individual stations. 71 million goes to PBS directly. Not much of that 71 million goes to produce episodes of Sesame Street. Overall, the CPB gets about 12% of it's revenue from Congress. 88% comes from other sources.
PBS in the budget or not, cutting PBS will not save the US Tax Payer a lot of money. Chances are, if every American will look under his or her couch cushions, we will find enough money to keep PBS operating. It is more akin to your favorite sports bar taking down 1 TV to save electricity. Every little bit helps, but this alone will not do the trick. It will not even come close.
The real problem, if the CPB is dismissed, is the amount of money that goes directly to your local stations. Now, those of us who watch PBS regularly will occasionally have our favorite shows and concerts interrupted with pledge drives. We, as individuals, often directly support our favorite PBS stations through our own pledges.
That is likely where most of the money your local PBS station needs to operate comes from, directly from your pledges. But every little bit helps, and whatever comes from Congress helps keep some of those stations on the air.
Here is the problem with Federal Funding. Getting overloaded on the monthly budgets happens the way it does for you and for me. A dollar here and a dollar there adds up to hundreds each month. A library fine, a late fee for a credit card payment. New wiper blades. Too much of that and one is in the red. When the Public Deficit is as high as it is, every little bit that can be cut helps.
PBS can likely get by without Federal Funding. Even if PBS goes away, Big Bird will find a new home on either Nickelodeon or on the Disney Channel or some other station that caters to youngsters. It will not be difficult at all. Sesame Street is a brand that sells, and would make a valuable commercial property. Other PBS shows will have to find ways to enter America's living rooms, and many will. Sesame Street does not need public dollars to survive. Some other shows do. Many that are produced locally and shown locally would not hit the airwaves without public dollars.
There is one other service that PBS provides. Experience. Most PBS stations are run out of local colleges and universities. Many who work behind the scenes in TV and Radio get their start at PBS and NPR stations. Yes, there are other ways to break into the biz. Many people start directly at commercial TV and Radio stations. It is very hard to buy experience; without PBS, a channel that is used to get students from the classroom to an actual paying job will be lost. Even if federal dollars are cut, the practical experience that many young people get working for PBS and NPR stations is worth trying to keep these stations going.
Sure, we can kill the CPB if we wish to. But let's keep the valuable training ground going. Let's find another way...even if PBS stations have to begin showing, gulp, commercials.
Tuesday, October 2, 2012
Distorting Mormon Views on Welfare and Taxation
Harry Reid has accused Mitt Romney of distorting the LDS view on welfare and assistance to the poor. I believe that Mr. Reid and others who support this accusation, for political gain, are the ones who are wrong. Here is why.
First off, the LDS Church is politically neutral. The use of LDS church doctrine for political gain by a Latter-day Saint such as Harry Reid is unethical. Anyone who claims or implies that their views are supported by LDS church doctrine or belief for political gain are wrong to do so, even if their views are correct. Harry Reid is not the only one guilty of such an offense. Spend an election season here in Utah and you will see what I mean.
Second, the LDS Church does indeed encourage it's members to assist the poor. In fact, it is considered a commandment. However, the church does not say anything for or against collecting and taxes for this purpose. The Church does not say HOW we should render our assistance to the needy. Members are encouraged to fast once a month and donate the money that would have been spent on food for assistance to the church administered by the local Bishop. Tithing that is collected from the church is used for the purposes of administering the mission of the church. That is the minimum that is expected of those who only have enough to take care of themselves. Everyone else in strongly encouraged to give much more, but it is left to them to determine how and to whom to give. The thing that should be remembered is that taxes can be used for any purpose once it is in the hands of the government. The Book of Mormon definitely decries outrageously high taxes, but does commend assistance to the needy.
When considering this point, one should also remember the advice given in the Doctrine and Covenants, "It is not meet that I should command in all things." Meaning that the greater blessings from giving go to those who choose to give out of their own free will and choice and are not compelled by the church or government to do so give.
Third, the LDS Church puts a high importance on self-reliance and emphasizes to the poor and needy that any assistance from any source should be temporary. They encourage people to save money and store food so that when a financial difficulty arises, that people have the resources to endure the trial without going to anyone for assistance. An LDS Bishop can refuse to provide assistance from the church to anyone he feels is abusing the system or not doing enough to help himself.
Fourth, the LDS Church states the first source that anyone should go to if they need assistance is their extended family. That church and government resources should be used after family resources have been exhausted. Church bishops have encouraged people to seek help from government resources when it is available.
Fifth, the LDS Church strongly encourages welfare recipients to work for the assistance that they receive. When God kicked Adam and Eve out of the Garden of Eden, he told them, "by the sweat of thy face shalt thou eat bread." (Genesis 3:19) This is still true today, the Lord expects each adult individual to pay their own way first, then to give any excess that they have to the poor.
Sixth, we should not expect that people should become themselves poor by giving to the poor. Mormon Apostle Neal A. Maxwell once said, "A good gift should not impoverish the giver."
Seventh, it is never right to question the giving of everyone else. Bishops are not instructed to pry how people pay their tithing, only to ask whether or not they pay it. Good Latter-Day Saints should never question the giving of another. Jesus said, "do not let the left hand know what the right hand doeth."
I will leave to the reader to determine whose views are closer to LDS doctrine and teachings. Chances are that neither Mitt Romney's view nor Harry Reid's view are an exact match of LDS Church doctrine on welfare assistance. But one thing is for certain, the status quo is unsustainable and if living beyond one's means is bad for the individual, it is bad for the government too. Harry Reid is wrong for saying that Mitt Romney's views are not the face of Mormonism, even if Harry is correct and Mitt is wrong.
First off, the LDS Church is politically neutral. The use of LDS church doctrine for political gain by a Latter-day Saint such as Harry Reid is unethical. Anyone who claims or implies that their views are supported by LDS church doctrine or belief for political gain are wrong to do so, even if their views are correct. Harry Reid is not the only one guilty of such an offense. Spend an election season here in Utah and you will see what I mean.
Second, the LDS Church does indeed encourage it's members to assist the poor. In fact, it is considered a commandment. However, the church does not say anything for or against collecting and taxes for this purpose. The Church does not say HOW we should render our assistance to the needy. Members are encouraged to fast once a month and donate the money that would have been spent on food for assistance to the church administered by the local Bishop. Tithing that is collected from the church is used for the purposes of administering the mission of the church. That is the minimum that is expected of those who only have enough to take care of themselves. Everyone else in strongly encouraged to give much more, but it is left to them to determine how and to whom to give. The thing that should be remembered is that taxes can be used for any purpose once it is in the hands of the government. The Book of Mormon definitely decries outrageously high taxes, but does commend assistance to the needy.
When considering this point, one should also remember the advice given in the Doctrine and Covenants, "It is not meet that I should command in all things." Meaning that the greater blessings from giving go to those who choose to give out of their own free will and choice and are not compelled by the church or government to do so give.
Third, the LDS Church puts a high importance on self-reliance and emphasizes to the poor and needy that any assistance from any source should be temporary. They encourage people to save money and store food so that when a financial difficulty arises, that people have the resources to endure the trial without going to anyone for assistance. An LDS Bishop can refuse to provide assistance from the church to anyone he feels is abusing the system or not doing enough to help himself.
Fourth, the LDS Church states the first source that anyone should go to if they need assistance is their extended family. That church and government resources should be used after family resources have been exhausted. Church bishops have encouraged people to seek help from government resources when it is available.
Fifth, the LDS Church strongly encourages welfare recipients to work for the assistance that they receive. When God kicked Adam and Eve out of the Garden of Eden, he told them, "by the sweat of thy face shalt thou eat bread." (Genesis 3:19) This is still true today, the Lord expects each adult individual to pay their own way first, then to give any excess that they have to the poor.
Sixth, we should not expect that people should become themselves poor by giving to the poor. Mormon Apostle Neal A. Maxwell once said, "A good gift should not impoverish the giver."
Seventh, it is never right to question the giving of everyone else. Bishops are not instructed to pry how people pay their tithing, only to ask whether or not they pay it. Good Latter-Day Saints should never question the giving of another. Jesus said, "do not let the left hand know what the right hand doeth."
I will leave to the reader to determine whose views are closer to LDS doctrine and teachings. Chances are that neither Mitt Romney's view nor Harry Reid's view are an exact match of LDS Church doctrine on welfare assistance. But one thing is for certain, the status quo is unsustainable and if living beyond one's means is bad for the individual, it is bad for the government too. Harry Reid is wrong for saying that Mitt Romney's views are not the face of Mormonism, even if Harry is correct and Mitt is wrong.
The one thing to consider
Those of you who read this blog, know who I endorse in the presidential race. Those of you who are undecided should only consider one thing.
Think of the most successful president in your lifetime. Most of the Republican leaning people will think of Ronald Reagan. Most of the Democratic people will think of Bill Clinton. Now think of what Bill Clinton and Ronald Reagan had in common. Give up?
Ronald Reagan was a Republican who, for most of his presidency, had a Democratic majority in Congress. Bill Clinton was a Democrat who had a Republican majority in Congress. The relationship was not always smooth, but Clinton and Reagan had to reach across the isle in Congress to get things accomplished. This means that these successful presidents did not always get what they wanted, but were able to get things done.
If there was one great failing in the administration of both Bush administrations it was this. Both George W. Bush and his father had a difficult time reaching across the isle to work with the opposite party in Congress. Some say that Jimmy Carter, a Democrat with a Democratic majority did not have to reach across the isle, but that was his great failing.
Bill Clinton did not always get along with Congress, he was impeached, after all. But when push came to shove, Clinton and the Republican Speaker Newt Gingrich worked together to push legislation that both could support.
Ronald Reagan and Democratic Speaker Tip O'Neill did not see eye to eye. There were some budget battles that shut down the government. But in Reagan's second term, the relationship between Mr. Reagan and Congress was more smooth. Not perfect, not uncontentious, but better. America benefited from it.
Now, let's think about the current race. How has Barrack Obama been with the Republicans in Congress?
How well did Mitt Romney work with the Democrats in the Massachusetts Legislature?
You may think that the President and his party will gain a political mandate in this coming election. The truth is that 469 members of Congress will also arrive in Washington with their own political mandates. Every member of the House and every member of the Senate, when the next Congressional session begins, will have won his or her last election, just like the President. The president is going to get judged by history. Constitutionally, he can get very little done without collaboration from Congress. He will, no matter what you have been taught to believe, be judged on how well he worked with Congress. No matter what Mr. Obama and Mr. Romney have in their agenda, it will matter little without help from Congress.
In any presidential election, the one thing that matters is this: which candidate is more likely to get along with Congress. Without help from Congress, the president is little more than a figure head. When the President and the opposite party in Congress find common ground and work together, America prospers. When they do no, we all suffer. Yes, it's a two-way street, Congress is not exactly popular right now, either. But the one who should extend the olive branch of peace is the one in the Oval Office. This is the one thing that matters.
Think of the most successful president in your lifetime. Most of the Republican leaning people will think of Ronald Reagan. Most of the Democratic people will think of Bill Clinton. Now think of what Bill Clinton and Ronald Reagan had in common. Give up?
Ronald Reagan was a Republican who, for most of his presidency, had a Democratic majority in Congress. Bill Clinton was a Democrat who had a Republican majority in Congress. The relationship was not always smooth, but Clinton and Reagan had to reach across the isle in Congress to get things accomplished. This means that these successful presidents did not always get what they wanted, but were able to get things done.
If there was one great failing in the administration of both Bush administrations it was this. Both George W. Bush and his father had a difficult time reaching across the isle to work with the opposite party in Congress. Some say that Jimmy Carter, a Democrat with a Democratic majority did not have to reach across the isle, but that was his great failing.
Bill Clinton did not always get along with Congress, he was impeached, after all. But when push came to shove, Clinton and the Republican Speaker Newt Gingrich worked together to push legislation that both could support.
Ronald Reagan and Democratic Speaker Tip O'Neill did not see eye to eye. There were some budget battles that shut down the government. But in Reagan's second term, the relationship between Mr. Reagan and Congress was more smooth. Not perfect, not uncontentious, but better. America benefited from it.
Now, let's think about the current race. How has Barrack Obama been with the Republicans in Congress?
How well did Mitt Romney work with the Democrats in the Massachusetts Legislature?
You may think that the President and his party will gain a political mandate in this coming election. The truth is that 469 members of Congress will also arrive in Washington with their own political mandates. Every member of the House and every member of the Senate, when the next Congressional session begins, will have won his or her last election, just like the President. The president is going to get judged by history. Constitutionally, he can get very little done without collaboration from Congress. He will, no matter what you have been taught to believe, be judged on how well he worked with Congress. No matter what Mr. Obama and Mr. Romney have in their agenda, it will matter little without help from Congress.
In any presidential election, the one thing that matters is this: which candidate is more likely to get along with Congress. Without help from Congress, the president is little more than a figure head. When the President and the opposite party in Congress find common ground and work together, America prospers. When they do no, we all suffer. Yes, it's a two-way street, Congress is not exactly popular right now, either. But the one who should extend the olive branch of peace is the one in the Oval Office. This is the one thing that matters.
Saturday, September 22, 2012
The 47% comment comment...the truth hurts
If you are part of the 47% that were insulted by Romney's comments in May, take a minute to think about this for a moment...what if Mitt Romney was right? I'm not talking to you if you are on unemployment or social security or if you are in the Armed Forces, I'm talking to those who get goodies from the government, but still earn a living wage.
If you receive the Earned Income Tax credit, and still make a living wage would you go without it? Would you fight against someone who tried to take it away?
In order for the government to be solvent, you need at least 2 and 1/2 wage earners to pay for one person receiving a government goody. If you received more back from the government than you paid in, you are not one of the wage earners paying into the system, even if you are earning money and receive no other federal assistance.
Here is the real challenge facing the US Congress in the next 2 to 4 years. Reduce the number of people who pay no income taxes to 30% from the current 49%. Then ensure that the 30%-tile of wage earners in this country is receiving a living wage. Right now, people at the 30%-tile need to earn about 8,000 more per year than they do now.
No politician can promise you a 34% wage increase. Fortunately, neither major party has been that bold. I do not excuse what Mitt Romney has said. It may go down as the biggest blunder since Walter Mondale's promise to raise taxes in 1984. However, what is being lost in the message is this: Let's build the economy so that fewer people need government assistance.
Congress can pass laws ensuring that a higher percentage of the people pay taxes. This would not be very popular in a recession and not popular at all if people making between 100,000 and 250,000 per year are getting a tax cut. So, even with republicans in office, that 47% is probably going to remain.
If anyone is to reduce to 47% down to 30% one has to focus on improving the economy and creating jobs. There are only 2 sure-fire ways to see wage inflation. First is to flip the supply/demand equation on jobs. Right now, with unemployment so high, there is downward pressure on wages. If employees are in demand, and there are more jobs than people to fill them, wages will increase.
After the flip, then the debate about where the limit for the EITC should be can begin.
But the economy is the most important thing right now.
If you receive the Earned Income Tax credit, and still make a living wage would you go without it? Would you fight against someone who tried to take it away?
In order for the government to be solvent, you need at least 2 and 1/2 wage earners to pay for one person receiving a government goody. If you received more back from the government than you paid in, you are not one of the wage earners paying into the system, even if you are earning money and receive no other federal assistance.
Here is the real challenge facing the US Congress in the next 2 to 4 years. Reduce the number of people who pay no income taxes to 30% from the current 49%. Then ensure that the 30%-tile of wage earners in this country is receiving a living wage. Right now, people at the 30%-tile need to earn about 8,000 more per year than they do now.
No politician can promise you a 34% wage increase. Fortunately, neither major party has been that bold. I do not excuse what Mitt Romney has said. It may go down as the biggest blunder since Walter Mondale's promise to raise taxes in 1984. However, what is being lost in the message is this: Let's build the economy so that fewer people need government assistance.
Congress can pass laws ensuring that a higher percentage of the people pay taxes. This would not be very popular in a recession and not popular at all if people making between 100,000 and 250,000 per year are getting a tax cut. So, even with republicans in office, that 47% is probably going to remain.
If anyone is to reduce to 47% down to 30% one has to focus on improving the economy and creating jobs. There are only 2 sure-fire ways to see wage inflation. First is to flip the supply/demand equation on jobs. Right now, with unemployment so high, there is downward pressure on wages. If employees are in demand, and there are more jobs than people to fill them, wages will increase.
After the flip, then the debate about where the limit for the EITC should be can begin.
But the economy is the most important thing right now.
Thursday, September 20, 2012
The Myth of the Career Poliltician and the presidency
If you ask many people what the problem with the American Government is today, there is a good chance that that person will say, "Career Politician." Are career politician really bad for the US? The argument is that Career Politicians have to spend an inordinate amount of time raising money for their next campaign and that it makes them more susceptible to influence from those who fund their campaign. The answer to all of this is term limits. I hope that I have been consistent in this blog...that term limits is not a panecea to fix problems in Washington. But here is another argument against term limits, and that is to dispel the myths of the Career Politician.
Ask the person to name the best and worst US President in their lifetime. For the worst president, a democratic leaning person will probably name George W. Bush as the worst. If they are old enough, they may name Richard Nixon. If they are a Republican, they will likely name Barrack Obama or Jimmy Carter as the worst. For the best president, a Democrat will probably name Bill Clinton as the best president, while a Republican will likely name Ronald Reagan.
Do you know that some of these presidents were "Career Politicians" before they became president? Every President since the Civil War, expect for Grant, Hayes and Eisenhower served at least 4 years in some elected office before becoming president. Some worked their way to the top. Let's take a look at all of the offices which the Presidents since the first World War held before becoming president. I think that one will find that there is no correlation between "Career Politician" and what kind of President they were. I would define a Career Politician as someone who served more than 2 terms in one office, or more than 20 years in politics before becoming President.
Woodrow Wilson--Before becoming President, he served a term as the Governor of New Jersey. Before that, he was President of Princeton. Before that, he practiced law. Can't be classified as a career politician and generally considered to be a good president.
Warren Harding---Before being elected in 1921 served as a US Senator from Ohio, as the Lieutenant Governor of Ohio and in the Ohio State Senate. He was a newspaper publisher before being elected to the Ohio Senate in 1899. I would not define Harding as a career politician because he only served one term in each office and was out of elected office between his stint in the Ohio State Senate and his election to the US Senate. From 1906 to 1915, Harding was running Marion Daily Star and not in political office at all. He is considered to be a poor president.
So far--2 non-carreer politicians, 1 good president and 1 poor president.
Calvin Coolidge assumed the presidency in 1923 upon the death of Harding. Coolidge first ran for office in 1898 in the city council of Northampton, Massachusetts and worked his way up the ladder to become the Governor of Massachusetts in 1919. Prior to that, he was the Lieutenant Governor of his state. Although he never served more than 1 term in office, he was in politics for more than 20 years before becoming the Vice President and was therefore a career politician. He is considered to be a good president.
Herbert Hoover was definitely not a career politician. The presidency was his first elected office. He was the Secretary of Commerce for 8 years prior to running for the White House. He was successful in the field of mining around the turn of the century to world-wide acclaim. He gained fame in World War I for his humanitarian efforts to bring aid and relief to many victims of the war, beginning with the repatriation of Americans who were in Europe when hostilities began. He is considered to be a poor president because the Great Depression began when he was in office and for all his brilliance, he could do nothing to stop it.
Franklin Roosevelt began is political career in 1911 and was elected to the Presidency in 1932. He was a career politician. He is considered by many historians to be a good president.
Harry Truman was first elected to office, as a Jackson County Missouri judge in 1922, but only served one term. But he returned to public office in 1926 transforming Kansas City into the city it would become. He ran for the US Senate in 1934. He was an upwardly mobile career politician and considered to be a good president.
Eisenhower was not a career politician before becoming the President. He was the senior commander in the European theater in World War II and the Vets loved him, even if his presidency was not as effective as it could have been.
Kennedy served for 3 terms in the House of Representatives and was in his second term in the US Senate when he ran for the White House. That fits the definition of a career politician. Reviews on his presidency were mixed.
Lyndon Johnson was in Congress before World War 2 began. He volunteered for the Navy during the war, and when he nearly became a POW, President Roosevelt ordered all members of Congress who were also in the Armed forces to choose one or the other. Johnson chose to remain in the House and resigned his Navy commission. As such, he fit the description of a Career politician. He was an effective president, but decided not to seek another term in 1968 due to the unpopularity of the Vietnam War.
Richard Nixon was also a career politician, serving in one office or another from his days at Whittier College. He was elected to Congress in 1947 and service in office until 1961. He is considered to be a weak president.
Gerald Ford was elected to Congress in 1949 and served there until he became the appointed Vice President in 1973. He was considered to be an ineffective president.
Jimmy Carter was only in elected office for 8 years before becoming the President of the US. He served 1 term in the Georgia State Senate and 1 term as the Governor from Georgia. Not a career politician and not considered to be an effective president.
Ronald Regan served 2 terms as Governor of California before becoming the President. Not a career politician and considered to be an effective president.
George HW Bush Served in Congress for only four years, but was in a slew of appointed offices throughout the 1970s before becoming Reagan's running mate. I will consider him a career politician and a mostly ineffective president.
Bill Clinton was first elected to office in 1977 and was only out of office for two years...1981 to 1983...before becoming the President in 1992. He served 5 2-year terms as Governor of Arkansas. We will call Bill Clinton a Career Politician and an effective president
George W. Bush only served as Texas Governor for 6 years before becoming president. He was not a Career Politician and not an effective president.
I will not evaluate Barrack Obama for this exercise.
Here is the grid...
Career Politician, ineffective president...
George H.W. Bush
Gerald Ford
Richard Nixon
Lyndon Johnson
Non-career Politician, ineffective president
Jimmy Carter
Lyndon Johnson
Herbert Hoover
Warren Harding
Career Politician, effective President
John F. Kennedy
Harry Truman
Franklin D. Roosevelt
Calvin Coolidge
Non-career Politician, effective President
Ronald Reagan
Dwight Eisenhower
Woodrow Wilson
The conclusion is that for those who served as the President of the United States, spending a career in politics is no predictor of their quality. Chances are you will find similar results in Congress. This is really an argument against those who say that career politicians are bad just for being career politicians and use it as a justification for term limits.
Ask the person to name the best and worst US President in their lifetime. For the worst president, a democratic leaning person will probably name George W. Bush as the worst. If they are old enough, they may name Richard Nixon. If they are a Republican, they will likely name Barrack Obama or Jimmy Carter as the worst. For the best president, a Democrat will probably name Bill Clinton as the best president, while a Republican will likely name Ronald Reagan.
Do you know that some of these presidents were "Career Politicians" before they became president? Every President since the Civil War, expect for Grant, Hayes and Eisenhower served at least 4 years in some elected office before becoming president. Some worked their way to the top. Let's take a look at all of the offices which the Presidents since the first World War held before becoming president. I think that one will find that there is no correlation between "Career Politician" and what kind of President they were. I would define a Career Politician as someone who served more than 2 terms in one office, or more than 20 years in politics before becoming President.
Woodrow Wilson--Before becoming President, he served a term as the Governor of New Jersey. Before that, he was President of Princeton. Before that, he practiced law. Can't be classified as a career politician and generally considered to be a good president.
Warren Harding---Before being elected in 1921 served as a US Senator from Ohio, as the Lieutenant Governor of Ohio and in the Ohio State Senate. He was a newspaper publisher before being elected to the Ohio Senate in 1899. I would not define Harding as a career politician because he only served one term in each office and was out of elected office between his stint in the Ohio State Senate and his election to the US Senate. From 1906 to 1915, Harding was running Marion Daily Star and not in political office at all. He is considered to be a poor president.
So far--2 non-carreer politicians, 1 good president and 1 poor president.
Calvin Coolidge assumed the presidency in 1923 upon the death of Harding. Coolidge first ran for office in 1898 in the city council of Northampton, Massachusetts and worked his way up the ladder to become the Governor of Massachusetts in 1919. Prior to that, he was the Lieutenant Governor of his state. Although he never served more than 1 term in office, he was in politics for more than 20 years before becoming the Vice President and was therefore a career politician. He is considered to be a good president.
Herbert Hoover was definitely not a career politician. The presidency was his first elected office. He was the Secretary of Commerce for 8 years prior to running for the White House. He was successful in the field of mining around the turn of the century to world-wide acclaim. He gained fame in World War I for his humanitarian efforts to bring aid and relief to many victims of the war, beginning with the repatriation of Americans who were in Europe when hostilities began. He is considered to be a poor president because the Great Depression began when he was in office and for all his brilliance, he could do nothing to stop it.
Franklin Roosevelt began is political career in 1911 and was elected to the Presidency in 1932. He was a career politician. He is considered by many historians to be a good president.
Harry Truman was first elected to office, as a Jackson County Missouri judge in 1922, but only served one term. But he returned to public office in 1926 transforming Kansas City into the city it would become. He ran for the US Senate in 1934. He was an upwardly mobile career politician and considered to be a good president.
Eisenhower was not a career politician before becoming the President. He was the senior commander in the European theater in World War II and the Vets loved him, even if his presidency was not as effective as it could have been.
Kennedy served for 3 terms in the House of Representatives and was in his second term in the US Senate when he ran for the White House. That fits the definition of a career politician. Reviews on his presidency were mixed.
Lyndon Johnson was in Congress before World War 2 began. He volunteered for the Navy during the war, and when he nearly became a POW, President Roosevelt ordered all members of Congress who were also in the Armed forces to choose one or the other. Johnson chose to remain in the House and resigned his Navy commission. As such, he fit the description of a Career politician. He was an effective president, but decided not to seek another term in 1968 due to the unpopularity of the Vietnam War.
Richard Nixon was also a career politician, serving in one office or another from his days at Whittier College. He was elected to Congress in 1947 and service in office until 1961. He is considered to be a weak president.
Gerald Ford was elected to Congress in 1949 and served there until he became the appointed Vice President in 1973. He was considered to be an ineffective president.
Jimmy Carter was only in elected office for 8 years before becoming the President of the US. He served 1 term in the Georgia State Senate and 1 term as the Governor from Georgia. Not a career politician and not considered to be an effective president.
Ronald Regan served 2 terms as Governor of California before becoming the President. Not a career politician and considered to be an effective president.
George HW Bush Served in Congress for only four years, but was in a slew of appointed offices throughout the 1970s before becoming Reagan's running mate. I will consider him a career politician and a mostly ineffective president.
Bill Clinton was first elected to office in 1977 and was only out of office for two years...1981 to 1983...before becoming the President in 1992. He served 5 2-year terms as Governor of Arkansas. We will call Bill Clinton a Career Politician and an effective president
George W. Bush only served as Texas Governor for 6 years before becoming president. He was not a Career Politician and not an effective president.
I will not evaluate Barrack Obama for this exercise.
Here is the grid...
Career Politician, ineffective president...
George H.W. Bush
Gerald Ford
Richard Nixon
Lyndon Johnson
Non-career Politician, ineffective president
Jimmy Carter
Lyndon Johnson
Herbert Hoover
Warren Harding
Career Politician, effective President
John F. Kennedy
Harry Truman
Franklin D. Roosevelt
Calvin Coolidge
Non-career Politician, effective President
Ronald Reagan
Dwight Eisenhower
Woodrow Wilson
The conclusion is that for those who served as the President of the United States, spending a career in politics is no predictor of their quality. Chances are you will find similar results in Congress. This is really an argument against those who say that career politicians are bad just for being career politicians and use it as a justification for term limits.
Friday, September 7, 2012
Now that the conventions are over.
Here are some things to keep in mind...
1. The budget is set by Congress and not the president. While you and your friends are debating, here is the truth about the deficit that may have escaped you.
In the late 1990s, the US had a surplus...meaning more money was coming in than going out. Today we have a huge deficit. About 1/3 of this was caused by a Republican-controlled congress...from 2000 to 2006. 1/3 of this was caused by a Democratic-controlled Congress...from 2006 to 2012. About 1/3 of this is tax revenue lost because of the poor economy.
2. The US is part of a global economy. Much of what can happen in the economy is outside of the control of anyone in the US government.
3. You and you alone decide if you are going to be happy. For me, no matter who wins on Election Day, I am going to go on with my life and live it the best that I can.
4. If the economy grows to 1998 levels, and programs designed to stimulate the economy since 2007 are allowed to be phased out, the federal budget will be balanced with no additional taxes or spending cuts.
Some things to keep in mind. Share with all of your friends.
1. The budget is set by Congress and not the president. While you and your friends are debating, here is the truth about the deficit that may have escaped you.
In the late 1990s, the US had a surplus...meaning more money was coming in than going out. Today we have a huge deficit. About 1/3 of this was caused by a Republican-controlled congress...from 2000 to 2006. 1/3 of this was caused by a Democratic-controlled Congress...from 2006 to 2012. About 1/3 of this is tax revenue lost because of the poor economy.
2. The US is part of a global economy. Much of what can happen in the economy is outside of the control of anyone in the US government.
3. You and you alone decide if you are going to be happy. For me, no matter who wins on Election Day, I am going to go on with my life and live it the best that I can.
4. If the economy grows to 1998 levels, and programs designed to stimulate the economy since 2007 are allowed to be phased out, the federal budget will be balanced with no additional taxes or spending cuts.
Some things to keep in mind. Share with all of your friends.
Tuesday, September 4, 2012
Is Corporate Welfare a Good Use of Tax Dollars?
The question we should ask about Corporate Welfare is: why? There are many different reasons why this happens. First, it depends on the type of business that is receiving an incentive from the government. A suburb may give a property tax rebate to a Wal-Mart Super Center because that expenditure will be offset many times over by an increase in sales tax revenues. A city like Salt Lake City may give a tax break to Microsoft because there will be an increase in tax revenue in other area. If there are people coming to town for jobs, houses are going to be built and stores are going to sell goods. It increases the overall health of the economy.
The other reason why government at all levels gives tax breaks to firms is because it is a common practice world-wide, and it is a competitive world. If your town is not willing to give a tax break to bring some business to town, someone else is. That becomes a lost opportunity.
This usually works all fine and dandy until the company begins to have trouble and then begins to lay off employees. Let's say the corporate tax break in your town was given to Widgets are US because of a military contract. Your town gave them a 50% discount on property tax because the new factory would bring 2,000 jobs to town that did not exist before. Your town has put in the streets, street lights, sewage, water, electricity and gas into new subdivisions to make way for the new hoses. They have bonded for new schools and parks. The town has incurred tons of new debt in hopes of increases the tax base in town by 2,000 new households. They have also zoned for new shops and other commercial development.
Right before Widgets are US breaks ground on their new factory, Congress cancels the contract. Then the town is out all of the investment that they put into the project. The new subdivisions remain vacant and the new stores never come to town. What has been lost? The money put into the anticipated new development.
What some people call Corporate Welfare is really a gamble. But the most important thing to remember is the way that Corporate America plays the game. When they want to build a new plant, they will shop it around to several communities to see who will give them the best deal. That has been going on for a long time and it is not likely to stop unless congress makes it illegal.
But what would happen if America outlawed corporate tax subsidies. Would that put the United States at a bigger disadvantage than they already have? Would that mean more jobs going overseas? The answer is yes to the first question and maybe to the second. Companies will not completely leave the US until there is no longer a market for their products in the United States. But it will cost this country jobs.
It would be unwise to spend money on projects that are going to be in your jurisdiction anyway. For example, if Winco is opening a store in either Layton or Kaysville, why would the State of Utah bother to incentive-ize one city of the next? But if the company is considering Layton instead of Wendover, then I would want those jobs to come to Utah.
At the federal level, the government may want to give businesses incentives to expand and hire people. Column A is people who have jobs and pay taxes. Column B is people who lack jobs are receive government assistance. The federal may spend millions as an incentive for Apple to open a new plant in Indiana. But that is worth it if the government can save millions more in welfare payments. It is worth if Apple is going to not build the plant for 2 or 3 years. It is worth it if Apple may build the plant in Mexico. It is worth it if the plant is going to revitalize an economically depressed area of Indiana instead of a affluent community in California. It is not worth it if none of the above applies, because any of the above options could save the federal government millions in social welfare payments.
A positive example is the government spending millions to provide incentives for companies to take over a closed military base or auto plant or steel mill. These programs will save taxpayers money as federal safety-net programs are allowed to recoup funds and people are removed from the sting of welfare. Hud sells houses and business properties. The city has the tax funds to repair their infrastructure. It's a win/win.
It goes too far when one member of congress uses federal funds to take a proposed projects away from the district of one of his colleagues. Then it simply becomes a bidding war, buying votes and everything else that is said negatively about it. Is there a fix for this? Yes, this is the type of problem that could be resolved with a line-item veto and someone sensible enough to use it the right way in the White House.
The bottom line is this: even though Corporate Welfare sounds bad, it can bring positive results when used correctly. It is not Corporate Welfare or Social Welfare, it's using corporate welfare to PREVENT the use of Social Welfare.
Sunday, September 2, 2012
5 Step Plan to Fix the US Economy...Step 5 Outsourcing and the Proper Example
In this presidential campaign, outsourcing has become an issue. Why should it not be something that we speak about, many people have lost jobs to overseas competition. Yes, Bain Capital has outsourced jobs overseas. But the Federal Government, under the watch of President Barrack Obama has done the same. No major large business has clean hands when it comes to sending jobs overseas, and that includes the Federal Government and many state governments as well.
Outsourcing is really importing. Instead of importing cars, oil or other goods, we are importing white collar labor.
This blog is not against free trade, and believes that the reversal of trade agreements will not resolve the outsourcing problem. Outsourcing is beyond costs and profits. Let's pose a question to all of our readers, why do companies outsource? The one obvious answer to that question is cost. Labor costs are cheaper in overseas markets, and that is why companies outsource. But the answer is not that simple. It goes beyond cost. If outsourcing is the answer to the labor costs question, why don't smaller companies do it? In fact, if outsourcing is the answer, why not move your entire operation overseas?
According to Forbes, the number one reason, and perhaps the only reason for some companies, to outsource jobs is to open up markets for their products. In other words, if I am Company X, and I want to sell my good and services in Renovia...then I am going to move jobs to Renovia so that barriers that the Renovian government normally puts in my way will be removed. The number one reason why companies outsource is to remove trade barriers.
There are other reasons, besides costs, behind outsourcing. They include the lack of labor unions in other countries, the willingness of governments to foot the costs for retraining employees, access to a younger workforce, lower health care costs, access to a specific labor pool and to avoid some of the regulation that the US government and many states have.
But there is a cycle, and eventually there will be little advantage to outsourcing other than to open up markets. Remember Back to the Future Part 3? There is a scene in that movie where the 1985 Marty is speaking to the 1955 Doc. Doc says to Marty, "here is the reason why this car broke down, all of your electronic parts were made in Japan." Marty's response is, "Doc, all of the best stuff comes from Japan." In 2012, many of those same parts are no longer made in Japan, but in Korea, China and India. In 2035, we may be buying electronic parts made in Costa Rica, Brazil, and Chile.
When a nation first enters the world market, it's products are of low quality and low price. Then the quality improves, but the price remains low. When the countries economy improves and inflates, the prices increase. Finally, the quality decreases. Just like we have already seen in Japan and Western Europe. We are getting to the point where India is no longer the hot spot for outsourcing, it is being replaced by The Philippines and by Costa Rica.
Can the trend for overseas jobs be reversed? Not completely, but it can improve for the US. The Federal Government can take two steps in order to reverse the trend. First, set a proper example. Second, strengthen the US dollar.
The US government and many state governments are as guilty as Bain Capital when outsourcing work. Very few US jobs have been directly outsourced, if more were, the AFL-CIO would raise a royal stink about it, even with Obama in the White House. But the contractors that the US and many states hire are some of the biggest outsourcers of work. This could be stopped with one stoke of Barack Obama's left hand. Simply adopt a policy that disallows government contractors from outsourcing. The reason why government contractors outsource is that they are trying to win contracts with foreign governments by showing what they can do with US taxpayer dollars. It is completely uneccisary and it will probably backfire. If I can outsource US government work with how strong US labor unions are, I can outsource the taxpayer dollars from other countries as well. It is not a good practice.
The second policy that could curb outsourcing is to strengthen the US dollar. A stronger dollar takes away some of the financial benefit for sending work overseas. This is where US public debt, especially the debt held by overseas nations, hurts the US economy the most. The more debt the government has, the weaker the dollar. It's a supply and demand issue. Dollars have to be printed when the US goes into debt, that means a higher supply of dollars. A higher supply means a lower price. Getting the government financial house in order will lower the supply of dollars available, and that means a higher price, or a strong dollar. That means less incentive to outsource work and less incentive to import goods.
Taking these steps will not stop outsourcing. There will always be the factor of opening up new markets and reaching new customers. That factor should not be taken out of the question. We should not attempt to stop US companies from expanding overseas. But we can take steps to remove the cost benefit by reducing some of the financial incentives. Our children will thank us if we do.
Step 1--Fix the corporate tax structure.
Step 2--Interest rates and lending
Step 3--Energy
Step 4--Legal Reforms
Step 5--Outsourcing
Outsourcing is really importing. Instead of importing cars, oil or other goods, we are importing white collar labor.
This blog is not against free trade, and believes that the reversal of trade agreements will not resolve the outsourcing problem. Outsourcing is beyond costs and profits. Let's pose a question to all of our readers, why do companies outsource? The one obvious answer to that question is cost. Labor costs are cheaper in overseas markets, and that is why companies outsource. But the answer is not that simple. It goes beyond cost. If outsourcing is the answer to the labor costs question, why don't smaller companies do it? In fact, if outsourcing is the answer, why not move your entire operation overseas?
According to Forbes, the number one reason, and perhaps the only reason for some companies, to outsource jobs is to open up markets for their products. In other words, if I am Company X, and I want to sell my good and services in Renovia...then I am going to move jobs to Renovia so that barriers that the Renovian government normally puts in my way will be removed. The number one reason why companies outsource is to remove trade barriers.
There are other reasons, besides costs, behind outsourcing. They include the lack of labor unions in other countries, the willingness of governments to foot the costs for retraining employees, access to a younger workforce, lower health care costs, access to a specific labor pool and to avoid some of the regulation that the US government and many states have.
But there is a cycle, and eventually there will be little advantage to outsourcing other than to open up markets. Remember Back to the Future Part 3? There is a scene in that movie where the 1985 Marty is speaking to the 1955 Doc. Doc says to Marty, "here is the reason why this car broke down, all of your electronic parts were made in Japan." Marty's response is, "Doc, all of the best stuff comes from Japan." In 2012, many of those same parts are no longer made in Japan, but in Korea, China and India. In 2035, we may be buying electronic parts made in Costa Rica, Brazil, and Chile.
When a nation first enters the world market, it's products are of low quality and low price. Then the quality improves, but the price remains low. When the countries economy improves and inflates, the prices increase. Finally, the quality decreases. Just like we have already seen in Japan and Western Europe. We are getting to the point where India is no longer the hot spot for outsourcing, it is being replaced by The Philippines and by Costa Rica.
Can the trend for overseas jobs be reversed? Not completely, but it can improve for the US. The Federal Government can take two steps in order to reverse the trend. First, set a proper example. Second, strengthen the US dollar.
The US government and many state governments are as guilty as Bain Capital when outsourcing work. Very few US jobs have been directly outsourced, if more were, the AFL-CIO would raise a royal stink about it, even with Obama in the White House. But the contractors that the US and many states hire are some of the biggest outsourcers of work. This could be stopped with one stoke of Barack Obama's left hand. Simply adopt a policy that disallows government contractors from outsourcing. The reason why government contractors outsource is that they are trying to win contracts with foreign governments by showing what they can do with US taxpayer dollars. It is completely uneccisary and it will probably backfire. If I can outsource US government work with how strong US labor unions are, I can outsource the taxpayer dollars from other countries as well. It is not a good practice.
The second policy that could curb outsourcing is to strengthen the US dollar. A stronger dollar takes away some of the financial benefit for sending work overseas. This is where US public debt, especially the debt held by overseas nations, hurts the US economy the most. The more debt the government has, the weaker the dollar. It's a supply and demand issue. Dollars have to be printed when the US goes into debt, that means a higher supply of dollars. A higher supply means a lower price. Getting the government financial house in order will lower the supply of dollars available, and that means a higher price, or a strong dollar. That means less incentive to outsource work and less incentive to import goods.
Taking these steps will not stop outsourcing. There will always be the factor of opening up new markets and reaching new customers. That factor should not be taken out of the question. We should not attempt to stop US companies from expanding overseas. But we can take steps to remove the cost benefit by reducing some of the financial incentives. Our children will thank us if we do.
Step 1--Fix the corporate tax structure.
Step 2--Interest rates and lending
Step 3--Energy
Step 4--Legal Reforms
Step 5--Outsourcing
Sunday, August 26, 2012
5 Step Plan to fix the US Economy...Litigation Reforms.
Torts and liability are not just a problem in the medical industry, but throughout Corporate America. All of America is suffering because of runaway lawsuits. Litigation has taken it's toll more greatly with small business, where the majority of America is employed.
You will not find litigation on this list of top-10 things that will kill a small business. Legal issues fall under the umbrella of poor management and can lead to cash flow difficulties. It can also lead to levels of stress that kill good customer service and synergy between employees. You can see legal issues all over this list.
The dollar cost of litigation on small business is not available in this study from the SBA. According to the report, the majority of legal cases that a small business deals with are for amounts under 10,000. Litigation is part of being in business, and the majority of legal cases are not going to bring most businesses to their knees. It's that occasional big case that causes problems.
The plurality of small business lawsuits comes from contract disputes...about 34% of lawsuits. #2 is torts and liability. #3 is civil rights lawsuits, #4 is a general category which includes prisoner petitions and federal tax disputes. #5 is labor issues and #6 is property rights disputes. These six categories represent 96% of the lawsuits that small business faces each year.
More than half of lawsuits directed at small business are at those that have fewer than 50 employees. At the time of the survey, 95% of businesses surveyed were in business more than 5 years. The majority of businesses sued had revenue over 5 million.
The SBA study said that there are three main causes for lawsuits against small business.
1. Employee Complaints
2. Business-specific claims such as copyright infringement.
3. Customer satisfaction issues.
Here is one place where government spending can create more revenue for the government than it spends. If the majority of business and employment in America is small business, then it would be money well spent to protect small business and keep tax dollars from small business flowing. There is also the economic principle of opportunity cost. What could that dollar that is spent to settle a legal matter be spent on instead?
We have a public defenders office to provide counsel to those accused of crime. Every county has an extension agent to give advice to farmers. It would be money well spent by government to have a small business assistance office in each county to provide advice to small business. There is such a thing on a small level, the NFIB. However, they do very little outside of lobbying. The advice they give is good, but would be more lasting if there was someone to talk to face-to-face. At least, there should be a legal referral service to someone familiar with the laws in the local state. If your business needs help writing a contract, you know who you can retain to ensure the contract prevents a lawsuit.
It is well understood that we live in a litigious society. According to the Public Law Research Institute, the major of wrongful termination lawsuits are dismissed before they ever go to trial. If there is basis for such lawsuits to go to trial, most companies...and wisely so...settle these cases before they to to trial. When they go to trial, the rewards are huge. Usually, the rewards are between 450,000 and 650,000.
Here is where reform can help. Let's say that you are wrongfully terminated at age 45. Does a jury really need to award the plantiff with the amount of money that would have been earned up until the age of 65? Even at age 45, people usually do not stay with a private-sector company for 20 years until they retire in today's society. Such cases could logically be settled at 5 years of lost wages, health care benefits and coverage at an executive-level job-search firm and retraining if that is required to obtain new employment. For the average person, this is around 250,000. This is the type of reform that is needed. We need to prevent run-a-way jury awards. We need to get society away from the "sue someone to get rich" mentality.
For companies with enough revenue to hire permanent legal counsel, this reform may not be needed. For everyone else, however, tort reform is necessary. It could be the difference, for some small firms, between staying open and closing. Until this happens, here is a list, according to the NFIB, of the top 5 things a small business can do to prevent lawsuits.
1. Document everything. Every business conversation--whether with employees, partners or customers--should be put in writing.
2. Create an employee handbook. Employees should know the company policies on discrimination, sexual harassment and such. No employee termination should come as a surprise.
3. Understand intellectual property laws. Know whether or not you have the right to use something that you borrow from another firm.
4. Maintain the business property. Do everything possible to prevent accidents. Purchase accident liability insurance. Have a regular insurance audit.
5. Communicate. Some misunderstandings can be cleared up with a simple phone call or a face to face conversation before they result legal action.
Taking these steps will help prevent the big lawsuits. Even after proper tort reform, this is still good advice.
Step 1--Fix the corporate tax structure.
Step 2--Interest rates and lending
Step 3--Energy
Step 4--Legal Reforms
Step 5--Outsourcing
You will not find litigation on this list of top-10 things that will kill a small business. Legal issues fall under the umbrella of poor management and can lead to cash flow difficulties. It can also lead to levels of stress that kill good customer service and synergy between employees. You can see legal issues all over this list.
The dollar cost of litigation on small business is not available in this study from the SBA. According to the report, the majority of legal cases that a small business deals with are for amounts under 10,000. Litigation is part of being in business, and the majority of legal cases are not going to bring most businesses to their knees. It's that occasional big case that causes problems.
The plurality of small business lawsuits comes from contract disputes...about 34% of lawsuits. #2 is torts and liability. #3 is civil rights lawsuits, #4 is a general category which includes prisoner petitions and federal tax disputes. #5 is labor issues and #6 is property rights disputes. These six categories represent 96% of the lawsuits that small business faces each year.
More than half of lawsuits directed at small business are at those that have fewer than 50 employees. At the time of the survey, 95% of businesses surveyed were in business more than 5 years. The majority of businesses sued had revenue over 5 million.
The SBA study said that there are three main causes for lawsuits against small business.
1. Employee Complaints
2. Business-specific claims such as copyright infringement.
3. Customer satisfaction issues.
Here is one place where government spending can create more revenue for the government than it spends. If the majority of business and employment in America is small business, then it would be money well spent to protect small business and keep tax dollars from small business flowing. There is also the economic principle of opportunity cost. What could that dollar that is spent to settle a legal matter be spent on instead?
We have a public defenders office to provide counsel to those accused of crime. Every county has an extension agent to give advice to farmers. It would be money well spent by government to have a small business assistance office in each county to provide advice to small business. There is such a thing on a small level, the NFIB. However, they do very little outside of lobbying. The advice they give is good, but would be more lasting if there was someone to talk to face-to-face. At least, there should be a legal referral service to someone familiar with the laws in the local state. If your business needs help writing a contract, you know who you can retain to ensure the contract prevents a lawsuit.
It is well understood that we live in a litigious society. According to the Public Law Research Institute, the major of wrongful termination lawsuits are dismissed before they ever go to trial. If there is basis for such lawsuits to go to trial, most companies...and wisely so...settle these cases before they to to trial. When they go to trial, the rewards are huge. Usually, the rewards are between 450,000 and 650,000.
Here is where reform can help. Let's say that you are wrongfully terminated at age 45. Does a jury really need to award the plantiff with the amount of money that would have been earned up until the age of 65? Even at age 45, people usually do not stay with a private-sector company for 20 years until they retire in today's society. Such cases could logically be settled at 5 years of lost wages, health care benefits and coverage at an executive-level job-search firm and retraining if that is required to obtain new employment. For the average person, this is around 250,000. This is the type of reform that is needed. We need to prevent run-a-way jury awards. We need to get society away from the "sue someone to get rich" mentality.
For companies with enough revenue to hire permanent legal counsel, this reform may not be needed. For everyone else, however, tort reform is necessary. It could be the difference, for some small firms, between staying open and closing. Until this happens, here is a list, according to the NFIB, of the top 5 things a small business can do to prevent lawsuits.
1. Document everything. Every business conversation--whether with employees, partners or customers--should be put in writing.
2. Create an employee handbook. Employees should know the company policies on discrimination, sexual harassment and such. No employee termination should come as a surprise.
3. Understand intellectual property laws. Know whether or not you have the right to use something that you borrow from another firm.
4. Maintain the business property. Do everything possible to prevent accidents. Purchase accident liability insurance. Have a regular insurance audit.
5. Communicate. Some misunderstandings can be cleared up with a simple phone call or a face to face conversation before they result legal action.
Taking these steps will help prevent the big lawsuits. Even after proper tort reform, this is still good advice.
Step 1--Fix the corporate tax structure.
Step 2--Interest rates and lending
Step 3--Energy
Step 4--Legal Reforms
Step 5--Outsourcing
Sunday, August 19, 2012
Five step plan to fix the economy...Step 3 Energy
Energy is an input to all facets of the American economy. From pencils to computers, all products use a component of energy to get made and delivered to customers. That is why a solid energy plan is so critical to the economy of the US. And this is something that has been absent since the Reagan administration. Yes, the White House has an energy policy, but how realistic is it?
One expert says that the world is at least 15 years away from real solar energy. Perhaps sometime next decade, most of the electricity in your house will come directly from the sun. But, do we have a bridge to get to the future? We are not there yet.
True, there are some consequences to burning fossil fuels and to nuclear energy, but they are the most efficient sources of fuel that we have at this time. Solar energy and other green sources of power are still in the "Model-T" stage of development and have a long way to go. One day, Solar power will be cheaper than coal. But we are not there, yet.
Some say that we need tax subsidies and help from government to get solar energy off the ground. I propose that we give solar energy the same level of tax help that we gave coal. Enough said.
Economic forces will drive cleaner energy, like it or not. But we do not get there by making it more difficult to deliver conventional sources of energy. The reason this is so is because of the economic principle of opportunity cost. That is a simple principle to understand. If I did not spend this $1 on x, I would spend it on y.
While Obama and his administration have sacrificed traditional energy for green energy, costs have been on the increase. While many of you believe that business simply passes the higher energy costs to you the consumer, it is not completely true. When prices are raised, the law of supply and demand says that less product will be sold. This is exacerbated because the consumer is also paying for fuel and has less to pay for other things. Companies have to find other ways to absorb costs. Eventually they respond by cutting staff.
You see where I am going with this, do you? We have needed a bridge to the future, not a cliff. Even those of us to advocate the use of more traditional sources or energy...coal, oil and natural gas...know that these sources of energy will not last forever and that we need to improve solar and wind technologies. Until the new energy technologies can supply our needs, we need to take advantage of the resources we now have for cheaper and more reliable sources of energy.
When companies spend less money on energy, they have more to spend on other things, such as payroll. When Mr. and Mrs. America spend less on gas in the tank, they have more to spend on luxuries such as food and clothing.
If allowed to expand, the energy industry has plenty of extra cash to hire hard-working, down-on-their-luck Americans. Don't we need to put good people to work? Thousands of people have lost work just for the Gulf Drilling Moratorium.
Just because we allow oil and coal companies to expand does not mean that we are abandoning green energy, it just means that we are trying to be realistic. Reality is, as we have been reminded since the 70s, the supply of fossil fuels is limited and we, sooner or later, need to find something different.
"Drill Here, Drill Now" is not the only answer to the energy problem. We need more refineries. When a fire at a refinery on the West Coast raises the price of gasoline 30 cents, it shows that improvements and upgrades are needed on every link in the supply chain. This is why the Keystone Pipeline is so important. It makes for more efficient delivery from oil field to refinery. We need new, safer and more efficient refineries, where few new refineries have been built in the past 30 years.
We also need to upgrade our coal-burning plants to make them more efficient and less polluting. We have the technology to do this, but instead our current administration insists on shutting them down.
Most importantly, we must develop domestic sources of energy. When we import 60% of our oil from foreign soil, we send 60% of the dollars that we spend on oil and gas outside of the United States. That weakens the dollar. This has consequences for every American, not just those who travel. A stronger dollar will help keep jobs in the US.
There is no telling how a better energy problem will benefit the United States. It's impact will be greatly felt. It may be the most important thing that the President and Congress can work on in the next four years. If there is one industry in the US that has the cash to invest in more American jobs, it is Big Oil. We should not engage in policies that view big oil companies that the enemy of the American People. We should treat this industry like an ally.
Step 1--Fix the corporate tax structure.
Step 2--Interest rates and lending
Step 3--Energy
Step 4--Legal Reforms
Step 5--Outsourcing
One expert says that the world is at least 15 years away from real solar energy. Perhaps sometime next decade, most of the electricity in your house will come directly from the sun. But, do we have a bridge to get to the future? We are not there yet.
True, there are some consequences to burning fossil fuels and to nuclear energy, but they are the most efficient sources of fuel that we have at this time. Solar energy and other green sources of power are still in the "Model-T" stage of development and have a long way to go. One day, Solar power will be cheaper than coal. But we are not there, yet.
Some say that we need tax subsidies and help from government to get solar energy off the ground. I propose that we give solar energy the same level of tax help that we gave coal. Enough said.
Economic forces will drive cleaner energy, like it or not. But we do not get there by making it more difficult to deliver conventional sources of energy. The reason this is so is because of the economic principle of opportunity cost. That is a simple principle to understand. If I did not spend this $1 on x, I would spend it on y.
While Obama and his administration have sacrificed traditional energy for green energy, costs have been on the increase. While many of you believe that business simply passes the higher energy costs to you the consumer, it is not completely true. When prices are raised, the law of supply and demand says that less product will be sold. This is exacerbated because the consumer is also paying for fuel and has less to pay for other things. Companies have to find other ways to absorb costs. Eventually they respond by cutting staff.
You see where I am going with this, do you? We have needed a bridge to the future, not a cliff. Even those of us to advocate the use of more traditional sources or energy...coal, oil and natural gas...know that these sources of energy will not last forever and that we need to improve solar and wind technologies. Until the new energy technologies can supply our needs, we need to take advantage of the resources we now have for cheaper and more reliable sources of energy.
When companies spend less money on energy, they have more to spend on other things, such as payroll. When Mr. and Mrs. America spend less on gas in the tank, they have more to spend on luxuries such as food and clothing.
If allowed to expand, the energy industry has plenty of extra cash to hire hard-working, down-on-their-luck Americans. Don't we need to put good people to work? Thousands of people have lost work just for the Gulf Drilling Moratorium.
Just because we allow oil and coal companies to expand does not mean that we are abandoning green energy, it just means that we are trying to be realistic. Reality is, as we have been reminded since the 70s, the supply of fossil fuels is limited and we, sooner or later, need to find something different.
"Drill Here, Drill Now" is not the only answer to the energy problem. We need more refineries. When a fire at a refinery on the West Coast raises the price of gasoline 30 cents, it shows that improvements and upgrades are needed on every link in the supply chain. This is why the Keystone Pipeline is so important. It makes for more efficient delivery from oil field to refinery. We need new, safer and more efficient refineries, where few new refineries have been built in the past 30 years.
We also need to upgrade our coal-burning plants to make them more efficient and less polluting. We have the technology to do this, but instead our current administration insists on shutting them down.
Most importantly, we must develop domestic sources of energy. When we import 60% of our oil from foreign soil, we send 60% of the dollars that we spend on oil and gas outside of the United States. That weakens the dollar. This has consequences for every American, not just those who travel. A stronger dollar will help keep jobs in the US.
There is no telling how a better energy problem will benefit the United States. It's impact will be greatly felt. It may be the most important thing that the President and Congress can work on in the next four years. If there is one industry in the US that has the cash to invest in more American jobs, it is Big Oil. We should not engage in policies that view big oil companies that the enemy of the American People. We should treat this industry like an ally.
Step 1--Fix the corporate tax structure.
Step 2--Interest rates and lending
Step 3--Energy
Step 4--Legal Reforms
Step 5--Outsourcing
Wednesday, August 8, 2012
Five Step Plan to Fix the Economy...Part 2, Interest Rates
In the late 1970s, America was experiencing a period of stagflation. High unemployment, high inflation and high interest rates. The Fed was trying to fight the inflation by raising interest rates. Rates for durable goods, such as cars and homes were over 20%. The interest rate solution was part of the problem, where monetary policy was part of the solution. Interest rates were so high, that economic activity was stifled. The Fed eventually had to respond by flooding the market with new dollars. With money to lend, banks had to respond by lowering standards so that more people could borrow money. But with interest rates so high, it was worth the risk.
Failing to tighten standards once interest rates became low again is one of the causes of the current economic situation. The reason is that the higher the interest rates, the lower the risk of lending to someone. The lower the interest rates, the higher the risk.
Interest rates today are low, and than means the risk of lending to someone, anyone, is very high. If anyone has tried to purchase a home, recently, they know how difficult it is to qualify. The bank who loans the money for a mortgage has very little room for error.
The conventional wisdom is that lower interest rates spur borrowing. But interest rates that are too low do not spur lending. And that is what is happening today.
The Fed has been keeping interest rates low to spur spending and borrowing, but it is not the Federal Reserve Bank that assumes the risk. Foreclosure is the first big risk that a bank takes when underwriting a mortgae. If there is a 15% chance that a home is going to go into foreclosure, then there is a 15% chance that the banks will lose. Foreclosure is expensive. It involves court costs and legal fees. Homes in foreclosure will sell for a reduced value. It is often doubtful that banks will recover the difference. The only way that banks make money on a foreclosed property is if property values are increasing. Often, the bank takes a big hit on a foreclosed property, even if values are increasing.
The second problem is the rate of inflation. If the inflation rate is 3%, and mortgage rates are 3%, then the bank will still be at a loss due to the cost of processing the mortgage. If the inflation rate is 5% and the mortgage rate is 2% then the bank loses, even if the borrow pays on time.
FHA exists to help banks mitigate the risk. But the real mitigation comes from having the interest rate more closely tied to the rate of inflation. It may sound counter-intuitive, but the fed needs to let interest rates increase gradually. Not back to where they were, just enough to spur lending. It may discourage some people from borrowing, but if more people can borrow, who will notice?
It's just like a friend told me. We needed some tightening in lending, we needed lower interest rates, but the pendulum has swung too far in one direction. It now needs to swing back. Not all the way to where it was. It just needs to retreat back a little.
One of the Fed Banks backs up this opinion piece.
Step 1--Fix the corporate tax structure.
Step 2--Interest rates and lending
Step 3--Energy
Step 4--Legal Reforms
Step 5--Outsourcing
Failing to tighten standards once interest rates became low again is one of the causes of the current economic situation. The reason is that the higher the interest rates, the lower the risk of lending to someone. The lower the interest rates, the higher the risk.
Interest rates today are low, and than means the risk of lending to someone, anyone, is very high. If anyone has tried to purchase a home, recently, they know how difficult it is to qualify. The bank who loans the money for a mortgage has very little room for error.
The conventional wisdom is that lower interest rates spur borrowing. But interest rates that are too low do not spur lending. And that is what is happening today.
The Fed has been keeping interest rates low to spur spending and borrowing, but it is not the Federal Reserve Bank that assumes the risk. Foreclosure is the first big risk that a bank takes when underwriting a mortgae. If there is a 15% chance that a home is going to go into foreclosure, then there is a 15% chance that the banks will lose. Foreclosure is expensive. It involves court costs and legal fees. Homes in foreclosure will sell for a reduced value. It is often doubtful that banks will recover the difference. The only way that banks make money on a foreclosed property is if property values are increasing. Often, the bank takes a big hit on a foreclosed property, even if values are increasing.
The second problem is the rate of inflation. If the inflation rate is 3%, and mortgage rates are 3%, then the bank will still be at a loss due to the cost of processing the mortgage. If the inflation rate is 5% and the mortgage rate is 2% then the bank loses, even if the borrow pays on time.
FHA exists to help banks mitigate the risk. But the real mitigation comes from having the interest rate more closely tied to the rate of inflation. It may sound counter-intuitive, but the fed needs to let interest rates increase gradually. Not back to where they were, just enough to spur lending. It may discourage some people from borrowing, but if more people can borrow, who will notice?
It's just like a friend told me. We needed some tightening in lending, we needed lower interest rates, but the pendulum has swung too far in one direction. It now needs to swing back. Not all the way to where it was. It just needs to retreat back a little.
One of the Fed Banks backs up this opinion piece.
Step 1--Fix the corporate tax structure.
Step 2--Interest rates and lending
Step 3--Energy
Step 4--Legal Reforms
Step 5--Outsourcing
Thursday, August 2, 2012
Five step plan to fix the US economy. Step 1--Corporate Taxes.
Reduce taxes on business. It is true right now that individuals of a certain income have it real good with taxes right now. But if those same individuals make their large incomes with their own businesses, they are getting killed with the corporate tax rate. The Corporate tax rate tables have not been adjusted since early in Ronald Regan's first term. The lowest bracket is at 50,000. If you run a business, and only make 50,000 in revenues minus cost of goods sold, you are struggling mightily. Conventional wisdom is that at 50,000, your take home pay should be no more than 25,000 or about 12.00 per hour. That qualifies a family of 2, a couple with no children, for food stamps. Guaranteed that you are the only employee at that level. You are probably working another job on the side. And your business is paying 7500 to the government. Hard to support a family at that level.
Let's take a look at the current corporate tax level...
Current Tax Rates
0 - 50,000--15%
50,001 - 75,000--7,500 + 25% of the amount over 50,000
75,001 - 100,000--13,750 + 35% of the amount over 75,000
100,001 - 335,000--22,250 + 39% of the amount over 100,000
335,001 - 10,000,000--113,900 + 34% of the amount over 335,000
10,000,001 - 15,000,000--3,400,000 + 35% of the amount over 10,000,000
15,000,001 - 18,333,333--5,150,000 + 38% of the amount over 15,000,000
above 18,333,333--35%
The tax tables do not tell the who story. There are deductions for many things in business, such as deprecation of assets, uncollectable payments due, etc. In reality it is much more complicated than your individual taxes. That is why tax accounting is such a steady business. For this blog, I am going to simplify things a bit. Here is the actual tax rates that you pay at various levels of revenue.
50,000--actual tax bill is 7,500 or 15%
75,000--actual tax bill is 13,750 or 18%
100,000--actual tax bill is 22,250 or 22.25%
335,000--actual tax bill 113,900 or 34%
Anything above 335,000 will work out to be roughly 34%
If your business is making you enough money to earn a decent living, you are paying 22% in taxes or getting real creative at writing off expenses. If we force people to get creative of writing off business expenses, then the government really loses a chance to collect any good revenue. This needs to be fixed, so that the tax level for smaller businesses is realistic. Both the business owner and the government need to come out ahead.
If you do not own a business, this has a bigger impact on you than you may realize no matter the size of the company you work for. A good company will pay taxes before they make payroll. If a company is paying higher taxes, there is less money left over to pay employees. If a company's revenues are 335,000 then they have 221,100 left over for payroll and to grow the business. If the average full-time salary is 40,000, that company can hire 5 employees and would have 21,100 to grow the company. A company with this model is not going to grow very fast.
(According to this table, the average person employed by a small business earned about 42,000 in 2010).
If you triple the levels of the corporate tax table, you give smaller businesses a better chance to grow their company while still sticking it to the big boys. How about a new tax table, for starters.
150,000--actual tax bill is 22,500 or 15%
225,000--actual tax bill is 40,500 or 18%
300,000--actual tax bill is 66,750 or 22.25%
1,000,000--actual tax bill 340,000 or 34%
Anything above 1,000,000 is 34%
Therefore, the same business with revenues of 335,000 would pay 78,500 (40,500 + 35% of the amount over 225,000) instead of 113,900. That company would have 256500 left over after paying taxes. This company would have enough additional revenue to hire 1 additional employee and would have 16,500 left over to invest. Sounds like they are losing when you look just at the bottom line, but 1 additional full-time employee is far more valuable to a small business than 5,000 dollars. 1 additional employee to share in the work load means a lot to a small business.
According to the Census Bureau, 77% of all small businesses have 9 or fewer employees. That represents about 4.6 million companies. If the government cut taxes enough for each of these companies to hire one more employee, there would be jobs for another 1.6 million people. That would reduce the unemployment rate by nearly 1.5%. Would that fix the economy? It probably would help a lot.
This is over-simplified math, and one cannot expect companies to hire just because they have lower taxes, but if corporate taxes are lower, someone is going to have a higher income than they have today and that will give the government a chance to collect a higher tax from an individual somewhere. If someone is not off the dole, some rich guy has a higher income and will pay more in taxes. Let's say that 1 in 5 small companies use their extra money to hire a new employee. That is 320,000 new jobs. That's a good start.
Another benefit to lower corporate taxes for small enterprises is that more individuals will be motivated to begin their own business. Every tree in the forest grows from a sapling. When someone decides to make a go on their own, the job that that person used to have is open for someone else to fill. Either way, the unemployment rate goes down.
Finally, let's look at the effect this has on healthcare. Many of those small businesses are medical clinics. We complain and complain about the cost of health care, but have done little to mitigate the cost. How much does a doctor opening his own clinic make? A medical provider can see about 24 patients per day. The average doctor visit total cost after the insurance discount is around $105. The medical clinic in this model would have a revenue of 630,000. That doctor would pay about 220,500 (at 34%) in taxes before anything else. That is before he pays his staff, before he pays his medical school loans, before he pays for his Mercedes and before he pays for the green fees at his country club. Of course, that is assuming that he collects all of the money owed to him, which is rarely the case for any physician. If there was an adjustment like this in taxes, that doctor's tax bill would be reduced to 140,000.
Think about what that doctor could do with an extra 80,000. He could hire a nurse practitioner or physician's assistant to help out. The clinic could see more patients and the doctor could spend more time with his more difficult patients. He could pay his medical school debt at a faster clip. He could invest in more modern medical equipment. He would have more flexibility to make deals with uninsured patients. He may even reduce his fees.
What if he does buy another car or add on to his house? Likely another small business owner, like a car dealer of a house contractor will get a little more revenue. What if he hides it in a Swiss Bank Account? Well, that is the risk we take when we lower taxes. But aren't the benefits worth the risks. Not everyone with a big wad a cash hides it overseas. Why not ask a doctor in your family what he or she would do with an extra 80,000.
Now, I am not taking about lowering the tax rate on firms that make more than 1,000,000...companies that have about 25 or more employees. Those big boys will still get theirs. With this structure, the government will likely not lose a lot of revenue. Perhaps as a compromise, some of the Bush-era tax cuts could expire to help some democrats vote for the plan. Some of the more ridiculous business write-offs can be eliminated. The purpose of this plan is to give smaller companies a fighting chance at success. Since 2007, 200,000 small businesses have closed their doors. About 1 out of every 8 people who are now unemployed worked for a smaller business. Big business got their bail-out, now it is time to take care of the little guy.
Small companies do not make deals with communities for lower taxes and do ship jobs overseas. Small companies are the heart of the American economy. They hire 120 million people. They keep companies like Wal-Mart and General Motors in business. Their employees buy houses and pay taxes. It's time to give small companies a break.
My rough math says that this will cost the government about 200 billion but save the government about 500 billion in unemployment benefits. Net savings to the government are about 300 billion.
Five-step plan for fixing the US economy.
Step 1--Fix the corporate tax structure.
Step 2--Interest rates and lending
Step 3--Energy
Step 4--Legal Reforms
Step 5--Outsourcing
Let's take a look at the current corporate tax level...
Current Tax Rates
0 - 50,000--15%
50,001 - 75,000--7,500 + 25% of the amount over 50,000
75,001 - 100,000--13,750 + 35% of the amount over 75,000
100,001 - 335,000--22,250 + 39% of the amount over 100,000
335,001 - 10,000,000--113,900 + 34% of the amount over 335,000
10,000,001 - 15,000,000--3,400,000 + 35% of the amount over 10,000,000
15,000,001 - 18,333,333--5,150,000 + 38% of the amount over 15,000,000
above 18,333,333--35%
The tax tables do not tell the who story. There are deductions for many things in business, such as deprecation of assets, uncollectable payments due, etc. In reality it is much more complicated than your individual taxes. That is why tax accounting is such a steady business. For this blog, I am going to simplify things a bit. Here is the actual tax rates that you pay at various levels of revenue.
50,000--actual tax bill is 7,500 or 15%
75,000--actual tax bill is 13,750 or 18%
100,000--actual tax bill is 22,250 or 22.25%
335,000--actual tax bill 113,900 or 34%
Anything above 335,000 will work out to be roughly 34%
If your business is making you enough money to earn a decent living, you are paying 22% in taxes or getting real creative at writing off expenses. If we force people to get creative of writing off business expenses, then the government really loses a chance to collect any good revenue. This needs to be fixed, so that the tax level for smaller businesses is realistic. Both the business owner and the government need to come out ahead.
If you do not own a business, this has a bigger impact on you than you may realize no matter the size of the company you work for. A good company will pay taxes before they make payroll. If a company is paying higher taxes, there is less money left over to pay employees. If a company's revenues are 335,000 then they have 221,100 left over for payroll and to grow the business. If the average full-time salary is 40,000, that company can hire 5 employees and would have 21,100 to grow the company. A company with this model is not going to grow very fast.
(According to this table, the average person employed by a small business earned about 42,000 in 2010).
If you triple the levels of the corporate tax table, you give smaller businesses a better chance to grow their company while still sticking it to the big boys. How about a new tax table, for starters.
150,000--actual tax bill is 22,500 or 15%
225,000--actual tax bill is 40,500 or 18%
300,000--actual tax bill is 66,750 or 22.25%
1,000,000--actual tax bill 340,000 or 34%
Anything above 1,000,000 is 34%
Therefore, the same business with revenues of 335,000 would pay 78,500 (40,500 + 35% of the amount over 225,000) instead of 113,900. That company would have 256500 left over after paying taxes. This company would have enough additional revenue to hire 1 additional employee and would have 16,500 left over to invest. Sounds like they are losing when you look just at the bottom line, but 1 additional full-time employee is far more valuable to a small business than 5,000 dollars. 1 additional employee to share in the work load means a lot to a small business.
According to the Census Bureau, 77% of all small businesses have 9 or fewer employees. That represents about 4.6 million companies. If the government cut taxes enough for each of these companies to hire one more employee, there would be jobs for another 1.6 million people. That would reduce the unemployment rate by nearly 1.5%. Would that fix the economy? It probably would help a lot.
This is over-simplified math, and one cannot expect companies to hire just because they have lower taxes, but if corporate taxes are lower, someone is going to have a higher income than they have today and that will give the government a chance to collect a higher tax from an individual somewhere. If someone is not off the dole, some rich guy has a higher income and will pay more in taxes. Let's say that 1 in 5 small companies use their extra money to hire a new employee. That is 320,000 new jobs. That's a good start.
Another benefit to lower corporate taxes for small enterprises is that more individuals will be motivated to begin their own business. Every tree in the forest grows from a sapling. When someone decides to make a go on their own, the job that that person used to have is open for someone else to fill. Either way, the unemployment rate goes down.
Finally, let's look at the effect this has on healthcare. Many of those small businesses are medical clinics. We complain and complain about the cost of health care, but have done little to mitigate the cost. How much does a doctor opening his own clinic make? A medical provider can see about 24 patients per day. The average doctor visit total cost after the insurance discount is around $105. The medical clinic in this model would have a revenue of 630,000. That doctor would pay about 220,500 (at 34%) in taxes before anything else. That is before he pays his staff, before he pays his medical school loans, before he pays for his Mercedes and before he pays for the green fees at his country club. Of course, that is assuming that he collects all of the money owed to him, which is rarely the case for any physician. If there was an adjustment like this in taxes, that doctor's tax bill would be reduced to 140,000.
Think about what that doctor could do with an extra 80,000. He could hire a nurse practitioner or physician's assistant to help out. The clinic could see more patients and the doctor could spend more time with his more difficult patients. He could pay his medical school debt at a faster clip. He could invest in more modern medical equipment. He would have more flexibility to make deals with uninsured patients. He may even reduce his fees.
What if he does buy another car or add on to his house? Likely another small business owner, like a car dealer of a house contractor will get a little more revenue. What if he hides it in a Swiss Bank Account? Well, that is the risk we take when we lower taxes. But aren't the benefits worth the risks. Not everyone with a big wad a cash hides it overseas. Why not ask a doctor in your family what he or she would do with an extra 80,000.
Now, I am not taking about lowering the tax rate on firms that make more than 1,000,000...companies that have about 25 or more employees. Those big boys will still get theirs. With this structure, the government will likely not lose a lot of revenue. Perhaps as a compromise, some of the Bush-era tax cuts could expire to help some democrats vote for the plan. Some of the more ridiculous business write-offs can be eliminated. The purpose of this plan is to give smaller companies a fighting chance at success. Since 2007, 200,000 small businesses have closed their doors. About 1 out of every 8 people who are now unemployed worked for a smaller business. Big business got their bail-out, now it is time to take care of the little guy.
Small companies do not make deals with communities for lower taxes and do ship jobs overseas. Small companies are the heart of the American economy. They hire 120 million people. They keep companies like Wal-Mart and General Motors in business. Their employees buy houses and pay taxes. It's time to give small companies a break.
My rough math says that this will cost the government about 200 billion but save the government about 500 billion in unemployment benefits. Net savings to the government are about 300 billion.
Five-step plan for fixing the US economy.
Step 1--Fix the corporate tax structure.
Step 2--Interest rates and lending
Step 3--Energy
Step 4--Legal Reforms
Step 5--Outsourcing
Sunday, July 29, 2012
Actually Mr. President, It Was You Who Didn't Build It!
No business would be successful if it wasn't for the infrastructure of the government supporting them. It is the government who enforces the laws and builds the infrastructure that makes it possible for business to succeed. At least this is the point that President Obama was trying to make when he made his unfortunate "You didn't build that" comment. But was it really government who did that?
The infrastructure part, was it really government? Every new road was not, in fact, built by the government. In most cases, it is a company like Peter Kewitt or JB Parsons that actually builds the roads. Roads are built by contractors. The government only finances the road. Usually, it is a combination of federal and state gas taxes that finances a road.
Many people need a little capital to get a business going, so they get a government-guaranteed loan from the Small Business Administration. However, they do not go directly to the SBA to get the loan. It is usually administered through a bank. Many banks are also small businesses, although some are very large.
What about other government services? None of those would be possible with the sacrifice of individuals. The police for that enforces the law. Those that prosecute criminals. Those that issue business licenses. There are many that are on the government payroll, and in good economic times, most of those people would make more money in the private sector.
Therefore, who builds a small business other than the proprietor? Mostly, it is other businesses. The governments role is there, but it is very small. The government's job is to provide the infrastructure and the environment that a small business can flourish in, but the hard work is mostly done by other businesses and by individual. It is those people who Obama did not give credit to in his, "you didn't build that" speech. If you helped build that, I salute you.
The infrastructure part, was it really government? Every new road was not, in fact, built by the government. In most cases, it is a company like Peter Kewitt or JB Parsons that actually builds the roads. Roads are built by contractors. The government only finances the road. Usually, it is a combination of federal and state gas taxes that finances a road.
Many people need a little capital to get a business going, so they get a government-guaranteed loan from the Small Business Administration. However, they do not go directly to the SBA to get the loan. It is usually administered through a bank. Many banks are also small businesses, although some are very large.
What about other government services? None of those would be possible with the sacrifice of individuals. The police for that enforces the law. Those that prosecute criminals. Those that issue business licenses. There are many that are on the government payroll, and in good economic times, most of those people would make more money in the private sector.
Therefore, who builds a small business other than the proprietor? Mostly, it is other businesses. The governments role is there, but it is very small. The government's job is to provide the infrastructure and the environment that a small business can flourish in, but the hard work is mostly done by other businesses and by individual. It is those people who Obama did not give credit to in his, "you didn't build that" speech. If you helped build that, I salute you.
Thursday, July 19, 2012
The reasons why the deficit is so high.
1. There is no direction in Congress. The House of Representatives is controlled by one party and the Senate is controlled by the other. There are very few bills that will get through both houses. If the House passes a bill that is too Republican, the Democratic-controlled Senate will not even consider it. Congress has not passed a budget for 3 years.
2. The tax structure is too punitive on business, too lax on individuals. In the United States, the tax rate on business averages 35%. This is Federal tax, plus State tax plus local tax. Businesses are getting hit from all ends on the tax front. True, individuals are paying less in tax than ever...it has been that way for 10 years. It needs to be more balanced where individuals pay more but businesses pay less.
3. Jobs have moved overseas. This represents a loss in the opportunity to collect income taxes.
4. People are not making as much money as they used to. Some people have fallen out of tax brackets where they pay taxes to tax brackets where they receive back more than they pay.
5. Yes Congress (not the President) has been borrowing spending a lot of money...at unprecedented levels.
6. True some people are choosing to delay retirement and receive benefits, but more people are choosing to retire early because they have little confidence in working again.
The current deficit is as much a problem with lost revenue as it is with runaway spending. That is beyond the control and scope of Congress.
2. The tax structure is too punitive on business, too lax on individuals. In the United States, the tax rate on business averages 35%. This is Federal tax, plus State tax plus local tax. Businesses are getting hit from all ends on the tax front. True, individuals are paying less in tax than ever...it has been that way for 10 years. It needs to be more balanced where individuals pay more but businesses pay less.
3. Jobs have moved overseas. This represents a loss in the opportunity to collect income taxes.
4. People are not making as much money as they used to. Some people have fallen out of tax brackets where they pay taxes to tax brackets where they receive back more than they pay.
5. Yes Congress (not the President) has been borrowing spending a lot of money...at unprecedented levels.
6. True some people are choosing to delay retirement and receive benefits, but more people are choosing to retire early because they have little confidence in working again.
The current deficit is as much a problem with lost revenue as it is with runaway spending. That is beyond the control and scope of Congress.
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