It has been awhile since I posted anything to this blog.
Perhaps it was the busy holidays or maybe the uncertainty around the fiscal cliff
or most likely it is because I was so depressed about our path for this great
country. So here are some comments on recent events and some facts to consider
as we enter 2013. Enjoy.
The Fiscal Cliff
What a cluster this has been. Can the Congress do anything
well? I don’t think so which is why we are in for a tough ride in the coming
months and years. So we have succeeded in increasing taxes on the very group
that already pays the majority of the IRS income every year. What will this do
for us? Not much from what I can garner. The increased tax revenue from folks
making 450K or more can’t run the government for a month. They will not help
dent the deficit a bit either. So what was this? It was a political victory, a
slap to the face of the Republicans and a way to create more divisiveness in
our country. Is this leadership? Is this the way we are going to fix the
economy of the US? What an embarrassment this has been to the entire nation and
sadly no one will benefit from this at all. Look at California, our most
populous state. Governor Moon Beam and his cronies got a few propositions past
in November taxing the wealthy in that state. Unlike the fiscal cliff compromise
California will atx all that make over 250K year. The new top tax bracket for
state tax in California is now 13.3%. So when this is added to the new top federal
tax bracket one could be paying 52.9% in taxes if you earn 450K in California.
Needless to say the shock is now hitting many and the ground swell of rich who
are going to leave the state is growing rapidly. The big windfall of revenue
the state expects may actually be a lot smaller than expected with the exodus.
Just another example of why taxing the rich is not a solution to our fiscal
problems.
The National Deficit/Debt
We failed to address this in the “cliff” negotiations so now
we get to deal with all the bickering again. The House has a bill they passed
yesterday to address the debt. Naturally the administration has already said it
won’t accept it and we are off to the political races again. When Obama came to
the Presidency in 2009 we had a debt of approximately $10 trillion today we are
just shy of $17 trillion. On our current fiscal path we will have a debt of
over $20 trillion by the time he leaves office in 4 years. Our children and
grandchildren will start life with huge debt hanging over them and will carry
that burden most of their adult lives. Can no one see that this fiscal madness
has to stop? Even Former Federal Reserve Chairman, Greenspan said that he
thinks the debt not the weak dollar is our biggest economic foe.
To add fuel to the fire the White House, the Democratic
leaders and the President have all said that the major entitlement programs are
off the table. So how do we fix this deficit problem? Sure we can cut National
Defense spending some, we trim other small programs and we can keep raising
taxes on the rich. What will this do? According to all the studies I have read
– not much. Medicare and Social Security account for nearly 40% of our national
budget – they are the 800 pound gorilla. Actually guaranteed programs account
for over 54% of the Federal budget. We have to look at all spending – large and
small. It is critical that we do this now and take our medicine before we are
forced into emergency surgery. The President’s Vision
The president made an 18 minute speech at his inauguration
on Monday defining his vision for the country. It was very surprising to me
that he did not address in a specific way the deficit, our national debt, the
high unemployment or other huge economic challenges. No he focused on social
issues – women’s rights, gay rights, education and gun control. I applaud him
for realizing that all these social issues are important and in many areas I
agree with his desire to see change but we can’t worry about what to wear to
the Captains Ball when the Titanic is actually sinking. Sure we are
capable of addressing many issues at once but we must have priorities and his
speech left me believing that we were making the social issues a priority over
the economic ones. To do so would be paramount to national suicide.
He must address national spending – it must be significantly
curtailed in the short term. He must address the cost of his healthcare plan
and the negative impact that is having on the economy already. He must address
our military spending today and in the future. He must address private sector
job creation. With nearly 13 million unemployed and another 10 million underemployed
we have a serious issue. Sadly he came in with unemployment at 7.3% and it is
still at 7.8% with spikes in the last four years at well above 8.5%. Our tax
base is eroding rapidly and whether he believes it or not the ability to tax
the rich to solve the nation’s debt and deficit problems is very limited and
extremely short sighted. According to the St. Louis Federal Reserve economists this is the slowest and worst recovery in American history. Specifically they pointed to all the actions taken by the administration as financial and that all they have done is strengthen the stock market but has not addressed the fundamentals and confidence. Most business owners continue to be very reluctant to expand or hire as they have no confidence in the path the government is on. One CEO was quoted as saying that between tax and regulations he feels that the government is “slapping him in the face constantly”. When some economists have been asked the difference between this recovery and the one that President Reagan orchestrated, they indicate that tax policy and business regulations are huge deterrents and they undermine business confidence. Without confidence businesses will mitigate risk and limit growth. This in turn leads to less employment and investment in growth or innovation. Then add to this tight money supply, increased costs of PPACA, tough competition, and waning consumer buying behavior and you have a bad business recipe.
With a harshly divided Congress it is time for strong and balanced leadership, innovative solutions and excellent communication. The time for playing egotistical politics is over. Race, sex, religion, ideology and politics don’t matter anymore – just economics. Solve this problem first then you can address all the social issues and heck he may even have some money to do it with.
PPACA
As we struggle to recover from one of the worst recessions
in our history we are now facing the very expensive and disruptive PPACA. This
healthcare reform law completely misses the real issues in our system and will
drive insurance cost up significantly more in the next 4 years. The
impact it will have on all segments of American life is much broader than most
imagine and it will further burden the already weak economy. Congress
must act quickly to curb the costs and regulations in this law or we will have
significant economic retardation in the President’s second term.
Please see my next blog post, “PPACA Update” for critical
details.Gun Control
We are a very reactionary society and frankly it is one of
our greatest weaknesses and strengths. We had a horrible tragedy at Sandy Hook
Elementary School last year and we all still mourn the loss of innocent lives.
Using this as a political wedge to create sweeping gun control in the US is a
mistake and a waste of critical resources. We need to focus our legislature on
more critical issues surrounding our economic recover or lack thereof.
If I or any sane person thought that the proposed gun
controls could eliminate the possibility of another Sandy Hook we would all
make the necessary changes but the sad truth is none of these proposed laws
would have prevented that tragedy. The mother who bought the guns used
in the shooting did so legally and would have passed all the proposed new gun
laws. Her troubled son would still have killed her, stole her guns and killed
all those innocent people. That is a simple but harsh truth!
Look I have no issue with developing better gun laws in the
US. I personally have no issue with a true assault rifle ban or limiting clips
to 10 shots but that is not what is being proposed. We are once again over reacting.
Diane Feinstein is certainly not the one to lead this charge any more than LaPierre
the CEO of the NRA. Limiting clips to 3 or 5 shots, creating a national gun
registry, banning assault “like” rifles, requiring licenses and scrutiny for
the purchase of bullets, not allowing the private sale of guns etc. is just
ridiculous and costly. But most importantly will have no real effect on gun
violence. People are the problem not the guns.
We need to focus all this pent up energy and anger on the
real issue – troubled people. We have to find ways to identify and help the
folks that are so troubled they would do something like Sandy Hook. We need to
protect all public venues better and we need to focus on treatment of the
mentally ill. Look at all the major mass shootings in the US – Columbine, Virginia
Tech and Sandy Hook to name three and then add the Aurora Movie shooting. What
do we see in all of them? A troubled individual who “lost it” and did these
terrible acts. All were young, primarily white and male. All were known to have
anti-social behavior and in several cases were actually being treated psychologically.
The students at Columbine and at VT all stated after the fact that they knew
these killers were troubled. But because of our tight privacy laws and
political correctness no one came forward and offered their opinions and fears.
Gun laws would not have stopped these shootings but better identification,
treatment and restrictions could have.
No one seems to want to have that discussion. We are worried
that we may infringe on parents’ rights, mental health pros don’t want the
added responsibility, students are afraid of repercussions from the school,
other students and families and law enforcement is primarily left unaware till
it is too late. We can fix this but we need to be brutally honest and have a
strong national dialogue without the political agendas and tip toeing around
this sensitive issue.
Let’s spend the billions that the new gun laws will cost on
making schools safer. There is amazing technology that is available today that
could create much safer schools. Use that instead of gun restrictions to
prevent future tragedy. We can arm well trained school personnel or get volunteers
from the military, law enforcement and gun clubs to patrol our schools. Hell
just retrofit schools with bullet proof glass on classroom doors, heavier
magnetic locks, panic room type closets, panic buttons directly connected to
law enforcement, bullet proof dry erase boards and so much more. Let’s show the
world how innovative we are and solve this issue by better root identification
and treatment plus better school protection. But most of all let us empower our
citizens to report troubled folks so that they can get the help they need.