Corporate Profits

April 26, 2011

Corporations shouldn’t make a profit.

I know what your are thinking, “What kind of ultra left-wing garbage is this?”, but hear me out. Corporations should definitely generate revenue, but profit is only one outcome of corporate revenue generation, and we have to look at the others to understand where I am coming from. Corporations, like individuals, are taxed on profit, not on revenue. It’s the mistake that “Joe the Plumber” made during the 2008 elections. He thought because his gross revenue was over $250,000, he would be taxed at the rate of the wealthy. Since he has expenses, his taxable income would be considerably less, and that’s the first place that corporate revenue goes – expenses. They have to pay for all of the things that enable the business to run – from paper clips to the corporate jet.

The second place where a big chunk of money goes is salaries. That includes the compensation packages of the executive team all the way to paying the guy who empties your trash can long after you have gone home.

The third place where revenues can be spent is through dividends. The idea of a corporation is straightforward. People become part owner of the corporation by virtue of buying shares of stock. If the company does well, then then the Board of Directories can elect to distribute some of that success to the owners of the corporation – the shareholders – through dividend payments. You don’t hear as much about dividends as you used to, because fewer corporations feel the need to share the wealth with the shareholders.

So when a corporation pays all of its expenses, including salaries big and small, and still has money left, they can distribute the wealth to their owners – the shareholders – in the form of dividends, but most don’t. What is left is profit. When it is carried over to the next taxable year, that profit is called “retained earnings.” What do companies do with retained earnings, if it isn’t expenses, salaries or dividends?

Imagine a corporate tax structure that didn’t allow corporations to retain earnings across a tax year. What if they were required to distribute excess revenues to its employees and shareholders? Heresy, you say! Socialism! Government over-reach! In fact, not only does such a corporate structure exist, it is the most common form of incorporation for new and/or small businesses. It is the S-Corporation often wrapped in an LLC.  Most big corporations, like GE, Exxon, Google, and a few small ones like mine are C-Corporations.  I couldn’t find any statistics, but I would suspect that a substantial majority of American corporations are S-Corps simply because the majority are small corporations.

When you hear of tax rates on corporations, it is not the same as taxation on your personal income. They have a choice to distribute their success to shareholders as dividends. They have a choice to pay their executives or other employees more. Therefore, the amount of tax a corporation pays is always a choice.

Now I don’t really believe that corporations shouldn’t be able to make a profit. I just said that to get your attention. There are reasons for retained earnings. There may be a stockpiling of money for an acquisition or for a large, long-term capital expenditure such as a new factory. The tax structure should encourage such capital investment. I don’t think the current corporate tax structure is oriented this way, however.

I will ask the question again. So what are corporations doing with their retained earnings? I know what I did with retained earnings from my corporation. Hint. It wasn’t job growth or investment in America.


Critical Thinking Revisited

April 22, 2011

For those of us who care about politics, there is an element of emotion that accompanies our perspectives on where the country is and where we think it should be going. I am often reminded that it is important to always keep our critical thinking skills at the forefront and not just listen to what reinforces our preconceived notions. Perhaps it is more important when those messages are coming from those we see as holding similar views.

In a politically polarized environment, there are those who try to manipulate with emotion. Both sides are guilty of such. In fact, I just opt-ed out of e-mails from because the e-mail I received from them was just a lie – plain and simple. A conservative friend of mine posted a link from Fox Business that reinforced his feelings on where the country is. It provided me an opportunity to do some critical analysis on the story, snippets of which I posted back on Facebook. Here is the link:

Especially if you are of a conservative mindset, read the story and see how many factually incorrect or manipulative things you can find in the story.

The title of the article is “Government Cash Handouts Now Top Tax Revenues”, but that’s only true if you accept a very broad definition of what a cash handout is. According to the story it includes “stimulus spending, among other things.” I wonder what the “other things” they included to make the numbers fit the premise, but certainly stimulus spending doesn’t belong there. According to Glenn Beck[1] (hey, a fella’s got to have a sense of humor), a third of the stimulus money is in tax breaks. The Washington Post – that bastion of liberal media – reports that 22% of the stimulus money is in tax breaks[2]. Pick your number, but if conservatives started considering tax breaks as “cash handouts,” the political discourse would change radically. It should also be noted that as of September 2010, only 70% of the allocated money had been spent. I suspect Fox’s number included the entire appropriation.

The report states that 59% of Americans get at least one federal benefit. Again, we have to look at what is included. The story included veteran’s benefits in that. It’s a benefit, of course, but including that in the category of a “cash handout” strikes me as odd.

The bigger problem with this assertion is the math. If you total the number of people in the stated categories – Medicare, Medicaid, food stamps, etc. , you get 183.2 million Americans. If you divide that by the population of 308.7 million, you get 59% of the American population, so the math works, right? Wrong. There is considerable overlap in the people getting those various benefits, so they counted people multiple times. This story clearly has no credibility – and I am only at paragraph five.

Standing on the lilliputian shoulders of contrived premises and her failure at ninth grade math, Fox Business reporter, Elizabeth MacDonald has all of the ammunition she needs to assert that the government is responsible for wealth growth and that capitalism is doomed.

Of course, I picked low-hanging fruit, Fox News, to show how critical thinking can change the conclusions we reach from biased op-ed organizations. Material from other organizations is harder to critique, but we should do so, regardless of whether we are reading, an article in the New Yorker or a report from the Heritage Foundation.

There are serious fiscal problems in the country that require changes in the entitlement programs and changes in the tax laws and the rate structure. It can’t happen without political will and the political will won’t coalesce until we, the electorate, get out of our echo chambers and start to critically think about the problems that face us and the solutions are are available to us.



The Deficit

April 13, 2011

It has been interesting to watch the budget debate unfold. I was raised to be fiscally conservative in my personal finances, so it should not come as a surprise that I think our government should be run in a fiscally-conservative manner. Clearly, the present budgetary situation is disturbing to me.

It is disturbing on so many levels. First, the budgetary haggling that almost shut the government down wasn’t over the real budgetary problems. About two-thirds of the Federal budget goes toward Medicare, Medicaid, Social Security and the military budget. That wasn’t the issue for the Republicans, of course. The haggling was over funding for NPR and Planned Parenthood. It is demagoguery to their base at at time when we need a serious discussion about a serious issue.

The Democrats, including President Obama seemed to be missing in action once again.

There is someone serious about deficit reduction, though. Paul Ryan is serious in his intent. He shows the only admirable characteristic remaining in the GOP – the courage of his convictions – and I have respect for that. At least he has to courage to declare where he stands and let the electorate decide whether that is the America they want. The problem is that his assertions aren’t based on serious analysis. They are based on Ayn Rand-inspired ideology.

Once again, Ryan and the GOP advocates tax cuts that will “pay for themselves” based on pretend math from The Heritage Foundation. When George W. Bush took office, he inherited a budget surplus from Bill Clinton. Eight years later, Barack Obama inherited a deficit of $641 billion dollars[1] from the Bush Administration. Those tax cuts sure as hell did not pay for themselves. A study of Ryan’s proposal by the nonpartisan Congressional Budget Office finds that a large part of the savings from Ryan’s spending cuts would pay for tax cuts, not reduce the deficit[2], and that the deficit would actually increase. I guess Paul Ryan is just serious-sounding.

But again, where are the Democrats?

I have had a few exchanges with a conservative friend of mine, usually in short Facebook posts. It’s always a good exchange of ideas and we typically don’t find much common ground. There is one thing we agree on, though. There is no serious discussion of deficit reduction without including defense spending as part of the discussion.

Half of the military spending from all countries in the world is spent by the United States. That is unsustainable. I did contract work for the Department of Defense and it was common knowledge that there was still a plethora of cold war projects still being funded. A true political leader would have the courage to admit that and start a serious discussion of where we can reduce military spending in a way that doesn’t hurt national security.

It was late in coming, but President Obama finally said the words that I have been waiting to hear. There are no sacred cows in the budget discussion. He specifically mentioned cutting defense spending – something I never thought I would hear a modern President say. He also said that some programs near and dear to his heart are going to be reduced. I was also glad to hear him say that the Bush tax cuts would be allowed to expire. I found his excuse for not letting them to expire at the end of 2010 to be weak, but he gets a chance to redeem himself this time around.

Take the time to listen to the speech with an open mind. I am not exactly sure of all of his math, and I suspect I would dispute some of it, but certainly the approach is right on target. He framed the discussion as an adult discussion. The commentary was frank and exceptionally close to my thinking on the topic. Let’s just hope there are enough adults in Congress to try and solve what is a serious problem.

It can work if there is a general consensus that we all have to share in the burden.


Health Care Legislation

March 27, 2010

Health care legislation passed while I was in Canada on business. The subject did come up once. Those who lived their life in Canada were confused about how controversial it was, and that led to an intelligent discussion on the pros and cons of the reform – something that apparently is difficult, if not impossible, to achieve back here in the States. My Canadian co-worker referred to their system as “free” health care and my American co-worker and I pointed out that it isn’t free, it’s pre-paid. It’s pre-paid much like we pre-pay for a level of security provided by local police or the military. It is a matter of policy opinion whether health care should be prepaid or not, and that should have been the focus of national discourse. The Republicans purposefully avoided that discussion in favor of fear-mongering and the Democrats demonstrated their long-held incompetence at controlling the discussion. The media, looking for sensationalism, failed to increase the intellectual level of debate as well. We are left with a lot of misinformation, anger and fear on the topic. I am certain my perceptions of the bill aren’t entirely right, either.

First, I would like to talk about what the bill isn’t. The health care providers, for example hospitals and doctors, are in the private sector, so we didn’t socialize health care. The heath insurance industry is no less privatized than it was prior to the bill, so we don’t have anything approaching socialized health insurance, either.

The Office of Management and Budget (OMB) models suggest that it will be budget neutral or will slightly reduce the deficit. Of course, those are financial models based on assumptions – the same technique used by businesses to provide financial outlooks – and they could be wrong. However, the OMB is generally considered non-partisan. The OMB report is not “the big lie” as one of my conservative friends characterized it.  The OMB models for the Bush tax cuts were correct in modeling the large deficits they would produce. Where were the fiscal conservatives, then? The Republican argument that Democrats are the only party of fiscal irresponsibility were entirely dashed by the spendthrift Republicans in the decade past.

So it’s not socialized medicine. It’s not socialized heath care and it’s not a budget-buster. What is it, then?

The most important facet of the bill for me is the removal of exclusion for pre-existing conditions. That’s something that anyone – except for health insurance executives perhaps – should herald as a positive outcome.

It’s also an entitlement program in the sense that medical care will be provided for lower-income families. Republicans have a long history of opposing social safety nets and that is a position that is worthy of an intelligent policy discussion. That safety net, along with mandatory insurance, should significantly ease a serious dysfunction in our current health care system. People who can not afford health insurance often wait until they are very sick and then seek treatment in emergency rooms, which is a very expensive form of health care delivery, compared to doctor office treatments early in the disease process. This and the other systemic dysfunction in our health care system create the largest per capita cost in health care services for Americans, while leaving us 37th in health outcomes in the world. This, too, should be heralded as an improvement over the current situation.

I haven’t read the bill, of course. I am certain there are items with which I would disagree and items that I could add to the list of benefits. Instead of picking through reams of blogs and news articles to create a pros and cons list, I would like to close with an issue that is larger than the health care debate and is considerably more important.

Policy differences aside, I believe the most basic role of government is to first recognize problems and evaluate the scope of those problems. When a problem is recognized and the scope is appropriate for governmental action, our elected leaders should work together to create policy that strives for efficacy to resolve or ameliorate the problem. The gift of our democratic governmental structure to our society is the structure of checks-and-balances that encourages debate and pushes outcomes toward moderation. After the policies are put into play, there needs to be a governance model and checks for the efficacy in the field in order to adjustments as needed.

Republicans have lost the ability to recognize problems. The last Republican to do so was Ronald Reagan, who recognized the problem of an over reach of regulation and a tax structure that limited economic growth. He worked with Democrats in Congress and resolved that problem. The culmination of that solution subsequent to his presidency resulted in an over reach in the other direction and led to the economic failures of 2008. Today Republicans fail to see the problems in the current health care situation and most important, the demographic trends that were clearly unsustainable without action. Republicans fail to see the effects of global climate change. Republicans fail to see the effects of globalization on the middle class.  On the rare occasion where Republicans can not dismiss the reality of a problem, they are opposed to putting a governance model in place because that would imply a regulatory environment that enforces the policy, measures outcomes and supplies the information to make needed adjustments.  In spite of the economic failures 2008, caused by a lack regulation, there is no willingness by Republicans to put a governance model in place.  Simply put, Republicans don’t want to govern.

Democrats on the other hand seem to be able to recognize problems, but are ineffective at implementing policy. The financial system is still encumbered by the risks that led to the financial collapse in 2008. Climate change policy seems to be going nowhere. For what seemed to be the longest time, it appeared that Democrats – even with their man in the White House and majorities in both houses of Congress – were going to be ineffective at solving the problem of health care in this country. It is that effete nature of Democrats that prevents me from calling myself a Democrat.

While it is unclear if this health care reform will be effective, it shows that Democrats can still govern in spite of the recalcitrant and dysfunctional opposition party. That, at the very least, makes the health care bill – in the words of Joe Biden – a big fucking deal.

Reductio Ad Absurdum

February 13, 2010

I try to stick with political topics that are relevant and serious. While I sometimes comment on the nuttiness that seems to accompany contemporary political discourse, I try to place it in the larger context of public policy. This time I couldn’t resist.

There are a group of conservatives who have tried to make hay from some of the most ridiculous arguments. There are some who aren’t introspective enough to realize their ideologically-centered beliefs won’t live up to the light of reality – one might call them teabaggers – but many who fling their rhetoric truly realize their arguments are baseless. For some reason, they still feel the need to launch baseless and meaningless criticism. For those people, the absurdity eventually comes full circle and we can see their how disingenuous they are.

One of those criticisms that was leveled at President Obama was that he was not a person of substance. This was “proven” by the fact that he used a teleprompter. The argument goes that he is charismatic and gives a great speech, but that he needs a teleprompter to deliver that speech because, implicitly, he doesn’t understand the substance behind the words. Of course, there is another politician on the political stage that is also quite charismatic and is very effective at energizing the base. Sarah Palin.

Apparently Sarah Palin felt the need to avoid the teleprompter, given how onerous they are and decided to write some crib notes on her hand. There’s really nothing wrong with that, except that it is perhaps a little unprofessional, but one might even argue that it is part of her folksy charm. What I got a kick out of was the content. The word “budget” was crossed out. It’s unclear what the original bullet points were in her crib notes. Either the original item was “budget cuts” and it was changed to “tax cuts” or the original item was “budget” and that was replaced with “tax cuts”. It would be interesting to know what her thoughts were. If it was the former, it implies that she should indicate what should be cut from the budget. If it’s the latter, it would be interesting to know if she understands the relationship between taxes and budget. Of course, lower taxes means lower income for government operations, so you either need to cut something out of the budget, raise taxes or run deficits. It’s clear that George W. Bush didn’t understand that simple relationship – or at least ignored it – and I haven’t heard a recent Republican whose words or actions show that basic understanding, either. It’s a little more complicated, of course. You can also grow the economy, which increases tax revenue without increasing tax rates. That is the rationale of short-term deficit spending to stimulate growth, but there I go getting serious and this isn’t meant to be serious. Back to the hand.

To be fair, if I suggest that writing crib notes on the hand is unprofessional, I have to also say for the record that I thought is was unprofessional of White House Press Secretary, Robert Gibbs, to mock it. It think it is contrary to the culture that I otherwise see from the White House and would have been more consistent with what critics called the “frat boy culture” of the Clinton White House.

What got me chuckling this morning and what motivated this blog was the teleprompter issue coming full circle. When reporters in Chicago asked John McCain about the crib notes, he was apparently irritated by the question. “Which is more egregious? Reading a word from your hand or from a teleprompter?” McCain added, “I continue to be entertained now by the continuing hysterical attacks on Sarah Palin who is very popular with a significant segment of the American people and I’m very proud of her.” I guess that particular conservative has suddenly decided that teleprompters (or hands for that matter) aren’t really a topic of serious discussion and commentary on such are hysterical attacks.

So there we have it. Two charismatic politicians, Sarah Palin and Barack Obama, who use assistance to deliver their message. Both have been accused of lacking in substance. I will leave it up to the reader to decide the basis of that charge. However, if you need help in deciding, I will reference the extemporaneous question and answer session that President Obama had with Republicans a couple of days after the State of the Union address and we can compare that with, say, the Palin/Couric interview from the campaign trail, or the Palin gubernatorial resignation speech.

Now I can get back to something more substantive.

The “B” Side

January 7, 2010

Politicians have realized for decades the same thing that capitalists knew decades before that. In order to sell a product – or a politician – you need to create a bite-sized marketing message. For every marketing message there is a “B” side. It is a consequence of the message that was unintended or ignored for its unrelenting realness. It’s why McDonald’s hamburgers never look like the picture and why politicians rarely live up to their image.

For those readers born after 1975, single songs were sold on a 45-RPM record. The “A” side was the song that you heard on the radio wanted to buy. The “B” side was the other song you got when you bought the “A” side song – whether you wanted it or not.

Less Taxes

We all want less taxes. It would be helpful to be able to keep more of the money that we earn. Unfortunately, the reality is that taxes are what is used to fund our infrastructure. Those police officers and fireman that we all want available for us are funded by taxes. So is the military, social entitlement programs, road construction and a lot of ineffective bureaucracies.

If we want less taxes, we should have less spending. When a politician promises to lower taxes, ask them what they are going to cut – specifically what they are going to cut. Otherwise, we can’t have another thing we want – balanced budget.

Balanced Budget

It’s been a long time since we have seen a balanced federal budget. If we want to realize that goal, we need to raise taxes, spend less or both. (See above). It was a sad precedent that George H.W. Bush got politically penalized for raising taxes to be more fiscally responsible (Remember “Read my lips. No new taxes?”) We saw the alternative when his less pragmatic son lowered taxes, but didn’t understand that it should be accompanied by vetoing a spending bill or two along the way.

When (or perhaps if) we ever see an opportunity for a balanced budget, maybe we should pay down the debt or – gasp – create a surplus so we don’t have to deficit spend. Could you imagine the political furor of not giving back excess revue to the taxpayers? We know all-too-well know that good times are always sandwiched between bad times. Retaining excess revenue during good times is part of a strategy toward a balanced budget.

As much as I dislike deficit spending, a federal balanced budget law would hamstring fiscal policy during the bad times. History suggests that deficit spending during deep recessions are necessary. If you don’t believe me, research what happened in 1937.

An obvious consequence of balancing the budget is to look where we are spending the most money. That’s what capitalists do when they have revenue problems. Guess what, folks. That means we have to look at cuts in defense spending along with the other programs that are cited more often as the cause of excess spending.

Social Safety Net

I think all but the most insensitive people realize the value of a social safety net. However, we all know those who use the social safety net as a hammock. I think the Ted Kennedy-style liberals ignore the scope to which people figured out how to game the system.

While the vast majority of American begrudge multi-generational welfare families as a lifestyle, those entitlement programs also help those with physical or mental limitations. Cutting entitlements for adults mean that the children of those people suffer as well. It’s clear that conservatives had a problem with that part of the ideology and coined the “compassionate conservative” marketing message, although that failed to get much traction.

Smaller Government

This always sounds good, but it’s really quite esoteric. For conservatives, I think this is code for cutting spending on social entitlement programs. That has consequences, too. (See above).

For those with a libertarian streak, like myself, it means fewer laws that infringe on my personal decisions. For example, smaller government to me means getting rid of seatbelt laws and motorcycle helmet laws (although I always wear both) and especially drug laws (although I’ve never done an illegal drug in my life) and staying out of issues around reproductive rights.

Nanny State

Although the libertarian in me doesn’t like those seat belt and helmet laws, there is a social cost to not having them. Additional medical costs, and the social costs to families caused by accidental death are real.  I have to admit that.

Our current dysfunctional drug policy is an attempt at imposing legal consequences on what we do to ourselves. Again, there is a social cost to families as a result of excessive drug (or legal alcohol) use. There was a time with fewer drug laws and we saw the carnage of opium dens. We see that same problem today with meth addiction. The current policies add to the social problems by criminalizing even non-problematic drug-use behavior.

This is one of those issues were there are negatives on both side of the coin. This is where thoughtful political discourse can determine a worthwhile course of action. Unfortunately, that is quite rare right now.

Tough on Crime

It should be obvious that we want to reduce crime against our person and our property. Determining effective policy is much tougher. Being tough on crime means creating laws that create more criminals. Many of those criminals – like recreational drug users – aren’t really criminals, unless you ask the most extreme nutcases like Sheriff Joe Arpaio of Maricopa County. I saw an interview with him and he stated that anyone that smokes marijuana should be in jail. Anecdotal evidence suggests that we would have to build a lot more jails.

It means we have “three strikes” laws where people are incarcerated for the minor “third strike” to a degree that is a stunning failure of the Constitutional protection against cruel and unusual punishment. When the pundits advocate tough-on-crime legislation, ask about those consequences.

Political Correctness

Some liberals have taken the notion of political correctness to an extreme. It is as though they feel that it should be illegal to hurt someone’s feelings. The most evil manifestation of this is the convergence of the political correctness from the left and the zero-tolerance from the right derived from being tough-on-everything.

Zero-tolerance means high school kids get kicked out of school for having cap guns in their locker or simply smelling like marijuana. Zero-tolerance means that judges can no longer judge and school bureaucrats don’t have to think about individuals and context.

So What Can We Learn?

What it all means is that these marketing messages are for getting elected and not for governance or a basis for policy. Governance is difficult and requires that people are insightful enough to understand the consequences of policies. As the commentary above reveals, these policy issues are complex and intertwined.

I have been baffled by the whole “teabagger” movement. It isn’t conventionally conservative or libertarian, although there were some of that in the mix. Some small part (in my estimation, anyway) is simply racism. It dawned on me that perhaps the teabaggers are a loose confederation of people who can’t differentiate between political marketing messages and real policies. They are people disenfranchised with the complexity of reality.

If we want to solve the very real issues of our day and position our country for what lies ahead, we need to seek out and be honest about the “B” side of the marketing message.

The System That Fails

January 3, 2010

David Brooks wrote an intelligent, thought-provoking article in the New York Times a couple of days ago [1] entitled “The God That Fails“. It’s a pleasure to read such articles from political conservatives, in contrast to the largely incoherent and inconsistent rantings from the likes of Glenn Beck and Rush Limbaugh. The Brooks article was a reflection on the recent terrorist attempt on the plane bound for Detroit.

One key point of the article is that regardless of the measures that we put in place, there will be circumstances at which they fail. In his words, “Human institutions are always going to miss crucial clues because the information in the universe is infinite and events do not conform to algorithmic regularity.” I agree with that. He also goes on to state that much of the criticism of the Obama Administration “has been contemptuous and hysterical.” I agree with that and his assertion that calls for the resignation of the Secretary of the Department of Homeland Security won’t fix the problem. We are going to have incidents regardless of the political party controlling the White House or Congress.

Much of the current security is simply theatre and does nothing to enhance security in any meaningful way. We should, as Brooks asserts, be mature enough to hear the truth – that terrorists are going to get through sometimes. He castigates us for not being a mature nation and criticizes Obama specifically for stating “I consider that [intelligence failure] totally unacceptable.” Brooks asserts that the Obama statement is a reflection of a nanny state that has emerged in the last half-century.

There are two reasons why Obama made that statement and neither is a nanny-state syndrome. The first is political. If Obama would state that some terrorists are going to get through, he would be fodder for conservative pundits. You can see it now – “Obama admits that their approach to counter-terrorism failed.” Sadly, political pressures prevents complete candor, especially at the current level of political polarization.

The second and more salient reason Obama stated that is because it actually is unacceptable. I recently completed a project for the Department of Defense that was specifically assessing the cultural and technological reasons why there are intelligence failures in connecting the dots. I can tell you from that experience, there are things that can be done better.

Brooks postulates that “Many people seem to be in the middle of a religious crisis of faith. All the gods they believe in — technology, technocracy, centralized government control — have failed them in this instance.” He lost me there. I can’t tell if “many people” are the bureaucrats or the electorate, but I suspect this leap was to reinforce his notion that centralized government control is wrong-headed.

To those who implement it and use it, technology is a tool, not a “god” in which we have faith. This issue has nothing to do with centralized government control, either. In fact, the technological part of our recommendation to the Department of Defense was to use technology that enables decentralized management of intelligence information, while still being able to interoperate among agencies – possibly down to local law enforcement – in order to connect the dots. The facts of my experience just don’t support his assertions.

Brooks did make some good points, however.  He almost lost me out of the gate with his revisionist history that “the Federal Reserve and the Congress exacerbated the Great Depression“, but he recovered in his realization of the need to view the threat of terrorism in a realistic and mature way. When he tries to morph that notion into the conservative memes of the nanny-state, or the failure of centralized government, he fails to make a solid case.


The Non-Obama (Part 2)

January 1, 2010

Campaigns are all about creating a marketing message. It’s rare that the application of the marketing message is effective for governance. While Obama has been exceptionally consistent with his tangible campaign promises, the marketing message of hope and change has yet to be fulfilled in the minds of many. If any mistake was made on Obama’s part, it was a lack of tempering those unrealistic expectations. The recent editorial that I picked up from a friend on Facebook is a rather nutty example [1] of comparing the fictional Jesus Christ to the fictional Obama.

Many on the left apparently hoped for a far-left-of-center President that would take the same political approach of the previous administration in driving ideological goals into law. Bill Maher has expressed this point-of-view with a vengeance [2]. Lasting change is accomplished through moderation and patience. Bill seems to be lacking in this regard, but the president is not.

As a case in point, Dan Savage, a blogger [3] and gay rights activist, is a harsh critic of what he views as betrayal by the Administration for not being more activist on gay rights issues. Obama has not overturned the flawed Clinton Administration policy of “Don’t Ask, Don’t Tell”, but we are in the midst of two wars. Being an effective citizen-commander includes not alienating those who are necessary to accomplish our wartime goals. The time isn’t right. Instead Obama signaled in an October 2009 speech that the policy would end. He took a shot over the bow of those bigots who want to discriminate against gays, but fell short – apparently – of the desires of those in the midst of this social discrimination. Patience and pragmatism are always at odds with ideology.

Those on the far left would like to see healthcare to be the domain of the government. The medical system afforded to those in the military is truly socialized healthcare. Those administering care are employees of the government. Those left-of-center would like to see – not socialized medicine or even socialized insurance – but government competition in a capitalist marketplace in the field of healthcare. That notion has been dubbed the “public option.” Obama advocated for that, and I concur that competition in the form of the public option is a worthy government policy. Those on the left see the current state of healthcare reform legislation as a failure of the Obama Administration. Like so many things in politics, it was not what I hoped for, but the left needs to understand that progress short of a goal is not failure.

Obama has taken a hit in the polls, much of it from those considerably to the left of my political views. Passion for a general ideology or a single issue is at odds with effective governance. Lasting change comes slowly and incrementally (which I think was the original definition of political conservatism). Those ideologues on the left need to temper their passion with an appreciation for the patience and pragmatism that is the key to effective governance.




The Non-Existent Obama

December 31, 2009

We Americans have the great misfortune of living in a time a great political polarization. Pundits and bloggers from both ends of the political spectrum have tried to create a marketing version of President Obama that suits their taste.

From the right, we see this strange homunculus intended to be a strawman for their ideological fodder. One is the “socialist president.” Those on the right claiming such should first consult a dictionary. Merriam-Webster defines socialism as “any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods.

If Obama was an advocate of socialism, the first thing he would have done upon taking office would have been to nationalize the banks. At that time, we were in a serious banking crisis and it’s likely that a partial or complete takeover of the banking system could have been accomplished. Instead, he extended the policy started by the Bush Administration. He listened to the advice of Ben Bernanke and Tim Geithner and keep the flawed TARP program in place. Bernanke and Geither are capitalists with a capital “C”. That move angered those on the left and right and in spite of its numerous flaws seems to have been the right thing to do. I am not an economist, but I have studied what happened in the fall of 2008, what led up to it, and the experiences learned from the Great Depression. I am confident that it was the right move. The banks are starting to pay back TARP (probably prematurely) at a profit for our treasury, so they can be left unencumbered by the accompanying regulations. That sounds a lot like capitalism to me.

The Obama Administration infused a lot of capital into General Motors. Some of that was likely motivated by political activism by trade unions, but it was also motivated by the realization that GM had a systemic influence on the economy. In addition to the direct unemployment ripple, there are a lot of small businesses that supply GM that would have been affected. GM is also a player in the weakened financial sector. Socialism implies that the government would have taken over GM. Instead, the bulk of the direction is left to capitalist businessmen. Given the GM stock now owned by the government, I would have liked to have seen a little more influence interjected. Specifically, I would have liked to have seen a couple of government employees on the Board of Directors as any investment capitalist would have done. Instead, government control is relatively minor within GM [1]. Socialist, my ass.

Another attribution is the spendthrift president. Apparently those on the right have forgotten that we had a national debt before January 29, 2009. Statistics can be faceted to tell the desired story [2][3], but a few things are clear, looking at our history. First, not all debt is created equal. In our personal lives, mortgage debt is better than automobile debt, which is better than credit card debt. There are a few justifiable reasons for governments should deficit spend. One is for a necessary war. World War II was such a reason. Iraq was definitely not. The depth of our involvement in Afghanistan, in my opinion, is not. The second reason for short-term deficit spending is economic stimulus. The Reagan Administration deficit spent, initially for economic stimulus in 1981-1982, and later for tax breaks, largely for the wealthy. The G.W. Bush Administration deficit budgets were spent largely for tax breaks for the wealthy. It is true that the Obama Administration has set new highs in deficit spending rates. If this is short-term and limited to economic stimulus, then it is analogous to the spending during the Great Depression. Obama has stated that goal and if we ensure that he sticks to that, we can sustain this short-term. The directive from the administration that health care reform should be budget-neutral is a good sign.

Obama the narcissist is another charge I have seen from the right. Webster lists it as a synonym for egocentrism, which is “concerned with the individual rather than society.” Such a person in the office of the presidency would consider themselves to be… well… you know… like “the decider”. Obama gave direction, but largely delegated health care reform to the Congress, where it most belongs. Narcissists don’t delegate. They seek control.

Upon hearing the news of the Nobel Prize award, Obama stated he was “surprised and deeply humbled” and viewed it as a “call to action” more than a recognition of his own accomplishments [4]. Narcissist? Really?

Of course, the collection of extremists on the right aren’t the only ones creating a false representation of the President. Those on the left have done a good job of irrational expectations that have obviously not been met. After all, it’s a tall order to be a savior. More on that tomorrow.





What Great Leadership Job Looks Like

November 21, 2009

I think President Obama is doing a great job as president. In spite of all of the blather coming from the ultra right, Obama is a moderate and I like moderates. He is deliberative in his decisions. Those decisions take into consideration different points-of-view, including the most important point-of-view; that of history. He is conservative in changing long-held social norms, even those with which he disagrees.

You can tell Obama is a moderate because the ultra left has taken issue with his approach to “change we can believe in.” In a short opinion piece by Eugene Robinson [1], he indicates that he would like to see a tougher stance on Wall Street, an investigation of the Bush-era abuses and a more bold approach to universal health care, although Robinson goes on to acknowledge the substantive positive things that Obama has accomplished so far in the first year.

I saw an interview with Dan Savage. Dan is a progressive homosexual, who is a vocal advocate of gays rights. He is intelligent and witty, funny as hell, and I agree with most of his opinions. Dan Savage is mad as hell that Obama did not repeal the deeply flawed “Don’t Ask, Don’t Tell” rule for gays in the military that was enacted during the Clinton Administration. President Obama indicated in an October 10, 2009 speech [3] that he would end the policy. As a moderate, deliberative thinking person, Obama has an appreciation that it’s not a good idea to create discord with the top military brass in the midst of the two wars that he inherited. By signaling that the policy with end, he gives those in the military who are homophobic time to adapt to the eventuality.

Bill Maher has been on a rant, too. I consistently agreed with Bill’s views when Bush was in office, but as our government took a leisurely walk to the left, Bill kept running. I find myself in agreement with his views much less than I used to. In a blog [4] entitled “Is this as Good as It Gets From Obama?” that was posted a few weeks ago, he expresses his profound disappointment with the administration’s policies. He waxes poetic about Roosevelt and the first 100 days of that administration. History suggests that lasting change in government happens with thoughtful, deliberative changes in policy that lead – but aren’t radically out-of-step with – general public opinion. The lunacy of the Bush Administration, like torture and unauthorized wiretapping became a thing of the past before Bush cleared his first pile of brush in Crawford.

Most Americans are upset at the bailout of the Wall Street firms. Me, too. The progressives want to see a wave of regulation and punitive legislation against Wall Street CEOs now. The left has correctly pointed out that financial regulation is essentially the same as it was when this crisis was created during the Bush Administration. I suspect that the President understands that capitalism is the basis of wealth in this country. It would be counter-productive to poke a sharp stick in the side of Wall Street as they struggle to recover. It would, at the very least, slow the recovery. I suspect we will see regulation once the economy stabilizes. A moderate approach will work best here, too. I expect that we will see the regulatory environment close to that at the end of the first Clinton Administration by this end of this administration.

Political capital is the currency in Washington. You choose your battles wisely and do your best to never lose. You spend capital frugally. That’s how to gain more political capital.

Obama seems to understand how to do that. I can’t say that I agree with every decision Obama has made, but I agree with the approach he has taken to every decision he has made.




[3] [4]