Category Archives: Government Issues

the root of the problem

Short vs. Long Term

Short vs. Long Term

One significant issue that has kept us from maintaining our elite status, as a country, is that we have had a very short-term focus. Most public companies tend to make decisions that maximize their performance from one quarter to the next. Many political decisions are made to support special interest contributors’ short term profits ignoring the consequences to the longer-term cost to the economy and resource availability.

One good example is the low price of fuel, which ignores the cost to maintain the transportation infrastructure. Does it make sense to encourage the sale of fossil fuels when all of the experts recognize that this resource is limited? The only disagreement is just how much time remains before exhausting this resource. Would longer-term thinking dictate that higher fuel taxes with proceeds dedicated to infrastructure improvements make more sense?

Another example is the out of control Federal spending that tends to satisfy current political agendas but which mortgages the future for many generations to come. The facts are that our internal population in both aging and is declining. Our total population continues to grow slightly via immigration, but our workforce continues to decline even with the addition of folks from other countries (both documented & undocumented). The decline means there are fewer workers to pay taxes to support spending, especially as it relates to social security & Medicare. The fact that healthcare costs have accelerated out of control and many times faster than wages adds to the problem.  Average wages have only increased slightly since 2000, from $30,756 to $33,229 or less than 9%. For that same period, the median cost of a new house has increased from $165,814 to $315,815, or over 95%. During that same period, the cost of healthcare and advanced education have almost tripled! We started mortgaging the future several decades ago, and we are already experiencing the results.

There are many other examples, but one of the most recent was the tax reduction. It was deficit funded and is currently adding $150 Billion of red ink every year and will continue to do so for the next ten years. Not only will future generations have to pay the price, but the middle class did not receive their fair share of this redistribution of income. Our National debt is well on the way to $23 trillion and will reach that level early in 2020. Currently, we are adding $1 million to our debt every 35 seconds! Two years ago, we were running an annualized deficit of approximately $800 Billion. Today that is running $990 Billion. Believe it or not, that is the good news. The level of unfunded liabilities for all the budget area commitments now exceeds $125 trillion. These are costs that we have committed to pay but which we have not identified any revenues to support the costs. The unfunded liability for just one item, Medicare, exceeds $30 trillion.

The most likely keys to the 2020 Presidential Election

The most likely keys to the 2020 Presidential Election

Will President Trump achieve re-election? In my view, there are only three states that will determine the outcome.  Wisconsin, Michigan, and Pennsylvania were all states that Trump carried in 2016, but each by slim margins. If the Democratic nominee carries all 3 states then that person will be elected.

Wisconsin 2016: margin of victory was23,000 votes, less than .8%     10 electoral votes

Michigan 2016:  margin of victory was 11,000 votes, less than .3%      16 electoral votes

Pennsylvania 2016: margin of victory was 44,000 votes, less than .7%  20  electoral votes

Trump won 304 votes in 2016. These 46 votes would have given Mrs. Clinton a victory with 283. If Trump is able to retain one of these states then he will likely be reelected.

There are few other states where the Democrats have a very slight chance to flip the results.

Arizona – Trump margin of Victory  3.5%

Florida –   Trump margin of Victory  1.2%

North Carolina –  Trump margin of Victory  3.7%

On the other hand, there are a few states that the Reps have a chance to flip.

New Hampshire – Trump lost by .4% (best chance to flip)

Nevada-  Trump lost by  2.4%

Current polls show that all of the top polling Democratic candidates are running ahead in 2020. However, the election is over 10 months away and we also know that polls are often wrong.

Healthcare Revisited – A simple solution to 2 problems

  • Healthcare Revisited – A simple solution to 2 problems

As the Democratic contenders vie for the nomination “Healthcare” is again one of the more significant topics. Medicare for all, private option and other variants are being proposed. My view is that no candidate is willing to confront the real issue with our broken healthcare system. I strongly believe that healthcare should be a right of citizenship and permanent residency. However, as a fiscal conservative I cannot support a solution that adds to our out of control National Debt.

When searching for solutions to any problem I favor two approaches. First, start by working “upstream”. By this I mean search for the cause of the problem. Once you determine that cause keep working on additional factors that are contributing to the it. The US has by far the highest cost of healthcare, per capita, of any country in the world. Our costs are almost three times the average for the EU countries without the corresponding benefit of better quality of care. What is causing the problem and why are we not addressing solutions?

There are several factors that contribute to out of control costs. Among them are the role of insurance companies, drug costs, hospital costs, physician compensation, obesity rates and legal factors. These areas have been thoroughly addressed in several earlier posts on this topic.

The second method that I advocate for problem solving is a technique called “base-lining”. What this means is to investigate other systems that are yielding positive results and learning how to benefit from the experience of others. There are several countries’ systems that are worth investigating that have a higher quality of care at less than half the per capita cost.

Solving the cost issue would more than cover the cost of proving healthcare for all and would also significantly reduce the out of balance national budget deficit. One solution to improve, if not solve, two problems.