It is time to govern

Now that the elections are over, it is time to put away the rhetoric and focus on governance. This used to be how it was done, until we segmented the news into various markets. The past twenty years or so, we seem to govern off the campaign rhetoric rather than facts and collaboration has become a dirty word.

As an Independent voter, who has been a member of both parties, the governing off rhetoric and lack of collaboration need to stop. Neither side owns all the good ideas and both sides have some bad ones. And, we need to focus on the underlying truths and facts rather than tweets and who wins a public relations battle over an issue. Process matters – when politicians deviate from process, it is for political reasons.

In this spirit, here are the issues that this voter thinks we should focus on. Many voters have voiced agreement on some of these, but some issues just don’t get due attention.

– we should stabilize and shore up the ACA which most Americans favor: funding commitments to insurers will stabilize premiums, as will expanding Medicaid and considering the expansion of Medicare down to age 55, 60 or 62.

– we should ditch the harmful tariffs and work with our allies and the WTO to pressure China to stop the intellectual capital theft. Tariffs hurt consumers and producers, especially our farmers.

– we should address infrastructure needs which are many, doing so as we have done in the past with a blend of business, venture capital and federal, state and local government funding.

– we should recognize that the two biggest threats to our planet per the World Economic Forum are our water crisis and climate change, which exacerbates the first issue: strides have been made, but we need to reassume our global leadership role on climate change and focus on measures to address both.

– we should add more governance around gun control issues: Gun-owners and non-gun owners have voiced agreement on measures that would help. It should be noted most gun-owners do not belong to the NRA, so the NRA’s political activism against reasonable change should be noted, but not over-emphasized.

– The deficit and debt are building to a point of huge reckoning. It has been eight years since the Simpson-Bowles Deficit Resuction Committee report was shelved. It was shelved because it recommended $2 in expense cuts to every $1 in revenue increases. It was shelved because neither party had the political courage to roll up their sleeves and make tough decisions – we cannot get there with only expense cuts or revenue increases, needing both.

– We should stop the lack of civil discourse and beating up on the media. The media’s role is vital to our democracy. Pay attention to where your news comes from. Be wary of opinion disguised as news. Tweets are not long enough to show context or subtlety and are an easy way to misinform, as a result. To this end, it is vital for our democracy to return to appropriate Congressional oversight. We are not a kingdom.

If anything, we must have our politicians work together. The crime bill the President is pushing and that passed the House is not perfect, but is a bipartisan effort. It makes steps forward. Let’s make needed improvements and get something done. And, that is what Americans want most from our politicians – stop the grandstanding and get stuff done.

 

 

Let’s speak plainly

After watching a few newscasts with politicians using words that sound nice, but lack substance, I am in the need of some plain spoken comments. Here are a few to start the conversation. Please let me hear some of yours.

The US President and Congress are speaking of Tax Reform, but what I am hearing are tax cuts. We have a debt of $20 Trillion and an annual budget deficit. There is no way in hell to reduce either with lower tax revenue. We need spending cuts and tax increases, but no politician has the stomach to do what is needed.

Steve Bannon is the latest White House departure to say the President likes for his direct reports to compete for his attention and favor. People say this is how he likes to run his businesses. Two comments. First, I have witnessed this model as an employee, manager and consultant and it is a highly unproductive model. Second, biographers and financial reporters have all said Trump’s business record is spotty. He is a great salesman, but the word great is rarely used to describe his management style. It shows in the level of chaos and incompetence in the White House. General Kelly has helped, but it is a tall hill to climb.

While I understand the reasons for Brexit, I have been very concerned by the consideration and vote to exit the EU. From the outset, financial experts forewarned of the British leaving the EU. They spoke of EU headquarter movement, less investment, and less collaboration. This is already occurring in plans of the exit. I understand Former PM Tony Blair has an idea to govern immigration better without leaving – my strong suggestion is to hear him out.

Along these lines, those who want to retrench from global markets need to know a truism – it is very hard to shrink to greatness. I understand middle income workers in flourishing economies feel the brunt of globalization, but a large part of that is due to and will continue to result from technology gains. Retraining is a must. Shoring up wages is a must. But, we need to be careful about retrenching from global markets, that also add jobs here.

What are your thoughts? Do you agree with these comments? If you do not, let me know why?

 

Big Issue #1 – Dealing with our Debt

A topic that was discussed very little during the campaign and debates is our ticking time bomb problem of US debt. At almost $20 trillion and growing, it deserves its ranking as Big Issue #1 as it will impact everything we do as interest cost becomes an even greater part of our annual budget.

Let’s start with a few quick numbers in our 2015-16 fiscal year for context:

Current Debt = $19.8 trillion
Annual Revenue = $3.267 trillion
Annual Expenses = $3.854 trillion
Annual Deficit = $0.587 trillion
Annual Interest Cost = $0.284 trillion

Note, the annual interest cost is included in the expenses. If we did not spend one cent outside of paying the interest cost, it would take almost seven years to pay down the debt. But, we do have major and minor expenses, so it will take a concerted effort that will need to include some revenue increases, as cost cutting will not get us there unless we are prepared to make significant cuts to defense and major programs like Social Security and Medicare, the top three cost items.

What is troubling is our President Elect’s economic and tax plan has been measured by two non-partisan groups – The Committee for a Responsible Federal Budget and The Tax Foundation – to increase our debt by $5.3 trillion over the next ten years. Quite simply, we cannot afford to do that.

So, we must be smart about what we do it or we will make the problem much worse. The President Elect has said we will make it up in an expanded economy, but several  economic modeling firms, such as UK based Oxford Economics and US based Moody Analytics, project his plans as creating from malaise to recession in our economy.

We are at the point where we must set campaign rhetoric aside and govern off real data and analytics. There are things we can do to decrease the debt. Two non-partisan organizations – The Concord Coalition (www.concordcoalition.org) and Fix the Debt (www.fixthedebt.org) – have good exercises where you can value the impact of certain changes on the expense side and revenue side.

It should be noted, like Corporations, there are areas where we need to increase spending such as on infrastructure investment, while we make cuts in others. Also, as we are an aging country that is the most obese country in the world per the World Health Organization, there will be upward cost pressures on health related programs.

This is not an easy exercise, but one we must do. Cutting revenue through less taxes is an easy thing to promise during the campaign season, but we are at the point where we must make tough decisions and decreasing revenue is one we probably should avoid. And, the longer we wait, it will become even tougher to solve this problem.

Economists weigh in

A famous quote from President Ronald Reagan advising his Vice President George H.W. Bush about the focus for presidential elections is “it is the economy, stupid.” From the outset of this election, Donald Trump has touted his business skills making him the best person suited to lead our economy. Yet, what is funny is he forgot to convince the economists, who support Hillary Clinton as the best guide for our economy.

In short, the economists have modeled that Trump’s economic plan would create a malaise or recession. It will also increase the debt significantly. Clinton’s economic plan has been rated neutral to positive on its economic impact and its impact on the debt is much smaller.

Per the analysis (see link below) of the non-partisan Committee for a Responsible Federal Budget, this organization estimates Trump’s economic plan would increase our $19 trillion debt by $5.3 trillion, while Clinton’s would increase it by only $200 billion. Note, both are in the wrong direction, but the business man’s proposal would increase the debt by 27x more than his opponent’s plan.

It should also be noted that the National Association for Business Economics rates Clinton at 55% as the best candidate for the economy, with Trump placing third at 14%, behind Gary Johnson at 15%. This group represents working economists and not think tank economists.

Please refer to the attached article for more on the subject. As an aside, there are several investigative news pieces which note that Trump’s sales skills greatly exceed his business management skills as evidenced by six bankruptcies, 3,500 lawsuits and a host of other ill-timed ventures here and abroad. The key is we should not buy the story he is selling.

http://crfb.org/papers/promises-and-price-tags-preliminary-update