Friday, December 23, 2011

Marketing Real Social Security Reform

The Republicans in Congress need some fresh ideas for marketing their efforts to reform this program that is headed for a fiscal train wreck. The emotion displayed by most Social Security (SS) recipients needs to be neutralized in a constructive manner in order to have an adult conversation on this topic. Below are several suggestions to aid in this effort.

Common Sense Approach:
This must be the overriding theme to the delivery of the reform proposals. Combine that with stopping the growth of the crushing debt we are leaving for future generations. The term Ponzi scheme should not be used, but the term “pay as you go” should be used to explain why they track then number of workers per retire. Graphics of the change in ratio would be helpful to cement the image into the minds of the electorate.

Balance Sheet:
All current benefit recipients would be mailed a balance sheet showing their total contributions and their benefits paid to date. It may be easier to show contributions on an annual basis as well as benefits paid on an annual basis. My estimates show that current recipients over the age of 78 are well past their breakeven point. This should take a lot of the emotion out of their arguments when they see their own numbers.

Demographics
A visual graph of the live expectancy, retirement age, and birth rate should be used to explain how much things have changed since 1935. By making it visual, it has a better chance at getting through to those that can’t or won’t listen to a bunch of numbers. Most people are visual learners.

Audit All Recipients:
All current benefit recipients would be subject to an audit to confirm that they did indeed contribute the minimum 40 quarters. It might be interesting to see how many are not qualified. Citizenship should be a key part of this audit. This can be sold by the argument that many familiar organizations undergo a periodic audit, from corporations, churches, civic organizations, and even the Body Scouts. This is merely common sense.

Partial Privatization Options:
Make this optional for current recipients and those over 40, but make it mandatory for those under 40. The “partial” amount could be optional as well, anywhere from 30 to 70 percent. Let the individuals pick their own level. In addition, eliminate all SS taxes for all workers born after 01 Jan 2000. Instruct them that they are on their own and that at least 10% of every paycheck should wind up in a 401K or an IRA.

Means Tested
Due to the degree of debt we face, we may want to put this on the table. Why do multi millionaires need to get a SS check each month? This could be used as a bargaining chip as long as the formulae are clearly defined (in less than 200 pages) and explained.

Social Security Disability
Benefits to the recipients of the SS Disability Insurance would also be audited by a third party to ensure all on the take are truly disabled. The rules for declaring someone disabled would need to be shared with the public and then reviewed and reapproved by Congress.

Summary;
The theme of “common sense solutions” needs to be the basis of every interface with the electorate. The audits can be sold as prudent business practices, something that could apply to other areas of government as well. The Republicans must go on offense, but to do so, they need a solid playbook that includes simple graphics that the electorate can comprehend.

The Heritage Foundation has excellent charts that could be used as a basis for many of the graphics.

Show them with the visuals, make it personal with the balance sheet, and manage the program with common sense.

Monday, September 5, 2011

Now it’s the Postal Service

Now the government run U.S. Postal Service (USPS) is on the edge of bankruptcy. And some people want the same government to manage your health care??? The problems with the USPS can be explained in one word: Congress. It appears the “2006 Postal Accountability and Enhancement Act” has further tied the hands of USPS management in addition to meddling of various Congress members that don’t want to close any Post Offices or distribution centers in their districts. For certain the management of the USPS shares a good deal of blame for agreeing to contracts with “no layoff” clauses and far above private sector benefit plans. It appears to be a perfect storm of failure that requires a different response to new realities by all parties: management, the unions, and especially Congress.

The Cato Institute has written several articles outlining changes that would help modernize the USPS, the latest being in their Winter 2011 Journal. The outline below is a brief summary of their work with some additions for consideration by all parties:

1. Renegotiate the labor contracts to bring them in line with private sector in terms of benefit contributions, pay rates, and the elimination of the “no lay off” clauses. Work rules would need to be altered, the unions will need to understand it is not 1957, therefore, their business model must change.

2. Close 25%+/- of the Post Offices and distribution centers and reduce the work force accordingly. Base it on business needs and not whining from members of Congress.

3. Replace many of the Offices with contract postal units in other retail establishments or partner with retailers to provide basic services.

4. Eliminate six day a week delivery and base delivery schedules on population densities. I.E. for areas with less than 50 people per square mile (PPSM) they would get once or twice a week delivery, for areas between 50 and 250 PPSM target three times a week, and for more than 250 PPSM target five times a week. These numbers could be negotiated up or down based on business needs.

5. Cut all Congressional meddling by moving towards privatization over the next 2-5 years. Let the USPS operate like a business, not a government agency with two cinder blocks chained to its ankles. Repeal most, if not all, of the 2006 Postal Accountability and Enhancement Act.

6. Allow the USPS to branch out into other business ventures as foreign postal services have done.

The Cato Journal presents a thorough argument for most of these initiatives. The delivery schedule based on population density is the contribution of this author.

We’ll need to provide some talking points to members of Congress that don’t understand business models, labor costs, and demographics. When their constituents call to complain, they should respond with the question of whether or not they want to pay $3 to mail a letter, or do they want to work with a modern Postal Service at a reasonable rate.

I challenge each of you to count the number of times you actually HAVE to go to a Post Office over the next six months. And if there was a satellite unit in the local Wal-Mart or Supermarket, would that make it more convenient. It’s not 1957 anymore, the USPS needs a different business model and consumers have to accept this reality, or be willing to pay $3 to mail a letter. But most important, Congress needs to get out of the way. They should spend their time on repealing Obamacare.

Six Steps to Nowhere

As a student of economics I will argue that the six steps proposed by Gov. Granholm (5 Sept 2011 Press&Argus) are shallow and not based on sound economic principles and will not lead to long lasting (if any) improvement in the job market. Let’s go by the numbers:

#1 Businesses do not respond to one time gimmicks. Most small businesses look 3-5 years into the future to plan. Given the $1.3 Trillion deficit, the overly optimistic expectation of $150 Billion is chump change anyway.

#2 Government programs do not create jobs, small businesses do. Given the failure of public education, I don’t think we want more of the same type of failed programs. We do not need to burden our grandchildren with more debt by spending $228,055 or more to create a single $40,000 a year job. The cost per Stimulus job number is from the CBO.

#3 The concept of an infrastructure bank is just another way to kick the can down the road and burden future generations with more debt.

#4 This one is half right. Lowering the corporate tax rate is a good idea. However, tax cuts do not have to be paid for, unless you consider all money belongs to the state and not the people that earn it. We have a spending problem, not a revenue problem.

#5 Emulating the failed social welfare states of Western Europe is not a viable answer. Plenty of private training schools already exist that can train a motivated individual. And do so at a much lower cost than a government programs.

#6 Clean Energy is not market ready. Can you say Solyndra and the loss of 1100 jobs? Does the loss of $500 Million of taxpayer money mean anything to you? Besides, which article of the Constitution gives the government the right to dictate where my electricity comes from? Does freedom and liberty mean anything to you? Let free markets work.

The only jolt delivered would be to the burden of debt we would place on future generations. The former Governor should simply enjoy her retirement and stop meddling in areas that she does not understand.

Friday, April 29, 2011

The Debt Ceiling, Default, and Reality

The world will not end if Congress refuses to raise the debt ceiling. The United States will not default the morning after the vote not to raise the debt ceiling. Commerce will go on, banks will be open, and the Federal Government will continue to spend like a drunken sailor.

The debt ceiling is an arbitrary number made up by Congress and bureaucrats that do not know how to even balance a checkbook. The limit is no different than a sports fan going into a bar and promising himself that he will have no more than three beers during the Red Wings playoff game. When he gets to the third period he has another two beers. As long as he can pay for them, nothing happens, except that his immaturity and lack of self discipline is on display once again.

One must look closely at those that claim the debt ceiling must be raised, or financial armageddon will occur. These are the same folks that said that the TARP bill had to be passed within 48 hours or the global economy would collapse beyond repair. Please remember that it took Congress almost 30 days to pass TARP, and nothing happen. Also be mindful that those calling for more debt stand to gain the most from prolonging business as usual inside the Beltway. Old line politicians on both sides of the aisle stand to gain much from lobbyists if they can prolong the game. Can America really afford to trust these people again?

The Federal Government will not default immediately. The IRS has a great cash flow situation. The biggest part is payroll taxes that are collected every time that someone gets paid. The next part is quarterly tax payments made by investors and corporations. Essentially, the IRS is raking in the dough almost 24 x 7. They could pay the interest on the debt first each month, then operate the government on what is left over.

Now if Congress doesn’t stop spending like a delirious drunken sailor, they will eventually spend more than they take in and this would lead to default. This is where the reality comes in. We must pressure our public servants in Washington to stop the immoral inter-generational thief and trim spending. Trim as with a Chain Saw and not cuticle scissors. However, this would require elected officials with a spine and principles, I don’t suggest holding one’s breath.

For the sake of the Republic and our children’s children, we must pressure our public servants to stop the inter-generational thief. There is no technical, logical, nor practical reason to raise the debt limit. It would only illustrate the spinelessness and ignorance of our ruling elite yet once again.

Gas Prices, Government, and Reality

The rise in gas prices is NOT being caused by speculators nor the greedy oil companies. It is being caused by the Federal Government and the Federal Reserve.

One part is the actions (and inactions) of the Federal Government not to pursue a plan to make America energy independent. The blame can be shared by ALL administrations since the 1970’s when the Energy Department was formed with the goal of energy independence. The moratoriums on drilling in the Gulf of Mexico and off the shore of Alaska are but two of the latest stumbles by the ruling elite. If construction in ANWAR had been started when the reserves were first discovered, the oil would be flowing by now.

These actions and inactions by the Federal Government have not allowed the growth of the domestic oil industry to keep pace with the growth in population and energy demands. It is simply the law of supply and demand. The solution is simple, Drill Baby Drill.

The Federal reserve has a big hand in the increase in price as well, if not the larger hand. Quantitative Easing by the Fed is only the latest action that has put excess dollars into the market. Due to this, the value of the dollar continues to decline, therefore, the oil producers around the world simply demand more dollars for the same barrel of oil. Again, it is simply the law of supply and demand. It is no more complex that to imagine a commodity such as diamonds being increased by 1000 fold on the market. Do you think the value of diamonds would not plummet? The same is true for dollars.

These actions and inactions are being done by people that have a large stake in maintaining the status quo. The reality comes in when the American people realize they are being played by the ruling elite.

For the sake of the Republic and our children’s children, we must pressure our public servants to stop these destructive policies and practices. The alternative is not only serfdom to the ruling elite, but the loss of most of the value of our savings and investments, the value of our homes, and the future prospects for our children.

Time is getting short. We must unite and act against the arrogance of the ruling elite.

Tuesday, April 12, 2011

The Arrogance of the Insiders

Roberts: Compounding ignorance with arrogance
By Cokie and Steven Roberts/Syndicated columnists
GHS
Posted Apr 10, 2011 @ 12:21 AM

It has been barely three months since John Boehner became Speaker of the House, but Judson Phillips has already lost patience with him. The founder of Tea Party Nation wrote recently that the speaker "did not get the message" from the last election. "The honeymoon is over," he announced, and Tea Partiers should find a candidate to challenge Boehner in the Republican primary next year.

The speaker's unforgivable sin? He promised to cut $100 billion from this year's budget, but because Democrats control the Senate and the White House, he will fall far short of that goal. The speaker looks "like a fool," says Phillips. But who's the real fool here?

In fairness, not every Tea Party activist agrees with Phillips about ousting Boehner, but his tirade reveals the basic - and possibly fatal - flaw in the party's approach to politics. Tea Partiers simply do not understand how democracy works. And they compound their ignorance with arrogance.

Contrary to their claims, the Tea Party did not "win" the 2010 election. Yes, party activists helped elect 87 Republican House freshmen, and most of them share the Tea Party's fierce hostility toward government. That accomplishment entitles them to an important seat at the decision-making table.

But those freshmen account for only one of five House members. Voters sent another 348 congressmen to Washington as well, and all of them have their own constituencies and interests, priorities and principles. This is a large and diverse country, and no one group or philosophy can dictate how the government operates.

We know, we know. Tea Party types will read those words and say, see, they are written by "Washington insiders" who don't understand "the people." But we've been watching and analyzing politics for close to half a century and experience has taught us a profound truth.

Compromise is not a dirty word. And Boehner is not an infidel for talking to Democrats. Compromise is absolutely essential for democracy to work efficiently. Without it, politics becomes holy war. Republicans and Democrats start acting like Shiites and Sunnis. Washington resembles Baghdad or Kabul.

At its core, this is a pragmatic country that rejects extremes on both sides. In the 2008 election, only one of three voters called themselves conservatives and only one-fifth identified as liberals. The rest, 44 percent, chose the label "moderate," and the latest poll by the Pew Research Center reinforces the country's middle-of-the-road character. While 68 percent of all Tea Party sympathizers said that lawmakers should "stick to their principles" and shut down the government if they don't get their way in budget negotiations, only 36 percent of all voters shared that view - a huge disparity.

History shows clearly: Any faction that tries to defy this moderate impulse is ultimately doomed to failure. That's exactly what happened to the Moral Majority and the Christian Coalition, two movements that entered politics convinced they had a monopoly on truth and wound up isolating themselves in an ideological dead end.
The same problem exists on the left. Some liberals want to emulate Judson Phillips and fire President Obama for failing to keep key campaign promises, such as closing the prison at Guantanamo or enacting a "public option" in his healthcare bill. But like Boehner, Obama could not keep some of his promises because reality prevented him from doing so.

He could not close Gitmo because he had nowhere to put its inmates. He could not pass a public option because he didn't have the votes. But that has not stopped some of his left-wing critics from denouncing him as a traitor.

In the 2012 election, the Tea Party could be the best thing that ever happened to Barack Obama. In early primary states like Iowa and South Carolina, party activists could force Republican candidates to make outlandish promises that play well at Tea Party rallies but cripple the GOP's nominee in the fall election. To make it even worse, Tea Party favorites like Rep. Michele Bachmann could interject their extreme views into early debates and candidate forums, making sure that no one on the platform escapes with a shred of moderation intact.

If Bachmann wants to run in those early primaries, the Democrats should pay her filing fee. And if Judson Phillips wants to come back to Washington and denounce John Boehner as a sellout, the Democrats should pay his bus fare. Better yet, a one-way first-class air ticket so he cannot leave town. They know who the fool is.


Steve and Cokie's new book, "Our Haggadah" (HarperCollins), has just been published. Steve and Cokie Roberts can be contacted by e-mail at stevecokie@gmail.com.
Copyright 2011 The MetroWest Daily News. Some rights reserved


A grass root level response:
The Arrogance of Insiders

Steve and Cokie Roberts are the arrogant ones here. Their 50 years inside the beltway have indeed clouded their ability to reason and understand principles the way ordinary Americans do.

As a Tea Party Patriot, I do not have hostility towards my government. I only want it to operate at a level that does not condone and even demand intergenerational theft. Nor do I want my government to operate with the concept that it is entitled to tell us what to eat, what type of light bulbs to buy, and what type of health insurance we have to purchase.

Is it extreme that I balance my checkbook each month? Is it extreme that I live within my means, and that I save for my own retirement? Is it extreme to ask each level of my government to do the same? Or is a debt for our children's children's of $14,000,000,000,000 extreme?

There is a time and place for compromise on the details, but there is also a time and place for standing on principles. Given the fiscal insanity over the last 50 years, it is time that ordinary Americans demand a little more standing on principles and less compromise with the self appointed ruling elites that got us into this mess.

I guess the ignorance part comes from the fact we refused to read and obey the memo that states we in the country class can never, never question the intentions or actions of the self appointed ruling elites.