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Friday  September 25, 2009

Today's Zinger:

You Get The Results That You Measure



The Morning Briefing:

Eight months has passed since the Obama Administration took office.  Zinger's May 1, 2009 outlined a number of critical issues that the administration must deal with.  The budget, social programs,deficits, bailouts, war, health care, education, international relations, energy are just a few items that must be addressed.  As Zinger pointed out six months ago, no President in our lifetime, maybe no President in history,  has undertaken a more robust set of challenges.  While eight months is not a long time, the action has attempted to address many issues simultaneously.  So Zinger asks, how is the administration doing.  You will notice that each category has two comments.  The comment in black was Zinger's observations at the 100 days in office.  The comments in red are the eight month report card. The letter is the grade thus far. 
      
                    

President Obama has much on his agenda.  Trying to make progress on so many fronts is difficult.  While there has been a lot of discussion, as of yet, there has been few real changes.  In my opinion the President has done an average job, however there are so many initiatives with significant change implications, I am sure that these grades will change in the next year. 
 
Who Said It:

"No business which depends for existence on paying less than living wages to its workers has any right to continue in this country”           Answer at the bottom of article


Discussion:

1)  (C)  Education: With a 20%-40% high school drop out rate (depending on location),college costs rising so rapidly that most Americans can no longer afford to send their children to college and household income in America declining, it is critical that we, as Americans, deal with this crisis.   Education is the clearest path to prosperity in the future. Should we not deal with this, we will place the security and prosperity of our country at risk.    

The administration has proposed the government take over all student loans.  The administration has supported the school voucher system in Washington DC but has blocked new entrants to the system. The President continues to support revamping the education system, but no specifics are proposed at this time. The grade of C is based on an average performance in relation to prior Presidents.

2)  (B-)  Health care:  Access to affordable health care for our citizens has reached critical mass.  The cost of health care and medical lawsuits has pushed the cost out of the reach of most individuals and small companies.   The current system is not the solution to health care as it ends up insuring the healthy and the unhealthy cannot afford the cost. It may be easy to blame the unhealthy for their situation, but don't forget, we will all be there someday. This is not sustainable.

There are currently more than four separate health care bills being discussed.  With little consensus between parties and little agreement within the Democratic Party, prospects for the passing any of the current bills is slim, unless the Democrats invoke a parliamentary procedure to pass the bills under a budget agenda without the normal 60 votes.  If Democrats invoke this parliamentary procedure with only 51 Senate votes, the Democrats will most likely face a voter backlash.  Zinger believes that there is a 50-50 chance that any current bills will be passed and better than a 80% chance that a bill will be passed in the next two years.  The grade of B- is based on the fact that we have gotten further this time than any time in the past and there is a general agreement on the urgency of getting something done this time.

3)  (D)  War and Terrorism:  While the Iraq war is going well, relative to the past, Iraq remains an opportunity for success that could be lost if we withdraw too early.  Losing focus will open the way for Iran, or others, to enter the country and build another stronghold for anti-west ideology.  This will create further risk in the world.  Iran continues to operate outside the world of nations and has done so since the late 70’s.  With a commitment to the destruction of Israel and the growing threat of long-range nuclear weapons, the need for action grows.  Afghanistan: The Obama Presidency has shifted focus back to the origins of Taliban rule and is rapidly ramping-up our involvement.  North Korea:Has remained the same for more than thirty years with on-again,off-again nuclear ambition used as a chip to blackmail the world,especially the west, of money to sustain their declining economy.  With regime change immanent, we can expect more posturing for power.

Iraq continues to go well and withdrawal is on schedule.  Despite reaching out to Iran and North Korea, the threat from each of these countries grows.  North Korea is openly testing long range missiles and Iran is continuing to refine nuclear material and developing short and long range delivery systems.  Russia continues to support both countries and the United Nations sanctions remain impotent to stopping either country.   Afghanistan is becoming more dangerous and the likelihood of success is in doubt.  The grade of D is primarily due to the fact the the threats are escalating and there has been little support from our NATO partners, China or Russia. The President has also created a negative atmosphere in the CIA.


4)  (D)  Pakistan: Probably one of the most volatile situations in the world.  The Taliban and al-Qaida have negotiated concessions of the elected government. They are now expanding their hold on the region.

Pakistan is coming under increasing Taliban control.  The President has said that he may refocus efforts into Pakistan.  This may be where the action is but we can surely assume that moving the war to Pakistan will prove more difficult to achieve victory in the region.

5)  (C)  International relations: There is no question that under the Bush Administration the relationship of the United States with its allies had become strained. This is partly due to our allies reluctance to take on difficult issues and Bush’s approach to diplomacy.  Our future will be as a team player and not the big gorilla in the world.  Even the largest enemy can be destroyed by a thousand cuts coming from many places.  This is not sustainable.

The world likes President Obama, but as I have said in the past, the President's goodwill is not transferring to the United States.  President Obama has become known as the apology President, going around the world and apologizing for the United States. If the President's goodwill does not translate into measurable actions there is little benefit to the constant apologies for our nation.

6) (C)   Immigration:  There are now an estimated16-17 million illegal immigrants in the United States.  This situation has been building since Reagan legislated amnesty for the last large group of southern trespassers.  Bush attempted to legislate an immigration policy that centered on a guest worker program, but not amnesty.  The 2007 Congress saw an opportunity to add 16 million new Democratic voters and blocked the immigration legislation while supporting other efforts for easy passage and work in the United States (including not enforcing current laws).  President Obama will have to deal with this problem since it will impact the security as well as the financial health of the country.  The fight centers around what is right for America versus what is right for the Democrats.  I don't really see this any other way.

Who can forget Joe Williams (R- SC) shouting to President Obama "You Lie".  Well, that outburst resulted in a change in the Health Care Bill to specifically eliminate coverage for illegal immigrants.
On a positive note, the administration has begun enforcing current employment laws.  The administration raided and fined businesses that were employing illegal aliens.  Interestingly, those business then had to replace these workers.  They were replaced with American workers.  So, for years we have heard that illegals do the work that Americans won't do.  Wrong......  The administration plans to take up immigration reform in 2010.

7) (F)   Deficits:  It was just eight months ago that we were worrying about a $150 billion budget shortfall and an $11 trillion dollar debt.  We are now looking at an annual budget shortfall of  $1.2 trillion and a total debt, including off balance sheet items such as Medicare, of almost $60 trillion dollars. President Obama formulated his campaign in 2006/2007 based on expectations of spending to change direction.  Despite escalating war spending, bailouts and deficit spending to deal with the recession,President Obama has not changed his expectations for social change.  Asa result, we will have a combined debt of legacy spending and new social spending.  This is not sustainable.

Not only has the budget deficits increased, the administration is looking for new ways to reduce the deficit and it looks like they are using the F.D. Roosevelt playbook.  Rather than calling attention to a big Federal Income Tax increase, the administration is looking for opportunities to increase taxes, or add new taxes, to products and services (excise taxes). 

8) (C)  Social Security and Medicare: Originally put in place during the Lyndon Johnson years, these programs have grown exponentially of late.   The unfunded liability, the escalation in costs combined with the aging population soon to join the ranks of the Social Security and Medicare, puts this on the critical list.  The Social Security fund will run out in the next 10 years based on new estimates.  Radical change will have to be made and it can’t wait for the next President.  Prior Presidents have attempted to deal with this to be rebuffed by Congress.  It is such a charged issue they didn’t want to take a vote and go on record because they know there is hell to pay.  This is not sustainable.

The administration is looking into ways of dealing with the escalating costs of Medicare and Social Security but it is too early to determine where this is heading.

10) (C)  Energy: Whether you believe in global warming or come down on the side that it is a natural cycle, we must deal with our dependency on oil.  Whether your motive is to sustain the planet or national security, we must migrate to a new energy future.  Drilling for more oil in the United States will only temporarily meet energy requirements because it will run out within our children's lifetime.  The United States has not had an energy policy in almost four decades.  Everyone has talked about it but no one has done anything about it because it meant displacement of relationships and businesses.  It is time to move on.

Oil production in the United States has risen in the past six months.  Energy prices have been stable to declining, which has helped inflation.  The administration continues to push a tax on energy as a means to reduce consumption and green house gases.  There is no legislation at this time that will affect America's energy future. 

11) (C)  Military: We no longer fight conventional wars.  As such, we will have to rethink our military approach going forward.  It will require balancing conventional force to sustain existing wars with new techniques for terrorism and smaller/surgical theaters. Counter-insurgency techniques will replace battle hardware.  We currently spend approximately $570 billion a year on Military along with $160 billion on war activities. This is not sustainable.

There has been a lot of talk about military spending and deployment, but there has been little change.  The Iraq pullout is on schedule (as defined during the Bush administration).  Afghanistan is the real question.  The President is facing is toughest test on military deployment.  Should he increase the force on the ground by 40,000 soldiers as requested by the Generals or find some way out of Afghanistan.  The President also ended funding for several major military spending projects

12)  (D)  Bailouts:  How much, how longand to whom?  We have already committed almost $3 Trillion in loans,subsidies and equity in failing companies.  We must extract ourselvesand prepare for the next round of trouble.  We will soon see creditcard debt and commercial real estate suffering the same conditions asthe financial meltdown.      Soon we will learn of the student loan crisis, but that won’t hit the fan for a few more years.  If we do not “keep some of our powder dry” we will not have the finances to deal with these crisis.
 
The bailouts have stabilized.  The car companies are now owned by the employees.  AIG has little to no hope of repaying the $180+ billion.  The financial services firms are reaping billions in new fees to pay off the government loans as quickly as possible.  And Wall Street has seen no change in regulation.

13) (D)  A culture divided: Our country is now highly divided.  Politicians and the media support this.  We are no longer a Republic; we are red states and blue states. We are no longer Americans; we are liberals or conservatives.  We are no longer independent thinkers; we are Republicans and Democrats. Certain groups wish to sustain the division as it helps them position for power or money.  Whether it is politics or race we need to operate as Americans.  A band of supportive and like-minded American states is more powerful than individual groups fighting and positioning against each other.  Congress and President Obama may now have the 60 votes to ignore the minority but they do so at great risk to America and Americans.

Our country is more divided today.  In addition to political divides, our country is undergoing a reevaluation of the racial divide.  The hope was that this President will improve racial issues in our country.  Personally, I don't think this is the case. 

 

14. (C) The Economy:  Lets not forget that our economy has been shrinking and our equity markets are 40% off their peak. Unemployment is in excess of 8%.  Real unemployment, which includes people that want a job but have given up on the continued search for a job, is estimated at 11%.  Minority unemployment in certain cities is reaching 50%.  The Obama Administration has focused on green jobs and construction to put America back to work.  These programs are just beginning, yet the markets are stabilizing, equities are gaining and the liquidity crunch is easing.  President Obama must ensure the recovery continues and find another 3 million sustainable jobs this year.

The verdict is out.  With massive government spending you would expect the economy to improve, however the question is, "will the economy generate jobs that will remain even when the government stimulus stops in 2012?"  Clearly TARP had a beneficial effect on stabilizing the financial markets.  Official unemployment is approaching 10% and unofficial is estimated in 16% (unofficial includes the people that have given up trying to find a job).  The future is still very uncertain.


Who Said It:

"No business which depends for existence on paying less than living wages to its workers has any right to continue in this country”
                                                                                                                                           Franklin D. Roosevelt


Today's ZingerToon:


        

This cartoon was published in 1934 as a comment against the policies of F.D. Roosevelt. . Clearly, the Obama administration is using the F.D.R. playbook.

       
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