Political Thoughts

Church got cancelled because of snow so I thought I'd chime in here instead. 

We are at the one year anniversary of the stimulus package and there is a lot of talk about it.  Obviously every article that you read on the subject is going to be biased based on whether a person is a democrat or republican.    Democrats claim that the stimulus has created jobs and therefore was a success.  Republicans say that people don't like it and it increased the deficit significantly so it was a waste of money.  I'd like to offer a different perspective as an independent.

The stimulus package was necessary on account that it gave people hope.  It was passed when the stock market was spiraling downward and many people were scared.  For the time being, people needed to feel as if the government had a handle on things and the stimulus package provided that.  It may have been just as effective with a smaller price tag or could have been more effective if even more money was spent, I don't know.  The stimulus package gave people hope however and the stock market soon rebounded in March, giving people the impression that things were on the upturn.

People are now turning against the stimulus package because it was not everything that they had hoped for.  It is possible that the stimulus will deliver absolutely everything that President Obama said it would but the American people expected more.  They expected that unemployment would have dropped instead of risen.  And more importantly they expected that the economy would be in better shape overall by this point.

What about actual numbers?  The stimulus passed in 2009 was said to have a hefty price tag of $787 billion.  Recently this price was raised by $75 billion.  To be honest I'm not clear why the price was raised except it seemed as if no one figured in the interest that this would cost us on the deficit. 

The first report that was issued by the government after the third quarter stated that 640,000 jobs had been created or saved as a result of the stimulus.  The reports that were received contained numerous factual errors including many instances where reported congressional districts did not ever exist.  Because of this and other problems, the accuracy of the jobs created was called into question.  The fourth quarter report claims that just under 600,000 jobs were created or saved as a result of the stimulus.  This gives us 1.24 million jobs that have been directly saved or created as a result of the stimulus package.

The Obama administration is touting a number of jobs created between 1.5 and 2 million as a result of indirect jobs created.  The reports only reflect jobs directly created with the money spent.  It is only fair to reason that these additional jobs created causes a need for more supplies, construction equipment, fast food meals, etc.  This indirectly adds to the job total as those companies must have more workers to deal with increased demand.

So far $263.3 billion has been spent of the stimulus money.  Using the most optimistic 2 million jobs number, this means that the cost of each job has been $131,650.  Mind you, this is not salary that has been paid to each worker for a year's labor but reflects only what has been spent in six months of reports.  When projects are finished and completely paid for, that number will likely rise.  So yes, the stimulus has created jobs as promised.  And yes, the stimulus has come at a tremendous price tag.  One would think that we could create jobs at a much smaller price tag than $131k per job, especially considering that a third of those jobs were indirect jobs with no official government spending.  It also looks like the proposed $5,000 small business incentive to hire workers look like a pittance even at an overall price tag of $33 billion.

Not that a 10% unemployment rate isn't a big problem for those who are out of work, but 90% of Americans are getting little to nothing for their tax dollars.  I believe that we can provide stimulus and provide lasting value for Americans.  Our infrastructure is crumbling.  Bridges and roadways are in bad repair.  The engineers who inspect these things give our infrastructure a grade of D.  They estimate that it will take $100 billion to repair our infrastructure to where it should be.  I say write the check.  $100 billion to repair our roads will provide real, tangible benefits to everyone as well as lasting value.  It will provide more jobs, even if they are mainly construction and manufacturing ones.  And the price tag seems like a drop in the bucket compared to what has been spent in the last six months and even smaller compared to the overall price that hasn't even been paid yet.

One final note on all of this government money.  Not that anyone is a fan of big banks these days but they've mostly held up their end of the bargain.  Of the $700 billion provided by the Bush administration in TARP funds, only $99 billion is still outstanding.  Granted this is a huge chunk of change and would almost fully fund by proposed infrastructure improvements, it is much better off than the stimulus.  As mentioned earlier, the price of the stimulus package was just raised another $75 billion for a total of $862 billion.  The Obama administration keeps blaming the Bush administration for the current problems.  What is never mentioned is that it was a democratic congress that passed the bills and Bush just signed them into law.  Just comparing the two bills, it appears that Bush was far more financially smart.  That doesn't account for anything else passed during his watch, just that TARP looks like the better of the two bills right now.

There have been two major issues that keep appearing on the news week after week.  The first issue is the health care debate.  This may be resolved soon, or sometime next year, with the longer it takes to get passed, the less likely it is to pass.

The second issue that keeps getting the public riled up is the issue of executive pay at large companies.  Some places have been reined in, specifically ones that have received government bailout money.  There is also talk about giving shareholders the right to vote on executive pay.  However most stocks are not held by individuals but by companies who couldn't care less about how much executives make.

Obviously many people are against changes to the health care system and my point is not to address individual problems with the health care proposals.  One major sticking point is going to come down to the price of the proposal.  This is what I want to address in an attempt to fix two of the major problems that are in the news today.

Rather than putting a cap on the pay for executives, simply add a tax to the bonus compensation.  If Company X wants to give $50 million in bonuses to their executives, let them do it, but require them to contribute an additional $50 million towards the price of whatever health care plan is passed.

The public won't care nearly as much about executive pay if they know that much of that money is going to the government to fund a program that they are interested in and ultimately will keep them from paying higher taxes to pay for this program.  If a company gives out $50 million in bonuses, 40% of this will be paid back to the government in individual taxes, which adds up to $20 million.  Add to the $50 million that the company will pay in taxes and that is $70 million that goes to the government and only $30 million that goes to executives.

Well, yesterday was election day and here is what we've learned about the direction of our country - absolutely nothing.  Without a doubt Republicans will spin the results as a rejection of Obama's policies and a revival of conservatism in the United States.  Democrats will repeatedly say that yesterday's results were no big deal and not a sign of things to come in next year's election.

The truth is, both are right.  Conservatism was never dead to begin with.  Last year so many pundits were pronouncing the Republican party as dead but had very short memories.  The same pundits, and I mean literally the same ones because I can recall several of the same men and women on CNN, declared the Democratic party dead four years earlier when George Bush was re-elected and Democrats lost seats in Congress for about the sixth straight time.

Which is the other point worth remembering.  Typically the party in the White House loses seats in Congress.  This prediction could have been made last year about 2010 even after President Obama's astounding victory because that is simply the cycle of things.  The winner's party is a little less enthusiastic about getting out to vote at mid term elections while the loser's party is bitter and motivated. 

The White House should be less concerned about the results of yesterday's election and far more concerned about fulfilling promises.  Obama campaigned on a promise of change and so far the American people have seen little of it.  Guantanamo Bay is still open.  We're still involved in wars in Iraq Afghanistan - actually escalating there.  While the economy is showing signs of recovery, this is little comfort to to 9.8% of unemployed workers who will likely top 10% when the latest numbers are released.  Add to this the cost of a $787 billion stimulus package that has not created jobs as quickly as we were led to believe.  And of course there is the promise of medical reform that has languished in Congress.  I don't know if I'm representative of the rest of America, but my thoughts are that I hardly care what gets passed now because regardless there will be things that both sides don't like about the bill.  Just get something passed and prove to me that you are capable of enacting some reform.

It can easily be argued that the President inherited most of the problems that he is facing right now.  In a year that is unlikely to matter because a) perception is greater than reality and voters have short memories.  In another year some won't remember the fear of the economy last year but will remember a failed health care bill or a $787 billion stimulus that didn't accomplish what they anticipated.  And b) the President ran a campaign of change.  He may have inherited these problems and he was elected to fix them.  If progress isn't made by then, there will definitely be some disillusioned voters out there next year.

Today I was reflecting on the difficulties of being President and thinking about similarities of the position to that of a pastor.  Right now the biggest domestic issue that faces the President is the issue of health care.  He can approach the task in a couple of ways.  He can decide that first and foremost he is a leader.  As a leader it is his job to get what he feels is the best health care plan for the American people regardless of what the opposition may feel.  As a leader he must stick to his principles and do what is best.

Or the president may decide that his main job is to serve the American people and because of this he should try to find a health care plan that pleases the most people possible.