There is something going on. That is what I know. I do not know exactly what it is, but something strange, and perhaps not so wonderful is going on in the U.S. The environment in this country is ripe for revolution. The United States appears to be a powder keg ready to explode right now.
Commentaries on the Occupy Wall Street protests (and the Tea Party for that matter) are missing something. One side mocks the Occupy Wall Street protestors, one side glorifies them. The reverse is true of the Tea Party. Yet there is something bigger going on that such small analysis misses. Occupy Wall Street and the Tea Party are protesting different sides of the same coin. OWS is protesting the "1 percent", those who have gotten fat from Big Business. The Tea Party is protesting Big Government. I believe that Big Business, Big Government, Big Labor, and to a large extent, Big Media have been in an unholy alliance of greed and hubris. Finally, the excess greed is catching up to all of them.
Executive compensation has been out of touch with reality for the better part of the last twenty years. There seems to be very little accountability on the part of corporate boards of directors to reign in executive compensation, even during this difficult economic period. This is especially true on Wall Street, where taxpayers were called upon to bail out bank after bank that took The System down. Within two years of the bailouts, Wall Street securities firms were posting record profits and handing out bonuses deemed obscene by many who were struggling to find work or make ends meet. Their tax dollars went to line the pockets of the fat cats in the most unholy of alliances between government and business. So the "1%" live as high as ever on the hog while the rest of us fight for scraps. Is it any wonder that this type of largess has drawn protests?
Now, do not misunderstand me. I do believe that executives should earn more than entry level, clerical type workers. I applaud those who risk their capital and earn a fair profit. And if consumers are willing to pay premium prices for certain products (i.e. Apple products), then God bless that company. And I do not mind an executive has earned a large compensation, including bonuses. But too often, executive compensation is disconnected from reality. Executives too often have been paid fat bonuses in the face of declining sales and declining profits (or even losses). It is easy for the masses to become disillusioned when the company's fortunes are declining, workers are being asked to take pay cuts or are laid off, and the executives are earning ever higher amounts of money.
Meanwhile, the Tea Party protests a government that has clearly grown too big. The government is now running $1.5 trillion annual budget deficits and has a national debt equal to our annual GDP. Until the Tea Party came along there was no action by either party in Washington to do anything about it, other than kick it down the road. The Tea Party to its credit understands that there is a fundamental entitlement mentality among the politicians in Washington that is bankrupting our country. Yet until they awoke the politicians, they were all for living off the fat of taxpayer money, being completely oblivious to taxpayer anger over irresponsible spending. Is it any wonder CNBC commentator Rick Santelli ranted on TV and got the Tea Party started. If it wasn't him, it would have been someone else.
With the $1.5 trillion budget deficits projected as far as the eye can see, interest expense to service the debt will become an ever larger piece of the federal government's budget. Even with record low interest rates, this component is one of the largest parts of the budget. What happens if short-term interest rates go to 3%? Interest expense will explode and we will be looking at the budget deficit increasing by hundreds of millions of dollars each year simply due to a movement in interest rates. On top of that, the latest CBO estimate is that the new health care law will increase the budget deficit by $540 billion in the first 10 years of the law's existence. Remember when we were told that it would cut the deficit by $138 billion during the first ten years? Not going to happen. Remember all the back room deals made to pass the bill? Is it any wonder that people rose up and protested a government that was too big and too arrogant?
What this all amounts to is a Great Awakening by ordinary citizens of this country. The politicians either ignore or mock the protestors at their own peril. The Tea Party needs to understand that in the end, the OWS crowd is their friend and vice versa. If the 1% and the government are truly responsive to the protestors, then we will wind up with a more accountable Corporate America which will help facilitate a more limited government. If Big Government and Big Business take on a "let them eat cake" mentality (which both seem to be carrying at the moment), then this thing will end very very badly. Revolutions never end well for those in power, and right now, those in power are sitting on a powder keg that is ready to explode.
Tuesday, October 11, 2011
Thursday, September 8, 2011
Did Baylor Do The Right Thing?
Last week, Texas A&M University announced its intention to leave the Big 12 Conference and earlier this week announced its intention to join the Southeastern Conference. After the A&M's SEC bid was announced, Baylor filed a lawsuit blocking A&M's move to the SEC.
Did Baylor do the right thing? In the short run, yes (perhaps), but in the long run no. Baylor's move obviously is an effort to keep the Big 12 together. Last weekend, Oklahoma announced that it is looking at its options in terms of moving to another conference. It is being widely reported that OU will join the Pacific 12 Conference, and take Oklahoma State, Texas and Texas Tech with it. What does mean for Baylor? Obviously, it would mean the end of any affiliation within a BCS conference. Baylor has enjoyed its status as "BCS" school and benefitted greatly, particularly financially. The Big 12/BCS affiliation has led to a big upgrade in football facilities and new facilities for numerous other sports, most notably baseball.
Baylor is behaving like a cornered animal. With all the talk of conference realignment, Baylor has been left out. Other major BCS conferences do not perceive that Baylor brings them any benefit, so BU is left out in the cold (a rather odd word choice to describe anything in Texas these days). So Baylor is taking any and all steps it can at this time to preserve its status as an affiliate of a major conference. Really, what other choice does Baylor have? So it fights with the only weapon it has at its disposal. The loss of BCS status would greatly affect Baylor's athletic revenue, and likely hurt its overall General Fund revenue as well.
How did it get so bad? There are two reasons for this: The University of Texas and Dan Beebe. Texas is perhaps the most arrogant university in the country and certainly the most destructive university, at least when it comes to athletics. Meanwhile, Dan Beebe's lack of leadership and vision, combined with his complete ass-kissing of Texas is simply appalling. Seriously, what other conference has the problems the Big 12 has? You don't see Ohio State strong arming the rest of the Big 10. You don't see Florida strong arming the rest of the SEC. Where else are schools in major BCS conferences desperately looking to leave?
As soon as the ink dried last summer to save the Big 12 as a 10 team conference, A&M went shopping. The Longhorn Network was a bone of contention, as this would result in UT realizing $300 million in revenue over the next 20 years. No one else had anything like this, and Comissioner Beebe simply allowed this to happen in order to save the Big 12. Does Ohio State have its own network? Or does Florida have its own? No, there is an SEC network and a Big 10 network and these conferences share equally. Ohio State gets the same money as Northwestern in the Big 10 network. Major network TV contracts are shared equally in all other conferences. Yet Texas is allowed to keep a larger share of the network TV contracts than the other schools in this conference. No wonder Colorado and Nebraska left!
For a school like Baylor, there is no choice but to go along with the unfair arrangement. For a Texas A&M, there are other options. They were smart to recognize that a better option existed and they jumped. I do not blame them. The University of Texas, with the blessing of Dan Beebe, destroyed the Big 12. The problems go way back to the founding of the Big 12 in the mid 1990's and never got better. Texas has always enjoyed being the "big fish in the small pond" and does not seem to play well with others.
Where does Baylor go from here? Filing the lawsuit was a long-term death sentence. I do not believe it will stop A&M from going to the SEC, nor will it stop the others from leaving for greener pastures. Of the current Big 12 schools, I can say with 100% certainty that Baylor and Iowa State will not end up in BCS conferences. Kansas State does not appear likely to either and Kansas hangs in the balance, but might be saved by its basketball program. Baylor might not end up in any conference because of the lawsuit. Baylor now is known as someone who does not play nice and throws a tantrum when it does not get its way. The politicians will not demand that Texas let Baylor tag along like they did in the formation of the Big 12. This means that in the short run, Baylor's lawsuit might preserve the Big 12 for another year. Long run, it might cripple the athletic program. Makes me sad for Baylor. The University is between a rock and a hard place.
Finally, why in the hell does Dan Beebe still have a job? Seriously? He completely lacks vision, is completely reactionary, and just basically does the bidding of Texas. When rumors that A&M was going to leave first surfaced, officials at Texas were quoted as saying they were making a list of possible replacements. That's Mr. Beebe's job! Where the hell is he? Why is everyone looking to bolt this league? Lack of leadership at the top! No one is looking to leave the Big 10, the Pac 12 or the SEC. In fact, Big 12 schools are begging to join these leagues! Dan Beebe needs to leave town ASAP and never show his face again. He has taken what should be a great league, a league that has been extremely competitive on the field, and driven it into near extinction (and that is only a matter of time). Hey Dan, I hope Bevo's ass tastes good!
Did Baylor do the right thing? In the short run, yes (perhaps), but in the long run no. Baylor's move obviously is an effort to keep the Big 12 together. Last weekend, Oklahoma announced that it is looking at its options in terms of moving to another conference. It is being widely reported that OU will join the Pacific 12 Conference, and take Oklahoma State, Texas and Texas Tech with it. What does mean for Baylor? Obviously, it would mean the end of any affiliation within a BCS conference. Baylor has enjoyed its status as "BCS" school and benefitted greatly, particularly financially. The Big 12/BCS affiliation has led to a big upgrade in football facilities and new facilities for numerous other sports, most notably baseball.
Baylor is behaving like a cornered animal. With all the talk of conference realignment, Baylor has been left out. Other major BCS conferences do not perceive that Baylor brings them any benefit, so BU is left out in the cold (a rather odd word choice to describe anything in Texas these days). So Baylor is taking any and all steps it can at this time to preserve its status as an affiliate of a major conference. Really, what other choice does Baylor have? So it fights with the only weapon it has at its disposal. The loss of BCS status would greatly affect Baylor's athletic revenue, and likely hurt its overall General Fund revenue as well.
How did it get so bad? There are two reasons for this: The University of Texas and Dan Beebe. Texas is perhaps the most arrogant university in the country and certainly the most destructive university, at least when it comes to athletics. Meanwhile, Dan Beebe's lack of leadership and vision, combined with his complete ass-kissing of Texas is simply appalling. Seriously, what other conference has the problems the Big 12 has? You don't see Ohio State strong arming the rest of the Big 10. You don't see Florida strong arming the rest of the SEC. Where else are schools in major BCS conferences desperately looking to leave?
As soon as the ink dried last summer to save the Big 12 as a 10 team conference, A&M went shopping. The Longhorn Network was a bone of contention, as this would result in UT realizing $300 million in revenue over the next 20 years. No one else had anything like this, and Comissioner Beebe simply allowed this to happen in order to save the Big 12. Does Ohio State have its own network? Or does Florida have its own? No, there is an SEC network and a Big 10 network and these conferences share equally. Ohio State gets the same money as Northwestern in the Big 10 network. Major network TV contracts are shared equally in all other conferences. Yet Texas is allowed to keep a larger share of the network TV contracts than the other schools in this conference. No wonder Colorado and Nebraska left!
For a school like Baylor, there is no choice but to go along with the unfair arrangement. For a Texas A&M, there are other options. They were smart to recognize that a better option existed and they jumped. I do not blame them. The University of Texas, with the blessing of Dan Beebe, destroyed the Big 12. The problems go way back to the founding of the Big 12 in the mid 1990's and never got better. Texas has always enjoyed being the "big fish in the small pond" and does not seem to play well with others.
Where does Baylor go from here? Filing the lawsuit was a long-term death sentence. I do not believe it will stop A&M from going to the SEC, nor will it stop the others from leaving for greener pastures. Of the current Big 12 schools, I can say with 100% certainty that Baylor and Iowa State will not end up in BCS conferences. Kansas State does not appear likely to either and Kansas hangs in the balance, but might be saved by its basketball program. Baylor might not end up in any conference because of the lawsuit. Baylor now is known as someone who does not play nice and throws a tantrum when it does not get its way. The politicians will not demand that Texas let Baylor tag along like they did in the formation of the Big 12. This means that in the short run, Baylor's lawsuit might preserve the Big 12 for another year. Long run, it might cripple the athletic program. Makes me sad for Baylor. The University is between a rock and a hard place.
Finally, why in the hell does Dan Beebe still have a job? Seriously? He completely lacks vision, is completely reactionary, and just basically does the bidding of Texas. When rumors that A&M was going to leave first surfaced, officials at Texas were quoted as saying they were making a list of possible replacements. That's Mr. Beebe's job! Where the hell is he? Why is everyone looking to bolt this league? Lack of leadership at the top! No one is looking to leave the Big 10, the Pac 12 or the SEC. In fact, Big 12 schools are begging to join these leagues! Dan Beebe needs to leave town ASAP and never show his face again. He has taken what should be a great league, a league that has been extremely competitive on the field, and driven it into near extinction (and that is only a matter of time). Hey Dan, I hope Bevo's ass tastes good!
Tuesday, September 6, 2011
Reflections of September 11 - Ten Years Later
Sunday marks the 10th anniversary of the September 11 terrorist attacks on the United States, and I cannot help but reflect on such a tragic, surreal day. I remember my day, which now seems so absurd. And I reflect on the courage of heroism of so many who helped save countless numbers of lives.
I am sure we all remember where we were when we first heard the news. I was sitting in my car at the intersection of 79th Street and Metcalf, waiting for the light to turn green. The DJ on the radio reported that a plane had struck one of the World Trade Center buildings in New York. I figured it was just a prop plane, piloted by an inexperienced pilot who did not know what he was doing. The clock in my car said 7:56, so this was approximately 10 minutes after the first plane struck. A few minutes later, someone in the office reported that a second plane had struck the second tower. I knew at that point that it was intentional.
My job at the time entailed traveling downtown for Tuesday morning investment meetings, so I headed down shortly, and on my way in, the news on the radio reported that a plane crashed into the Pentagon in Washington DC. This was unreal. Finally, I don't when, but I heard about the plane crash in Pennsylvania. This was becoming a blur. Shortly after arriving in downtown Kansas City, I saw the headline flash across a Bloomberg screen that the FAA grounded all flights and ordered all planes to land immediately. The investment meeting was canceled and I was told to get back to my office and call clients.
Those were the oddest calls I ever made. There was no script, and I barely had a clue as to what to say. My bosses barely had a clue. No one had ever seen anything like this before. I spent my day reassuring customers that the financial system was still sound and that their money was safe. Paled in comparison to the tragedy unfolding. First call I made, the client told me that we were at war. With whom I asked. Whoever attacked us! I remember a call I made to a client around 1:30pm. I went through my pitch, then he said to me, "Chuck I have no idea what you're talking about." He had not heard the news yet. The story I told had to sound so unbelievable that he probably thought I had lost my mind. How could the events of that day possibly be real?
In the end, it was a day that showed the best and worst of humanity. We saw the worst that day. What emerged later was the best. Watching a special the other night that spotlighted two heroes, among many that day, Frank DiMartini and Pablo Ortiz. They rescued people from the 88th, 89th and 90th floors of the North Tower and got them out before the building collapsed, yet they died when the building collapsed. More than 300 New York firefighters died as they attempted to rescue people caught in the buildings. In all, approximately 3,000 people died that day as a result of the terrorist attacks. Yet, as we reflect on that day, I choose to remember the heroes, the people who died while saving others. The firefighters and police officers who were doing their duty when it all caved in on them.
For once, on that day and the several days that followed, we were all Americans. Just Americans. In fact, the whole civilized world became Americans that day. Ultimately we learned that America isn't about monuments or buildings. It is about freedom. And we learned that freedom is not free. Sometimes we pay a dear price for our freedom. But I love that America is about an idea. That the spirit of the people can be bent, but not broken. That the greatness of America lies in its people. Its resilient, ever optimistic people, people with a can-do spirit. The terrorists destroyed two buildings, and yes, they massacred unbelievable amounts of people. People whose lives will never be the same. But they did not destroy the spirit of any of them. All 3,000 people who died that day died as heroes. They did not die in vain. The terrorists died as cowards. As I look back, ten years later, the truth rings out: The Heroes Won.
I am sure we all remember where we were when we first heard the news. I was sitting in my car at the intersection of 79th Street and Metcalf, waiting for the light to turn green. The DJ on the radio reported that a plane had struck one of the World Trade Center buildings in New York. I figured it was just a prop plane, piloted by an inexperienced pilot who did not know what he was doing. The clock in my car said 7:56, so this was approximately 10 minutes after the first plane struck. A few minutes later, someone in the office reported that a second plane had struck the second tower. I knew at that point that it was intentional.
My job at the time entailed traveling downtown for Tuesday morning investment meetings, so I headed down shortly, and on my way in, the news on the radio reported that a plane crashed into the Pentagon in Washington DC. This was unreal. Finally, I don't when, but I heard about the plane crash in Pennsylvania. This was becoming a blur. Shortly after arriving in downtown Kansas City, I saw the headline flash across a Bloomberg screen that the FAA grounded all flights and ordered all planes to land immediately. The investment meeting was canceled and I was told to get back to my office and call clients.
Those were the oddest calls I ever made. There was no script, and I barely had a clue as to what to say. My bosses barely had a clue. No one had ever seen anything like this before. I spent my day reassuring customers that the financial system was still sound and that their money was safe. Paled in comparison to the tragedy unfolding. First call I made, the client told me that we were at war. With whom I asked. Whoever attacked us! I remember a call I made to a client around 1:30pm. I went through my pitch, then he said to me, "Chuck I have no idea what you're talking about." He had not heard the news yet. The story I told had to sound so unbelievable that he probably thought I had lost my mind. How could the events of that day possibly be real?
In the end, it was a day that showed the best and worst of humanity. We saw the worst that day. What emerged later was the best. Watching a special the other night that spotlighted two heroes, among many that day, Frank DiMartini and Pablo Ortiz. They rescued people from the 88th, 89th and 90th floors of the North Tower and got them out before the building collapsed, yet they died when the building collapsed. More than 300 New York firefighters died as they attempted to rescue people caught in the buildings. In all, approximately 3,000 people died that day as a result of the terrorist attacks. Yet, as we reflect on that day, I choose to remember the heroes, the people who died while saving others. The firefighters and police officers who were doing their duty when it all caved in on them.
For once, on that day and the several days that followed, we were all Americans. Just Americans. In fact, the whole civilized world became Americans that day. Ultimately we learned that America isn't about monuments or buildings. It is about freedom. And we learned that freedom is not free. Sometimes we pay a dear price for our freedom. But I love that America is about an idea. That the spirit of the people can be bent, but not broken. That the greatness of America lies in its people. Its resilient, ever optimistic people, people with a can-do spirit. The terrorists destroyed two buildings, and yes, they massacred unbelievable amounts of people. People whose lives will never be the same. But they did not destroy the spirit of any of them. All 3,000 people who died that day died as heroes. They did not die in vain. The terrorists died as cowards. As I look back, ten years later, the truth rings out: The Heroes Won.
Saturday, May 21, 2011
It's The End of the World As We Know It (And I Feel Fine)...
"You must be ready because the Son of Man will come at an hour when you do not expect him." Luke 12:40
These words of Jesus noted above in the Gospel of Luke have drawn attention lately thanks to the musings of Harold Camping, a founder of Family Radio, a non-commercial Christian broadcasting network. He has prophecied (is that a word?) that the Second Coming of Jesus will occur today, May 21. Thanks largely to the verse above, I do not believe him. And his prediction has come under scrutnity, been the butt of jokes, and even inspired such things as "post-Rapture looting parties."
But what if one takes a different approach? If the Second Coming were to occur today, would you be ready? What would you change about your life, if anything? Use this as an opportunity to do good in the world and serve mankind. Take time to laugh more (I could certainly use my own advice here!). Enjoy life more! Create a "bucket list" and go do it. Once again, I need to follow my own advice. Now to go make that bucket list...
Sunday, April 24, 2011
Haunting Words
"At the sixth hour darkness came over the whole land until the ninth hour. And at the ninth hour Jesus cried out in a loud voice, "Eloi, Eloi, lama sabachthani?" - which means, "My God, my God, why have you forsaken me?" Mark 15:33-35
I have just celebrated Easter service as I write this. The music this morning may have been the best I've ever heard at COR (or any other church for that matter). Very uplifting and inspiring. The sermon was really good. Yet the verse written above has haunted me all week. I have been haunted because I have been feeling the words of Jesus on the cross this week. The pastor of my church, Adam Hamilton, preached a sermon on these very words several weeks ago, noting with amazement that even Jesus, the Son of God, felt abandoned by God in his hour of greatest need. I write this today not to impart some great wisdom, but to seek answers.
I know why I am feeling forsaken by God. This week, I will celebrate my 20th wedding anniversary - alone. The great joy of such an occasion should not be overwhelmed with sadness. There are other things going on in my life that also lead to my feelings. The apostle Paul, writing in 1 Thessolonians reminded me that I should give thanks in all situations because this is God's will for me in Christ Jesus (1 Thess. 5:18). Yet I cannot help but feel differently. On top of that, Mother's Day is right around the corner. Oh joy. Easily the emptiest day of the year in our house. A day that only serves to remind my two sons how unfair life has been to them. Meanwhile, I read Genesis 2:18 (It is not good for the man to be alone. I will make a helper suitable for him, said God) and I wonder "where is God and where is my suitable helper?"
Do I worship a God that abandons His followers at their hour of greatest need? Jesus himself felt abandoned by God while on the cross! I find myself feeling that way now as I approach a very difficult time of the year. I have prayed with more intensity than ever these past few months, and I can see that some prayers have been answered, others have not. I have lashed out in anger at God, out of frustration. I want some reassurance that He is there, and that He is listening. I want some reassurance that He is hearing my prayers. Right now, it does not feel that way. I know my faith has been bent, contorted and twisted in all kinds of ways these past several years. That faith is being severely tested again. When do I come through this storm?
The words of Jesus on the cross come from Psalm 22:1. David writes this as an ultimate praise of a Lord who delivers him from his enemies and predators. At this point, when do I come out the other side, having been delivered from my demons and frustrations?
Tuesday, November 2, 2010
Don't Count Obama Out Yet
As I write this on election night, the major news services have already projected that the Republicans will win control of the House of Representatives and make gains in the Senate. Based on opinion polls leading up to the election, neither of these developments is a surprise. But these results, especially in the House where Republicans put extra effort, send a message to the current administration that the way things are done needs to change.
The Republicans made it perfectly clear that this election was a referendum on the presidency of Barack Obama. No doubt this message resonated with the voters who obviously agreed with the Republicans. President Obama must change his approach to save his presidency, but can he or will he do it? It is clear in hindsight that President Obama misinterpreted his mandate in 2008. The voters wanted a President who would fix the economy. Mr. Obama interpreted his election as a mandate to be a transformational president. The people did not want healthcare or cap-and-trade, or the heavy hand of regulation. The people wanted jobs and a greater degree of job security.
Can Mr. Obama save his presidency? Sure he can. What needs to change? Everything. For a man who campaigned so brilliantly in 2008, he has been the most tone deaf president I have ever seen. When he was inaugurated, the president's top three priorities should have read like this: 1. the economy, 2. the economy, 3. the economy. He signed a poorly conceived stimulus bill into law then promptly forgot about the economy. As a result, the economy has made a weak recovery, with just 2% GDP growth in the third quarter (it was 1.6% in the 2nd qtr), and 15 consecutive months of unemployment at 9.5% or higher. Given the depths of the 2007-2009 recession, producing 3 or 4 consecutive quarters of 6% plus GDP growth should be a lay-up. He pushed healthcare when the people wanted jobs. He pushed cap-and-trade when the people wanted jobs. The people clearly saw both these legislative priorities as job killers.
There are historical precedents here, Ronald Reagan and Bill Clinton. Reagan dealt with a large Democratic majority in the house his entire 8 years in office, but in 1982 his Republicans lost 26 seats in the House. Unemployment was at 10.8% on election day in 1982. Yet, he stuck to his agenda of limited government growth, dereguation and unleashing the private sector. It worked. In 1983, the economy recovered by creating 4 million new jobs (3.8 million private sector jobs), and grew at a 7% rate. Unemployment dropped to 8.3% by the end of 1983. In fact, the economy sustained 4 consecutive quarters of 8% plus GDP growth over the final 3 quarters of 1983 and the first quarter of 1984. So far in the current recovery, the economy has produced only 1 quarter of 4% plus GDP growth (4.9% in 4Q09), a sorry economic performance given the depth of the recent recession.
Bill Clinton encountered a different set of circumstances. On election day 1994, the economy was actually posting healthy results. The economy grew at a very healthy 4.2% in 1994 and the unemployment rate was 5.4% on election day. So what went wrong with Mr. Clinton? His ambitious agenda, largely based on his desire to pass a healthcare bill. People were clearly not on board with the bill. He appointed his wife who was not confirmed by the Senate, who held meetings in secret, hired a panel of experts who were never named, and producted a bill that would greatly expand the role of government in healthcare. In addition, Mr. Clinton always had a character deficit with the American people that sapped his political capital. After the election, Mr. Clinton embraced a more limited government in conjunction with the Republicans in Congress, and the economy enjoyed another 5 years of uninterupted prosperity.
The lesson for Mr. Obama is simple. Embrace a more limited government and unleash the private sector. His rhetoric towards various portions of the private sector has been downright hostile. There is a good reason he has been labeled as an anti-business president by former General Electric CEO Jack Welch. Jobs are not being created because business has been saddled with higher costs and a higher regulatory burden. Companies are hesitant to invest because they do not know how costly these new burdens will be. The president has created a world of uncertainty. He has taken steps to make investment money available, but has also created an environment that is hostile to risk taking and investment that will ultimately be needed to grow the economy.
In the end, it all rests on the economy. If the economy makes a stronger recovery and creates jobs, Mr. Obama will be re-elected in 2012. Simple as that. He still enjoys the personal approval of over 50% of the electorate, although his job performance barely rates 40%. This says people still like the man and want him to succeed. Mr. Reagan and Mr. Clinton both enjoyed high personal approval ratings, and each easily won re-election after horrendous mid-term elections. Don't count Mr. Obama out yet. But, the current path he's on will guarantee Mr. Obama an election defeat in 2012.
The Republicans made it perfectly clear that this election was a referendum on the presidency of Barack Obama. No doubt this message resonated with the voters who obviously agreed with the Republicans. President Obama must change his approach to save his presidency, but can he or will he do it? It is clear in hindsight that President Obama misinterpreted his mandate in 2008. The voters wanted a President who would fix the economy. Mr. Obama interpreted his election as a mandate to be a transformational president. The people did not want healthcare or cap-and-trade, or the heavy hand of regulation. The people wanted jobs and a greater degree of job security.
Can Mr. Obama save his presidency? Sure he can. What needs to change? Everything. For a man who campaigned so brilliantly in 2008, he has been the most tone deaf president I have ever seen. When he was inaugurated, the president's top three priorities should have read like this: 1. the economy, 2. the economy, 3. the economy. He signed a poorly conceived stimulus bill into law then promptly forgot about the economy. As a result, the economy has made a weak recovery, with just 2% GDP growth in the third quarter (it was 1.6% in the 2nd qtr), and 15 consecutive months of unemployment at 9.5% or higher. Given the depths of the 2007-2009 recession, producing 3 or 4 consecutive quarters of 6% plus GDP growth should be a lay-up. He pushed healthcare when the people wanted jobs. He pushed cap-and-trade when the people wanted jobs. The people clearly saw both these legislative priorities as job killers.
There are historical precedents here, Ronald Reagan and Bill Clinton. Reagan dealt with a large Democratic majority in the house his entire 8 years in office, but in 1982 his Republicans lost 26 seats in the House. Unemployment was at 10.8% on election day in 1982. Yet, he stuck to his agenda of limited government growth, dereguation and unleashing the private sector. It worked. In 1983, the economy recovered by creating 4 million new jobs (3.8 million private sector jobs), and grew at a 7% rate. Unemployment dropped to 8.3% by the end of 1983. In fact, the economy sustained 4 consecutive quarters of 8% plus GDP growth over the final 3 quarters of 1983 and the first quarter of 1984. So far in the current recovery, the economy has produced only 1 quarter of 4% plus GDP growth (4.9% in 4Q09), a sorry economic performance given the depth of the recent recession.
Bill Clinton encountered a different set of circumstances. On election day 1994, the economy was actually posting healthy results. The economy grew at a very healthy 4.2% in 1994 and the unemployment rate was 5.4% on election day. So what went wrong with Mr. Clinton? His ambitious agenda, largely based on his desire to pass a healthcare bill. People were clearly not on board with the bill. He appointed his wife who was not confirmed by the Senate, who held meetings in secret, hired a panel of experts who were never named, and producted a bill that would greatly expand the role of government in healthcare. In addition, Mr. Clinton always had a character deficit with the American people that sapped his political capital. After the election, Mr. Clinton embraced a more limited government in conjunction with the Republicans in Congress, and the economy enjoyed another 5 years of uninterupted prosperity.
The lesson for Mr. Obama is simple. Embrace a more limited government and unleash the private sector. His rhetoric towards various portions of the private sector has been downright hostile. There is a good reason he has been labeled as an anti-business president by former General Electric CEO Jack Welch. Jobs are not being created because business has been saddled with higher costs and a higher regulatory burden. Companies are hesitant to invest because they do not know how costly these new burdens will be. The president has created a world of uncertainty. He has taken steps to make investment money available, but has also created an environment that is hostile to risk taking and investment that will ultimately be needed to grow the economy.
In the end, it all rests on the economy. If the economy makes a stronger recovery and creates jobs, Mr. Obama will be re-elected in 2012. Simple as that. He still enjoys the personal approval of over 50% of the electorate, although his job performance barely rates 40%. This says people still like the man and want him to succeed. Mr. Reagan and Mr. Clinton both enjoyed high personal approval ratings, and each easily won re-election after horrendous mid-term elections. Don't count Mr. Obama out yet. But, the current path he's on will guarantee Mr. Obama an election defeat in 2012.
Friday, September 24, 2010
With Charity For All
I read Arianna Huffington's latest column today with a great deal of interest, perhaps for reasons other than what she actually wrote. The column was well written and inspired thoughts of my own. Overall, I agree with what she wrote, and I hope the actions of Mark Zuckerberg will inspire others to act as well. The column can be found at the following link: http://www.huffingtonpost.com/arianna-huffington/troubled-times-when-mark-_b_737159.html.
In this particular case, I do not think Mr. Zuckerberg's gift will solve the problems within the Newark school system. Mr. Zuckerberg's $100 million gift is certainly generous. The main question that popped into my mind as I read this dealt with the "why" behind the Newark school system's low graduation rate. I do not question the motivation behind Mr. Zuckerberg's generous gift. I would imagine that the low graduation rate has more to do with unmotivated students and uninvolved parents than the spending per student by the government. The state currently spends $22,000 per student per year, according to the article. Yet Newark's graduation rate is only around 50 percent. Approximately 1 in 5 Newark graduates go to a 4-year college, and 85 percent of the students that go to a community college need remedial help in math and English. However, my perception may be wrong on this, but the student's motivation and parental involvement are the first needs to be addressed.
The gift also made me wonder how governments and/or private citizens can meet the needs of this country's neediest citizens and institutions. With the country in a mood to cut government spending, private citizens need to step up. Just because a government entity cuts spending, the demand for the services cut does not disappear. Instead of saying that at some point, a rich person has "made enough money", why not issue a call for those so richly blessed financially to step up more? Let those blessed with the gift of making money continue to make more money. However, those with that ability should use their wealth to help those in the most dire need, and not just simply to pad an already extravagent lifestyle. To whom much has been given, much is expected. Seems this is consistent with Warren Buffet's and Bill Gates's call for the wealthiest citizens to give more of their financial wealth to charity. An added benefit is that more money would go directly to those in need, and the money would likely be spent more efficiently.
Americans have always been generous with their time and money, one of the facets that make this country so unique. Parents need to remain involved in their children's lives to every extent possible. Of course, limitations to this include long hours at work, especially when it involves out of town travel. However, millions of parents do remain involved, and these are the children that usually succeed in school and go on to lead successful, happy, prosperous lives of their own.
When the Mark Zuckerberg's of the world step up and give more, let's not be so cynical of the motives. Sure, he has his motives. Actions like Mr. Zuckerberg's gift used to inspire others to act in a similar fashion. Today's leaders can show true leadership by exhorting others in a similar position to act in a similar manner. Instead, these days, such large gifts inspire cynicism, and we villify someone else's generosity. But, as Ms. Huffington stated in her column, it is more about the gift than the motivation.
In this particular case, I do not think Mr. Zuckerberg's gift will solve the problems within the Newark school system. Mr. Zuckerberg's $100 million gift is certainly generous. The main question that popped into my mind as I read this dealt with the "why" behind the Newark school system's low graduation rate. I do not question the motivation behind Mr. Zuckerberg's generous gift. I would imagine that the low graduation rate has more to do with unmotivated students and uninvolved parents than the spending per student by the government. The state currently spends $22,000 per student per year, according to the article. Yet Newark's graduation rate is only around 50 percent. Approximately 1 in 5 Newark graduates go to a 4-year college, and 85 percent of the students that go to a community college need remedial help in math and English. However, my perception may be wrong on this, but the student's motivation and parental involvement are the first needs to be addressed.
The gift also made me wonder how governments and/or private citizens can meet the needs of this country's neediest citizens and institutions. With the country in a mood to cut government spending, private citizens need to step up. Just because a government entity cuts spending, the demand for the services cut does not disappear. Instead of saying that at some point, a rich person has "made enough money", why not issue a call for those so richly blessed financially to step up more? Let those blessed with the gift of making money continue to make more money. However, those with that ability should use their wealth to help those in the most dire need, and not just simply to pad an already extravagent lifestyle. To whom much has been given, much is expected. Seems this is consistent with Warren Buffet's and Bill Gates's call for the wealthiest citizens to give more of their financial wealth to charity. An added benefit is that more money would go directly to those in need, and the money would likely be spent more efficiently.
Americans have always been generous with their time and money, one of the facets that make this country so unique. Parents need to remain involved in their children's lives to every extent possible. Of course, limitations to this include long hours at work, especially when it involves out of town travel. However, millions of parents do remain involved, and these are the children that usually succeed in school and go on to lead successful, happy, prosperous lives of their own.
When the Mark Zuckerberg's of the world step up and give more, let's not be so cynical of the motives. Sure, he has his motives. Actions like Mr. Zuckerberg's gift used to inspire others to act in a similar fashion. Today's leaders can show true leadership by exhorting others in a similar position to act in a similar manner. Instead, these days, such large gifts inspire cynicism, and we villify someone else's generosity. But, as Ms. Huffington stated in her column, it is more about the gift than the motivation.
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