Status Quo

In the middle of the National Election hangover, the conservative pundits are trying to figure out what happened on Election Day.  With high unemployment, trillions of dollars in deficit and a gridlock in Congress, I expected changes that would put this country back on track.  Some pundits say Romney failed to connect with voters.  Others say that the voter demographics changed and the Republicans failed to respond.  A few say the Democratic grassroots campaign was more effective than the Republicans’ campaign.  There are those who say the negative ad campaign undertaken by the President and Romney’s failure to respond hurt Romney.  I’m not a political consultant, but I noticed two things that worked against Romney and the Republicans, in general.

First thing at work against Romney was the voter’s love of the status quo.  The second is hot-button/low-information voters.  I’ll leave the second for a future post, but now I want to talk about voters and their love of status quo.  If it isn’t love, then it is comfort in the familiar or fear of change that propagates the status quo.

According to a Gallup® poll released in August, the approval rating of Congress reached a high of 24% in May 2011 and remained below 20%.  In August, when the time the poll was released, Congress’ approval rating was a mere 10%.  Surely, with a rating that bad, one would think that voters would have “voted the bums out” in hopes of something better.

But that didn’t happen.  Thirty three Senate seats were on the ballot this year.  Ten of the 33 incumbents retired and one incumbent lost in the primaries.  Of the 22 incumbents on the ballot, 21 were re-elected.  In the House, all 435 seats were up for re-election.  Due to redistricting or retirements, 412 incumbents were up for re-election. Thirteen incumbents were defeated in the primaries and 26 were defeated in the general election, meaning 373 Congressmen were re-elected to Congress. 

Einstein said that the definition of insanity is doing the same thing over and over again and expecting different results.  With an approval rating of 10%, we sent more than 90% of Congress back to Washington.  What do we expect different when we re-elect the same group?  Doesn’t that qualify as insane?  

The status quo is not a good one, the country is not prospering.  Let’s try something different.  Be aware of what’s going on in Washington.  Go to http://www.house.gov/ or http://www.senate.gov/ to find out about pending legislation and hearings.  Contact your Congressman or Senators and let them know what you think and how you want them to vote.  We put them in office, let’s make them work for us.

Black Friday

President Lincoln issued a proclamation declaring November 26, 1863, “as a day of Thanksgiving and Praise to our beneficent Father who dwelleth in the Heavens.”  An annual holiday since then, Thanksgiving has traditionally been a day for family and friends to gather and give thanks for material and spiritual blessings.

In the last few years, however, Thanksgiving has been overshadowed by the rampant consumerism of Black Friday.  The beginning of the Christmas shopping season, the day after Thanksgiving is one of the busiest shopping days of the year.  Retailers advertise special sale prices and other incentives to bring shoppers into their stores.  Shoppers, in an effort to find the bargain price or the hard-to-find-gift, flood the stores.

Long lines of anxious shoppers form outside the stores days in advance, waiting for the retailers to open their doors on Black Friday.  Stories abound of violent shoppers assaulting and pepper-spraying other shoppers or injuring store workers and shoppers in their haste to get at the bargains.  In 2008, a Walmart employee was trampled to death and shoppers refused to stop their shopping and allow employees and rescue workers to render aid.  Pretty pathetic behavior considering Christmas is supposed to be season of giving.

This year, retailers such as Target and Walmart opened on Thanksgiving night.  Not a surprise, considering retailers are in the business of meeting shoppers’ demands.  However, news stories about shoppers lining up on the Wednesday before Thanksgiving caught my attention.

According to the news, people began lining up on Wednesday at various Best Buy locations in order to be the first to take advantage of the sale prices.  Are the sales prices really that great and are the items advertised the things we really want?  Is it anything we need?  Have we become so materialistic that we will skip time to share thanks with family and friends just to save a few dollars?  When did we lose sight of the purpose and importance of Thanksgiving and Christmas?  Is your time really worth $300 off a 50-inch television?  Most of the people in line appeared to be well-dressed, over-30 adults.  After reviewing prices of many of the Black Friday deals, the Black Friday “deals” were the prices offered in September. 

I understand that folks want to find a bargain.  As consumers, we need to make smart purchases, not fall into the media frenzy that pulls shoppers into the store with promises of ultra-low prices, but often result in impulse buys.  So, think through these questions before Black Friday 2013:  Do you need it, can you afford it, and with a bit more planning, could you have gotten it at a better price with some planning?  More importantly, we should also remember the meaning of Christmas in the midst of the shopping frenzy.  Christ was betrayed for the price of 30 pieces of silver.  Let’s not betray him again for a discounted television and BOGO (buy-one-get-one) DVDs.

47%

I recently overheard a couple of 20-somethings on the patio at an open-air mall talk about how they will vote in the upcoming election.  The insipid arguments they made to justify their choice made me cringe.  They talked about universal health care as a “good idea” and how “tax cuts for the rich” would widen the gap between the “haves” and the “have-nots.”  They also talked about the Republican plan to “wipe out Medicare and Social Security “and how electing Romney would be “bad for the economy.”

As I listened to their conversation, the main theme was they want the government to do even more for people. The more I thought about what I heard, the more I thought about Romney’s recent “47%” commentary.

During a private fundraiser held in May, Romney said “There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that's an entitlement. And the government should give it to them. And they will vote for this president no matter what.”

After the videotape became public, Romney stood by his comments while admitting that his thoughts were “not elegantly” stated.  I agree it may be inelegant, but I think his point is fair.

An April 2012 poll conducted by the Pew Research Center (http://www.pewsocialtrends.org/2012/09/20/where-the-public-stands-on-government-assistance-taxes-and-the-presidential-candidates/) indicates that while most Americans (71%) believe that poor people have become too dependent on government programs, a majority (59%) believe  it is the responsibility of the government to take care of people who can’t take care of themselves. Fifty nine percent of Americans also believe the government should guarantee every citizen enough to eat and a place to sleep.

Frankly, that disturbs me.  The Preamble outlines the purpose of the U. S. Constitution. It says “promote the general welfare,” but nothing about providing food and shelter.  As a matter of fact, nowhere in the U. S. Constitution does it say that the federal government will provide food, shelter, or any of the other basic necessities to the American public.  And it says that for a good reason; it is not the responsibility of the U. S. government to provide food, clothing, or shelter to the American citizens.  It is the responsibility of the American citizens to secure such things for themselves and their families.

I want everyone to have enough food and proper shelter.  I sure don’t want people to starve or live on the streets.  But with a national debt exceeding $16,000,000,000,000 and likely to go higher, the government cannot afford to assume responsibility for the personal welfare of each and every citizen.  The risk of an economic meltdown, such as the recent European debt crisis, grows as the debt grows.  So, whose responsibility is it to feed and shelter U.S. citizens?  I work so I can provide for my family.  Isn't that a reasonable expectation?  The U.S. Constitution grants us certain rights and protections, but it doesn't promise food and shelter.    

What happened to the American spirit that drives us to pick ourselves up by our own bootstraps and make a life for ourselves and our families?  The government should not assume responsibility, especially for those who choose not take responsibility for their own welfare.  The government should eliminate barriers to fulfilling the American dream, yet even those are not guaranteed.  In the same speech, Romney said, “My job is not to worry about those people.  I'll never convince them that they should take personal responsibility and care for their lives."  He’s absolutely right.  He won’t convince them.  This November, we have a choice between an incumbent with a track record of federal government expansion and entitlements that are likely to drive us over the fiscal cliff or a candidate that has plans for reducing the size of and dependence on the federal government.  If we don’t make a change, we may all be on the street in four years.

Get Out of the Way

A recent Gallup® poll found that Americans believe the top three most important problems facing the country are unemployment, the economy, and the federal debt.  I agree.  Unemployment has remained above 8% for 42 consecutive months; the federal debt is more than $16 trillion.  As Election Day rapidly approaches, the candidates are spending a considerable amount of time talking about how to fix the economy and stimulate job growth.

I know that a President cannot fix the economy or create jobs.  But a President, along with Congress, can create and implement policies that promote economic growth, which in turn, stimulate employment.  They can also create policies and regulations that hinder growth.

For an indicator of what U.S businesses think of the candidates and their economic policies, I went to the U.S Chamber of Commerce website (http://www.uschamber.com/).  There I found a link to an article titled, “Small Business Owners: Uncertainty Holding Back Hiring”.  What I read is bothersome, to say the least.

As I’ve written before, small businesses are the backbone of our economy and a good gauge of our economic health.  Most small business owners believe the expiration of 2001 and 2003 tax cuts will significantly impact business growth and 58% have no plans to hire.  Of the small business owners surveyed, 72% believe the new health care laws will make it more difficult to hire new employees. Nine out of ten small business owners are concerned about the “fiscal cliff”. The fiscal cliff is the automatic tax increases and spending cuts that take effect at the start of 2013 if Congress does not produce deficit reduction legislation.  If Congress fails to act, the cuts and tax increase are expected to cause a recession relapse (http://www.nytimes.com/2012/05/23/business/congressional-budget-office-warns-of-a-fiscal-cliff.html).  So, rather than hiring, employers are taking a wait-and-see approach.   

On the U.S Chamber of Commerce (USCoC) website, I also found the written testimony by the USCoC Vice President for Environment, Technology, and Regulatory Affairs, William L. Kovacs, to the U.S. House of Representatives Committee on the Judiciary (http://www.uschamber.com/sites/default/files/091812tesimonyRegulationNation.pdf).  In his testimony, Mr. Kovacs states that the scope and pace of federal rulemaking has drastically increased in recent years and the increases impact the cost of doing business.  Mr. Kovacs cites a Small Business Administration study that found the total cost to comply with federal regulations was $1.75 trillion in 2008.  That’s a significant cost.  How many federal regulations have been added since 2008?

The Code of Federal Regulations (CFR) is the collection of rules and regulations passed by the federal agencies of the executive branch of the U.S. government.  In 2008, the CFR was almost 158, 000 pages.  Since then, the executive branch, headed by the President, expanded the CFR by more than 11,000 pages for total of over 169,000 pages of rules and regulations!

Mr. Kovacs points out that many regulations are beneficial and necessary.  He also points out that many regulations are imposed without regard or understanding of the costs of implementation or impacts to employment.  In his testimony, he cites specific examples of impacts on business resulting from federal regulations.

I’ve written before that small business employs nearly 50% of U.S. workers (http://active-thinker.blogspot.com/2012/07/you-didnt-build-that.html).  Small businesses are an extremely important part of the U.S. economy.  When asked what they want from Washington, 78% of small business owners said they want Washington to “get out of the way.”  Maybe the best way to grow the economy and create jobs is to elect a president and congressmen who will get out of the way of economic growth. Otherwise, we really are headed for the cliff.

Affordable Health Care?

A few days ago, a friend related, after a visit to the doctor, that a sign in the doctor’s waiting room stated that the doctor would no longer accept Medicare patients.  Another friend mentioned seeing a similar sign in his doctor’s office.  I wondered why these doctors would refuse Medicare patients, so I did some digging.

Back in February, Congress voted to extend payroll tax cuts. That legislation also postponed a 27.4% cut in Medicare physician payment rates, freezing current payment rates through December 31, 2012.  In July, the Centers for Medicare and Medicaid Services released its proposed Medicare physician fee schedule, listing the various fees and allowed charges for which physicians will be reimbursed by Medicare.  The cuts contained in the proposed schedule are approximately 27%. 

A quick survey of the web indicates that most medical insurance coverage reimburses doctors at a higher rate than Medicare. By agreeing to accept Medicare patients, physicians receive a fixed payment for services, regardless of the charges.  With large payments cuts looming in the future, doctors are trying to figure out how to keep their practices from going under.

In order to stay in business, the physician must ensure that their costs of services are less than the amount paid by the patients.  To reduce costs, the physician may reduce staff, increase the number of appointments, and/or eliminate some services.

Dr. Sowell writes in his book, Basic Economics, that price controls lead to a deterioration of quality in good or services.  If you’ve been frustrated when scheduling an appointment, having been told the first available appointment is weeks or months in the future; or frustrated by the long wait time once you arrive; or disappointed that the time actually spent with the doctor is mere minutes, you would likely say the quality of service is diminished.  Another option physicians have to decrease costs is to limit the number of Medicare patients they see. 

Doctors are choosing to drop out of Medicare.  A recent survey by the Texas Medical Association showed that number of physicians accepting Medicare dropped from 78% in 2000 to 58% in 2012.  Many believe that the low reimbursement payments and the bureaucratic hassle do not provide enough incentive to provide care for Medicare patients.  So to reduce costs and remain in business, doctors are no longer accepting Medicare patients, the very ones who, quite often, need the most health care.

 If a medical practice can’t remain financially viable, then, like any other business, it must reduce costs or close its doors.  It’s that simple. The next time you hear a politician or candidate speak about “affordable health care”, find out how they plan to make it affordable.  Lowering the costs of health care, such as lowering costs of regulation compliance and administrative costs, makes it affordable.  Simply lowering the price of health care doesn’t make it affordable, it makes it scarce. 

The Policy of Good Intentions

During a newscast concerning the impacts of this summer’s drought which is decimating corn crops, the reporter stated that the President planned to direct the military to buy extra beef to alleviate the burden on farmers.  Corn is a major ingredient in livestock’s diet.  The reporter also discussed how this action, while it may help beef farmers, does nothing to help dairy farmers.  I am sympathetic to the farmers’ plight.  Farming is a tough job with little influence over the weather, disease, or pests.  But what if the military didn’t buy extra beef?  Would the farmers flood the market when they take their cattle to market early, thereby lowering beef prices?  Sure, the farmers would take a loss, but wouldn’t lower prices be good for the rest of the economy? 

 

The newscast quickly moved on to a related story that really surprised me.  The report stated that many lawmakers were requesting the Environmental Protection Agency (EPA) suspend its mandate concerning ethanol production.  It turns out that approximately 40% of this year’s corn crop is mandated to become ethanol.  Lawmakers wanted more of this year’s crop, limited due to the drought, to be available for livestock feed.  Why is the EPA controlling the distribution of the US corn crop?  I had to find out, so I did some research.

Here’s what I found. In 2007, Congress passed the Energy Independence and Security Act (Public Law 110-140), which amends certain provisions of the Clean Air Act.  The 1990 version of the Clean Air Act required the EPA to establish a national renewable fuel program. The purpose, according to the EPA website, is to significantly increase the volume of renewable fuel that is blended into fuels.

By law, the corn-based ethanol production quota for 2012 is 13.2 billion gallons.  According to a Cornell University study (http://www.news.cornell.edu/releases/Aug01/corn-basedethanol.hrs.html), it takes 21.6 pounds of corn to create 1 gallon of ethanol. That’s 5.1 billion bushels of corn required to meet the quota. The study also states that it takes 70% more energy to create ethanol than is available in ethanol. So why are we using it in gasoline if it’s so inefficient?

Supporters say that using ethanol as a fuel reduces dependence on foreign oil and reduces greenhouse gases (i.e., carbon dioxide).  Does it really? Ethanol has only 67% of the energy contained in gasoline, so a gallon of 90% gasoline-10% ethanol (designated as E10) has 96% of the energy of a gallon of gasoline.  I drive roughly 6,500 miles per year to work and back.  Assuming my vehicle gets 20 miles per gallon, that’s 325 gallons of gasoline.  With E10, my vehicle will only get 19.2 miles per gallon.  That means 338.5 gallons of E10 to travel 6,500 miles.  So I use an extra 12.2 gallons of gasoline per year to travel the same distance using E10.  E10 isn’t as efficient as gasoline and at $4 a gallon that is $48.80 more out of my pocket.

And, E10 isn’t better for the environment.  Gasoline produces 2.44 kilograms of carbon dioxide per liter burned and ethanol produces 1.94 kilograms of carbon dioxide per liter burned.  However, because I have to burn more E10 than gasoline to drive the same number of miles, the E10 produces more carbon dioxide than the gasoline.  A study by Stanford University, indicate that increased usage of ethanol as a fuel increases smog.

Based on the math, the reasons for using ethanol don’t add up. Converting 40% of the corn crop into ethanol, especially when the corn crop is predicted by the US  Department of Agriculture to be the smallest in 17 years, will drive up corn prices.  The price will be passed along to the farmers and to the consumers.  This, in turn, will drive up food prices.  Not only is corn used to feed livestock, it is also an ingredient in many of our processed foods and beverages.  Given that we already have a weak economy, is it really smart to do this?

Reducing dependence on foreign oil and limiting air pollution are important and necessary.  But, good intentions are not a viable replacement for sound policy.  The country needs an energy policy that makes sense and doesn’t cripple the economy.  The impacts of policies should be analyzed beyond the immediate consequences.  The impacts of the drought will raise the cost of putting food on your table in many ways, but imposing ethanol use versus free market demand shouldn’t be one of them.  Contact your senator (http://www.senate.gov/) or congressmen (http://house.gov/) and let them know what you think about the current policy.  

Legacy of the First Man

One of my childhood heroes died recently. Neil Armstrong, 82, was commander of the Apollo 11 mission, the first lunar landing. As I got older and learned more about the man, I found much to admire about him. He was an Eagle Scout, an engineer, a Korean War veteran, and a test pilot. I was impressed that after leaving NASA, he didn’t cash in on his fame; he became a professor of aerospace engineering, using his experience and expertise to teach future engineers.

By Presidential proclamation, the US flag flew at half-mast in honor of Armstrong.  Many have issued statements concerning Armstrong’s passing, praising him and his accomplishments. NASA Administrator Charles Bolden, stated that Armstrong will be “remembered for taking humankind’s first small step on a world beyond our own.”  My heart goes out to the Armstrong family and I offer my condolences for the loss of a father, a grandfather, and husband.  But I’m not writing to praise Armstrong or his accomplishments; I’m writing about his legacy.

As a child, Neil Armstrong was my hero because he was an astronaut and the first person to set foot on the moon.  He and the 11 other astronauts who walked on the moon inspired me. I wanted to be an astronaut and a pilot because I saw what they accomplished.  The US Space Program’s accomplishments sparked my interest in science and math.  I became an engineer and a part of the US Space Program.

The US Human Space Program has done some amazing things since December of 1972, when the final Apollo lunar mission left the Moon’s surface.  A technological marvel, the Space Shuttle flew 133 successful missions and traveled almost 550 million miles in 30 years.  We’ve launched two space stations. The first one, Skylab, launched in 1973, played host to three crews, with the third crew living on orbit for 84 days, a record for US spaceflight at the time. 

The second, the International Space Station (ISS), has been continuously crewed since March 2, 2000, for over 4300 days.  The ISS vehicle is 239 feet long by 356 feet wide by 66 feet high. The habitable volume is equivalent to a five bedroom house. The eight solar array wings, each 115 feet long by 39 feet wide, generate enough electricity to power 120 homes.  In addition to being an incredible engineering feat, it is proof that we can work in space and we can cooperate with international partners on a grand scale.

Yes, we’ve done some grand things, but the Shuttle is retired and the US has no human launch capability.  Since December 1972, humans have not travelled farther than 380 miles above the Earth.  For the last 40 years, we’ve been making left-hand turns around the Earth.  NASA has no concrete plans to go back to the moon and NASA says it is “… designing and building the capabilities to send humans to explore the solar system, working toward a goal of landing humans on Mars.” 

However, the reality is that NASA’s plans for a new spacecraft and a new launch vehicle are depressing.  According to NASA (http://www.nasa.gov/pdf/664158main_sls_fs_master.pdf) the new spacecraft and launch vehicle would make an unmanned flight in 2017. A second, manned mission would occur in 2021 and proceed with a launch rate of one mission per year thereafter.  There are plans for a second launch vehicle with heavier lift capability, but the plans don’t include taking humans anywhere.

NASA is the agency that implements the US Human Space Policy.  As with all federal government agencies, it exists to serve the American public. Tell NASA, your Congressman, and your Senator what you want NASA to do and where you think we should explore.  It would be a crime for Armstrong’s legacy to end in left-hand turns around the Earth.