Show Us, Missouri
Tomorrow is primary day in Missouri. Though I live in New Jersey, there is one item on the statewide ballot there that has captured my attention. If you live in Missouri, I certainly hope you’ve studied Proposition C and plan to vote for it. Missourians, this is your opportunity to show the rest of the nation that government intrusion on the personal liberties of Americans will not be tolerated.
For the uninitiated: Proposition C is a ballot measure that would, by statute, exempt all Missourians from the oppressive federal mandate to purchase heath insurance or face stiff penalties. By its passage, Missouri would send a message to the folks in Washington that Americans do not want the government subverting personal liberty in order to cover for a mess the federal government created. Although other states have enacted similar measures, those have been passed by legislative action – not by direct vote. With this ballot initiative, the good people of Missouri have the chance to show that it isn’t only legislators who are opposed to the “progressive” ideal that the Nanny State knows what is best for you and your family. It is ordinary Americans who are opposed to an usurpation of the long-established tradition that “those rights not especially enumerated in the Constitution are considered as belonging to a free people…The powers delegated by the proposed Constitution to the federal government are few and defined.” James Madison wrote that phrase in the Federalist Papers, and he meant it to illustrate to a skeptical populace that the federal government would not and could not take away a fundamental freedom simply because it had not been mentioned in the Constitution.
Certainly, decisions about which types of products to purchase are a fundamental right. Should the federal government assume he power to direct the citizenry to purchase a particular product (in this case, medical insurance) then our nation has ceded the a fundamental right. More, the nation will have undermined the very Constitution and the principle on which the nation was founded. If you do not have a fundamental right to decide when, whether and how to purchase any product, then are you truly free to pursue life liberty and happiness?
The Obama administration realizes the fallacy of their central argument during the run-up to passage of Health Care Reform; that essentially, the Commerce Clause grants this power to the federal government. This is why, in their preparations for the defense of the indefensible in court, they have resorted to declaring the mandate is essentially a tax – a power that is reserved by the Constitution for the Congress. If that is the case, then this is the largest tax hike in history and also paves the way for a federal take-over of the entire health care industry. In short, the Obama administration is trying to lay the groundwork that by declaring medical insurance is a de facto tax, then those who provide that product are, in essence, appendages to the federal government. To anyone who has any concern about personal freedom, this is an affront to the very ideals of national identity.
Already, the “progressive” forces are hard at work to discredit Proposition C’s passage. They are making numerous and rather spurious claims that its passage are only due to an intemperate electorate that will be heavily Republican on primary day. They are claiming that it will not hold any import, since a state law cannot supersede a federal mandate (this, by the way is currently winding its way through the court system and is certain to end in a decision by the Supreme Court).
What “progressives” are afraid of is a state law, passed not by legislative fiat but by popular vote, that directly tells an over-reaching federal government it has overstepped its bounds. The reason is, as always, the ideal of progressive theology is that individuals are not intelligent enough to make sound decisions and only an apparatchik of federal authority should have such authority. It was this very notion, in the past called “monarchism,” that both angered and frightened those that created our nation from the dust of their boots. It is the same principle applied by socialists and communists in defining the role government.
So Missouri: pass Propostition C. Do it in overwhelming numbers. And show the rest of us that our nation still exists for the purpose of guaranteeing the ideals of liberty and freedom.
You can read the full Proposition here.
Extending Benefits
I’m certain many of you have been watching the unfolding – seemingly in slow-motion – debate on extending unemployment benefits. Then again, I’m also certain that quite a few of my fellow citizens haven’t given it more thought than which sunscreen to bring to the beach. After all, it is July. This is hardly the time of year when political juices get flowing for most of the electorate.
However, I have two strikes against me when thinking about this: for one, I am an admitted political junkie and two; I am one of those approximately 6,800,000 Americans who has been officially unemployed for longer than 6 months. (That’s a pretty dismal number, but it’s actually rosy when compared to the long-term underemployment number and the actual numbers of Americans who have been unemployed so long that the feds stopped counting them. But I digress.) So, I’ve been watching and listening with keen interest.
Being fiscally conservative (ok, ϋber-conservative) and also unable to secure new, permanent employment, I find myself torn between the two very real issues at play. Those two issues are, to put it simply, how do we reconcile a real need to prevent utter destitution for the millions like myself – and at the same time, do it in a way that doesn’t further bankrupt the country? It seems to most reasonable Americans that the proposal put forth by the Republican caucus – paying for the cost of extending unemployment benefits by using some of the remaining funds from last year’s gargantuan stimulus package – is a good compromise. Why the Democratic caucus is so opposed to the idea has been beyond me. After all, even that most liberal of economists, Paul Krugman has said repeatedly that unemployment benefits are “a highly effective form of stimulus.” Congress loves “earmarks,” or setting aside money for pet projects. In an election year when there are likely upwards of 20 million voters who face the prospect of losing everything on a daily basis, it seems logical that Congress would earmark $38 billion of pre-existing expenditures on a pretty popular program. It would be a win-win, something that almost never happens for a politician: they could claim both the labels of “caring liberal” and “fiscal conservative” with one vote. So why won’t they?
The answer (as with almost everything Congress does these days) lies in the details. The program is part of H.R. 4213, a 412 page megalith that deals with a whole of stuff not at all related to employment or economic stimulus. In fact, the section dealing with the benefit extensions is Title V, subtitle A of the bill. It incorporates all of 9 ½ pages of the bill.
I’m sure you’re asking yourself what could be in the other 402 pages of the bill. Well, here are a few highlights. Feel free to hit the link and read it for yourself:
*Provisions to build sewer systems
*Alternative fuels vehicle credits
*Energy efficient appliance tax credits
*New standards for windows and doors (You can’t make this up, folks)
*Railroad track maintenance credits
*Rum excise tax relief for Puerto Rico and the US Virgin Islands. Hey, even if we’re all broke, at least we should be able to swig cheap rum, get drunk and forget this mess!
The list goes on and on. There are over 500 individual line items in this bill. Not only have our congressmen been busy putting earmarks into this thing, it seems they’ve taken special care to pack it with more pork than a Jimmy Dean breakfast sausage. No wonder they couldn’t find the $38 billion! (By the way, by the Obama administrations own estimates, there should be nearly $340 billion left from last year’s budget buster.)
Oh, and one final note regarding the supposed disincentive of providing unemployment benefits: In ordinary times, I agree that extending unemployment benefits can be a disincentive to finding gainful employment. But these are not ordinary times; not when estimates range from five to eight people for every available job opening. And speaking from personal experience, I can assure you that getting 30% of my prior earnings in an unemployment check doesn’t exactly meet my monthly commitments. Here’s hoping Sen. Jon Kyl and Senatorial candidate Sharron Angle, who have publicly espoused this thought, take a good look around their respective states and come to their senses. They are not properly representing their constituents, their party or the nation as long as they hold that view.
Are the jobs REALLY gone?
There’s been a lot of talk lately, from both the left and the right, that most of the jobs lost in the current recession are lost forever. Robert Reich is a well-respected former Labor Secretary for President Clinton. In his article The Future of American Jobs, he contends that American jobs were permanently lost to a pair of factors: technology and outsourcing. Technology allows companies to increase employee efficiency (more employee productivity at lower labor costs); outsourcing is enabled by technology that enables foreign workers to remain competitive with Americans and can be closely monitored using new technologies. Although philosophically opposed to Reich, James Sherk of the Heritage Foundation reaches the same many of the same conclusions in Reduced Investment and Job Creation to Blame for High Unemployment. The only difference in these two articles is that Reich focuses on job losses, while Sherk focuses on job creation. But in both articles, the authors contend that both near- and long-term unemployment will remain at or near 8%. ( I wrote about the disappearing jobs phenomenon earlier this month)
There are many causes for this, of course, beginning with the fact that United States (and most of the developed world) began moving earnestly away from labor-intensive manufacturing economies towards knowledge-based service economies in the late 1970’s. Although well aware of this, nobody did much to prepare the citizenry for this fundamental economic change. Much as the US experienced a dramatic cultural and demographic shift in the late 19th century as we moved from an agrarian economy to a manufacturing economy, we are experiencing the same now. Policies over the past 30 years at both the federal and state level, rather than focusing on restructuring education and employment policies, were largely concentrated on sparing the status quo. Although the days of a high-school dropout being able to get a well-paying job for life at the local manufacturing plant ended a generation ago, we’ve continued to subsidize both the labor unions (who rely on perpetuating this myth) and the educational systems (whose labor unions and administrators have been resistant to changing the formulas they’ve worked under for 6 generations). As a result, we have a large segment of the population that is ill-suited for the type of work the modern economy provides.
Both liberals and conservatives in this country (and other Western nations) are calling for a return to 20th century economies. Liberals believe that the US can return to a manufacturing-based economy, if only certain policies are enacted. Some of these include: engaging in protectionist trade policy (apply punitive tariffs on goods produced in low-age countries); requiring a percentage of all goods sold in the US to be produced in American factories and tightening labor and banking regulations to “protect” the American worker. Conservatives are championing reduced immigration, business credits and lower taxes as the way to spur manufacturing growth. Both of these approaches – or any combination thereof – is wrong, immoral and ill-conceived. They are intended primarily to appease the 60% of Americans whose jobs will disappear or have disappeared in the past three decades.
First of all, thanks to technologies that were not even conceived a century ago, the modern world is more tightly interwoven than at any time in history. When combined with the fact that the days of imperialism ended with WWII, it is now impossible for any nation that relies on exports for economic vitality to successfully engage in protectionist trade policies. Imposing excessive tariffs or limiting imports in any way will, in the end, prove counter-productive as other nations reciprocate the move. Many persons in what we often derisively refer to as the “developing world” consider the steady income provided by manufacturing economies as a vast improvement in their situations. Despite wages that are considered substandard in the west, the mere fact that workers have a steady source of income – and therefore, food and shelter – provides a sense of security previously unknown. This was, by the way, the same attitude that drove many former tenant farmers to migrate to cities during the late 19th and early 20th centuries, in the US and Europe. This was despite the advance knowledge that most would work in conditions that we find abhorrent and for wages that we can’t countenance today. Combined with the interactive nature of modern economies, no nation can afford to block goods coming from these nations.These types of policies were tried during the heights of the Great Depression – the result was over 50 million human beings killed in the greatest conflagration in history. Secondly, imposing inane limits on immigration will rob the US of a tremendous source of energy and vigor, both of which are priceless commodities in the new economy (and I suspect that very vitality is what many are afraid of). Finally, any restructuring of tax and revenue policies that ignore the modern economic realities in favor of a long passed age robs the emerging job market of strength and future generations of Americans of a sorely needed simplified tax code.
So, if the modern economy in the West will not be based on manufacturing, what will we do in the future? Where will the jobs come from? Well, first of all, not all manufacturing will be permanently off-shored. For several reasons (including national defense), there will always be some sort of manufacturing in the US. However, the reality is that as a percentage of employment and average compensation, American manufacturing will never return to the halcyon days of the 1960’s and 70’s. The new economy will be services based and requires a more educated and more flexible workforce than the one that currently exists. I realize that when I say “services” many people conjure visions of hotel maids and McDonald’s cashiers. Those type of jobs have always existed and will always exist, but nobody should think we’ll become a nation of gas station attendants. What I’m referring to by services are the types of positions that require more brain power than brawn power; fields like medicine, technology, research, aerospace, education and banking are all services. All are creating jobs right now. The problem is, their growth is restricted by a lack of skilled workers. It’s a fact that none of your politicians want to talk about, because they know in large part they’re directly responsible for this fact.
The answers about what to do for the next generation of Americans is pretty obvious and I applaud President Obama for starting education initiatives that may prove fruitful. (I’m no fan of the President, but you have to give credit where it’s due). However, there are 2 generations of Americans now in the workforce and a third about to enter, whose citizens are ill-prepared for the current economy. The big question is what do we do about restoring some semblance of full employment, and at tolerable wages now? The first thing is for the labor unions to understand that the world has changed and they need to get with the times. Once, the antagonistic approach between organized labor and business in the US led to a system that worked well, in the contained system that was the US. Once the US was no longer the dominant player in manufacturing, though, the unions failed to keep up with pace of global economics. It is long past time for them to seriously engage foreign governments and labor markets -by working to raise living standards oversees, they can reinforce those standards back home. Secondly, our own politicians need to work in ways that remove the yoke of debt from our collective shoulders. The projected national debt for 2020 equates to $150,000 for every family in the US – or more than 3x the anticipated per family income for that year. That level of debt is unsustainable and is largely driven by “entitlement” spending – Social Security and the new Health Care package. It is past time to revisit how these programs are funded before they drive the entire nation into bankruptcy. Until debt projections are reduced, funding for projects needed to revitalize the economy cannot be pursued. In the same vein, the political class needs to be honest about the limits of government intervention in economic policy – aside from fiscal and tax policy, there really isn’t anything they can do for immediate and sustainable growth. At the moment, fiscal policy is stagnated -interest rates are at zero. That leaves tax policy – which will not unfreeze capital markets. However, by implementing a strategic tax policy in coordination with a debt reduction plan, lawmakers can relax market tensions by demonstrating long-term fiscal sense.
However, even if the various entrenched factions were to begin immediately putting these ideas in action, the near-term effect would be negligible. We would still need high spending on unemployment compensation and other safety net program to prevent our society from devolving into absolute chaos. I would like to add a caveat to this spending, though. One thing obvious to anyone who’s driven any road in Pennsylvania or watched a manhole explode in New York City knows our infrastructure is aging badly. I would offer those receiving government assistance the option of either attending training in a new field or showing up for manual labor repairing our bridges, schools and the like. This recreation of the WPA would at least prevent the nation from just throwing money down a rat-hole.
Dinosaurs among us: The USPS
The long awaited GAO report on the financial viability of the US Postal Service was released earlier today. Ok, maybe you weren’t on the edge of your seat waiting for it. But you should have been.
A little background, for those of you who haven’t been following the story:
The Post Office reported to Congress earlier this year that it is facing the prospect of losing $238 billion over the next ten years. This becomes problematic because, unlike most federal agencies, the USPS is required to balance its budget. Congress made this stipulation when it semi-privatized the service in 1970. I say semi-privatized because the same statute made the post-office a monopoly and guaranteed that Congress would subsidize any operating losses stemming from “mandated services” with money from the general revenue. In 1982, Congress went a step further when they declared that income received by the USPS (from selling stamps and metering packages, primarily) was not tax revenue – therefore, the money raised by the USPS by conducting its daily business was solely to be used by the USPS for the purposes of its operating costs. This effectively split the post office’s accounting from the rest of the federal budget; almost immediately, the Postal Service began running deficits. However, the early shortfalls were quickly made up by arbitrarily raising postage rates.
This brings us to the modern-day, when changing demographics, technologies and competition for the lucrative package business have altered the postal landscape. When the USPS reported in March that they were on the verge of needing a massive cash infusion just to stay afloat, Congress did what it does best: commission an independent report on the state of postal services finances, and tapped the Government Accounting Office for the project. The news is both sobering and not unexpected.
The USPS is, in fact, facing a $238 billion deficit over the next ten years. That puts the US taxpayer on the hook for $238 billion in postal subsidies over the next ten years, unless way are found to bring costs into line with revenues. So what to do?
The GAO report notes three specific areas where USPS costs are out of control and out of whack with their anticipated business: employment, operations and pricing structure.
Workforce
The GAO report notes that the USPS currently has 300,000 employees, far more than needed to efficiently deliver the mail. It recommends reducing the workforce through attrition and outsourcing. It also recommends restructuring contributions to retirement plans to match those of other federal agencies. The latter two points would need concessions from the postal workers union – don’t hold your breath, especially with Democrats in control of both Houses of Congress and the Presidency.
Operations
The USPS is currently over capacity, both in terms of facilities and delivery routes. They recommend a series of actions, including reducing mail delivery from 6 to 5 days, closing excess post offices, moving post offices to self-serve kiosks and leasing space in retail establishments, closing unneeded distribution centers, and instituting “cluster boxes.” (A cluster box is a centrally located box that houses the mail boxes for a neighborhood). All of their recommendations would require union concession and the Congress to change current statutes.
Pricing
The GAO recommends that the USPS restructure it’s prices to better compete on products where it has to, and raise rates where it has a monopoly. The key here is getting Congress to agree to end preferential pricing for money-losing, but statutorily required, services (such as 2nd- and 3rd-class mail). Yes, in case you missed that last point – not only does your mailbox get stuffed with “junk” mail, but Congress has mandated that the postal service cannot charge a fair rate for it. And it’s one of the biggest money-losers for the USPS.
The GAO report points out that the USPS business model is a recipe for disaster and cannot sufficiently absorb the dual impact of lower revenues and higher costs. (See General Motors for an example of how this business model succeeds).
Mail volume declined 36 billion pieces over the last 3 fiscal years, 2007 through 2009, due to the economic downturn and changing use of the mail, with mail continuing to shift to electronic communications and payments. USPS lost nearly $12 billion over this period, despite achieving billions in cost savings, reducing capital investments, and raising rates. However, USPS had difficulty in eliminating costly excess capacity, and its revenue initiatives had limited results. To put these results into context, until recently, USPS’s business model benefited from growth in mail volume to help cover costs and enable it to be self-supporting. In each of the last 3 fiscal years, USPS borrowed the maximum $3 billion from the U.S. Treasury and incurred record financial losses. A looming cash shortfall led to congressional action at the end of fiscal year 2009 that deferred costs by reducing USPS’s mandated retiree health benefit payment. Looking forward, USPS projects continued mail volume decline and financial losses over the next decade.
So what factors are leading to the declining mail volume? Well, the biggest is probably the Internet. 10 years ago, you would have to sign up to receive this blog as a newsletter delivered by your friendly local postman. In the same way, more and more of us are paying our bills on-line. (Personally, I’m on check 298 on 4 year old checking account – and I started on check 200). Even junk mailers are cutting back – they’ve discovered spam, which is actually more effective than 3rd class delivery. Catalogs by mail are another item that has taken to the internet. In my youth, we anticipated the quadrennial mailing of the JC Penney, Montgomery Ward and Sears catalogs. Montgomery Ward has since gone out of business, but the other two stopped mailing catalogs this decade. Secondly, at the time of the 1970 law, the Postal Service did not have any real competition, other than from local couriers in urban settings. It was not until UPS won the right of common carriage in 1974 that any real competition opened. Next came Federal Express (FedEx). The two package shipping giants have decimated the USPS’ package delivery services by shipping freight cheaper, more efficiently and faster than the post office is able. So, that leaves first-class mail as the only profit center left to the USPS monopoly – and it’s in no way profitable. (When was the last time you mailed a letter?)
Is it time to fully privatize the USPS? Well, the GAO report makes pretty clear that to do so would doom it to bankruptcy faster than you can say “boo.” Is it time to off-load the services to a 3rd party, or group of third party common carriers? They wouldn’t want it – especially with the same Congressional restrictions that have in large part sunk the USPS. Is it time to just say “so long” to the idea of the Post Office?
Probably not. Many USPS defenders point to the Constitution – particularly Article 1, Section 8 – as mandating postal delivery. In fact, that clause only gives Congress the power to “Establish Post Offices and Post Roads.” It doesn’t mandate that a post office be created. However, the fact that Congress did establish the first national post office with the Postal Act of 1792 I think demonstrates that the Founders understood the importance of a postal service to the dissemination of information and the conduct of national commerce. However, given the current state of the Postal Service’s finances and the finances of the nation in general, something needs to be done – and quickly. Here are my recommendations.
- Adopt most of the GAO report. The only section I have trouble with is their recommendation to reduce delivery to 5 days from 6. While those in urban areas have viable alternatives for weekend mail service, those in rural areas do not. (UPS and FedEx actually hire the USPS for rural package delivery, if it’s not a priority overnight package).
- End the distinction between 1st-, 2nd and 3rd class mail. If you have a piece of paper you want delivered somewhere, pay full freight. Or deliver it yourself.
- If the union won’t go along, Reaganize it. I’m referring to PATCO and the way President Reagan dealt with them when they struck in 1981. The same rule applies to the NALC and APWU. If they do not acquiesce in what are essentially reasonable demands by the USPS and GAO, they should all immediately be fired and replaced.
Harsh? Perhaps. The alternative is, however, for the post office to become another of those large, sucking government agencies that robs the American taxpayer.
Political Baseballs 