Saturday, January 30, 2010

The Year in Review Part II

This past week President Obama gave his State of The Union Speech. Many pundits thought that this was his opportunity to start over again. Here is what took place in the past year.

While legislation was passed prior to Obama taking the reins, it was up to his administration’s team and to that of The Federal Reserve’s Ben Bernanke to lead the country out of the financial mess we had built for ourselves. While hundreds billions of dollars were lent to the banking and insurance sectors to get their shops in order, the term “too big to fail” was coined. The conservatives who voted for the stimulus package under the former President Bush were now heard criticizing the plan because they said that this money would never be paid back and that we were mortgaging our kid’s futures. Just under a year later all the large banks have paid back the money lent to them. While the banks do not lay blameless and played a large role in economic meltdown, what can be said is that one year after Obama became president, the US taxpayer is no longer an investor in big banking. As a footnote it should be said that the banks did no one but themselves a favor during this time charging scathingly high rates for credit cards and being all but totally uncooperative toward the consumers which help build their institutions. The banks in conjunction with the government put themselves in a no lose situation. If they refused to lend the government was bailing them out. If they did lend, it was to only those who could qualify and rates that were uncompetitive to those they borrowers were paying presently. Banks that have become too big to fail should not become too big. But for now, though fragile our financial system seems to have stabilized. Grade B.

Because of the financial situation or perhaps in a show of early bipartisanship and reaching out to the conservatives, President Obama left in place the sitting Bush administration Secretary of Defense, Robert Gates who it was announced this week has just agreed to stay on for another year. The wars in Iraq and Afghanistan have in the past year been largely unchanged. Iraq is winding down. Whether or not things are better there or not, we hear little about what goes on there day to day. Afghanistan is another story. In the late summer a very public debate took place between the sitting general in the region Stanley McChrystal and The President. McChrystal wanted 40,000 troops to complete the still largely undefined mission in Afghanistan. Obama, who has been largely criticized by the conservatives, led by the former Vice President, gave McChrystal 30,000 additional troops and 18 months before saying that he will begin a troop draw down in that region. Will it help? Will it make a difference? History is not on our side and no one really knows at this point. Now we have Yemen as the base for the latest terrorist threat. Grade C+.

Every major decision seems to draw the opposition out against the Obama administration. One recent firestorm was the decision by the Justice Department to try some of the September 11 terrorists in open court in New York City close to where the twin towers fell. This, as opposed to trying them in a military court. The same critics that wanted these trials held behind closed doors are many of the same ones that applauded the former president for prosecuting these terrorist the same way. Yet they call Obama weak on the war on terrorism. But when it comes to the Constitutional rights granted us by our founders, they are all too quick to relinquish those in the name of security. While we are at war with terrorists and terrorism we are not at war with a sovereign nation state. Therefore to grant a military trial recognizes terrorists as a sovereign body; a nation state. It gives them a defacto political status. By trying these people in open court not only re enforces our fair and open system of justice but does not lend legitimacy to the ideals for which they claim to be fighting for. The previous administration left the messy ordeal of trying terrorists to the new administration after holding them in Cuba for nearly seven years. But again our former vice president is quick to react to what his administration and many would say he would not do himself; set a trial venue, determine a method of justice and move forward. Grade: B.

In 2008 our auto industry was in a tailspin. Ford was shedding subsidiaries like Jaguar (to India), Aston Martin (private investors and Kuwait) and had put up Volvo for sale. Ford was in the best shape of the big US automakers. Chrysler was legitimately bankrupt and GM an icon of US business for the past 75 years was bleeding cash an unable to sell cars. It was unprecedented that a population of 300 million people could not sustain three auto companies and the Japanese, our largest competitors were healthy by comparison. As a symbol of how out of touch this industry had become, each company head traveled to Washington D.C. without a plan on their own private aircraft and naively asked for hundreds millions of dollars to right themselves. They were turned down flatly. A year later Ford asked for no government funding , is building cars that people are buying and is committed to being profitable by 2011. GM received loans and has recently committed to paying the money back to get the tax payer out of their board room. This week they say that they may be profitable this year. Chrysler was saved from receivership, largely to save jobs, by the Obama administration that pumped money into the company. Chrysler was later purchased by Fiat, Italy’s largest automaker that will be re entering the US market after being gone from our market for 25 years. In late summer as part of the stimulus package the Obama administration implemented the Cash for Clunkers program which jump started the auto industry if not just temporarily. As Obama enters the second year of his first term, the auto industry is not out of the woods but it is no longer endangered as it was a year ago. What can be said is that we still have an auto industry in this country a year later which was truly a question as we entered 2009. Grade: B+.

What is yet to materialize is a jobs recovery. This week a jobs report came out and it was not particularly encouraging. People are out of work and continue to lose jobs. It is happening across all sectors in all areas of the country. Small business is suffering, big business has continued to lay off thousands of people. This trickles down to the retail sector and no one is spending money. “It’s the economy stupid,” was coined a generation ago by Ronald Reagan and the economy either good or bad is based on whether or not you are employed. Certain inner cities are seeing unemployment in the area of 16%. California is seeing an unemployment rate of over 10%. One thing is certain: Our economy will not recover until our employment numbers improve dramatically. All the good that has been done on a national level will not mean much unless people are working. The Obama administration has implemented the cash for clunkers program and has poured billions of dollars into infrastructure repair and while both are needed and in the case of rebuilding crumbling infrastructure, overdue, these jobs created are as good as the long as the jobs are active. They largely benefit the construction sector. Some trickle down effect is felt with suppliers but not widespread. More, much more needs to be done in 2010 when it comes to creating jobs and incentives to get employers to hire. One such suggestion is a real tax break for employers to hire, companies to purchase capital equipment , and continue with research and development. The Obama administration could also provide incentives to emerging technologies such as the green sciences and industry, nano technology and bio sciences. All of these areas provide a future for our children, our economy and the world. Grade: C-.

A note to republicans. Whether you agree or disagree with the policies, as Americans you should want America to succeed. An argument can certainly be made that we “failed” under the policies of the previous administration. Right after Obama was inaugurated, the republicans started in on the wild spending policies of the democratic president. The eight year run of George W. Bush, A REPUBLICAN, caused a deficit and wild spending of unprecedented proportions. They did this while they had a majority in both houses of Congress. That included pork barrel spending as well. No one party can no lay claim that they are fiscally conservative.

A lot of crazy stuff has been said in the past year. It started days after the president was sworn in. The best was that once Obama was sworn in, he would be recruiting a national police force to implement martial law. Fringe groups called Obama a Kenyan and a secret Muslim. Conservative talk show hosts shed tears. The most remarkable statement made by talk show host Rush Limbaugh in the early days of the Obama presidency was that he wanted Obama to fail. That meant his show would continue to flourish with added ditto heads. Good for him, bad for us.

Before then and since, continued opposition by the conservatives have organized rallies against the administration vowing opposition to Obama’s health care policy and policies for economic recovery even before the details were known. What was so brilliant about these demonstrations were that were being popularized by the right’s media personalities and attended by the very people that the administration was trying to help. The republicans have not been on board with a single Obama initiative even though many of them began in the waning days of the Bush administration. Just saying no makes you look at best stupid and at worst uncaring toward a populous that you represent. Pork project benefiting a few are part of our legislative process. But no one party can claim virtue on this issue. It is an unfortunate part of our political process. But Obama and his people were charged with implementing many of the programs and policies initiated by Bush and the democratic Congress in the waning days of his administration . One has to wonder if the opposing party is more concerned about winning back power than actually helping the country overcome its problems. They should provide legitimate opposition and an alternative proposals which is their job. No substantive proposals regarding any of the primary issues have been proposed during the past year. They simply say no.

We are in a crisis that this country has not seen in generations. Partisan bickering which was business as usual should not be tolerated by the electorate. But this situation is not unique. Democratic bickering happens when the republicans are in power too. It just seems as time goes on the nastiness is taken to a whole new level. This helps no one. Could things be better right now? Yes. Governing is not an exact science. Call it an average performance this past year. But could they have been much much worse? Yes. We were headed down that road just 12 months ago. Whether or not you agree with the measures that were implemented in the past year to halt the recession, at least the problems were met head on and were being addressed. While some, even in his own party are not satisfied with the Obama leadership, a sense of reasonableness should prevail. A lot has been done over the past year. A lot still needs to be done. We have many problems that need to be addressed. But if nothing else we have a chief executive that is engaged in the problems of our time.

Sunday, January 17, 2010

The Year In Review Part I

If there might be one thing that democrats and republicans would agree on, it is that the last year has been a busy year in Washington. Our current president was voted into office a year ago with a wave of optimism and hope that had not been seen since the Kennedy era. The country was reeling from what everyone feared (and soon to be officially confirmed) was the worst recession since the Great Depression. There was an undercurrent of hope that a new leader would somehow bring us out of this national funk that had existed for the past several years.

How would you grade the president’s performance as a leader since taking office in January 2009? What has he done and what is still left to do for him to be considered a mediocre, good or even a great president? What events could take place that would have him as one of the more forgettable leaders of our time? Would he quiet his critics who said that he had little or no executive experience? Could he begin to make a case for a second term?

It is fair to say that leaders do not succeed or fail in a vacuum. They have help. We have had average presidents who have surrounded themselves with great people and therefore became great. We have had very intelligent chief executives who have been pounded by the opposition and by circumstances largely not of their own making and been forgotten.

Pounded by the opposition is a fair way to describe what happened to Obama in the weeks after he took office. The Republican Party reeling from a defeat where they lost both the Executive Branch in 2008 and both houses of Congress in 2006, began their attack of the new president as soon as he and his family moved into 1600 Pennsylvania Avenue. His detractors on the right were many. But the most vocal in the early days was conservative talk show host Rush Limbaugh who simply said that he wished the President “would fail.” Conservatives branded him a socialist and even some democrats questioned the amount of money lent to the financial sector and others under the guise of a stimulus. To many it looked like a big giveaway to the biggest and greediest banks in the country who some accused of starting this financial crisis.

But these are unusual times. There were few similarities in the first six months between our former president and Barack Obama. George W. Bush inherited a relatively healthy America. Though peaked by 2000, Bush had been voted into office in the most robust economic climate in a generation. Our country’s economy was stable with a balanced federal budget and a deficit dating back to the Reagan administration that had been erased. Some of the administrative oversight seen in the previous democratic administration was relaxed in favor of a self regulation. Bush in the early days of his administration laid out a conservative agenda that included a stem cell research ban and announced it as a priority to crackdown on pornography in the United States headed by his newly confirmed Attorney General John Ashcroft. Some said that he would be a “caretaker president” who simply presided over a calm and self-sustaining American economy. Though the President of the United State never really gets a full vacation, within the first eight months George Bush took 96 days of vacation. The only president with more vacation time under his belt was his father George H.W. Bush. Of course the Bush agenda changed with 911.


Contrast this with Barack Obama’s first six months in office. The president, from the moment he took office was under siege by an economic meltdown. Our stock market was dropping like a rock. The auto industry was failing. Our real estate market, long the bell weather for our economy was in an unprecedented slump not seen since the great depression and our banking system was in a shambles. This was just the beginning. Unemployment was rising at an unchecked rate. Small business and Main Street were badly wounded with consumer spending and confidence down dramatically. AIG, among the largest insurers in the world was in need of a government bailout because of bad investments by just a few unchecked employees. Our national debt was exploding to levels never seen before. This and we were fighting wars on two fronts one of which we were mired in with no defined mission or exit strategy. Our economic problems interconnected with European and Asian economies. Their economies were following ours with rising unemployment and an economic downturn. It was a perfect storm of devastatingly bad news worldwide. While candidate for President John McCain called the “fundamentals of our economy essentially strong,” few could look at the glass as half full.

In the past we had sectors of poor performance in the economy while others did well. But our country had seen nothing approaching an assault of our economy of this scale in our generation. Muslim extremists went as far as saying that it was the crumbling of the Infidels’ Western Civilization built around capitalism.

These were the conditions that existed in the US economy in January, 2009. If you had money, it was a great time to buy. But few had any wealth to speak of. Stock values and personal portfolios dropped. Home equity evaporated. Manufacturing had disintegrated. New orders for goods and capital expenditures came to a halt. The real estate industry which had been flying high just a year and a half before was laying off agents and brokerages were closing. Foreclosures were at levels not seen since the Great Depression. Mortgage brokers and departments were being eliminated. You counted yourself lucky if you had a job.

In the next week, we will examine the steps taken to turn around the faltering economy. How far have we come in the past year and what is left to accomplish to turn around the faltering American economy? How has America rebounded in the past year? What is left to do and how well would you grade the existing administration in attempting to fix our economy? What about the President's agenda to move our country forward? The answers in part II.

Sunday, January 3, 2010

The Fix

So what can be done to begin to fix just a few of the problems we are facing today both at home and abroad? Perhaps ironically our problems abroad can be fixed by focusing our resources domestically. The United States needs a domestic energy program that will sustain itself for the next generation and the generations beyond. We also need a healthcare system that will allow those in need to be covered whether for the flu or the most life threatening disease. We need to shore up our social security system; a system that everyone agrees is broken but no one has the courage to fix. We need to strengthen our economy and realize that we simply cannot outsource ourselves to prosperity. Finally, our elected officials cannot be exclusively beholden to those who have the means to buy themselves influence.

Leadership with regards to a national energy policy has been lacking for the past 20 years. While our leaders have given lip service to the need for an energy policy, the reality is that our energy policy is to drill for and seek additional sources for oil. This policy is so well re-enforced, in the early days of the Bush administration that our vice president held a secret meeting with executives from the energy industry that to this day the agenda and the participants are still unknown. Alternative energy for day to day use is just now becoming a reality for some. While green energy sources are available they continue to be expensive to the average energy consumer. It is a fact that while the US is a leading producer of solar energy systems, those systems are exported to countries like Germany, a leader in the use of solar electricity. With actions dating all the way back to the Reagan administration, tax breaks for wind driven energy were cut while today we publicly enhance oil company profits with generous tax incentives.

Technology is available to assist us in becoming less dependent on oil. It is naive to think that oil will be completely eliminated as an energy source nor should it be. Oil is plentiful. But much of it resides in hostile, remote or unstable regions of the world. Oil needs to be part of an overall equation that makes up our domestic energy policy. It should become a diminishing part of that equation. The same incentives given to the large oil companies should be instituted down to the consumer level for those who deploy energy means not dependent on oil. This should include conservation as well as fossil fuel alternatives. Just as the modern version of the combustion engine has changed so to will the oil independent alternatives.

We should not wait for the best alternative but rather use what is available and the market will evolve with better and more efficient alternatives to oil. Incentives should also be given to those who wish to invent and create better and more efficient ways of producing and transporting energy. We need to change the way we think about our use of energy. Our parents had the luxury of a limitless supply of energy. Our children will not have that same luxury. This generation is wrestling with how to make the transition while not impacting our way of life. It is important that we learn from other countries around the world on how to save our resources. Many of those countries are well ahead of us when it comes to alternative energy sources and conservation. What we do poorly is look to other cultures and countries as examples of what we could do better. We also need to insist that the international community step up and join us as partners worldwide. The US cannot continue to go at it alone. Finally, our leaders should lead. We elect them not only as representatives but as examples. They should not only use, but be leaders in promoting visible and high profile methods off alternatives to oil. Would it be nice to hear a story about how our elected officials were not jockeying for a bigger plane in their new position, but rather about how they were considering an alternative to travel to bring them closer to their constituents?

It is time for our leadership to make difficult decisions. It is said that we cannot kill off the domestic oil industry that employs hundreds of thousands if not millions of people world-wide. We have already done this to our manufacturing sector under the guise of globalization. It would seem that we are more reluctant to decimate the white collar jobs that makes up much of oil industry. The good news is that much of this sector could easily be re-employed innovating new alternatives to energy. Furthermore, the oil companies while chasing drilling sites all over the world could themselves be private sector leaders in alternative energy sources.

Finally, we need to take a good hard look at ourselves. While somewhat changed during the past year, we need to ask ourselves why the view of America falls so quickly in the eyes of the world community? One answer is that we make up a very small percentage of the world’s population yet we consume a disproportionate amount of the world’s resources. That may have worked for us sixty-five years ago right after World War II, but the world has evolved since then and our foreign policy has not.

Another answer may be that rather than continuing to pillage the world’s resources, we now compete with emerging countries such as India and China on the open market for these same limited resources. Finally, much resentment seems to have come through globalization which has brought American products to foreign countries displacing local shopkeepers, store owners and proprietors of food and lodging establishments. Is this really the way to spread the American way of life? Just as we wish to preserve our heritage, others wish to do the same. Does might make right? If we continue to spread one form of democracy, one form of capitalism and tell others that they should be more like us, we can only expect what we get when it is asked “why do they hate us?”