WILL AMERICA FALL OFF THE CLIFF?

As I predicted in previous blog postings, negotiations between President Obama and the Congress on how to avoid the so-called “fiscal cliff” have slowed to a grinding halt.  Here we are, with one month to go and no meaningful progress has been made.  Instead, each political party is positioning itself to blame the other party in the event of a failure to reach an agreement.  Even worse, none of the elected leaders, the President, the Speaker and the majority and minority leaders has demonstrated the strong leadership skills needed to convince the extremists in both parties to compromise enough in order to broker a deal everyone can live with.

Recently, House Speaker John Boehner said President Obama has yet to put forth a “serious” plan.  Democrats responded that the President had proposed an immediate $1.6 trillion tax increase aimed at the top 2% of Americans and $400 million of spending cuts.  These cuts were not specific and were to be determined “later.”  Republicans countered that that was “completely unbalanced and unrealistic.”  Details on the tax increases were not very specific either.  They included an increase in rates and/or a cap on itemized deductions on incomes of over $250,000, $500,000 or $1,000,000.  Dems have also floated the idea of a “Buffett tax,” which would be a 30% effective tax rate on adjusted gross income in excess of $1,000,000.  I find it mind-boggling that they are this far apart at this late stage.

As I have discussed in previous blog postings, falling off the “fiscal cliff” would have devasting economic consequences for virtually all Americnas – rich and poor, young and old, Republicans and Democrats.   Some of the major effects would be as follows:

1.  The Bush tax cuts would cease, resulting not only in higher tax rates across the board, but other tax hardships as well.

2.  Government services would be cut arbitrarily across the board without any analysis or logic.  This would include programs such as medicare, social security disability and homeland security.

3.  Millions of jobs would be lost (best estimate 3.4 million).

4.   The country would fall back into a recession.

5.   The stock market would fall sharply, severely damaging the wealth and income of all retirees and, indeed, anyone who has a 401k or IRA.

6.   The country’s debt would increase dramatically, and its credit rating would likely be lowered once again.

7.   The country’s standing as the world’s pre-eminent economic power would take a major hit.

8.   Political heads would roll.

I’m sure there would be others, but you get the picture.

Prediction and Conclusion

Unfortunately, my original prediction of stagnated negotiations and each side blaming the other side is coming true.  History tells us that in the end some kind of deal will be reached at the last minute.  After all, our government leaders may inept, but they are not irresponsible.  Furthermore, said deal will likely be an unsatisfactory halfway measure that will be more a stopgap than a realistic solution to our fiscal problem.  Also, don’t be surprised if the deal is actually a temporary fix with a proviso to re-address the issue in 2013.

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FISCAL CLIFF – DEAL OR NO DEAL

The much discussed fiscal cliff looms on January 1, and the Congress and the President, are negotiating a deal with all deliberate slowness.  Will they reach an agreement in time, and will the agreement be meaningful?  One can only hope.

Essentially, if the Federal government takes no action the fiscal cliff mandates $7 trillion of tax increases and spending cuts over the next ten years.  The spending reductions would be across the board, in both defense and non-defense.  The tax increases would include, among other things, the expiration of the “Bush tax cuts” and the payroll tax holiday and advent of taxes relating to Obamacare.  Allowing these wholescale measures to be applied in this manner without thoughtful consideration would be grossly irresponsible, like using a hatchet to kill a fly.  No responsible person would be in favor of that, so it is incumbent upon Congress and the President to strike a deal.

There are three possible courses of action: (1) Do nothing and let the automatic measures take effect, which would be a disaster.  (2) Reach an agreement of some type that leaves some measures in place and replaces some others.  (3) Postpone action to some later date.   Looming over all of this, like a “Sword of Damocles” are the prospects of a Congressional approval to raise the debt ceiling, a credit downgrade, a double-dip recession, and/or a steep stock market decline.

Conclusion and Prediction

Now is the time for our elected officials to demonstrate some strong leadership, a quality that has been missing for the past several years.  Now is the time for each party’s leadership to reign in its fringe elements and negotiate a deal for the good of the country.  To use a sports analogy, it is the bottom of the ninth inning, and we need a big “hit.”  Time to step up to the plate Mr. President, Mr. Speaker, congressional leaders.

My prediction is there will be a lot of rhetoric and finger-pointing between now and the end of the year as each side blames the other for the country’s economic and fiscal problems and for the failure to reach an agreement.  Knowledgeable people will know, however, that the failure is on both sides of the aisle.

In the end, don’t be surprised if they concoct an inadequate makeshift deal just to get something done under the wire, or, even worse, pass a measure on December 31 to “stop the clock” while they continue to negotiate into January and beyond.  To that, I say to our elected officials: surprise us.

OBAMACARE – HOW ITS UNINTENDED CONSEQUENCES WILL HURT YOU

The Affordable Care Act, commonly known as “Obamacare,” is being praised by supporters as the signature domestic policy achievement of President Obama’s first term.  Indeed, it has some benefits, the foremost of which is that it extends healthcare coverage to everyone.  Its pros and cons have been debated endlessly, and I do not wish to repeat them here.

However, as I predicted in an earlier blog posting, there will be some unintended consequences to Obamacare, of which most people are unaware, which will have an adverse affect on most Americans.  Ironically, many of those most affected will be the very people who supported the law, in particular, and President Obama, in general.  Those would be the lower middle working class, African Americans, Hispanics, single women and young people.  As I said in another earlier blog, “Be careful what you wish for.”

The key date is January 1, 2014.  That is when Obamacare becomes fully effective.  Some of the adverse unintended consequences are as follows:

1.    Obamacare requires employers with 50 or more full time employees to provide those employees with the government-designed health plan or else pay a fine.  The problem is the cost of the insurance will likely add nearly $2.00/hour to the employer’s cost of each employee.  This is a significant additional expense for lower paid employees.  Therefore, employers may decide it is cheaper to either lay them off or, at least, cut their hours to part time status.  A preponderance of those affected will be people in the above-mentioned groups. For example, the CEO of Papa John’s Pizzas has already stated that the company is likely to reduce the hours of some employees.  Others will likely follow, particularly small businesses

2.  Companies may find it cost effective to outsource many functions utilizing agencies that specialize in providing temporary or part time employees.  These would be predominantly clerical, warehouse or stock room jobs. Workers of these agencies do not qualify for health benefits.

3.   A chain of Florida restaurants is considering adding a 5% surcharge to its customers’ bills to pay for Obamacare costs.  This is an interesting idea, a kind of “consumption tax,” that may catch on.  This would be a regressive tax that, once again, would affect Mr. Obama’s constituency disproportionally.

4.   Workers who lose their coverage will be required to purchase coverage.   Many would not be able to afford it.

5.   There will likely be cuts to Medicare funding to help pay for Obamacare.  If so, this will impact the quality of health care to seniors.  Hospitals and nursing homes may have to reduce personnel, further exacerbating this problem.

6.   Technically, the law empowers the Secretary of Health and Human Services to wield some influence over a doctor’s medical decisions, even if the patient is paying privately.  The many ramifications of this are obvious, none of them good.

7.   Finally, as I mentioned in another of my blogs, there will be tax increases to help pay for Obamacare, and not just on the wealthy as you may have been led to believe.  Perhaps, the most egregious is a 3.8% tax on the profit from the sale of any asset, including your home, business or stocks.

Prediction

1.   The 80% of Americans who already had health insurance will, in effect, be paying for the 20% who were previously not covered.  This payment will take the form of higher cost for health insurance, tax payments and/or lower quality of healthcare.  Thus, 80% of Americans will be worse off under Obamacare than they were before.  Eventually, they will figure that out.  At that point, the altruism of helping the disenfranchised 20% will fade.

2.   The medical profession will become less lucrative due to rising costs, such as malpractice insurance, resulting in a shortage of doctors in some locales and in some specialties.  Moreover, some top shelf doctors, who can get away with it, may cease accepting insurance, requiring payment upfront for services.  This trend has already begun.

3.  These unintended consequences will lead to disillusionment and displeasure with Obamacare and make it unpopular with most Americans.  As a result, it will become a major issue in the next election.

POST ELECTION THOUGHTS

As the election results sink in, I have some additional thoughts:

1.  During the campaign, polls repeatedly gave Mr. Obama an edge over Mr. Romney for “likeability.”  It’s true that Mr. Obama has a more friendly, outgoing, charming personality, but does that make him a better President?  Probably not, but in any walk of life, people who are “likeable” generally have an advantage over those who are not.  I compare the election to a situation where I might need a surgeon to perform a complicated and serious operation on me.  Dr. A is nice, charming, has a great bedside manner but mediocre surgical skills.  Dr. B is a superior surgeon but is a real SOB.  I would choose the SOB every time and then, if I want, I can celebrate my recovery by having drinks with the nice doctor.  In my mind, the electorate chose the nice doctor.

2.  Now that Mr. Obama has won, it’s time for the Administration to end the obfuscation and tell the American public the truth about the Libya fiasco.  We deserve it.

3.  It’s time for both the Dems and GOP to end their partisanship and work together for the good of the country.  We have a “fiscal cliff” looming on January 1, and several other serious issues to address.

4.  A word to Obama supporters in your jubilation over his re-election.  Be careful what you wish for.  He won, but now he has the sole responsibility to fix the economy, a task which he was not able to accomplish in his first term.  The economy was and is the most serious issue, and, unlike his opponent, there is nothing in his background that indicates he has the ability to fix it.  Dems will not be able to blame failure on George Bush in 2016.

Predictions

1.  The Congress and the President will work together to fashion some sort of compromise to avoid the “fiscal cliff,” but only because they have to.  The compromise will, however, result in fewer spending cuts than needed.  In addition, as I explained in one of my previous blogs, most of us, including many in the so-called middle class, will somehow end up paying more taxes.   We always do.

2.  I doubt that the American public will ever learn the whole truth about Libya, especially the part about who ordered the cover-up.  To me, the cover-up was as bad as the incident, itself, if not worse.

3.  I am pessimistic about Mr. Obama’s ability to improve the economy substantially.  I see unemployment remaining unacceptably high and the debt growing at a similar rate.  I see businesses remaining reluctant to make capital investments, spend money and hire workers. This is based on his political philosophy and his track record.  I foresee a real chance of another recession.

WHY OBAMA WON; WHY ROMNEY LOST

First of all, congratulations to Barack Obama and the Democrats.  They ran the superior race, and they won fair and square.  The voters have spoken, and those who voted for Mr. Romney must accept the decision and move on.   If you didn’t vote, shame on you, but that is another topic for discussion on another day.  The strength of America is that there will be no rioting, no revolution, no army takeover.  The losers will accept the results, analyze why they lost, and try to do better next time.

That brings me to the subject of this blog.  Why did Mr. Obama win, and, conversely, why did Mr. Romney lose?  Although the election was very close in terms of the total popular vote, 51% – 49%,  I believe some clear trends emerged, which bode well for the Dems and not so well for the GOP.

Why Obama Won

1.   Superior campaign staff with a better strategy.  This is, perhaps, the most important reason and permeates some of the other reasons as well.

2.   Support of the media, sometimes overt, sometimes more subtle.  This includes the mainstream press, entertainers, television and radio.  It is no secret that most members of the media are more liberal than the electorate as a whole, and Mr. Obama has always been a favorite of theirs. Certain negatives were downplayed, such as “fast and furious” and the Libya attack.

3.  Better organized grassroots effort, particularly in the “swing” states. Also known as the “ground game,” the Dems were able to start organizing early because Mr. Obama did not have any primary opposition.  The payoff was a very high turnout among their target groups – minorities, young people and Hispanics.

4.  Successful courting of Hispanics and women, particularly single women.  Hispanics are the fastest growing segment of the population, and no doubt they swung the results in FL, CO, NV and NM.  The “war on women” issue was more effective on single women.  Incidentally, there are many theories why single women favor the Dems and married women favor the GOP regardless of other factors, but no one seems to know for sure.  These groups, combined with Mr. Obama’s “natural ” supporters, African Americans and young people formed a winning coalition.

Why Romney Lost

1.   Inferior campaign strategy.  Again this one permeates all the other reasons listed below.

2.   VP choice.  Mr. Ryan, though a fine Congressman and an up-and-comer in the party, added little to the ticket’s election chances.  He did not appeal to moderates and independents, and he did not even deliver his home state (Wisconsin).  Marco Rubio would have delivered FL and energized the Hispanic vote for the GOP in other states as well.

3.  Failure to criticize Mr. Obama’s handling of the Libya attack.  Mr. Romney has his chance during the 3rd debate, and he blew it.  He could have couched his criticism in such a way as to not appear divisive, such as pointing out Mr. Obama’s lack of leadership and failure to be honest with the American people.

4.  Failure to recognize the rising influence of the Hispanic vote.  This ties in to his VP choice and his hard stance on immigration.

5.  Failure to explain his plan for reorganizing the auto industry adequately.  The Dems made it seem as though he wanted to destroy it, which was not the case.  In reality his plan of bankruptcy and reorganization was a reasonable one given the inherent  inefficiencies in the industry.  This issue hurt him severely in Ohio, a state he had to win.

6.  Super Storm Sandy blunted his momentum.  Mr. Obama was able to appear “Presidential” in a crisis.  Furthermore, the “hug” from Chris Christie reminded me of the old adage “a picture is worth a thousand words.”

7.  Much of the electorate preceived Mr. Obama as more “likeable,” which may have influenced some votes.

8.  He stopped attacking in the last few days, perceiving he was ahead, and tried to “run out the clock.”

Conclusion and Prediction

The makeup of the electorate is changing.  The number of minorities, Hispanics, women and young people are increasing.  If Republicans want to bounce back in 2016 it will be incumbent on them to recognize these shifts and adapt to them.  Undoubtedly, they will have to soften their positions on issues that appeal to those groups and nominate moderate candidates that have broad-based appeal.  The “base,” which has traditionally controlled the Party, will have to decide if it wants to stay true to their beliefs and lose national elections or become more moderate and possibly win.  I believe they are shrewd enough to adapt enough to compete nationally.

IS THIS AMERICA????

In watching the news about the aftermath of Storm Sandy, I am shocked and horrified. at the sheer devastation and the lack of progress  in restoration after one week.  I’m not talking about physically rebuilding homes and businesses.  I know that will take months.  I’m talking about providing basic services, like shelter, food and water.  I watch the news and I say to myself: “Is this America or some third world country?”

I see women sobbing uncontrollably at the hopelessness of their situation, babies without food and shelter wrapped in blankets and layers of clothing to try to keep warm, and 90 year olds,who we know are particularly vulnerable, without food and shelter.  Plus, 30 degree temperatures and another storm on the way.  Would you want your kids, grandkids, mother, or grandmother to be in this situation?  I think not. I am irate and so should you be.

Where is Mr. Obama’s “Big Government” when we really need it?  Where is Mr. Obama, himself, for that matter?  Where is FEMA?  Where are Jesse Jackson, “Reverend Al” (Sharpton), George Clooney, Barbra Streisand, and all the other Hollywood liberals when we really need them to support Americans in need?  The people suffering in NY and NJ include all socio-economic groups – rich, middle class, and poor, black, white and hispanic.  Sandy was an equal opportunity destroyer.

The answers to my rhetorical questions are obvious.  Mr. Obama, after a brief “photo op” with Chris Christie, is back doing what he does best: campaigning.  NY and NJ are not “swing states, so he doesn’t really care about them.  Pardon me, but I understood that the President  is supposed to be the President of all the people.  And, in 2008 didn’t Mr. Obama run on a platform of bringing us all together?

FEMA is doing what it does best – little or nothing.  And the celebrities, who were so quick to act in response to other disasters, such as Hurricane Katrina, Haiti’s earthquake and Africa’s various disasters, are either silent or busy campaigning for their guy – President Obama.  The order of the day is to maintain a low profile, hoping to keep a lid on it until after the election so as not to hurt Mr. Obama’s re-election chances.  (If this strategy sounds familiar, see Libya.)

A couple of things to keep in mind amid all the fingerpointing.

(1)   Sandy was not a surprise, like an earthquake.  FEMA and the utilities should have been better prepared.  Obviously, they underestimated the storm.

(2)   The person in charge has the ultimate responsibility and authority.  This is true in life, in business and in politics.  He or she takes the credit when things go right and the blame when things go wrong.  That’s what leadership is all about.  President Truman had it right when he said “The buck stops here.”  Although there is plenty of blame to go around, President Obama, as the ultimate boss, must take a lion’s share of it.  (After all, he was quick to take the credit for killing Bin Laden, wasn’t he?)

(3)  Once all parties blew the preparation part, they could have at least redeemed themselves with a quicker response, but they have not.  How hard would it have been to fly in generators, to supply power to homes, businesses and gas stations, water to drink, food to eat, etc.  Isn’t there a disaster recovery plan that can be enacted?

The bottom line is America ‘s commander-in-chief has, once again, failed the American people.  For two days after Sandy he displayed leadership, but then he reverted to his normal pattern of behavior. This is not an isolated case; it has been a four-year pattern.   For four years he has failed us economically, socially, militarily and, now, morally. He has failed to respond to a series of “3 am calls” appropriately.

To paraphrase one of Mr. Obama’s campaign slogans: Give me a second chance, and I will do better.  Americans pride themselves on giving people second chances, but not this time!  Vote for Mr. Romney.  Your kids and grandkids will thank you.

AND THE WINNER IS …….

At long last, we come to the end of the 2012 campaign.  After all the speeches, all the debates, all the PAC ads, all the exaggerations and, yes, the deceptions, the voters will finally have their say.  On Tuesday we get to exercise our constitutional right and pick our next President.

This election will be a pivotal one in the country’s history.  When you strip away all the rhetoric and political obfuscation the election comes down to a basic choice.  Voters will be choosing between two substantially different ideologies.  Do we want to continue the current trend toward a big government society similar to those in Western Europe or do we want one that stresses the traditional American values of individualism and free enterprise.

This election is the closest in memory.  As I write this on November 4, the election is still in a virtual dead heat and extremely difficult to forecast.   Complicating matters further is the plethora of polls, some of which are contradictory.

At the present time, the consensus is that the popular vote, for what it’s worth, is dead even – 47.4% for Mr. Obama and 47.2% for Mr. Romney.  Mr. Obama has a “safe” lead in states totaling 237 electoral votes, and Mr. Romney has a “safe” lead in states totaling 191.  There are nine states totaling 110 electoral votes that are too close to call.  They are: Colorado (9 electoral votes), Florida (29), Iowa (6), Nevada (6), New Hampshire (4), North Carolina (15), Ohio (18), Virginia (13), and Wisconsin (10).  270 electoral votes are needed to win.  Most pollsters are opining that Mr. Obama will win enough of these nine battleground states to put him over the top.  This appears to be based on (1)  the polls indicating he has slim margins in most of them, although within the margin for error, (2) a lead in the “safe” states’ electoral vote count, and (3) Storm Sandy appears to have blunted much of Mr. Romney’s recent momentum.

Prediction

I do not concur with that analysis completely.  I do agree that Sandy has blunted Mr. Romney’s recent momentum as it has afforded Mr. Obama the opportunity to appear “presidential” in dealing with the aftermath.  But, I think Mr. Romney will win Colorado, Florida, North Carolina, Ohio and Virginia with a total of 84 electoral votes, enough of the battleground states to win the election.    This is based on the fact that even though Mr. Obama has a slight lead in those states, according to the consensus of polls his plurality is 48% or less, and historically, undecided voters have voted predominantly for the challenger in almost every Presidential election.  These five states will give Mr. Romney 275 electoral votes.

Because of the extremely slim margins anticipated in so many states, it is highly likely that there will be recounts and, perhaps, even court challenges in a few states.  Thus, the official result may be delayed.  But, when all is said and done, I predict Mitt Romney will become the 45th President of the United States.

SANDY – LI DEVASTATED AND FORGOTTEN

Sandy was one of the most devastating storms ever to hit the East Coast.  Sandy’s impact on the Tri-State area, the death and devastation, was and is horrific  Pictures of Long Beach, Oceanside and Fire Island, to name a few examples, look like pictures of Haiti after an earthquake or bombed out cities from WWII.  Whole communities are gone.  People, some of whom are infants, the very aged and infirmed, are homeless, and without food, shelter, heat and all the other basics we take for granted until they’re no longer there.

As was the case with hurricane Katrina, the performance of FEMA and local utility companies, has been spotty, especially since the storm was well-publicized.  They should have prepared better, but apparently they underestimated the storm and overestimated their ability to respond to it.

Some of the individual stories are absolutely heart-wrenching

1.    Flood waters literally ripped two toddlers from their mother’s arms and swept them away.

2.     Approximately 100 homes in Breezy Point, NY were burned to the ground by wind-swept flames because firemen could not reach them .

3.       The death count is still rising; the value of property lost is incalculable.

4.    To make matters worse, many people cannot get gas for their cars and generators.  This is not due to a shortage of gas, but because (1) many gas stations have no power to run their pumps; (2) a couple of refineries were damaged by the storm; and (3)  tankers full of oil are sitting offshore unable to dock because of the devastation to ports.  The result is people having to wait in gas lines for hours to fill up, a scene reminiscent of the 1970s.  Why did it take Governor Cuomo until Friday to institute odd-even gas rationing?  It worked in the 1970s.  It was working in NJ?  Was it because Governor Christie thought of it first, and he didn’t want to be seen as copying his lead?  I hope not.

In the midst of all this, politicians, FEMA and the utilities have been seen on television congratulating themselves on a job well done.  Well, news flash!  The rescue, recovery and rebuilding, not just of property but also of lives, is not done.  It is just beginning.

Nearly two weeks after the storm insufficient progress has been made.  Most of the attention of the media, politicians and relief agencies has been focused on the Jersey Shore and Manhattan.  Well, we pay taxes too!  We deserve better!