One of the provisions of the Patient Protection and Affordable Care Act (ObamaCare) requires insurance companies to spend 80% of premiums they collect from small employer groups on claims. The figure for large employer groups is 85%. All other administrative expenses must be paid out of the remaining funds, referred to as the Medical Loss Ratio (MLR).
On the surface this seems to make sense and can be viewed as fair to all participants of these health insurance plans. But as the saying goes “the devil is in the details”.
A major problem/issue is that the law requires agent compensation to be part of the MLR, classifying it as an administrative expense. In order to comply, insurance companies were forced to cut agent compensation. In some cases, these cuts were up to 50%.
Now this makes no sense because ObamaCare created so much confusion, agents were inundated with questions from clients which necessitated much research to find answers. I can attest to this from my own experience. So at the very moment the government created more work for insurance agents and brokers, they effectively reduced their compensation.
Tell me how this makes any sense?
Hopefully, relief is in sight!
Two Congressman have introduced legislation that would exclude agent compensation from the MLR. The bill, the Access to Professional Health Insurance Advisors Act of 2011 has support from both sides of the aisle. It has been introduced by Reps. John Barrow (D-GA) and Mike Rogers (R-MI).
The bill is one of several attempts to free insurance companies from being forced to include agent compensation in their administrative costs. There is, of course, no guarantee that insurance companies will increase agent compensation if the law passed but it is a step in the right direction.
ObamaCare did not specify how to classify agent compensation under the MLR formula. However, through the regulatory process agent compensation was included in the MLR formula and also included as part of the “non-claims costs” category.
“Agent compensation is passed through by the insurance company from the consumer to the agent and is collected as part of the premium as a convenience,” says Robert Rusbuldt, president and CEO of the Independent Insurance Agents of America. “This compensation is not insurance company revenue and therefore should not be part of the MLR formula and the Rogers-Barrow legislation is a crucial technical fix to correct this error.”
If this issue is not addressed it can only cause harm to the consumer. Separately, many other insurance trade groups have been appealing for exemptions from the MLR calculations.
Hopefully, members of Congress will realize the value of this bill as the “status quo” is just not acceptable. According to a recent survey of 520 insurance agents conducted by the National Association of Insurance and Financial Advisors, 13% of agents experiencing reduced commissions have laid off or reduced the hours of support staff. Another 23% have considered staff reductions.
More than 25% say they will be forced to reduce staff in the future if commissions remain depressed.
Once again, the Obama administration and Congress, in spite of the claims that they are doing things to create jobs, propose and enact legislation that does just the opposite!
Monday, June 20, 2011
Monday, June 6, 2011
Are You Kidding Me?
In this past Sunday’s New York Times, Nicholas Kristof wrote an article entitled “Our Fantasy Nation?” His article centers on the desire of Tea Party conservatives and many Republicans to block the raising of the debt ceiling and offers an example of a nation that “lives up to their ideal”.
The nation he compares us to is Pakistan where he claims fewer than 2% of the people pay any taxes, government is limited and burdensome regulation never kills jobs. He further uses as examples of comparison that Pakistani society embraces traditional religious values, nobody objects to school prayer, same sex marriage is not imaginable and criminals are never coddled. Citizens are deeply patriotic and nobody burns flags.
And on this basis he concludes that the Republicans and Tea Party conservatives are moving America in the direction of Pakistan?
ARE YOU KIDDING ME?
Although he admits Sarah Palin and John Boehner do not intend to turn Washington into “Islamabad-on-the-Potomac” and that long-term budget issues need to be addressed (I assume he means by both Democrats and Republicans although he does not say this) he makes a very strong point that when Republicans insist on “starving the beast” of government, cutting taxes, regulations and social services, those are the steps to America becoming Pakistan.
ARE YOU KIDDING ME?
The rest of the article goes on to state how disastrous a Republican budget victory would be. For evidence he states the following:
history has taught us that government must take on more responsibility
citizens must pay more taxes
citizens of the Congo:
pay minimal taxes
there is high inequality
there is free-wheeling business and high military expenditures
the conclusion, I guess, is we are becoming like the Congo!
ARE YOU KIDDING ME?
And again we get the familiar argument that too much wealth is concentrated in too few hands, that the wealthiest 1% of Americans have greater net worth than the bottom 90%. Is this the fault of the wealthiest of our citizens?
ARE YOU KIDDING ME?
And if this were not enough nonsense, Mr. Kristof quotes G. Jeremiah Ryan, president of Bergen Community College in New Jersey. Mr. Ryan states that when the school was founded in 1965, two-thirds of the cost of running it was supposed to be paid by state and local governments and one-third by students. He goes on to say that today students bear 78% of the cost.
Is that the fault of the conservatives and Republicans? Perhaps that is not the conclusion that Mr. Kristof intended but the implication certainly is there. This is an example of the state government promising more than it could deliver, plain and simple. To imply otherwise is just not fair.
Yes, America is in an economic malaise and something must be done to spur employment, improve the housing market and aid the poorest of our citizens. It has been said that a society can be judged on how it treats its poor and I believe there is some truth to that.
But, in my opinion, the answer is not in government bailouts, re-distribution of wealth or taking from the rich to give to the poor. These are all the result of a president, and most who surround him, that is anti-business and believes all problems can be solved by taxing the rich.
I DISAGREE!
You really want to know why we have persistently high unemployment in excess of 9%?
You really want to know why we continue to have a lagging real estate market?
You really want to know why stock prices do not reflect growth in corporate profits?
It is because we have an administration that has an entitlement attitude. Mr. Obama and his supporters believe:
Re-distributing wealth is the answer to the nation’s economic woes
If you tax the “rich” enough, you have the solution to the nations’ economic woes
If you impose enough taxes on business - those dastardly hard-working Innovators who had the guts to start and attempt to grow a business - you will solve the nations’s economic woes
Growth of capital is not important
Mr. Obama and his administration are imposing on the American people social engineering at its worst. They display the attitude of the community organizer - look to the government to solve all problems. Turn the rich into the enemy. Blame successful businesses for all the nation’s ills.
Mr. Obama spent the first 2 years of his administration blaming everything on president Bush. He never acknowledge that by 2010, the Democrats had controlled Congress for 4 years! Then he discovered that government cannot do it all so he embarked on his campaign of soak the rich. How innovative!
We expect and deserve more from our president.
America will never return to greatness or realize its potential with an administration that pursues re-distribution of wealth and entitlement to the needy.
Businesses, both small and large, will not hire when they are unsure of what is the next piece of legislation that will adversely affect them and average workers are being hurt by this administration’s agenda.
Let me give you 2 examples.
In early 2009, the Obama administration passed the American Recovery and Reinvestment Act which came to be known as the ARRA law. One of its provisions required an employer to pay 65% of COBRA insurance premiums for 9 months for any employee terminated involuntarily. The Obama administration claimed that the expense would be offset by a payroll tax credit.
ARE YOU KIDDING ME?
This is an example of the empty-head thinking of administration officials who never ran a business, were never responsible for meeting a payroll and do not have a clue of what it takes to build a successful business.
Many small businesses did not have enough people remaining on payroll for the tax credit to offset the cost of the insurance premiums so it was a net loss to the business owner. The business owner was left holding the bag, including the expense of keeping track of all this and being penalized for this social legislation. I know this to be true for I was establishing COBRA administration plans for businesses and saw the devastating affect of this supposedly beneficial law. Time and time again I listened to business owners question how they could comply with all the new paperwork and the expense of that paperwork. And that, of course, is never considered by policy makers that have no business experience.
There was a ripple affect from this law. Companies like my former employer that did COBRA plan administration had to spend hundreds of thousands of dollars to communicate the provisions of this law to clients to be sure they were compliant. This all had a negative impact on the bottom line with absolutely no assistance from the government.
As a result, many businesses stopped hiring as times were so uncertain they did not want to face the prospect of paying COBRA premiums for additional involuntary terminations.
Another example.
Under “Obama Care” the ability of a worker to pay for over-the-counter drugs on a pre-tax basis as part of an employer sponsored flexible spending plan was eliminated. The administration justified this by saying mainly high income workers took advantage of this tax break.
ARE YOU KIDDING ME?
I can tell you from personal experience of establishing these pre-tax plans for many companies, many moderate income people participated. And since the amount of payroll being set aside for pre-taxing OTC medical expenses also gave a tax break to the employer, the elimination of this benefit also hurt the business owner.
This effectively RAISED the cost of OTC drugs for all flexible plan participants who could no longer take advantage of the tax break. Yet you never heard this from the Obama administration. All we heard is that Obama Care would REDUCE costs. How dishonest!
So, I submit that the Fantasy Nation is not what Mr. Kristof says the Republicans are moving us toward, it is the Nation we currently have!
The nation he compares us to is Pakistan where he claims fewer than 2% of the people pay any taxes, government is limited and burdensome regulation never kills jobs. He further uses as examples of comparison that Pakistani society embraces traditional religious values, nobody objects to school prayer, same sex marriage is not imaginable and criminals are never coddled. Citizens are deeply patriotic and nobody burns flags.
And on this basis he concludes that the Republicans and Tea Party conservatives are moving America in the direction of Pakistan?
ARE YOU KIDDING ME?
Although he admits Sarah Palin and John Boehner do not intend to turn Washington into “Islamabad-on-the-Potomac” and that long-term budget issues need to be addressed (I assume he means by both Democrats and Republicans although he does not say this) he makes a very strong point that when Republicans insist on “starving the beast” of government, cutting taxes, regulations and social services, those are the steps to America becoming Pakistan.
ARE YOU KIDDING ME?
The rest of the article goes on to state how disastrous a Republican budget victory would be. For evidence he states the following:
history has taught us that government must take on more responsibility
citizens must pay more taxes
citizens of the Congo:
pay minimal taxes
there is high inequality
there is free-wheeling business and high military expenditures
the conclusion, I guess, is we are becoming like the Congo!
ARE YOU KIDDING ME?
And again we get the familiar argument that too much wealth is concentrated in too few hands, that the wealthiest 1% of Americans have greater net worth than the bottom 90%. Is this the fault of the wealthiest of our citizens?
ARE YOU KIDDING ME?
And if this were not enough nonsense, Mr. Kristof quotes G. Jeremiah Ryan, president of Bergen Community College in New Jersey. Mr. Ryan states that when the school was founded in 1965, two-thirds of the cost of running it was supposed to be paid by state and local governments and one-third by students. He goes on to say that today students bear 78% of the cost.
Is that the fault of the conservatives and Republicans? Perhaps that is not the conclusion that Mr. Kristof intended but the implication certainly is there. This is an example of the state government promising more than it could deliver, plain and simple. To imply otherwise is just not fair.
Yes, America is in an economic malaise and something must be done to spur employment, improve the housing market and aid the poorest of our citizens. It has been said that a society can be judged on how it treats its poor and I believe there is some truth to that.
But, in my opinion, the answer is not in government bailouts, re-distribution of wealth or taking from the rich to give to the poor. These are all the result of a president, and most who surround him, that is anti-business and believes all problems can be solved by taxing the rich.
I DISAGREE!
You really want to know why we have persistently high unemployment in excess of 9%?
You really want to know why we continue to have a lagging real estate market?
You really want to know why stock prices do not reflect growth in corporate profits?
It is because we have an administration that has an entitlement attitude. Mr. Obama and his supporters believe:
Re-distributing wealth is the answer to the nation’s economic woes
If you tax the “rich” enough, you have the solution to the nations’ economic woes
If you impose enough taxes on business - those dastardly hard-working Innovators who had the guts to start and attempt to grow a business - you will solve the nations’s economic woes
Growth of capital is not important
Mr. Obama and his administration are imposing on the American people social engineering at its worst. They display the attitude of the community organizer - look to the government to solve all problems. Turn the rich into the enemy. Blame successful businesses for all the nation’s ills.
Mr. Obama spent the first 2 years of his administration blaming everything on president Bush. He never acknowledge that by 2010, the Democrats had controlled Congress for 4 years! Then he discovered that government cannot do it all so he embarked on his campaign of soak the rich. How innovative!
We expect and deserve more from our president.
America will never return to greatness or realize its potential with an administration that pursues re-distribution of wealth and entitlement to the needy.
Businesses, both small and large, will not hire when they are unsure of what is the next piece of legislation that will adversely affect them and average workers are being hurt by this administration’s agenda.
Let me give you 2 examples.
In early 2009, the Obama administration passed the American Recovery and Reinvestment Act which came to be known as the ARRA law. One of its provisions required an employer to pay 65% of COBRA insurance premiums for 9 months for any employee terminated involuntarily. The Obama administration claimed that the expense would be offset by a payroll tax credit.
ARE YOU KIDDING ME?
This is an example of the empty-head thinking of administration officials who never ran a business, were never responsible for meeting a payroll and do not have a clue of what it takes to build a successful business.
Many small businesses did not have enough people remaining on payroll for the tax credit to offset the cost of the insurance premiums so it was a net loss to the business owner. The business owner was left holding the bag, including the expense of keeping track of all this and being penalized for this social legislation. I know this to be true for I was establishing COBRA administration plans for businesses and saw the devastating affect of this supposedly beneficial law. Time and time again I listened to business owners question how they could comply with all the new paperwork and the expense of that paperwork. And that, of course, is never considered by policy makers that have no business experience.
There was a ripple affect from this law. Companies like my former employer that did COBRA plan administration had to spend hundreds of thousands of dollars to communicate the provisions of this law to clients to be sure they were compliant. This all had a negative impact on the bottom line with absolutely no assistance from the government.
As a result, many businesses stopped hiring as times were so uncertain they did not want to face the prospect of paying COBRA premiums for additional involuntary terminations.
Another example.
Under “Obama Care” the ability of a worker to pay for over-the-counter drugs on a pre-tax basis as part of an employer sponsored flexible spending plan was eliminated. The administration justified this by saying mainly high income workers took advantage of this tax break.
ARE YOU KIDDING ME?
I can tell you from personal experience of establishing these pre-tax plans for many companies, many moderate income people participated. And since the amount of payroll being set aside for pre-taxing OTC medical expenses also gave a tax break to the employer, the elimination of this benefit also hurt the business owner.
This effectively RAISED the cost of OTC drugs for all flexible plan participants who could no longer take advantage of the tax break. Yet you never heard this from the Obama administration. All we heard is that Obama Care would REDUCE costs. How dishonest!
So, I submit that the Fantasy Nation is not what Mr. Kristof says the Republicans are moving us toward, it is the Nation we currently have!
Sunday, July 4, 2010
On my friend George Miller
My friend George Miller died this week. He lost his one year battle with cancer. Ever since I learned of his illness, I prayed daily that the cancer would leave his body. But, God’s plan won out over mine.
I am writing about this, even though it is very personal, because George was a quiet and humble man. But he was also a very great man. He embodied what America is really all about.
George was my wife Rhonda’s uncle so I came to be “related” to him thru marriage. From the first time I met him, he accepted me as part of the family. George loved to hunt, fish and shoot and we spent many hours together talking about or actually engaging in our shared interest of guns and shooting.
George grew up in southwest Virginia, served his country in the Navy and then worked for over 30 years for the railroad. He and his wife Sandra were high school sweethearts. Together they raised and married off two children. Two weeks before his death their first grandchild was born. Fortunately, George was able to see and hold his granddaughter before he passed.
I always knew George to be a humble man. He worked hard, was honest and did not expect any bail-out from the government. He loved to cook and tell stories, mostly true stories but some probably with some exaggeration. But that is OK because I always enjoyed just listening to him. He was in his element in the outdoors and in the kitchen and would always help you any way he could.
He believed in hard work, personal responsibility and no excuses. That is how he raised his children. He stayed busy in retirement and always seemed to be on the move.
The last time I saw him was at his daughter Nickie’s wedding last August. That is how I will always remember him. He was not one to be comfortable in a suit but that day he looked so distinguished and his pride as father of the bride was evident.
George was a true American. A veteran, husband, father and Grand Dad.
I cannot imagine the grief his wife and children are experiencing and the void in their lives that will never be filled. I know that there is a hole in my heart that will never be repaired.
I cannot understand why we lose such good people at such a young age. He was 64.
So, I pray that God will hold the soul of my friend George Miller in his loving arms.
George, may you rest in peace. We all miss you and always will.
I am writing about this, even though it is very personal, because George was a quiet and humble man. But he was also a very great man. He embodied what America is really all about.
George was my wife Rhonda’s uncle so I came to be “related” to him thru marriage. From the first time I met him, he accepted me as part of the family. George loved to hunt, fish and shoot and we spent many hours together talking about or actually engaging in our shared interest of guns and shooting.
George grew up in southwest Virginia, served his country in the Navy and then worked for over 30 years for the railroad. He and his wife Sandra were high school sweethearts. Together they raised and married off two children. Two weeks before his death their first grandchild was born. Fortunately, George was able to see and hold his granddaughter before he passed.
I always knew George to be a humble man. He worked hard, was honest and did not expect any bail-out from the government. He loved to cook and tell stories, mostly true stories but some probably with some exaggeration. But that is OK because I always enjoyed just listening to him. He was in his element in the outdoors and in the kitchen and would always help you any way he could.
He believed in hard work, personal responsibility and no excuses. That is how he raised his children. He stayed busy in retirement and always seemed to be on the move.
The last time I saw him was at his daughter Nickie’s wedding last August. That is how I will always remember him. He was not one to be comfortable in a suit but that day he looked so distinguished and his pride as father of the bride was evident.
George was a true American. A veteran, husband, father and Grand Dad.
I cannot imagine the grief his wife and children are experiencing and the void in their lives that will never be filled. I know that there is a hole in my heart that will never be repaired.
I cannot understand why we lose such good people at such a young age. He was 64.
So, I pray that God will hold the soul of my friend George Miller in his loving arms.
George, may you rest in peace. We all miss you and always will.
Saturday, June 26, 2010
Annuity Tax
The Obama administration wants to impose a tax of 2.9% on income from annuities for individuals earning more than $200,000 and families earning more than $250,000. The purpose of the tax is to fund Medicare.
Every person who owns an annuity, regardless of income, should express their concern over this money grab. If they get away with this, watch for them to then tax life insurance death benefits. Here is yet another example of this administration’s policy of spend and tax!
The American Council of Life Insurers (ACLI), a life insurance trade group, is expressing its concern over this proposal. The ACLI recently sent a letter to Treasury Secretary Tim Geithner stating such a tax would hurt American’s ability to save for retirement.
Frank Keating, ACLI president, urged Mr. Geithner to reevaluate this proposal that will increase taxes on an important retirement security tool.
Revenue generated from this tax would fund the Medicare Hospital Insurance trust fund included in the Patient Protection and Affordable Care Act, more popularly known as “Obamacare”.
How illogical is this tax!! Our “leaders” in Washington should be devising ways to assist Americans in their retirement planning, not taking away a tool that has been used by millions for many years. In an age of disappearing pensions and decimated 401(k) accounts, you would think those geniuses in Washington would come up with something to help not hinder us in our retirement planning. This is yet another clear example of this Administration’s socialist approach to solving the country’s problems. Take from one group and re-distribute. That is not what America is about!
“Currently, Americans face unprecedented difficulties securing their retirement income in an environment that has shifted longevity, savings and other retirement risks onto the individual,” Keating said in the letter. “In such a landscape, policy-makers should not create a disincentive for annuity products that help Americans address these risks.”
The immediate gains to the federal budget from this tax will result in huge losses. These taxes, as the ACLI points out, will have the unintended effect of discouraging people from using these tools to plan for their financial futures. If people who struggle to save a few dollars each month stop using these investment vehicles, then a far bigger problem, and much larger taxes, will await Congress and all of us down the road.
As an alternative, Mr. Keating wants Congress to create tax incentives for people preparing for retirement, which would encourage them to use tools like annuities to develop lifetime income streams.
Amen to that!
Every person who owns an annuity, regardless of income, should express their concern over this money grab. If they get away with this, watch for them to then tax life insurance death benefits. Here is yet another example of this administration’s policy of spend and tax!
The American Council of Life Insurers (ACLI), a life insurance trade group, is expressing its concern over this proposal. The ACLI recently sent a letter to Treasury Secretary Tim Geithner stating such a tax would hurt American’s ability to save for retirement.
Frank Keating, ACLI president, urged Mr. Geithner to reevaluate this proposal that will increase taxes on an important retirement security tool.
Revenue generated from this tax would fund the Medicare Hospital Insurance trust fund included in the Patient Protection and Affordable Care Act, more popularly known as “Obamacare”.
How illogical is this tax!! Our “leaders” in Washington should be devising ways to assist Americans in their retirement planning, not taking away a tool that has been used by millions for many years. In an age of disappearing pensions and decimated 401(k) accounts, you would think those geniuses in Washington would come up with something to help not hinder us in our retirement planning. This is yet another clear example of this Administration’s socialist approach to solving the country’s problems. Take from one group and re-distribute. That is not what America is about!
“Currently, Americans face unprecedented difficulties securing their retirement income in an environment that has shifted longevity, savings and other retirement risks onto the individual,” Keating said in the letter. “In such a landscape, policy-makers should not create a disincentive for annuity products that help Americans address these risks.”
The immediate gains to the federal budget from this tax will result in huge losses. These taxes, as the ACLI points out, will have the unintended effect of discouraging people from using these tools to plan for their financial futures. If people who struggle to save a few dollars each month stop using these investment vehicles, then a far bigger problem, and much larger taxes, will await Congress and all of us down the road.
As an alternative, Mr. Keating wants Congress to create tax incentives for people preparing for retirement, which would encourage them to use tools like annuities to develop lifetime income streams.
Amen to that!
Monday, June 21, 2010
Start-Ups
It is common at college graduation time to ask the newly minted degree holder what he/she plans to do after graduation; meaning do you have a job? Too many recent grads just cannot find a job even remotely related to their field of study. We owe our young people better and the solution is not that complicated although it appears to generate little discussion in Washington.
In his excellent op-ed piece, Thomas Friedman says we need three things: start-ups, start-ups and more start-ups. However, good jobs do not come from government. They come from risk takers starting businesses. A business that makes people’s lives healthier, more productive, more comfortable or more entertained, with services and products that can be sold around the world has just got to be successful.
The bottom line is you cannot be for jobs and against business. And herein lies the rub. This administration has just not been focused on job creation. As pointed out by Leon Hardt in the New York Times, Mr. Obama, Harry Reid and Nancy Pelosi have done less than they could have. And what is their excuse? They have been busy with other things like creating legislation for health care and financial services reform.
Now, I am not against health care and financial services reform, but everything in due time. The first priority of the President as he took office was to resurrect the economy and that means job creation. The stock market will not grow and home sales will not return to robust levels until more people are employed.
Mr. Obama has not wrapped his arms around teachers, fire-fighters and other workers facing layoffs and dared Republicans to oppose him, just as he did with financial regulation. He has not pushed for tax cuts which could also put Republicans on the defensive. So now the Democrats find themselves in the unenviable position of heading into mid-term elections with the unemployment rate near 10%!
Instead of pushing for short term stimulus and tax cuts we are getting long term spending and tax increases.
As a result, relations today between Mr. Obama and the people, especially businesses, the people who make and sell “stuff” are particularly strained. I wonder how many business owners who voted for the president would vote for him again.
To be fair, Mr. Obama has never received credit for stabilizing the economy with virtually no help from Republicans but we do not like having our taxes increased to pay for some one else’s health care.
The main problem, again, is this administration’s lack of leadership. Their efforts at job growth do not appear to be well coordinated, a top priority or championed by knowledgeable leaders. As Mr. Friedman points out, “this administration is heavily staffed by academics, lawyers and political types. There is no senior person who has run a large company or built and sold globally a new innovative product. And that partly explains why this administration has been mostly interested in pushing taxes, social spending and regulation – not pushing trade expansion, competitiveness and new company formation. Innovation and competitiveness do not seem to float Obama’s boat.”
America is going to pay a heavy price for this if things do not change.
But what could that change look like?
Two prominent individuals have suggested the following:
Curtis Carlson, chief executive of SRI International, the Silicon Valley-based innovation specialists, says he would begin by creating a cabinet position exclusively for promoting innovation and competitiveness to ensure that America remains “the world’s new company formation leader.” He advocates lower taxes for start-ups, reducing costly regulation and expanding tax breaks for research. He says ‘we need to unleash millions of entrepreneurs.”
Another expert, Robert Litan, vice president of research and policy at the Kauffman Foundation, says he would staple a green card to the diploma of every foreign student who graduates from an American university and push for a new entrepreneur’s visa because the current one requires $1 million of capital that few foreign entrepreneurs have. It would grant temporary residence to any foreigner who comes here to establish a company and permanent residency if that company generates a certain level of new full-time jobs. He also suggests cutting the capital gains tax for any profit-making venture start-up from 15% to 1%. Now that is an incentive! He opines we should “encourage our best minds to be successful starting new companies rather than going to Wall Street and betting against existing companies.”
Finally, he would impose a carbon tax and balance that with a reduction in the payroll tax and corporate taxes. As he says, “let’s tax what we do not want and encourage what we do.” Makes sense to me.
Too bad we are not hearing any of this from Washington
In his excellent op-ed piece, Thomas Friedman says we need three things: start-ups, start-ups and more start-ups. However, good jobs do not come from government. They come from risk takers starting businesses. A business that makes people’s lives healthier, more productive, more comfortable or more entertained, with services and products that can be sold around the world has just got to be successful.
The bottom line is you cannot be for jobs and against business. And herein lies the rub. This administration has just not been focused on job creation. As pointed out by Leon Hardt in the New York Times, Mr. Obama, Harry Reid and Nancy Pelosi have done less than they could have. And what is their excuse? They have been busy with other things like creating legislation for health care and financial services reform.
Now, I am not against health care and financial services reform, but everything in due time. The first priority of the President as he took office was to resurrect the economy and that means job creation. The stock market will not grow and home sales will not return to robust levels until more people are employed.
Mr. Obama has not wrapped his arms around teachers, fire-fighters and other workers facing layoffs and dared Republicans to oppose him, just as he did with financial regulation. He has not pushed for tax cuts which could also put Republicans on the defensive. So now the Democrats find themselves in the unenviable position of heading into mid-term elections with the unemployment rate near 10%!
Instead of pushing for short term stimulus and tax cuts we are getting long term spending and tax increases.
As a result, relations today between Mr. Obama and the people, especially businesses, the people who make and sell “stuff” are particularly strained. I wonder how many business owners who voted for the president would vote for him again.
To be fair, Mr. Obama has never received credit for stabilizing the economy with virtually no help from Republicans but we do not like having our taxes increased to pay for some one else’s health care.
The main problem, again, is this administration’s lack of leadership. Their efforts at job growth do not appear to be well coordinated, a top priority or championed by knowledgeable leaders. As Mr. Friedman points out, “this administration is heavily staffed by academics, lawyers and political types. There is no senior person who has run a large company or built and sold globally a new innovative product. And that partly explains why this administration has been mostly interested in pushing taxes, social spending and regulation – not pushing trade expansion, competitiveness and new company formation. Innovation and competitiveness do not seem to float Obama’s boat.”
America is going to pay a heavy price for this if things do not change.
But what could that change look like?
Two prominent individuals have suggested the following:
Curtis Carlson, chief executive of SRI International, the Silicon Valley-based innovation specialists, says he would begin by creating a cabinet position exclusively for promoting innovation and competitiveness to ensure that America remains “the world’s new company formation leader.” He advocates lower taxes for start-ups, reducing costly regulation and expanding tax breaks for research. He says ‘we need to unleash millions of entrepreneurs.”
Another expert, Robert Litan, vice president of research and policy at the Kauffman Foundation, says he would staple a green card to the diploma of every foreign student who graduates from an American university and push for a new entrepreneur’s visa because the current one requires $1 million of capital that few foreign entrepreneurs have. It would grant temporary residence to any foreigner who comes here to establish a company and permanent residency if that company generates a certain level of new full-time jobs. He also suggests cutting the capital gains tax for any profit-making venture start-up from 15% to 1%. Now that is an incentive! He opines we should “encourage our best minds to be successful starting new companies rather than going to Wall Street and betting against existing companies.”
Finally, he would impose a carbon tax and balance that with a reduction in the payroll tax and corporate taxes. As he says, “let’s tax what we do not want and encourage what we do.” Makes sense to me.
Too bad we are not hearing any of this from Washington
Thursday, June 17, 2010
On Presidential Leadership
In watching the media coverage of the Gulf oil spill and the president’s reaction to it, I find it interesting how many times the commentator/reporter has discussed the president’s leadership, or lack thereof, depending on your perspective. Most of the overtone has been negative, criticizing the president for lack of dynamic, forceful leadership. One pundit even criticized him for lacking passion and approaching the problem as a lawyer instead of as a leader.
I simply ask “Why is everyone looking for Mr. Obama to display leadership”? You may find my question to be strange as all right thinking people would expect the president to display leadership in any crisis. Please understand the context in which I pose this question.
An expectation of anything, in this case presidential leadership, assumes the person in question has had prior experience with situations that called for the skill needed to deal with the situation in question. Is this true of Mr. Obama? Does he have the necessary skills to deal with this crisis? I do not know. You be the judge.
But let me provide the following “food for thought”.
General Colin Powell defines leadership as the art of accomplishing more than the science of management says is possible. There is a powerful message hidden in this statement. In my opinion, the operative words are “accomplishing more”.
Very few of us accomplish much on our own. We accomplish tasks by motivating and leading people to the desired outcome. It has been my experience that the American culture places too much emphasis on management. My life experience taught me early on that people do not want to be managed; they want to be led….. by someone whose vision they can embrace.
Managers manage things, leaders lead people. This is a huge distinction.
Is the president “managing” or “leading”?
Does Mr. Obama have anything in his life experience that would lead us to believe he can provide the leadership so necessary as president? Has he ever:
Run a business?
Met a payroll?
Hired anyone?
Created a vision that others wanted to follow and then executed that vision?
Had responsibility for the welfare of a group?
Surrounded himself with people that will tell him what he needs to hear, not what he wants to hear?
Confronted the people who need to be confronted?
Been the chief executive of anything?
Are we expecting more of him as a leader than he is equipped to deliver?
Again, you be the judge.
Remember one thing: The skills required to become president are not necessarily the skills required to be president!
Sunday, June 13, 2010
More on the Oil Spill
In the New York Times Week In Review section of June 6, Matt Bai wrote an excellent article titled “Obama and the Chaos Perception”. The main theme of the article is that it is usually not one crisis but a series of crises that pose a threat and can diminish a presidency . All presidents had to deal with chaos in their time in office. Jimmy Carter had inflation, gas shortages and the
Most presidents are faced with events that cause chaos. In addition to the oil spill, Mr. Obama must contend with a consistently weak economy, unacceptable unemployment levels and collapsing foreign economies. There is a sense that there are too many dangers at once. People are asking “what is this president doing to control the chaos”? Events appear to be spiraling beyond his reach.
We expect a president to use his power to rein in the chaos but we do not see this happening with Mr. Obama. He was elected on a promise to reform government but seems incapable of mastering the apparatus.
After 18 months in office he still presents himself as an intellectual critic of the government. However, we all see him as the embodiment of the government. The transition is over and he is the chief bureaucrat, accountable for the government’s failures whether that is fair or not!
During his news conference last week, Mr. Obama displayed a huge disconnect when he repeatedly referred to what the federal government is doing about the oil spill. We want to know what you are doing Mr. President. You are not a detached observer to this crisis. You are an integral part of the solution, or you should be.
We no longer care that you share our outrage. We want you to stop the leak!
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