Tuesday, November 30, 2010

All or Nothing

This week, President Obama announced a plan to freeze the wages of ALL Federal employees for two years,  saving billions of dollars.  My first reaction was "Good for him!  Saving billions is a step in the right direction."  After thinking about it, I realized the fallacy of this move.

While I believe that there are many Federal workers that deserve a wage freeze, not "All" do.

Similar "All or Nothing" thinking:

  • ALL people traveling on airplanes are suspected terrorists and are subjected to extreme measures (taking off clothing items, not allowing the carry of any liquids, subject to invasive electronic and physical searching) 
  • ALL deep-water drilling must stop for 6-months (Obama's offshore drilling moratorium after the BP Oil Spill), hurting many viable and safe drill sites and impacting the jobs and related economy. 
  • The $787 Billion Stimulus included ALL spending ideas (Why not pick the most valuable spending ideas and then authorize spending as needed?).
  • The Healthcare Reform Act included ALL 2000+ pages of reform (why not just pick the best couple of ideas and see how they work?)
This problem isn't Democrat nor is it Republican.  It's a "leave it to me, I know best" mentality.  When the All or Nothing decisions are made they typically result in unintended bad consequences.  The resulting criticism draws the excuse that "it would be too hard to sort out the good from the bad" or "we'll fix it later"[1].  

Extreme examples of "All or Nothing" thinking
  • During the French Revolution, the idea that ALL Aristocrats were bad and should be executed.
  • In early U.S. history, the idea that ALL blacks were inferior and NONE should be allowed basic civil rights.
  • Nazi Germany's idea that ALL Jews are bad for Germany 
  • During World War II, the idea in the U.S that ALL Japanese immigrants were bad and should be put in concentration camps. 

What would be a better approach to cutting the cost of Federal wages?  Here's my idea:
  1. Evaluate the relative "value" of all Federal Departments and Agencies (listed here)
  2. Determine a percentage that each Department/Agency needs to cut.
  3. Give the head of each Dept./Agency the task of making the cuts.
  4. The head of each Dept./Agency then performs steps 1-3 for his subordinates.
  5. Repeat steps 1-4 until you reach the bottom of the decision makers.
  6. Repeat steps 1-5 evary 1 to 12 months until you've balanced the budget.


Monday, November 22, 2010

First Effects of the Healthcare Reform Act

Our family is already benefiting from the Health Care Reform Act. Our 21 year-old son stopped being eligible under the old plan, but we can now have him covered thanks to the new law.

Our family is also starting to pay for the Health Care Reform Act. I got this memo from our benefits department:
The purpose of this memo is to provide you information on the medical rates for next year... The premiums for certain medical insurance plans are increasing significantly for 2011. This increase is due to medical trend, increased costs to meet requirements for the Healthcare Reform Act, and primarily, to the high dollar amount of medical claims in these plans over the last year...
The out-of-pocket increases to cover your family:

"Cadillac" plan increased by $529.75/month, $6,357/year.
"Cheap Cadillac" plan costs an extra $157.65/month or $1,892/year.
"Chevy" plan increased by $43.59/month, $523/year.

We had the "Chevy" plan, so the increase seems fair since we are getting the added value of coverage for an additional dependent.


The peasants are revolting over the increase in the Cadillac plan.

I don't know what percentage of these increases is due to the new law.  I know that most of the increase in the Cadillac plan is due to simple economics and not due to the new law.  Our company is trying to ween people off of a local health provider (covered by the "Cadillac") whose costs have risen significantly.  The "Cheap Cadillac" plan very explicitly excludes the evil, costly provider.

Surprisingly, the out-of-pocket cost of Kaiser (yet another option) went unchanged, so Kaiser is getting our business this year for the first time.  Free market forces are still working, in spite of all the rules and regulations.

Tuesday, November 16, 2010

Senate Save Us From The Practical Problems

I was watching the C-SPAN coverage of the Senate Committee on Air Cargo and Airport Security hearing[1] (a reasonable alternative to watching Glee).  This hearing was timely due to the recent controversy with the full body scanners at airports and pat-downs. [2]

It was obvious to me why Congress has such a low approval rating.  Do these Senators really think they are making us safer? My least favorite was Senator Levin (at 45 min in video [1]). He managed to point out 19 times during his 7 minutes of questioning that the "practical problems" had not been solved. I had no idea what point he was trying to make. The Senators did speak for us public by saying we would rather experience delays in shipping, be patted down by airport security, etc. than suffer another failed attempt like the underwear bomber or printer cartridge bomb.

Thanks for taking care of us!

TSA pat-down leaves traveler covered in urineWoman With 2 Artificial Knees Describes 'Sexual Assault' By Screener...
Searched because she wore a skirt
Cancer-surviving flight attendant forced to remove prosthetic breast...
TSA Apologizes For Making Boy Remove Leg Braces
Wow!  I agree with Senator Boxer on this one!

Going to far...Child scream's "Stop touching me!"



Tuesday, November 9, 2010

Civility, Debt and Partisanship

I was raised to believe that debt is bad and should be avoided with few exceptions.  Not surprisingly, every time I hear about the growing Federal Debt, I feel anxious and worried.  Recently, I came across a Wikipedia article titled National debt by U.S. presidential terms. I was bothered by the premise of the article that Republican Presidents increase the debt and Democrat Presidents decrease the debt.
I was pleased to see the discussion section for the article raise the same issues that I would have:
  • What about Obama? 
  • Why blame only the President when only the House of Representatives is authorized by the Constitution to originate spending bills? (Article I Section 7 "All bills for raising Revenue shall originate in the House of Representatives", and by precedence that includes spending). 
  • Why did the chart start in 1950, excluding the deficit spending of Democrat Presidents before this period?

I decided to look at the data myself. Of course I abandoned civility by starting with the premise that Democrats are the spenders and Republicans were fiscally responsible. I ended up with the chart below (the color represents the control of the House of Representatives). 


As I looked at the data, I couldn't find a clear pattern. I then looked at partisan splits in Congress and between Congress and the President. If you look at either chart, you can see that there are times when either party was responsible for the debt.

I then remembered my vow of civility and decided to take a fresh look at the data, not blaming either party. The results both surprised me and didn't. Below is a table of periods of rising debt.

What stands out:
  • What political party is in power is not significant
  • Periods of debt seem to be related to wars and financial crises
  • It takes much fewer years to create debt than to pay it off
  • Our government has had out of control spending for last 30 years.
  • Our government has not wisely used the surplus during recent years of plenty.
  • Republicans and Democrats are both right when they blame each other for our debt problems.

YearYears to Peak%GDPYears to PayoffHistorical EventParty
Pres House Senate
190811.5%1Panic of 1907RRR
1916-1919428%11World War IDDRDR
1930-19411226%Not paid forGreat DepressionRDRDRD
1941-1945583%24World War IIDDD
1981-19961635%???Cold War
Off Gold Standard?
RRDD
2002-Present9+38%???War in Middle East
Great Recession
RDRDRD
1981-Present30+62%??????RDRDRD


Monday, November 1, 2010

Night Before The Election

I had a couple friend's over tonight to look over the ballot.  Next election I'll try and get an earlier start.

Here's a summary:
  1. I've lived in California my whole life and I'm frankly scared for its future.
  2. I'm surprisingly voting mostly for incumbents at the local level.   
    • Our city is not in debt.
    • I've met the mayor and I like him.  I also trust him.
    • I like our cities development plan: the new parks are beautiful and I like the businesses that have come here.
    • The schools have continually been improving (at least their test scores).  The incumbents on the school board have lived here over 35 years and raised their kid's here.
  3. I guess I picked a good town to live in.  I hope I don't have to move out of California.
In Conclusion:

The enormous power in Sacramento that resulted from such a great state as California has resulted in greed, corruption and enormous debt.

The limited power at the local level allows civic minded people to act responsibly.