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Wall Street Weekly | 11/06/2009 11:45 am

Liz Peek: Obama Deaf to Election Warning But May Get Bailed Out

As bad as the recent jobs report is, the president is likely to receive some good news over the next several months …

Bears, Bulls, Chickens and Pigs: wOw’s Wall Street Weekly with Liz Peek (Week of 11/2) 

Editor’s Note: Liz Peek is a financial columnist.

The Bureau of Labor Statistics reports that the unemployment rate rose from 9.8% to 10.2% in October, the highest level since 1983. Job losses were primarily in construction, manufacturing and retail, and were worse than expected. This is not good news; the terrible job market clearly weighs on consumer sentiment and spending, slowing the recovery. The debilitating payroll cuts also produced some cranky voters this past Election Day.

All politics may be local, but it is hard not to read national significance into Tuesday’s election results. Voters rallied against high taxes and the worrisome economy, while in Virginia, disillusioned young and independent voters crossed the aisle yet again to elect a long-odds Republican.

Astonishingly, the Obama administration has chalked up this apparent warning shot to circumstances beyond their control. Neither tea parties nor sinking polls or, now, pointed election returns seem to have made the slightest dent in their enthusiasm for policies that the majority of Americans do not embrace. Speaker Nancy Pelosi could barely contain her glee that the Democrats had picked up an extra House seat in New York – all the better to ram health-care legislation through. Remember Obama’s words on the night he was elected? "I will listen to you, especially when we disagree."

Americans are genuinely concerned about their country’s fiscal prospects, and about Obama’s programs that will create even worse deficits down the road. Fundamentally, they are worried that a shrinking number of people are supporting a growing segment of the population. The jobs being "saved" or added currently are mainly government jobs; the private sector continues to lay off workers. Even a caveman (with all due respect) gets that this is an unworkable trend.

In 2007 economist Gary Shilling wrote that 52.6% of Americans received "significant income from government programs, up from 49.4% in 2000 and 28.3% in 1950." These figures included, for 2007, 19 million Americans on food stamps, 57 million receiving Social Security payments, over 4 million collecting income from the Veterans’ Administration and millions more employed by the government. For sure, the figure has risen in the past two years as increasing numbers have received unemployment assistance and as the government has propped up banks and autos.

At the same time, a growing number of Americans do not contribute to our tax roles. The Tax Foundation reports that about one-third of our population files returns but pays no taxes, up from 18% in the early 1980s, while another 20 million Americans do not file returns at all.

This is not about social justice. It’s about a shifting of the economic burden in a way that is unsustainable. As baby boomers approach retirement and begin to receive Social Security, the number of people paying in more than they are taking out is going to shrink yet again. Add to that inevitability the millions that will receive health care under the legislation working its way through Congress and it is no wonder that young voters shifted gears. They see the burden contained in the legislation that Democrats are so eager to adopt. It is worth noting that, in 1980, 55% of Americans were receiving government handouts – a level that ushered in the Reagan revolution.

433 Reader Comments (so far…) Sign In or Register to comment

Maggie W

You touched on perhaps this country’s greatest problem.  I give you US Senator Cornyn as an example.  From past actions, it seems he initially came to Washington with good and honorable intentions.  Recently, the Senator made the comment that he was "perplexed" by the AMA’s decision to support the Democratic version of health care reform.  Cornyn isn’t really perplexed at all.  He knew that if that version passed, he will lose his considerable political contributions and nice gifts  and trips from the health insurance lobby, nice perks he has come to love and depend upon.There are many more just like him, and in both parties, on Capitol Hill. 

This piece of legislation is huge.  The lobbyists will make certain the insurers and big pharm will continue to line their deep pockets. They do not give a rat’s furry buttocks whether we continue with our costly, substandard health care.  It’s not just about this legislation; we can expect the same of any type of true reform whether it is education or health care or the environment, etc. 

Until we can limit special interests’ influence on Capitol Hill, our Congressmen will continue to talk out of both sides of their mouths… telling their constituents one thing and the lobbyists another.  

 

 

By Maggie W on 11/08/2009 10:08 am
Mary E. Sayler

The Republican Health Plan which I just read an outline of leaves much to be desired.  In fact I think that maybe they tried to make sure that more people would be made destitute by increased medical costs.  Here are some of the things I learned.

1.  The amount of uninsured Americans (47 million) would increase over the next ten years, according to the Congressional Budget Office.  By 2019, the CBO estimates, we’d have no fewer than 52 million non-elderly people without health coverage.

2.  Insurers would be allowed to cross state lines in offering their polices but would be exempt from any consumer-protection laws outside their home state.

3.  Insurers would still be able to deny coverage to people with preexisting medical problems.

4.  Employers wouldn’t have to offer health insurance to workers.

5.  Lower income people would receive no additional assistance buying coverage for their families.

I see nothing in these points from the Republican Party that does anything to solve the problems of our current Health care.  While I was teaching I paid additional money so that my daughter was covered by my health plan.  When it was finall possible to buy into Medicare I paid for that out of my salary so that my daughter wouldn’t have the burden of my medical care when I was elderly.  At 70 years, I am lucky that I am basically in perfect health but it runs in the family genes.  What I know is that there are many people that need my help and the help of other Americans who have it easier in life.  To me it is putting into actual practice the Golden Rule which is a basic tenant of the Christian, Jewish and Muslim faiths.  Yes, all three run through my Family Tree.  

By Mary E. Sayler on 11/08/2009 6:52 pm
Frannie Em

Maizie,

You are right and I agree. 

By Frannie Em on 11/08/2009 5:44 pm
Frannie Em

Maizie

Great discussion and great posts.  I agree with so much.  Where did we get lost?  Power and money and the combination of the two of those is lethal.

I remember my 7th grade American History teacher Mrs. Keck.  She was older - rather prim, I remember walking by her house in wonder and awe at her garden.  Anyway, one of the lessons that she taught that has always struck me about the nature of our system was the creation by the founders of "checks and balances."  It was amazing to me how clever the system was devised to keep the different departments of government honest.  The founders understood human nature and what could happen, and I believe they were trying to set forth a system that would hold together, and be able to face the extremities caused by man’s drive for individual self-survival and dominance, as well as greed and imperialism.  They were also opposed to big government - as is evidenced by the fact that they were rebelling against one of the biggest governments on the planet - the British Empire.

Your illustration of the mansion is very telling.  It seems to me that it is more than just the corruption of time, and more than divisiveness, which at times is so petty and belittles the fact that the US was the first democracy ever established.  Many thinkers, dreamers and philosophers were moving toward that idea of freedom, limited only by the current belief systems at that time.  But the US was the only nation to actively embody those ideals with the Declaration of Independence and the Constitution.  

The paradox, if you will,  or hypocrisy of it was that slave holders had participated in writing the declaration and the constitution.  So, even at that time, when the clearly wrong and divisive issue of slavery was there, this nation emerged. Man’s thought had evolved to the point that somewhere they could dream that there would be a realization that "all men were created equal."  So even with one of the most backward practices in existence -slavery - this experiment of democracy was engaged.  

Where did the experiment go wrong?  I remember reading a book - wow - over 15 years ago - The Lobbyists, and it described the practices in Washington at that time.  I can only think it has gotten worse with time and more laws and "ifs ands and buts" that erode the original idea - that this country is supposed to be by the people and for the people. Now it is by the special interests and for the special interests.

Owning a business that has worked in some beautiful historic homes the lesson is always go back to the original concept of the designer and the builder.  Systems get overburdened with new lights and fixtures so the old system has to be redone, but it is always with keeping within the integrity of the original idea.  Has our government gotten too convoluted in the programs it has created?  Why don’t they clean out the attic and old wiring before they just put more of it all around the old.  I don’t think they have the ability to and what is the old saying?  "Once a program is initiated there is no getting rid of it - whether it has outlived it’s relevancy or whether or not we need it.

I have said a million times that something has to be done about healthcare, but Washington can’t seem to do anything with efficiency anymore.   

Both or your posts hit to the core of some of the biggest questions of our time.  I don’t know if they are capable of answering them in Washington, but everything that is happening is waking up the populace and that is a good thing.  I think there will be turmoil for a while, but hopefully something of benefit will emerge.

By Frannie Em on 11/08/2009 5:39 pm
Sara Smile

Liz — I’m sure you’re aware that companies are currently sending jobs involving intellectual capital overses, also.    Software design, engineering, accounting — all going overseas.   

Special interests donating money to "guess who" Nancy Pelosi — you seriously want us to believe that "guess what" — only Nancy Pelosi is accepting money from special interest groups?  

Liz, from what I have seen of your columns the last two weeks — I would say you don’t have much respect for the intelligence of those who come on this board.   Pity.

By Sara Smile on 11/07/2009 4:17 pm
Zera Lee

Dear Liz, please tell me you’re not seriously expecting “intellectual capital” to save our economy. Software design and hardware development have been going overseas for years - there is no golden goose there. H-1B visas are not just about importing cheap labor to replace Americans in middle and upper-middle class American jobs. When those workers go home, they go home as some of the top researchers, scientists, and engineers in their field. It accelerates the loss of U.S. competitive advantage, but it is “good business”. As a nation, we profited greatly from the post-WWII Brain Drain, but we are the losers in the 21st century Brain Drain. Intel is developing top-of-the-line processor chips in India. We are well behind in tidal energy and stem cell research, among other things. The gap between our cream-of-the-crop and that of other countries is closing rapidly. We are behind and losing ground in education, impairing our future ability to compete. Past performance is not indicative of future success.

U.S. commerce would have taken an even greater plunge if our companies could not take advantage of low labor rates elsewhere.

They all want to sell in our economy, but they do not want to invest in that economy through employment. They are weakening the economy year over year.

Our companies cannot possibly compete with others around the globe unless we have comparable costs of production.

Do you realize that you are arguing in favor of turning the U.S. into a third-world economy???

Intel shows off new India-made processor
Microsoft looked offshore for high-end labor
Microsoft Pushing Support Jobs Offshore?
Microsoft Signs Deal to Outsource 600 Jobs To India?s HCL
U.S. jobs jumping ship

By Zera Lee on 11/09/2009 8:47 pm
Frannie Em

Helen,

Most lobbying firms have made less since the economic crisis except those working with the Obama Administration.  A while back Politico.com reported that those firms revenues increased by millions.   Anywhere from 15% - 30% more than other firms.  So who is getting money from lobbyists?  It was a striking difference as compared to those that  do not work for the administration.  

The president also made a deal with Big Pharma to pay for 90million in advertising to sell the bill to the public.  For that the bill stipulates that Americans will then be prohibited from buying cheaper drugs from Canada.  They also got a 10 year limit of $80 billion on cuts in prescription drug costs.  THey helped write this bill.  

He also made a deal with the AMA (which angered a majority of doctors) that the medicare cuts to doctors that are supposed to happen every year, would be rolled over this year, not repealed, but rolled over (sooner or later they will have to make the cuts - it will probably happen after the midterm elections) but it was a kind of "back the deal, or we will cut the doctor reimbursements" - very Chicago politics.

The AARP endorsed it because they have now become the arm of an insurer.  They used to insure seniors with high cost Medi-gap until the Bush Administration got Medicare advantage passed that let seniors continue with their own doctors and got them extended care until the end of their lives - Medi-gap did not do that (you had to use their doctors) and it was more expensive.  So AARP went for the and sold us out in order to get back their Medi-gap business since Obama is eliminating Medicare Advantage.  I am going to cancel my membership with AARP.  Too much dirty and greedy politics. 

There is no torte reform in the bill - in fact there is Section 2531 entitled:

"Medical Liability Alternatives"  establishes and incentive program for states to adopt and implement alternatives to medical liability litigation.  (But)……a state is not eligible for the incentive payments if that state puts a law on the books that limits attorneys’ fees or imposes caps and damages."

The democrats are the favorite home of millions of dollars the lawyers spend on lobbying.  

The only people that weren’t at the table were "we the people".  They did not listen to any of the legitimate protests in the last 6 months.  The compromised very little and the things that the republicans wanted in have been removed by Reid and his staff.  

As an Independent, the democrats are a huge disappointment.   I am sure there are many important things in the bill, but who can any of it anymore.  Who knows what deals are still in the making.  It is mind boggling.  This is not change, this is business as usual for a party to get what it wants.

 

By Frannie Em on 11/08/2009 12:09 am
Kathy Lee

Frannie,

I read the AARP article in today’s paper, and you are so right about Medi-gap.  AARP are going to make a bundle out of this, and that’s why they are backing the healthcare plan.  They have their eye on the money!  It’s all so crooked that it is the people who are going to suffer the most when all is said and done.  If anyone believes you are going to be paying less for your health insurance, then you aren’t reading and researching at all.  If this bill passes, we will all be taking home less pay.  Then if they shove Cap and Trade down our thoats, then our utilities will go sky high.  It’s all going to be too late for people to protest then.  Now is the time we should all be speaking out and let our voices be heard.  I call my representives along with faxing and emailing.  I may be one voice, but if we all don’t start speaking out, then we have no one to blame but ourselves.  Thank you for some great posting this weekend.  Your were spot on!

By Kathy Lee on 11/08/2009 8:01 pm
Frannie Em

Thanks Kathy Lee

There has to be healthcare reform, and no matter what we want - it will be far reaching because everyone wants a piece of the pie.  I think this bill is so unfair and will not solve much but create more bureaucracy.   But as I said, something has to be done so I am torn because I don’t want the protesting to stop healthcare reform.  I see this debacle from both sides, Bush had the house and congress as prices were soaring and they didn’t do anything - we went from paying $400 per month for health insurance and now we are at $1300 per month.  If they take us higher I don’t know what we will do.  It takes a serious bite out of our ability to save and invest for retirement.  If the repubs hadn’t ignored the issue we may not be in this problem.  Where was the visionary thinking of - hey maybe we should do something because if the dems do it we will end up with a massive expensive bureaucracy that will cost the nation tons.  Where were they?

Okay, so here we are and it just seems that this bill is too much too early.  Where are the jobs?  They say unemployment numbers aren’t so bad- but they are creating "volunteer" jobs with stimulus funds.  Better they have a job than not, but how long will those jobs last if the country goes belly up due to bankruptcy because we don’t export and manufacture?  Thousands of young men and women are turning to the military - I know that 15,000 joined in July.  I was speaking to someone from Force Command last week and he says that now they come to join and the catch phrase is "take a number".  They send them home and they come back the next day.  Their parents are taking the part time jobs they used to work.  We need as much effort as they are focusing healthcare put on job creation.  I don’t get it.  

By Frannie Em on 11/08/2009 10:14 pm
Maizie James

"We need as much effort as they are focusing healthcare put on job creation." - Frannie Em

Excellent post! AMERICANS NEED JOBS!

*Ditto:

Frannie are ‘right on’ about outsourcing by big business, and the impact it has had on job lost in this country.  And it’s not just the labor intense manufacturing jobs that’s affected.    My eldest son tells me that he worries because he’s noticed that even high tech IT positons are now outsourced, including computer programmers, analyst, and software engineers.  In fact, in a recent email from my brother [an executive at Microchip], he echoed the same concerns as my son.

He wrote:

"I could write a book on what outsourcing and offshoring has done to our [semiconductor] industry.  Much of our industry’s manufacturing is outsourced and offshored.  So many industries; financial, pharmaceutical, health, etc have transitioned to [significantly] less expensive technical outsource companies.  With countries like India and China graduating top notch engineers 50 and 100 times [respectively] the rate as in the USA, coupled with the reduced wage/insurance requirement, significant cost reductionand liability is realized.

And when we discussed health-care reform recently, my brother wrote:

 "Its just a matter of time before the insurance companies start sending us abroad for cheaper medical procedures.  I guy at work had a double bypass, his billing thus far without the doctor’s fees amount to over $300K.  Imagine an insurer flying you to another country to have the same operation for only $15K!  Its going to happen…just like generic prescriptions."

In this sense, the real war on terrorism is abstract … because certainly,  America’s future depends on the revival of decent jobs. 

By Maizie James on 11/09/2009 2:14 pm
Zera Lee
Its just a matter of time before the insurance companies start sending us abroad for cheaper medical procedures.”

Try searching for “Medical tourism” - there is already an entire industry for this.

Your eldest son knows what he is talking about.

By Zera Lee on 11/16/2009 7:52 pm
Sherrie Crews

As usual, you’re wrong. What some of the voters here in Virginia sadly responded to was their frustration that President Obama hasn’t succeed in one year to clean up the disastrous economic mess that the past 25+ years of republicanomics has created in the country.

They were bombarded for months with ads sponsored by health care industry and NRA lobbies that made it sound as if all the problems in this country were caused in the last year and forecasting further disasters if we let the Democrats continue to "tax and spend" or to take away "our second amendment rights", and yada yada yada. The same tired, deceitful bullshit that the republicans have  used as catch phrases for the last 25+ years.

The there were still the ignorant red neck voters who don’t take the time and trouble (or don’t know how) to really find out what’s a candidate really stands for and rely on wingnut propaganda hucksters like Glen Beck, Rush Limbaugh and Sean Hannity for their information. 

By Sherrie Crews on 11/06/2009 11:31 am
D L
What some of the voters here in Virginia sadly responded to was their frustration that President Obama hasn’t succeed in one year to clean up the disastrous economic mess that the past 25+ years of republicanomics has created in the country.

Pardon but how long was Bill Clinton (a Democrat) in office for during this 25 years of republicanomics you are referring to? Can’t all be blamed on the Republicans. The Democrats controlled Congress the last 2+ years of Bush’s term. If the Republicans were "responsible" for all this mess, as you claim, what were the Democrats doing during this time… ?

By D L on 11/06/2009 12:25 pm
Zera Lee

For one thing, the Democrat win in 2006 helped push Rumsfeld and his ilk out. Once they were replaced with competent people, we started winning in Iraq. Three years of republican “stay the course” failure in Iraq brought to an end. Thanks to the Democrats.

Just how many years did Clinton face a republican-controlled Congress? You blame him for everything that happened during his years, but ignore 3/4 of the Bush years.

And true, it is not usually called “republicanomics”, it is “Reaganomics” or “voodoo economics” or “trickle-down prosperity”. Whatever you call it, it is toxic and unsustainable economically.

By Zera Lee on 11/06/2009 1:47 pm
deber B
Great question, D L!!   We need your voice here on wow.   How dare you bring up that the democrats controlled Congress for the last 2 l/2 years of Bush’s term!!!   Are they the same democrats who said "the economy is fine….and voted down the GSH Reform bill to regulate Fannie and Freddie??????  
By deber B on 11/07/2009 9:19 am