America's military spending must be reined in!

April 21, 2013

Eisenhower's guns vs. butter revisited:

As the latest rounds of federal budget debates rage, we would all be well served to remember a speech by President Dwight D. Eisenhower on January 17, 1961 as he was leaving office.

In his farewell, popularly referred to as the Guns vs. Butter speech, he warned against allowing the military-industrial complex to acquire unwarranted influence over federal spending. He clearly believed allowing America to continuously overspend on defense would inevitably damage our domestic economy.

Hedrick Smith, in one of my recent favorite books, Who stole the American Dream, quotes Eisenhower, "To amass military power without regard to our economic capacity would be to defend ourselves against one kind of disaster by inviting another." Ike also said, "Making one heavy bomber meant sacrificing thirty modern schools or two fully equipped hospitals, or two electric power plants. We pay for a single destroyer with new homes that could have housed 8000 people. This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron."

Eisenhower clearly knew each expenditure of limited resources requires trade-offs. However, it seems he never considered how easily our leaders would turn to borrowing to continue feeding the military-industrial complex war beast.

Look at America's financial and social conditions today and consider the validity of Eisenhower's warnings expressed over five decades ago. One truly unfortunate side-effect of the military industry's quest for growth is wars must be fought to justify and increase demand for their products. Since Eisenhower, America has fought many skirmishes in various places, and engaged in undeclared and unsuccessful wars in Vietnam, Iraq, and Afghanistan. These military engagements not only harmed and killed many thousands of America's finest, they also added trillions of dollars to our debt. Of course the deaths and injuries of enemy combatants and innocent civilians have been many times worse than our own. This clearly contributed to the hatred many in the Middle East feel for our nation, and the resulting terrorism on our own soil.

Our leaders, in spite of the undeniable reality of America's abysmal financial condition, approved borrowing nearly two thirds of a trillion dollars this year to support this industry. This amount nearly equals the entire military spending for the rest of the world combined. Ike must be spinning in his grave!

According to Smith, As recently as 2011, more than two decades after the Cold War ended, America had more than 580,000 personnel in uniform or defense contractors, stationed in 57 foreign countries, and over another million on American soil. He reports the U.S. military had 611 sites in non-combat zones and another 499 scattered around Iraq and Afghanistan. That's over 1000 overseas military installations. That doesn't include installations in the U.S., family housing complexes, schools, resort hotels, and even 172 golf courses owned by the Pentagon.

Eisenhower's warning have been largely unheeded as the powerful military-industrial complex lobbyists convinced our elected to make laws and take actions favoring military spending.

Today, we find our nation deeply in debt and unable to supply sufficient jobs or safety nets for our citizens. We clearly won't be able to keep the promises made to our retiring boomer generation, let alone afford to rebuild our crumbling infrastructure. Yet, somehow our leaders just keep voting for more borrowing to support military spending.

The central question is when will our elected finally connect Eisenhower's warnings to the reality America now faces? When will they realize we can no longer afford to pretend we are the wealthiest nation in the world? When will they instead set budgets for our inadequate resources primarily for the maximum benefits of our own citizens?

Eisenhower understood every dollar spent on military forced trade-offs for domestic programs such as infrastructure, health care, and education. He also understood we could not adequately provide for our citizens needs and continue to spend obscene amounts of money on war making tools. Of course, our leaders have now created an entirely new market for the armaments industry called the Department of Homeland Security.

In the choice between guns and butter...guns have clearly won! Sadly, the American people, especially those who have sacrificed their lives and health in too many needless conflicts are the real losers. But remember, our future generations will also lose as our nation's debts continue to expand. We keep hearing about the need for reforms to our citizen's promised entitlements...but rarely do we hear a call for actions to reform the appetites of the military-industrial complex.

If Dwight Eisenhower was alive today he would have continued to fight for us. Where is our generation's Eisenhower when our nation so desperately needs this type of leadership?

These are my opinions. What do you think?

Mike Tower

America's President's solution for job creation

April 21, 2013

Our President's creative solution for jobs?

Clearly, returning America to full-employment must be one of our top national priorities. It's our most important near-term challenge because we must have full employment to reduce safety net needs, raise tax revenues, and improve the consumption needed to fuel our economic recovery. Frankly, most economists believe only the return to a full-employment economy can prevent massive tax increases and spending cuts.

I have been critical of our President because of his lack of private sector work experience (read: none). Frankly, I couldn't imagine anyone without real-world work experience leading the largest economy in the world....especially considering the great recession his administration inherited.

A recent Associated Press news-wire article about our new health care law (Obamacare), pointed out it requires employers to provide health insurance or pay a penalty for any employee working more than 30 hours per week. The article said this provision will inevitably result in many companies reducing as many workers' as possible to 29 hours or less. When I finished reading the article, I first thought about the obvious negative consequences. Then I had one of those “Eureka” moments! It occurred to me Obamacare's mandate requiring employers to provide insurance for any employee working more than 30 hours might actually be a major blessing in disguise. Before you conclude I've finally lost my final brain cell, please hear me out.

Today America has the lowest percentage of working-age citizens in the workforce since the early 1980s. We also have close to 23 million Americans either unemployed or severely underemployed. Our economy simply isn't creating enough new jobs to employ everyone who wants to or should be working. Mr. Obama keeps saying his administration has created six million new private sector jobs in the past three years. I'm sure it's true, however, he fails to admit our population has grown even more during this same time-frame. Not even close to enough new jobs have been created to dig us out of the job loss hole caused by the housing bubble collapse.

My Eureka moment! If this 29 hour work week becomes widespread, we will inevitably end up with larger numbers of workers to get work done. For example, consider an employer with 100 employees currently working 40 hours per week to get their work done. If you cut their hours to 29...what happens? Well, if you divide the total hours formerly worked by these 40 employees by the 29 hours which they will now work...voila...it will require 138 workers to get the work accomplished...38 new jobs!

The winners will be those who currently have no jobs. Of course, current workers, who formerly worked 40 hours, will earn less pay. However, that's no different than the coming healthcare system in which most of those now insured will inevitably pay higher fees in order to subsidize the health care costs for millions formerly uninsured who will soon have coverage.

As nutty as the idea of job sharing may seem on the surface, the saving grace for this scenario may be the ongoing drop in the costs of most goods in our increasingly automated economy. Productivity gains may result in an almost magical solution to a better future for the majority of Americans, as the work week shrinks, leisure time increases, and basic needs are met. After all, who wouldn't love to work three or four days a week and still have most basic needs fulfilled. Certainly job-sharing with some shared pain has to be better than our unsustainable expanding welfare state.

I'm not willing to proclaim President Obama a genius who looked at two problems, health care and unemployment, and saw an opportunity to fix both with one act. He clearly must have seen a future in which automation would make it impossible to create enough new jobs if we stick with our current 40 hour work week model. However, I seriously doubt he, or anyone else in D.C., had this much foresight.

I doubt if we will ever know if he and his advisers put these thoughts together. Maybe it doesn't matter. After all, as the old saying goes, “sometimes it's better to be lucky than good”.

Whatever the case, it seems clear the most logical solution to create enough jobs in America will require shorter work weeks for most workers. I see no other likely strategy to make sure a higher percentage of those of workforce age are actually working, paying taxes, and supporting their families.

Should we give our President full credit for coming up with one idea to fix two of our biggest problems? I'm thinking we better wait and see if it comes to fruition. If works though, I suspect we will see him at the front of a long line of credit-seekers. Hmm....maybe I'll be second in line.:-)

These are my opinions. What do you think?

Mike Tower

The Future of American Healthcare

April 7, 2013

The future of American Healthcare

Most Americans will soon begin to see major changes in health care delivery. The changes will likely be mostly negative for the vast majority, but not for everyone. For example, those without health care insurance or with pre-existing conditions should see improvements. I would bet many of the young and healthy who have previously chosen not to buy health insurance might not like being required to do so.

Some pertinent facts: First, as deeply as our nation is in debt, our leaders have shown no ability to even slightly reduce spending, even though nearly 40% must be borrowed. Second, new health care laws (Obamacare) will add many millions to the health insurance rolls, and the rest of us will pay more as a result, either with higher costs, or reduced services...or likely both. Third, 78 million baby boomers began retiring and collecting benefits in 2011, and are expected to live an average of 19 years after retirement. This huge flow of retirees will continue needing entitlement resources until the last of them die around 2050.

Fourth, the boomer retirement period coincides with a projected decline in our working-age population paying taxes from three per retiree today to two within a couple of decades. Fifth, America (government and private) already spends twice as much per capita for health care compared to any other developed nation. Sixth, America currently has a shortage of primary care physicians, and a recent study in The Journal of the American Medical Association says the shortage will reach nearly 50,000 by 2020.

So, what health care changes can Americans expect in this new reality? Well, if you are wealthy, none. The wealthy will buy whatever health care they want. Many of this subset will use "concierge medicine" providers. Physicians in this niche provide their services for cash retainers, and simplify their lives by having a smaller pool of patients paying in advance for future services. Patients, in exchange, receive guaranteed 24/7 physician access instead of waiting in lines.

What about the rest of us? We will have rationing of access to all types of health care providers, tests, and treatments. Physician's assistants or nurse practitioners will increasingly become our primary care providers. And, while their level of education is not equal to a physician's, they can certainly cost-effectively diagnose and treat common ailments and provide lower-cost triage services.

The citizens of every other developed nation have access to government paid health care, spend far less than we do, and have better overall outcomes, but not without rationing. For example, in most of these countries the primary objective for the terminally ill becomes controlling pain, not prolonging life. And, many elective surgical procedures have long waiting periods. Financial reality simply makes it irrational to do otherwise.

Depending on the information source, it conservatively appears about half of America's health care dollars are spent on the elderly, with about half of that spent in the last year of life. Our family watched in horror as my wife's father spent his last week of life in a large hospital in Indianapolis dying from chronic emphysema. He was visited by more specialists than we could count, and was subjected to multitudes of medical tests...none aimed at saving his life. He even received a flu shot on the day he died! Honestly, it seemed he was kept alive as long as possible so the doctors and hospital could maximize revenues from his misfortune.
So, what can you do about your own health care? Beyond inheriting, marrying into, or accumulating wealth, you'd be smart to immediately initiate steps to improve your own life-style. If you smoke...stop. If you are obese...lose weight. If you live a sedentary life-style...get moving. If you have an unhealthy diet...change it. If you drink too much alcohol...moderate. Society will increasingly find it unaffordable to pay for treatment of diseases consequential to poor life-style choices.

On the brighter side, reduced resources should also result in less waste, with fewer unneeded surgical procedures, tests, treatments, and referrals to specialists. We should also see the long-promised implementation of paperless patient record management aimed at optimizing the coordination of health care delivery. If we're lucky we might even see some long-needed tort reform. Finally, we should see super computers, such as IBM's Watson, being used to help health care providers more effectively diagnose diseases and determine best treatment options. Imagine a future when a computer at Walmart acts as your primary health care provider...don't laugh, it's coming!
Some CVS Pharmacies and Walmart stores have already opened in-store health care clinics staffed by nurse practitioners and physician assistants. It's not exactly concierge medicine...but may beat waiting for an appointment for minor health issues.

Finally, our leaders face an important decision about whether to allow the free market to drive necessary cost and efficiency gains, or place all Americans on a federally paid system like Medicare. Either answer has pros and cons.

If my writing seems particularly choppy today it's because I'm trying to follow my own advice about improving my health. Walking on a treadmill while typing is a lot harder than walking and chewing gum:-)

These are my opinions. What do you think?


Mike Tower