Beyond the Cusp

August 21, 2012

Coming Election Will Not Affect Seniors Despite Claims

We have already heard the Grandma off a cliff in her wheelchair reference and will likely hear a lot more of that ilk between now and the election. Fortunately for Grandma and Grandpa, this election will have little effect on their comfort in their golden years. It is highly unlikely their Social Security will be drastically curtailed though they may not get as healthy an increase going forward, they will at least be guaranteed to get at least the same levels they currently receive. The biggest threat to their Medicare funding will not come from Paul Ryan as his plan leaves everything as it stands for those over fifty-five years of age. Unfortunately, the same cannot be said about President Obama’s signature Patient Protection and Affordable Care Act, Obama Care, which has already diverted (a political wording for stolen) approaching three-quarters of a trillion dollars from Medicare. Of course the administration has denied this even when confronted by Congress when Illinois Republican Congressman John Shimkus inquired of Health and Human Services Secretary Kathleen Sebelius during a House of Representatives hearing on March 3, 2011, “So, are you using it (the $716,000,000,000.00) to save Medicare, or are you using it to fund health-care reform? Which one?” To this question Secretary Sebelius remarkably replied, “Both!” Congressman John Shimkus then replied conclusively, “So, you’re double-counting.”

So, as things currently stand, no matter who wins the election, Medicare will start with their administration having to figure out how to fund it with it already short close to three-quarters of a trillion dollars, a significant amount in anybody’s proposed budget. The funding will be found even if it has to be printed, something that has apparently become the new American cure-all for budgetary problems. What will be decided in the upcoming election in the United States will be how the country will face the problems going forward. All the blame games over who made the mess, President George W. Bush, President Barack Obama, the Republican Congress obstruction, headwinds, speed-bumps or the alignment of the universe is irrelevant as whoever wins the election will be facing the same financial predicament. What will be decided is whether spending will be cut by choice now or by imposed necessity later. The main difference is if cuts are made as soon as possible, then the cuts can be made over time in a measured manner, while if we wait until economic conditions dictate the cuts, they will be drastic and beyond the control dictated by the creditors. This is the choice being placed to the American public and this November they will decide. What makes this election somewhat of a crisis is that many claim that this could be the last chance for the United States to exit the spending freeway of their own volition.

But, the question is whether this is reality or is this simply being used as a scare tactic? Those claiming that another four years of attempting to stimulate the economy through government spending to presumably invest in order to collect the funds back in future taxes will lead to the situation where sufficient numbers of voters will be receiving Government dole-outs and thus will create a permanent majority for continuing such programs. This is much like what we are witnessing in Greece and other places suffering in the Euro crisis in Europe. On the other side there is the claim that should we cut spending and wait for time to solve the economic slowdown, then the economy will continue to stagnate and funds through taxes will drop and the country will fall into a viscous cycle of Government cuts yielding less funds forcing more cuts etc. So, which prediction is correct we will find out about after the election and will be left to guess where the other path would have led. Where spending and tax cuts for the rich, the middle class or anyone who pays taxes will be the major discussion debated during the campaign, which is only half of the problem, much of the real problem with the stagnant economy will be left alone. So what is the other half and why will it escape debate?

The other half, what we believe will be the larger half (if there can be a larger and smaller halves), is regulations, particularly on businesses. What will spur the economy faster than tax cuts would be to simply take a laissez-faire attitude and simply make a promise not to add any more regulations or other requirements and keep Government from any further impinging on the daily operations of business. Just allowing business to know that the playing field will remain constant and the requirements are not going to change on a whim allows the business owners to make plans with some degree of certainty what the rules will be going forward. One of the quickest ways to kill economic growth is to keep fussing and adjusting the rules making for a high degree of uncertainty and unpredictability which makes planning difficult to impossible. This has been proven in a very easy historic lesson for people to research. In the United States they refer to the economic problems that resulted from the stock market crash of 1929 as the Great Depression. In Europe it was the economic crash of 1929 and they were in recovery by 1933 only to have it all destroyed by a small interruption best known as World War II. The difference was that Franklin Delano Roosevelt attempted one solution and within a few months impatiently tried his next approach on and on and on. In Europe their leadership could not agree on what they should do and what to enact to repair the problem, so the result was they did nothing and before they could agree their economies began to improve. That is the funny thing about economies; they are cyclic just like nature and just about everything else in the universe. Economies go hot then cool then simmer and repeat as needed. Often the best solution to any economic downturn is to simply be patient and wait, it will come back around. Unfortunately, doing nothing is directly against every impulse of humankind. So, the difficulty is to have the discipline to do nothing and rely that the cyclical nature of all things natural or manufactured is cyclical and the only thing that is constant is change. So, our advice to whoever wins in November, make your decisions on what regulations you like and which you wish to toss out and after enacting it in your first hundred days, just take your hands and sit on them. Do not do anything no matter how obviously correct it may appear. Can any politician actually have the mental discipline to leave things alone? Somehow it is doubtful.

 

Beyond the Cusp

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