Monday, August 23, 2010



Leadership involves bringing out the best in people and helping them understand the benefits of working together as a team. It also involves creating an environment that encourages the open exchange of ideas. It's hard to find much evidence of true political leadership from many of our candidates these days.  Instead, too many of them spend their energy attacking one another and mocking those with opposing opinions.  The press doesn't get high grade either when 90% of the coverage involves reporting all of the grisly details of who attacked who.  We can do better than this and maybe the first step in that process is for each of us to take a moment to reflect on how lucky we all are to be living in this wonderful country with this exceptional democracy. For all of our complaining, and all of the things we see going wrong, who among us would rather live in another country? The vast majority of us are here because of a random piece of hereditary good luck. Our parents were American citizens.  But being a naturally born citizen is not necessarily the same as being a true American. It's not that easy. Being a true American is hard work. In our brief history as a nation and a fledgling democracy we've had to work and fight to overcome slavery and racial prejudice. We've had to  work and fight to give women the right to vote, to allow inter-racial marriage, to provide equal education and opportunity to people of all colors, to make sure that workers are paid fairly and not abused, to prevent the cancer of greed from infecting our free enterprise system, and to live up to the words "We hold these truths to be self evident, that all people are created equal". It hasn't always been easy and it's often been messy but we've made progress. We're a better nation now than we were then, and we'll continue to become an even better nation if we all take personal responsibility to keep the promises of our founding fathers.  Personal responsibility and leadership require getting involved in the elective process and choosing leaders for their wisdom and compassion, for their ability to bring us together in common cause, and  for their ability to bring out the best in us .Put another way, we must continually be on guard against those who would divide us, those who promote anger and prejudice, those who attack our government, and those pit us against one another.

Wednesday, August 18, 2010

Job Creation

America's small businesses create over 75% of all new jobs. Yet the small business community is the sector of the economy which has been hit hardest by the current recession. Clearly the best way to create new jobs is to do all we can to bring the small  businesses  community back to good health. As someone who has owned and successfully operated a number of small businesses in Southern Arizona over the pasts 30 years I offer a few practical suggestions.

Historically, during difficult times,  government has come to the assistance of large corporations by offering tax breaks and incentives. Oddly, the government never offers the same tax breaks to small businesses. I suggest that we should consider offering two specific tax breaks to the small business community. One aimed at new business start-ups. The other aimed at existing businesses which need funds to expand. For the new business start ups I propose that we waive taxes on profits for the average period of time it takes a new business to get over the hump and become self-sustaining. That period of time is about three years.  For small businesses which are over that hump and ready to expand I propose that we set up a type of business IRA  which would allow small business owners to set aside up to 50% of their earnings every year into a tax free account over a five year period of time. Such tax free funds could then be withdrawn at any time during that five year period only for the express purpose of business expansion - such as the purchase of new equipment, marketing, expansion of facilities, etc..

I believe both of these proposals would help solve the biggest challenge most small businesses face. Namely the inability to obtain financing from banks, or investors. In order to make these tax breaks revenue neutral I propose that we use the money we will save by allowing the tax breaks for the super rich to expire to cover the cost of the tax breaks to small businesses. The argument that tax breaks to the wealthy create new jobs
is not valid.  Wealthy individuals seldom use their personal income to create jobs, with the possible exception of hiring illegal "nannies" to take care of their children..

Wednesday, August 11, 2010

The Issues


Whether we're talking about jobs, deficits, entitlement programs, terrorism, border issues, energy,  the environment, or Democracy itself,  it's still about the economy. When the economy fails everything else fails with it. When the economy is healthy everything else falls into place.

The key to turning our economy around is relatively straight forward   Our economy is too dependent on consumer spending which means that we are exporting too much of our cash in exchange for goods produced abroad with cheap labor. It also means than when consumers max out their credit cards and begin to run out of money our economy begins to falter. The solution is to diversify our economy by rebuilding our manufacturing capabilities . In order to do that we must first reduce the burden of health insurance on America's businesses so that we can become competitive once again in the global market place. Our long term goal should be to become exporters of products and importers of cash, not the other way around. In the meantime we need to go over government spending with a fine tooth comb eliminating waste and inefficiency. The good news is that consumers appear to be paying down their credit cards, and increasing their savings, and home prices are stabilizing at levels which once again makes home ownership affordable for many Americans. 


Medicare is a tax payer funded, taxpayer owned, Insurance Co-Op, which makes payments to private sector physicians and hospitals just like any other insurance company. However, no private sector insurance company could survive if it were only allowed to collect premiums from the highest risk patients and neither can Medicare. The solution to making Medicare solvent is to expand Medicare to cover every American, healthy or otherwise, so that premiums paid in by the younger healthy section of the population can be used to cover the cost of caring for the elderly. The side benefit of expanding Medicare to cover everyone is that it would reduce the burden of health insurance on America's businesses by at least 50% which amounts to a minimum savings of at least $3,000 per employee per year. This savings alone would be enough to bring our national economy out of the recession almost over night. For those with a soft spot in their hearts for private sector insurance companies keep in mind that expanding Medicare still leaves private sector insurers with the ability to market the highly profitable and low risk supplemental policies for the portion of health care not covered by Medicare or private sector insurance policies. You can see a more detailed analysis of the economics of this by clicking on the health care blog on this site.


Social Security is in trouble because the ratio of working people to retired people is dropping drastically as the baby boomers retire. This problem is going to be with us for at least another 20 years. We can improve the ratio of working people to retired people by passing a guest worker program that requires guest workers to contribute to Social Security like the rest of us do. We can also place limits on people who have enough wealth that the don't need Social Security. Removing the cap of $170,00 on Social Security wages  will also bring additional money into the fund. Finally, we can encourage the boomer population to stay in the work force as long as possible which would have the added benefit of solving the projected shortages of qualified workers in the next few decades.


The most effective way to improve border security is to eliminate the need for it. The majority of the border problems are created by demand in America for drugs and cheap labor. We can take a lesson from our experience during the Prohibition era, when banning alcohol produced the same kind of drug smuggling violence we see today. When we made alcohol legal and taxed liquor sales the problem was solved. Marijuana is no more dangerous, or addictive, than alcohol and making it legal would provide additional revenue to our government and reduce the enormous financial strain on our prisons. There is resistance to legalizing Marijuana because it is considered a drug, compared to alcohol which is considered a "beverage".
In truth, both substances are drugs and alcohol is by far the most destructive and deadly.


Once again we can learn a lesson from the past. Decades ago we established a "Bracero" program which allowed Mexican farm workers to cross the border to work in the fields picking crops. As soon as the program was passed illegal crossings dropped drastically. If we establish a guest worker program that pays fair wages, so that immigrants won't be taking jobs from Americans, we'll see a sharp drop in illegal immigration. Both parties realize that the ultimate solution is to establish a regulated guest worker program but the reason Congress hasn't passed such a bill is because the Democrats insist on tying a guest worker program to a "path to citizenship"- which is unfair to those already in line. On the other hand the Republicans insist that the border must be "secure" before they will sign on, and everybody knows it is physically impossible to completely secure the border. Both sides need to drop their unrealistic demands and pass this legislation.


Over 90% of the voters are unhappy with the partisan battles in Washington.   Clearly what we need here is a shift from combative debates to rational discussions. A shift from trying to defeat one another to honestly working together for the common good.  Lately we're seeing very little effort from either political party to find common ground, nor much willingness to work together as a team for the benefit of all.  We are all truly brothers and sisters in this grand adventure, not mortal enemies bent on destroying one another. If we set aside judgment and ideology and face the facts squarely we'll have a much better chance of finding rational solutions to our challenges.


We all know that we can't keep spending  money that we don't have without  inflicting serious damage to our own economy and the economies of countries who own much of our debt. There are no solutions that are pain free but if we're all willing to make our share of the sacrifices there is no reason why we can't turn things around fairly quickly. Here are a few steps which I submit for your consideration to start moving us in the right direction. I'm sure many of you have suggestions that you would like to add to this list.

1) Federal government employees earn on average  about $100,000 per year, including benefits, compared to employees in the private sector who earn about $50,000. With approximately 4 million Federal employees that differential costs taxpayers 200 billion dollars annually. 

2) One of our other major expenses is the interest on the money we are borrowing to finance our national debt. This expense is going to increase rapidly when interest rates start to rise in the next few years.The first obvious step is to stop borrowing  more money.  Congress should use projections from the Congressional Budget Office to determine the amount of money that can be spent each year without having to borrow additional funds. Congress should be then be required to cut their annual  spending to the level of those projected revenues, after allowing a set aside of 5% annually to start paying down our national debt. .

3) There is  tremendous waste and fraud in our Medicare and Social Security.programs. We can  eliminate that fraud by looking for statistical patterns of abuse and inefficiency . Social Security was designed to help those in need during their retirement years. Many people who don't need Social Security are drawing it anyway. That problem can easily be solved. Additionally, the salary cap on Social Security wages should be completely eliminated which means that the wealthy would be paying Social Security taxes on their entire salaries instead of just the first $106,000 in wages. The wealthy can afford to do without that extra  yacht. 

4) Wasteful military spending has become a national joke. There are thousands of military aides in the Pentagon shuffling papers.There are billions being spent on esoteric weapons development programs under no- bid contracts that never produce anything useful. We're fighting wars that we can no longer afford to fight and it's clear that we don't have the financial resources  to continue acting as  the world's policemen. Osama bin Ladin openly brags that he plans to bankrupt our economy by drawing us into endless wars around the globe - a strategy successfully pioneered by  George Washington, our first President. From a practical standpoint the world  needs our financial stability more than it need our troops.

5)  Tax revenues can be increased by raising the tax rates on the extremely wealthy, which are currently near  record low levels , by cracking down on off shore tax shelters, and by taking the burden of health insurance off  the backs of America's businesses.

6) We've got thousands of agencies with overlapping jurisdictions. We need to bring in some efficiency experts and eliminate, or combine, these agencies.


 The health insurance plan recently passed by Congress is filled with good intentions but the end result is a 2,000 page confusing maze of new agencies, which is financed by smoke and mirrors, that will only serve to drive the costs of health care even higher and make Medicare insolvent.  I've posted a more detailed analysis of Health Insurance on this web site. If you're having a case of insomnia some night and want to read something that will put you to sleep, go back to the first page and click on Health Insurance on the right side of the page to find my  Health Insurance blog. The best and most elegant solutions to any problem are always the ones that are the least complex. The new Health Insurance program fails that test miserably. 

SB 1070
The recent controversial bill passed by Arizona is mostly symbolic and will have little effect in terms of reducing the number of undocumented workers in our State. We're told that there may be as many as 400,000 undocumented workers in Arizona. According to my math that amounts to 400,000 consumers who probably spend about 8 billion dollars a year in the local economy for basics like housing, food, and clothing. In addition they probably pay over a billion dollars a year in State sales taxes and taxes of other types. Imagine what a blow it would be to the economy of Arizona if we were able to round up and deport all of those workers. It would be like losing a major city. Anyone who thinks the Federal Government isn't doing enough to secure the border hasn't been to the border. I own property within a few miles of the border in Cochise County and I don't see anything more that the Government could do that they aren't already doing. The Government has manned a massive effort that is costing us billions of dollars annually but it's physically impossible to completely seal the border.

The best way to solve the undocumented worker problem is to document the workers.  Migration of workers seeking jobs is happening on a massive scale around the world. It's been reported that the amount of money these workers send home to their families amounts to over 300 billion dollars a year globally. Some nations, such as the Philippines, are acting in the role of employment agencies. They train their citizens in various trades and crafts and then send them overseas under  contract with Visas.. This is a  classic example of free enterprise dealing with supply and demand.

Wednesday, February 17, 2010

Priming the Pump- Where is all that Money?

High on the list of the side effects of our current economic malaise is the fact that many community banks have stopped lending money to local shovel ready projects that are waiting for funds to be released so that construction can start. The Government tried to solve this problem by forcing money down the throats of the large investment banks at very low interest rates- hoping that the investment banks would then lend the money to the community banks at a low rate of interest . But instead of injecting that money into the community banks where it could be lent to local developers and contractors, many of the investment banks invested it back into the stock and security markets. As a result, the large investment banks are reporting very nice profits for themselves as the stock market rises but little  money is being injected into the part of the economy that  creates  jobs. In essence too much of the money is just circulating around in a loop through the pockets of the investment banks and high rollers, and not enough is finding it's way into the general economy. This problem could be solved if the Government would infuse money directly into the local community banks, instead of going through the large investment banks with the naive hope that they would pass the money on down the line. There is a lot of money out there but it's just not getting to the people who can put it to good use and create jobs.

Monday, February 15, 2010

Health Care

Much of the pain and agony of the Health Care debate for the past year could have been avoided if Congress had listened to the will and wisdom of the people. Providing health care for every American citizen is a goal well worth pursuing. No civilized nation can  refuse to provide medical care to those in need simply because they lack the money to pay for care. However, there is a more financially responsible, and less expensive way  to achieve universal coverage than the plan President Obama recently signed. The backlash against that bill is based on a number critical errors the politicians made which are too numerous to mention here. I favor expanding Medicare to cover everyone, financed by a  payroll tax, or a value added tax. Details of the advantages of that plan can be seen in the article below . Such a plan would have reduced the burden of employee health insurance for America's businesses by at least 50%. The resulting increase in corporate profits and tax revenues to the Government could have brought us out of this depression almost overnight.


The assumption that the Health Care Industry is a drag on our economy is patently false. The money we spend on health care circulates through the veins of our economy creating over 18 million jobs while  keeping our citizens healthy and productive.

The assumption that health insurance reform is not affordable is also false. Private insurance companies typically add 15% to 20% to the actual cost of health care to cover their marketing costs and profit margins. The money we save by eliminating the middle man can help bring us out of this recession by reducing the cost of employee health insurance for America’s businesses as well as covering the cost of providing insurance for every American citizen.  

Medicare is a good example of a National Health Insurance program that works.  Medicare is roughly equivalent to a high quality Blue Cross policy, with the added benefit that there are no pre-existing conditions. Medicare is currently financed by a 2.9% payroll tax split equally between employers and employees. The reason it’s headed for financial problems in a few decades is because it  covers only the oldest and sickest among us. If we add the other 85% of our younger healthier  population to Medicare the projected deficits disappear and the average cost of insuring every citizen drops significantly. As a result we end up actually saving money by covering everyone with a broad based payroll tax which costs significantly less per person than we are now paying on average. We don’t have to look for a new source of money if everyone is covered. The insurance companies know this and that is why they lobbied so strongly to force every American to buy individual health insurance policies.

People on Medicare are generally happy campers, which is the reason the health insurance industry also lobbied to hard to keep a public option off the table. They fear the competition. When you enroll in Medicare you receive your own personal policy which can not be canceled. Your policy is completely portable no matter where you work or live. You have freedom to choose your own doctors and you no longer have to worry about pre-existing conditions. Your card is accepted throughout the country by almost every physician and health care facility. Physicians like Medicare because they save money by only having to submit their bills to one agency and, Medicare tends to give Doctors a freer hand in deciding what care is best for the patient than the private insurance companies.

It’s been estimated that a 10% payroll tax  (split 8% employer-2% employee), would be adequate to provide Medicare style coverage for every American citizen. If you think that is unaffordable keep reading.  Employers can easily spend 12% to 16% of gross wages for health insurance through private insurers and that number is rising steadily. Therefore a payroll tax of only 8% could potentially reduce employer’s health insurance costs by as much as 50%.  That projects to a savings of hundreds of billions of dollars annually for our nation’s businesses. It’s that simple. As business profits rise so do wages and tax revenues to our struggling Federal and State governments. You can ask your employer how much he, or she,  pays for your insurance. Then calculate how much your employer would save if he only paid 8% of your salary for insurance. Now calculate how much your wages would increase if your employer passed on half of that savings to you.

While an 8% payroll tax would be a significant savings for the vast majority of employers who already provide health insurance to their employees, it would put a harsh burden on the small family owned businesses which can’t afford to provide insurance for their employees. Obviously these businesses would need to be subsidized with some of the 350 billion dollars we will save by eliminating the need for Medicaid, plus SCHIP, and other tax supported programs, once every American is covered under the same plan.

If anyone has further doubts that a public health insurance plan such as Medicare will save money, get on the internet and search for reports coming out of the Congressional Budget Office and the Government Accountability Office reporting that a single payer style system is the only system that saves enough money to pay for the cost of insuring every American citizen while reducing the national deficit.

Finally, we need to address the legitimate concerns of those who are worried about “Socialized Medicine”. Keep in mind that Health Insurance and Health Care are not the same thing. Medicare is insurance- not care. Veterans care is socialized medicine because the Doctors are government employees and the hospitals are owned by the government. Under Medicare our physicians remain self employed and the hospitals are still owned by private corporations. If you have good insurance now don’t assume that Medicare won’t be equal, or better, until you check the facts. Patient surveys consistently show Medicare receiving higher customer satisfaction ratings than private insurance.

The  convoluted plan signed by President Obama achieves none of  the cost savings that come from simplifying health insurance by covering every American under one policy. Instead that plan creates a confusing maze of “insurance exchanges” and “co-ops” that only make it more difficult for Doctors to get reimbursed and impose fines on those who can’t afford insurance. President Obama says that no one who likes their present insurance will lose it. That is not true. The plan signed by the President  provides strong incentives for businesses to pay a minor penalty and drop their employee health plans. Their employees will then be required to buy their own insurance policies in a private insurance market that is free from price fixing regulations. Many families won't be able to afford these policies even with the tax payer funded subsidies that are promised in the plan. The cost of these private policies are likely to be much higher than predicted and the ability of citizens to pay the cost of the subsidized premiums has been grossly overestimated by Congressmen and Congresswomen who receive salaries of $175,000 per year, plus  health insurance, at the expense of the taxpayers. Few of our  politicians in Washington have any idea how difficult it is to raise a family on  a typical median wage of  $45,000 per year.  

Jay Quick