Ruminations, January 17, 2010

Franklin Delano Obama

Franklin Delano Roosevelt is considered to be one of our most successful presidents. Roosevelt has been credited with successfully leading the nation during World War II, restoring the confidence of America during the early years of Depression and establishing a safety-net for many Americans through unemployment insurance and Social Security.

Roosevelt was not perfect, however. The American economy never did return to anything close to its pre-Depression levels during Roosevelt ’s first two terms. In fact, the unemployment rate averaged 18.7percent for Roosevelt ’s first eight years. One of the keys in the lackluster economy was the reluctance of business to invest and expand. That reluctance was understandable, given Roosevelt ’s tax programs that punished risk-taking and permitted little reward, a perceived plan to nationalize utilities, labor laws that increased costs of production and a generally hostile attitude toward business, at times accusing them of immoral conduct. In fact, it got to the point where economist John Maynard Keynes, in a 1938 letter to Roosevelt , admonished that, “It is a mistake to think businessmen are more immoral than politicians.”

President Barack Obama is an unabashed admirer of Roosevelt . There are similarities. Both took office during a severe economic downturn. Both have proposed extraordinary spending programs to pump up the economy. Both were fighting wars. Both have proposed large social welfare programs.

Unfortunately, Obama is also following Roosevelt ’s lead in displaying hostility toward business. He has proposed taxes that punishes risk-taking and permits little reward. He has increased government control of the insurance, banking, automobile and investment industries. His cap-and-trade proposals threaten the profitability of heavy industry and utilities. This, in all probability, causes business to sit on their capital and not reinvest. And, if business doesn’t reinvest, that may cause the Obama Administration to assume a larger role in business.

Roosevelt’s economic prescriptives were mitigated by the entry of the United Sates into World War II. World War II saved the American economy in two ways: (1) it eliminated 16 million from the rolls of the unemployed by putting them in uniform, and (2) in order to provide military armaments, it caused Roosevelt to work with business instead of against it.

Sixty million died in World War II. Let’s hope it doesn’t take a similar event for Obama to work with business.

The magic of health care financing

In his book, A Secular Age, Charles Taylor writes of a time in Western Civilization (pre-1500) that was an “enchanted” or “magical” era. That is, it was a time when people, especially uneducated peasants, attributed all causes to a conscious act of God. Earthquakes? God had a message for us in that. Disease? God was punishing you for your transgressions. The government? Put in place by God. Lacking a foundation in knowledge and seeking definitive answers, they attributed all to God. Nonetheless, they believed that “God was the ultimate guarantee that good would triumph or at least hold the plentiful forces of darkness at bay.”

Doesn’t it seem that many who support the health care proposals working their way through Congress live in their own enchanted or magical world?

These supporters are not stupid – not all of them anyway. Yet, they jigger the numbers to make it appear that the health care proposals are financially feasible, and they not only expect the public to believe it, they begin to believe the jiggered numbers themselves.

Consider:

• The numbers show ten years of revenue and balance it against six years of expenses.
• Some $500 billion in Medicare expenses are cut in the proposals but the money will be added in a separate bill as an additional deficit.
• Richard Foster, Chief Actuary for Centers for Medicare and Medicaid Services, last week said that the net result (i.e., after additional revenue and taxes have been taken into account) will be an increase in costs of $222 billion over ten years. Foster also stated that since expenses are only taken into account for six years, the actual results may be much worse.

Yet, President Obama insists that the health care plan will cut the deficit by a trillion dollars. And apparently the Democratic Congress agrees with him, not to mention a smaller (and shrinking) part of the public. Why? Faith.

These supporters must be in sync with those who lived in the 15^th century. They believe that God, or someone, is “the ultimate guarantee that good would triumph or at least hold the plentiful forces of darkness at bay.” They’d better put their faith in God because Barack Obama, for all his abilities, is not an ultimate guarantor.

Quote without comment

Ronald Reagan, February 20, 1978: “Why is it so many people alert to any threat from the right are incapable of seeing danger from the left?”