That's the Daily Dose for today. Be sure to return tomorrow to keep up-to-date with the latest news!
Saturday, June 18, 2011
That's the Daily Dose for today. Be sure to return tomorrow to keep up-to-date with the latest news!
Friday, June 17, 2011
This is the first in a series of articles dealing with the current state of America's finances.
Imagine that you have just been elected to the board of directors of a large, international corporation. This company used to be a very profitable company, but in recent years, it has struggled to turn a profit. For 2010, the company had a gross income of over $2.57 Billion, but total expenditures amounted to $3.83 Billion. This results in a net loss of $1.26 Billion dollars, with expenses reaching 112% of revenue. Furthermore, despite the large amount of assets owned by the company, it finds itself owing $14.3 Billion dollars in debt, and paying the interest on this debt takes up almost 10% of the company's revenue.
Both the CEO and the other members of the board have verbally acknowledged that the company needs to change course and improve its financial outlook. However, they disagree on how drastic to change course. Some of the board members have proposed that the board cut spending for remainder of the current year by approximately $61 Million, while the CEO and other board members want to cut only $33 Million. Finally, they agree on a spending cut of $40 Million, which cuts just over 3% off of the annual loss.
Now, one board member wants to propose a spending cut of $6.2 Billion over the next ten years, an average of $620 Million per year. If all other revenues and expenses remain the same, this would come close to cutting the annual loss in half. You would think that a plan like this would be welcomed by everyone, but the CEO, along with some of the other board members and shareholders, have called this plan extreme.
Does this sound familiar? It should, because this is exactly what is happening with our federal government, only the numbers are 1,000 times greater. The deficit for Fiscal Year 2011 is now projected by the Congressional Budget Office to hit $1.4 Trillion, yet the most “extreme” of the spending reduction plans will cut less half of that amount.
Most of the talk around Washington is about the national debt. While the amount of debt is a cause for alarm, it is not the most concerning issue. The biggest issue facing America is the financial deficit. Debt is a normal part of the financial picture for any company, and in many cases, debt is beneficial to the company. However, a loss or deficit is rarely beneficial to a company and should not be treated as normal. America could be considered financially sound with its current debt if we had a decent surplus which could be used to reduce the debt. However, no company, regardless of its level of debt, could be considered financially stable after losing money for over 40 years straight, and America should not consider itself an exception.
America's financial future will be determined not by its debt, but by its deficit or surplus. With that in mind, I must ask, “Why are we only cutting $6.2 Trillion over the next ten years?” A plan to only cut losses in half would be scoffed at in the boardroom of any company as not doing enough, but in American politics it is looked at as being too extreme. The reality is that if Ryan's “Roadmap for America's Future” still results in deficits and further debt increases, it really is only a detour on the path to America's financial destruction. Furthermore, knowing that the passage of any proposal prior to 2013 will have to survive the Democrat-controlled Senate and gain the approval of the President, it is highly unlikely that the $6.2 Trillion cuts proposed by the Republicans will actually be signed into law. Why is this our starting point; shouldn't we be asking for more?
Thursday, June 16, 2011
Wednesday, June 15, 2011
Apparently, even President Obama is getting tired of blaming the lack of job creation on President Bush. His new scapegoat: ATMs and Airline Check-In Kiosks. Obama stated in an NBC News interview, "...there are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM; you don't go to a bank teller. Or you go to the airport, and you're using a kiosk instead of checking in at the gate."
I can understand that he is saying that technology is reducing the number of available jobs in those industries. However, the airline kiosks have been around for almost as long as I've been flying, and ATMs have been around much longer. Unemployment has been as low as 4.2 percent and as high as 10.1 percent while we have had these devices available.
Furthermore, Obama's statement ignores the jobs that these machines create. Many people have to be involved in the planning and design stages for these new devices. Others have to work in the factories that create these devices. Salespeople have to be hired to market these devices to the industries that can use them. Technicians have to be employed to fix broken machines and perform preventative maintenance. Yes, new technology may have eliminated demand for certain jobs (such as bank tellers), but it has created demand for many others.
More details of the interview available here.
Tuesday, June 14, 2011
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed...” (Declaration of Independence)
Companies and organizations today often establish mission statements. Writing a mission statement for a company may seem like a small task, but it can be a very important one. The mission statement is what sets the company's goals, and its priorities are often judged against its mission. While the United States does not have an official mission statement, I think the best example of the mission of the American government is contained in this quote from the Declaration of Independence.
It was in 1776 when Thomas Jefferson, with input from several other men, penned these words that are known so well by Americans. While Jefferson was setting the stage to present his argument that the British government had overstepped these guidelines of governance, Jefferson certainly knew that should their revolution be successful, the 13 colonies would be faced with the task of setting up a government for their new country. This paragraph lays out the three purposes of government: protect life, protect liberty, and protect the pursuit of happiness. Unfortunately, it appears that many of our leaders have forgotten these purposes of government, and our government is failing at protecting these three basic rights.
First, the government is failing in its protection of the right to life. The government protects the right to life for those who can say that they want it, but it appears to have ignored it for those who cannot speak for themselves. A “fetus” grows in exactly the same manner prior to birth that a newborn child does following birth, yet only the newborn baby's right to life is protected by our government. Some may argue that a pregnancy affects a woman's pursuit of happiness, and this certainly could be a valid point. However, in all but a few cases, a woman finds herself pregnant because of the choices she made. Terminating the right to life of an unborn baby should not be just a way to reverse the consequences of bad choices. Furthermore, the government allowed Terri Schiavo to be starved to death in 2005, based on the request of her husband due to some statements he claimed she made. Death or even torture by starvation is prohibited for prisoners of war under the rules of the Geneva Convention, but the government views it as acceptable for an American citizen.
The government is also failing to protect the right to liberty. Liberty is the freedom to make choices independent of government control. However, we are finding that more of our choices are being made by the government rather than us as individuals. New York recently considered regulation of children's games such as wiffle ball and red rover at day camps in the state. Since I have never seen a serious injury from either of these games, it makes me question whether the state is looking to “protect children” or just force everyone to register and be approved by the state. The recent health care bill also infringes on our liberties by forcing us to purchase a product rather than allowing us to face the consequences of our own decisions. Day by day, Americans are giving up liberty to a growing government that seems to be seeking more and more control over our lives.
Finally, the government is failing to protect the right to pursue happiness. Each person will choose to pursue happiness in a different way. However, the government has adopted a philosophy that it is better to make everyone happy than to protect the ability to pursue happiness. We have waged the “War on Poverty” for years, yet it has made little impact on poverty. We have tried to guarantee a “living wage” for everyone working, but the cost of living keeps increasing at a faster rate. We tax the rich at a higher rate so that we can afford to give it to the poor through social programs and tax credits, yet the gap between the rich and poor continues to grow. Our government must change the philosophy that results in trying to make everyone happy and replace it with a philosophy that each person should have the ability to pursue happiness in the manner of their choosing.
America has become a great nation because America has protected these basic rights. However, this nation is starting to fail at its duty to protect these rights. We do still have some protection in each of the three basic categories, but we are regularly seeing more of these rights being taken away by a government who feels that it knows what is best for us. If America is to remain “the land of the free and the home of the brave,” it must return to protecting these basic rights for all.