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$10 million “Green Design” contest sponsored by Federal Government goes to … the Netherlands

Photo courtesy Living Off Grid, flickr

Each morning I look forward to reading the morning paper.  Since she got an iPad, a little over a year ago, my wife keeps saying why don’t you cancel the paper and just read the paper on-line.  It is a routine, I know, but this habit helps me start the day and get my mind in gear—usually.  And maybe now I am old fashioned.  Or perhaps just old, but I really appreciate the ritual—ritual sounds much more mature than routine and lends an air of distinction to this anachronistic practice.

Well, as I was reading once again I am presented with yet one more justification on why we need to have a serious discussion about the national economy, the role of government in the economy, and why we need to move much of the ‘new found’ federal responsibility back to the states, and the private sector; as if any more justification was needed on top of, Cartagena Hooker-gate, GSA let’s all meet and have a party at the taxpayer’s expense-gate, and Solyndra-gate.

The point of today’s reflection is an article in the Boston Globe by Peter Svensson, “Rebates to ease shock of a $60.00 light bulb.”  I think everyone needs to read this article, if you have not done so already.

Having been in the technology sector for many years, and having a few friends who have either invested in or started, “green” energy companies, I have a passing familiarity with the basis for the creation of this bulb.  There was a $10 million contest, sponsored by our federal government to stimulate the production of more energy efficient light bulbs, driven by political pandering to the let’s save the environment from the evils of incandescent light bulbs crowd.

The justification was that incandescent bulbs convert a large amount of energy to heat, therefore it is wasted.  This is a valid point.  Another point is that from these group’s figures, the average life span of a 60 watt incandescent bulb is 1,500 hours and therefore the contest was for not only a green bulb but one that lasts longer so the cost could be justified.

The contest rules were for a bulb that lasted much longer and it had to cost $22.00, or less, in the first year, with the assumption that the price would go down as adoption and production increased.  Oh yeah, it was an American program, and you would think it was also to stimulate American business? Nope!  Only one company, Phillips, and if you don’t know Phillips is based in the Netherlands, entered the contest.  Of course they won.  But there is a catch!

The bulb will cost $60.00 not $22.00 or less.  Of course the argument from the groups is they are forcing electric companies to provide rebates for the purchase of the bulb so the price will be offset by $20 or $30 dollars, but if my math is correct $60 – $30 is still $30 which is more than $22.00, last I checked.  And now, as this is coming to light (so to speak), Phillips says they will offer an initial discounted price of $50.00 so the price will be in the $20 to $30 range… Great deal isn’t it?  They got $10 million so you can bet the discount will last until they sell the first million bulbs (that’s $10 million divided by the $10 dollar discount). And let’s not even ask the question if the chemistry in these bulbs might be more hazardous to the environment once they are disposed of.

The thing that gets me about this whole program is that all of this “savings” are coming from us in the first place, so we are not saving anything.  The rebates are charged back to us in the form of higher cost per kilowatt, and the $10 million came from us in taxes.  Most importantly, we are increasing the cost of light bulbs from about $1.10 per bulb to over $50.00. And this is predicated on saving the planet, lowering our energy costs, and stimulating the American Job market . . .  Well forget the American Job market part I guess . . .

Last point I have on this subject is if the statistics I hear quoted about incandescent bulbs are accurate, then I am the luckiest S.O.B. in the whole world because…

They claim that an incandescent bulb only lasts for 1,500 hours.  I have by a quick count at least twenty-eight, 40 – 60 watt incandescent bulbs in my house now.  I have been in this house for over ten years. I replace on average two bulbs a year.  Most of the lights in my house burn five hours a day, some more, some less, but this is my best guess on the average.  So, my lights are lit about 1,825 hours per year.  Given the 1500 hour average life, according to these green groups, I should be buying and replacing about thirty bulbs a year.  But you know what, I don’t . . .  I never have.  In fact, the reason that incandescent bulbs burn out as quickly as they do, albeit much more slowly for lucky me, is because the vacuum in the bulb at manufacture is not as complete as it could be.  And it only costs me $1.11 cents to buy these evil, world destroying, 60 watt bulbs, or $2.20 per year.  This means, I theoretically change them all once every fourteen years.

Now, if I buy twenty-eight of these new bulbs that are supposed to last twenty years, even with the discount, it will cost me $840.00.  I can buy 756 of my old bulbs for that price, which would have lasted fifty-four years at my current replacement rate.

Light bulb manufacturers, all the way back to old Tom Edison, knew they could make bulbs that lasted for a long, long, time—10 to 30 years. In fact, they have, by accident and random chance.  My grandfather’s house had some of the original Edison bulbs with a base the size of a ping pong ball and a filament that looked as thick as a pencil lead.  If they were not broken over time, they would all probable be burning today. Good for homeowners, but bad for GE, Sylvania, etc.  These guys knew that bulbs could be cheap because you bought a lot of them every year, and if you only buy a few every twenty years then they will cost a whole lot more.  And guess what, they were correct back then and they are correct now!

Since I am now living in California, and I can’t buy many incandescent bulbs because they have been outlawed, I have a few CFL bulbs, and so far I have had to replace these bulbs at least once a year and in one case, in the globe ceiling fixture in my closet that has two 40 watt bulbs, much more frequently.  In fact, if one of these suckers blows out in the fixture, the other one dies, seemly out of sympathy, in just a few days.

Due primarily to labor and benefits costs, and secondarily because we have a dwindling lower wage labor pool because everyone must go to college, we are already non-competitive in manufacturing.  Now we will begin increasing the cost of lighting by almost fifty times as we move to these “save the planet” bulbs.  Many supporters of these bulbs argue that in the long run we are going to save so much more in costs of energy because of their efficiencies.  Well, due to past experience I am both skeptical of the claim, and dubious that the short term increase of costs on an already non-competitive economic structure will ever be offset.  And even if it theoretically will lower costs in the long run, I am starting to doubt we will be around as a vibrant economy for it to matter anyway; which means we won’t be buying a lot of $60 light bulbs because we won’t be able to afford them.

While I am all for limiting the impact we have on the environment, like everything else in life we need to also maintain some viability.  In this case, the viability is tied to our cumulative cost and its impact on our economic i.e. national and cultural viability. Perhaps If we really want to save the planet then we should likely all agree to commit suicide now.  Then we will no longer have an impact.  I guess, that is, after the ecosystem once again returns to stasis after the population blooms of bacteria, predators, carrion feeders, etc. — all go through their own population explosion-die off cycles as the excess food sources from the rotting polluting corpses we leave behind are finally consumed and absorbed into the ecosystem.  On second thought, this will likely be a bigger polluting source that all the incandescent bulbs so maybe we should just keep the incandescent bulb and balance it by what we save by not committing suicide in the first place—Cap n’ Trade at its finest.

Oh yea, can’t use cap n’ trade, cause the state is going to use that to pay for the High-Speed Rail to nowhere!

(Tom Loker served as the Chief Operating Officer of Ramsell Holding Corporation. Prior to joining Ramsell, Mr. Loker was the founder and senior partner of Wild Tiger Holding Company and Thomas Loker Consulting. Visit his website at www.loker.com and his blog at tloker.wordpress.com.)

Medicare, Medicaid, and Obamacare: Drawing Comparisons between LBJ and Obama

“. . . I think we’ve got you something that we won’t only run on in ’66, but we’ll run on from hereafter!”

As Congressman Wilbur Mills commented to President Lyndon Johnson, in a taped private conversation in 1965, he was encapsulating the primary benefit that the democrats of the day felt they would gain from the Medicaid and Medicare extension to the Social Security Act of 1935, and the primary reason that President Johnson and his team pushed so hard for the reform to include new entitlement programs for the elderly, the disaffected, and disillusioned.

The Historical Perspective

Wilbur Daigh Mills, democratic member of the U.S. House of Representatives, and the chairman of the powerful Ways and Means Committee, was considered, by many, to be the only person in Congress who truly understood the actuarial basis of Social Security, and was recognized as the Congress’s primary tax expert.  At the start of the war on poverty in 1964, Mills had serious concerns as to the affordability of the existing Social Security Act of 1935 for the nation, let alone any extension of the current benefits to include what was then viewed as a health care “safety-net” for the underserved and the elderly.

Mills did not believe that the nation’s tax system could fund the liability of Medicare.  In his paper, “The Origins of Medicare,” published in 1999, Robert B. Helms writes,

Even in the face of strong political pressure from other Democrats, Mills had been so consistent in his opposition to adding a medical benefit to Social Security that many suspected him of being sympathetic to the AMA’s socialized medicine arguments. He used his detailed knowledge of Social Security to question both the Kennedy and Johnson administrations’ cost estimates and to point out that estimating future medical costs was a much more difficult task than estimating the future costs of a cash benefit.

In a 1964 speech, Mills said: “In practical terms, this meant that if the hospital insurance system which would be created by the bill was to remain sound, the taxable wage base would have to be increased by $150 each year. Clearly, this would be a case of the tail wagging the dog.” (The taxable wage base increased an average of $46 per year from 1959 to 1964)

In that same speech, he pointed out that hospital costs were increasing at a rate of 6.7 percent, while average earnings were increasing at only 4 percent (1955 – 1963), and that he saw no reason to assume that the situation would change. His support for the final version of Medicare in 1965 was apparently due to the effects of Democratic gains in the House in the elections of 1964, President Johnson’s personal appeals for support, and the many technical changes that he was personally able to insert into the bill during its various stages of development.

We now know that Chairman Mills’ skepticism was justified: In 1964, the administration projected that Medicare, in 1990, would cost about $12 billion in 26 years (which included an allowance for inflation); the actual cost was $110 billion. We may not know until the year 2025 if today’s actuaries are any more accurate than those in 1964 in making twenty-six-year projections, but at least the current crew is leaving no stone unturned to tell everyone who will listen that the Medicare Part A trust fund does not meet their standards for short-term or long-term actuarial soundness.

Despite Mills’ dire warnings, and his correct calculation that the wage base would have to increase by 300% each year over the existing rate to afford this new entitlement, Johnson felt he was swept in with a clear mandate from the people due to his landslide victory in the 1964 election. So, to help drive increases in the Democratic Party majority in congress, he made the push for Medicare one of his primary platform goals. Johnson was so focused on getting Medicare pushed through congress, he was willing to leverage anyone, and everyone, with every tool he had at his disposal to get this divisive legislation approved. The following transcript, of a taped meeting with his Vice President, Hubert Humphrey, in the first days after the election, is quite telling.

Johnson: “They are bogged down. The House had nothing this week-all god-damn week. You and Moyers and Larry O’Brien have got to get something for them. And the Senate had nothing . . .  So we just wasted three weeks . . .  Now we are here in the first week in March, and we have just got to get these things passed . . .  The ones that I’m really interested in . . .  one of them is education, one of them is Medicare, and one of them is Appalachia . . .  I think the medical care will go through like a dose of salt through a widow-woman . . .  You’ve got to look each week and say, what is the Senate doing in Committee this week and when will they be through, what is the House doing . . .  You’ve got to be running into these guys in the halls, and going over and having a drink with them in the evenings . . .  I want that program carried. I’ll put every Cabinet officer behind you, I’ll put every banker behind you, I’ll put every organization that I can deliver behind you . . .  I’ll put the labor unions behind you.

Johnson’s election didn’t just change the Democratic Congress’s advantage over Republicans; it also changed Mills’ political view. Seeing the writing on the wall, Mills made another speech where he announced, “I can support a payroll tax for financing health benefits just as I have supported a payroll tax for cash benefits (meaning social security).”

Thus, began what has been termed by many as the greatest Ponzi scheme to ever be foisted on the American people. With Mills’ support, the measure passed. There were still several hurdles to overcome, but in the end, Johnson got the legislation he wanted, regardless of the consequences. On March 23, 1965, Johnson’s Oval Office taping system records the call he has been waiting for from Wilbur Cohen (architect of much of Social Security and Medicare), Wilbur Mills (Chairman of the Ways and Means Committee), Carl Albert (Democratic Majority Leader) and John McCormack (Speaker of the House) telling him the bill has just passed out of the Ways and Means Committee. It is the first time Johnson finds out what Cohen has just actually agreed to in Johnson’s name: (Listen to the Johnson Tapes on-Line)

Mills: We wound up, and I got instructions, we’ll introduce the bill at noon tomorrow, and will report it at 12:15 . . .  I think, we’ve got you something that we won’t only run on in ‘66 but we’ll run on from here after.

Johnson: Wonderful. Thank you, Wilbur.

Mills: Now here is Wilbur Cohen.

Johnson: When you going to take it up?

Mills: We could have it on late next week, if not, early the following week.

Johnson: For God sakes, let’s get it before Easter.

Mills: Oh, there’s no doubt about that.

Johnson: . . . I sure do congratulate you on getting this one out . . .  I congratulate you and thank you.

Cohen: I think it’s a great bill Mr. President.

Johnson: Is that right?

Cohen: Yes sir. I think you got not only everything that you wanted, but we got a lot more . . .  It’s a real comprehensive bill.

Johnson: How much does it cost our budget over what we estimated?

Cohen: Well, it would be, I would say, around $450 million more than what you estimated for the net cost of this supplementary program.

Johnson: What do they do under that? How is that handled? Explain that to me again, over and above the King-Anderson, this supplementary that you stole from Byrnes.

Cohen: Well, generally speaking, it’s physician’s services.

Johnson: Physicians. All right, now my doctor that I go out and he pumps my stomach out to see if I’ve got any ulcers, is that physicians?

Cohen: That’s right.

Johnson: Any medical services that are M.D. services?

Cohen: Any M.D. services.

Johnson: Does he charge what he wants to?

Cohen: No, he can’t quite charge what he wants to because this has been put in a separate fund and what the Secretary of HEW would have to do is make some kind of agreement with somebody like Blue Shield, let’s say, and it would be their responsibility . . .  that they would regulate the fees paid to the doctor. What he tried to do was make sure the government wasn’t regulating the fees directly . . .  the bill provides that the doctor can only charge the reasonable charges, but this intermediary, the Blue Shield, would have to do all the policing so that the government wouldn’t have its long hand . . .

Johnson: That’s good. Now what does it do for you the patient, on doctors. It says you can have doctor’s bills paid up to what extent or how much? Is there any limit?

Cohen: The individual patient has to pay the first $50 deductible, then he’s got to pay 20 percent . . .  of everything after that . . .

Johnson: That keeps your hypochondriacs out?

Cohen: That will keep the hypochondriacs out. At the same time, for most of the people it will provide the overwhelming portion of their physician’s costs.

Johnson: Yes sir, and that’s something nearly everyone could endure. They could borrow that much, or their folks could get them that much to pay their part . . .  I think that’s wonderful. Now remember this, nine out of ten things I get in trouble on is because they lay around. Tell the Speaker, and Wilbur, to please, get a rule just the moment they can . . .  That damn near killed my education bill, letting it lay around. It stinks. It’s just like a dead cat on the door. When a Committee reports it, you better either bury that cat or get it some life.

In the end, Medicare and Medicaid became the law of the land. And, as can now know, Mills was correct to have his doubts about the actuarial basis of Medicare, Medicaid, and Social Security when the bill was passed in 1965. But, like the Social Security Act of 1935, the 1965 Act was not an ending, but a beginning of a perpetual series of expansions of the benefits provided by these programs.

It is now painfully clear that Wilbur Mills was correct in his initial assumptions about both the solvency of the original Social Security Act of 1935 and its unprecedented expansion in the 1965 amendment that pushed through for significantly political reasons by President Johnson.  Mills estimates of what would be required in real taxable earnings gains in order to fund this “safety net” were eerily prescient. By 1974, the failure of the GDP to support the nation’s expenses for these entitlements, and the accumulating trade deficit, had placed the country in a significant cash shortage with few means of escape.  President Richard Nixon took us off the gold-standard, and by the late 1980s the significant, arbitrary increases in the currency had elevated almost everyone’s wage base to where they began to feel prosperous once again.  But, the costs were just being temporarily outpaced by the injection of this new currency, the day of reckoning was still coming and finally hit with a vengeance in 2009. It is now starting to become clear that the feeling of prosperity we all experienced was not the reality of our economy just the benefit of more baseless cash.

The Modern Perspective

Enter a few days ago our current President, Barack Obama. In the past few days, it is clear to me that the president still believes what Wilbur Mills told President Johnson in 1965.  He clearly believes that he should be able to run on the entitlements of Medicare and Medicaid to secure the votes for this free stuff, just like President Johnson.  The concept of “a chicken in every pot,” i.e. votes for free stuff, was not as much the hallmark of the Democratic Party prior to President Johnson.

Although President Franklin D. Roosevelt leveraged these ideals to help the country rise out of the Great Depression and prepare for WWII, and Herbert Hoover is often credited with the phrase; “A Chicken in Every Pot” is a quotation that is perhaps one of the most misattributed in American political history. Variously assigned to each of four presidents serving in the years between 1920 and 1936, it is most often associated with Herbert Hoover. In fact, the phrase has its origins in seventeenth century France; Henry IV reputedly wished that each of his peasants would enjoy “a chicken in his pot every Sunday.” Although Hoover never uttered the phrase, the Republican Party did use it in a 1928 campaign advertisement touting a period of “Republican prosperity” that had provided a “chicken in every pot—and a car in every backyard, to boot.” You see, we need to understand that political duplicity is not a democratic or republican affectation; it is a politician’s con.

But here we are once again, and even though President Obama is not uttering this phrase, it is clear that this is what he sees as his ticket to re-election.  Perhaps I am too cynical, but reading transcripts of committee hearings on what became the Affordable Care Act, listening to our congressional leadership saying things about the legislation like, “this is the path to a federal single payer system,” or “we need to pass it so we can see what’s in it,” and other equally ludicrous statements, and listening to the political agendas so blatantly expressed in the Johnson, or Nixon, tapes can do that to a person!

Based on my own experience, and backed up by the historical record all the way back to Mr. Mills, it is clear that the current system simply cannot work.  Frankly, and I don’t think I am telling anything out of school, none of our elected officials think it can work either.  They are currently almost evenly split between the “we know it can’t work and we need to fix it crowd,” and the “We know it can’t work but we can run on it again, and again, and again . . . crowd.” Regardless, to everyone it should now be clear that it can’t work.

So, it is astounding to me that the President of the United States, Barack Obama, now stands before the American people and making a reverse Robin Hood argument declares that the other party, Republicans, in this case, those evil people, want to take everything you have away and give it to the rich!  And what is more astounding is he says this is not class warfare!  People seriously can’t believe that such a bald faced lie can be true, can they? I have met many of our congressional leaders; republican and democrat.  I have not met one that was not concerned about all Americans.

To make a statement that one political party is dedicated to the destruction of poor and helpless people is beyond unconscionable it is simply irresponsible.  And it would be equally irresponsible for similar invectives to come from the other side as well.  We are in a significant national, social and economic crisis.  If our leaders do not get serious about solving the problems then we need to get new leadership.  If all we have left when someone talks of hard choices is to damn them as a pawn for the rich, then I do not see how we will survive.

As we move beyond this primary election cycle toward the presidential election, we need to elect a leader that will realize that he can’t promise America that there will not be a chicken in every pot.  You see Mr. Obama; the chickens have finally come home to roost!

Author’s Note: For those of you who may be interested in more on this issue, it is discussed in more detail in my upcoming book, “The History and Evolution of Healthcare in America,” go to my website at www.loker.com and sign up to receive notice of its release.

(Tom Loker served as the Chief Operating Officer of Ramsell Holding Corporation. Prior to joining Ramsell, Mr. Loker was the founder and senior partner of Wild Tiger Holding Company and Thomas Loker Consulting. Visit his website at www.loker.com and his blog at tloker.wordpress.com.)

What is Wrong with Politics

People that know me well know that I read.  I read a lot.  I read incessantly, I read everything and anything. I read everywhere, written by anyone, left, right or middle—it does not matter.

I long ago came to the conclusion that whether or not I agree with the points made by an author, this should not be the guiding principal of what I choose to read.  I find that, in fact, I learn the most when I read things I do not innately agree with.  In reading the contrasting opinions of others, and for the most part with the intent of maintain an open mind, I can try to compare their journey of understanding, expressed in their logic, if it exists, and either validate, or repudiate, parts of my own logic—hopefully, coming to a better understanding and opinion myself.

What’s the problem?

I am not so sure that this is what people really do anymore!  It seems to me more and more people are only interested in letting someone else tell them what to think!

Recently, I have seen a series of articles, from both sides, trying to answer the question of what is wrong with our political system.   Each side is spending lots of effort, and ink (or electronic bits), explaining how the system is not working because the other side is conspiring to subvert the system to harm something or someone, or to benefit something or someone at our expense.  They often formulate the basic justification as this is clear because we are not getting what we want from the system.

Wrong Premise

The problem for me, as I see it, is the entire premise is wrong!  By starting with the logic that something is wrong because we (pick either side in the argument) are not getting what we want, may be logical but it is not accurate on two levels.  First, the assumption that the system is designed to give us something that we want in the first place, is not a correct assumption.  Second, the idea that the system is designed so that whatever the majority wants is to be provided to us by the government is also not true.

System is working fine

The reality is that our political system is still, for the most part, working as it was designed despite the slow erosion of some of the original checks and balances over the past seventy-five years.  If you doubt this premise, read any of the biographies of Washington, Adams, Jefferson, Monroe, or Franklin and it will quickly become quite obvious that this was the design.

No, the system is still working just as it was intended.  The problem is not the system. Although, if we do not begin to understand the impact of the gradual changes we have made, soon this may not be the case.  The problem with the system is we are now starting to get what we want, and compounding this problem we have been for the last fifty or sixty years.  We are, in every corner, probably right or wrong, getting too much.  No, it is not the system that is the problem it is:

  1. The changes we have allowed to be made to the original system have weakened the checks and balances on our own greed and avarice
  2. What we expect that we are due from the system has grown exponentially as we have gained more from the system

The system is being changed

Our system was designed to be based on part-time citizen politicians directly subject to the impact of the laws and policies they create, not a ruling elite political class exempt for their communities day to day trials and tribulations.  At the very beginning of the implementation of our new form of government, in April of 1789, the grand design of our form of government showed the promise of its innate slow and difficult process to sort out where power and responsibility resides and to make difficult the ability of the federal government to pass laws that affect us.  Rapidly, the two competing philosophies, which I believe are inherent in mankind, congealed into two political parties.  The federalists, who advocated a strong federal government authority to foment consistency, rapid growth, and strength, became one pole, and the republicans, who were concerned about the rise of a tyrannical aristocracy or hereditary monarchy developing a predatory system reducing the rights and prosperity of citizens through taxes and needless, unwanted, regulations who advocated for government controls closer to the people at the state level.

While for over sixty years our education system has taught more, and more, that we are a democracy, and that we are by nature a nation where it is the majority that rules, this was specifically and unequivocally not the government that the founders created.  We were, and to some extent remain, a constitutional republic.  The difference is; in a democracy people have a direct control through their vote, and in a constitutional republic the control is indirect through the election of officials who are supposed to weigh the will of the people against what is best for the country and consistent with the constitutional republican principals of our government as they make law and policy.

System is still fine—For Now!

Today we are clearly migrating away from some of these fundamental principals in two areas:

  1. We now, as a people, no longer understand the benefits of the constitutional republic and many if not most simply believe we are a democracy, and
  2. We have inadvertently allowed the creation of a stronger federal control by stimulating the creation of a full-time professional political class—potentially, just the kind of tyrannical aristocracy that Jefferson and Madison were so worried about at the beginning of America.

The question we all need to answer is: is this what we agree we truly need?  If so, then we will have to accept the consequences of a pandering democratic machine continually taking prosperity from the individuals and granting it to the majority in exchange for the continuation of their livelihood as a full-time professional politician and the continual erosion of the original system of government and its checks and balances.

If this is not what we agree we need then there are some very had choices and changes we will need to consider to recover the checks and balances and once again return to the constitutional republican form of government we had.

Still up to us to define our system for a while longer

The good thing is it is still up to us for a bit longer.  The more we continue the erosion of the checks and balances inherent in our original constitutional republic, the more we become a democracy.  At some point we will slip beyond the edge and soon perhaps there will be no going back short of another costly and divisive civil war.

And the answer is?

So the answer to the question that headlines this article, “What is wrong with Politics?” is nothing at the moment, but stay tuned!

(Tom Loker served as the Chief Operating Officer of Ramsell Holding Corporation. Prior to joining Ramsell, Mr. Loker was the founder and senior partner of Wild Tiger Holding Company and Thomas Loker Consulting. Visit his website at www.loker.com and his blog at tloker.wordpress.com.)

Wheels of Justice Turn Slowly and Confuse the Common Man

If you want to listen to the lengths modern law and its practitioners, lawyers, go to spin reality and obscure common sense to convince courts that which otherwise normal people would deem ludicrous, just go to and listen to yesterday’s oral arguments on the Tax Anti-Injunction Act part of the HealthCare Act Supreme Court review of its constitutionality.

It is interesting to note that the Solicitor General, representing the government, seems to be schizophrenic as he attempts to argue for the Obama administration’s position that the court cant here the case because of the act—as the President does not want the decision to come till after the election—and on the other hand in representing the position of the government (the people in general) he tells the court that he thinks the court should hear the case.

Another point to note as it has very particular relevance is that in his argument yesterday, he describes the Assed fee for not purchasing insurance, under the mandate clause of the act, is a tax.  Tomorrow he will be arguing that it is in fact a tax.  This schizophrenic position has been confounding the government’s position since they debated the law and passed it in the first place.  In arguing why the case can be heard, Solicitor General, Donald Verrilli, argues that the penalty is not a tax for the purpose of the Tax Anti-Injunction Act.  Tomorrow he will argue that the “penalty” is in fact a tax to justify the federal government’s position that it can levee it and therefore it is not violating state’s rights.

It is very important to note that like Congress and the President, the power of the judicial branch, including the Supreme Court is granted, loaned if you will, from We, the people of the United States.  As such, if the decisions rendered make no sense to We, the people, then it is either because they are wrong or not crafted to reflect well on our intentions as a people.

We need to begin to exercise our responsibility as the grantors of these very important and solemn powers and demand that all decisions and arguments be rendered with a standard of language that we can all understand and does not obscure whether or not our constitutional rights are being upheld.

I encourage everyone to take the time to listen to the arguments in the first person, not as reported by others.  Yes they will take a combined six to nine hours but to allow others to police our rights is to grant them the power to help obscure the elimination, or neutering, of our rights.

To quote and old friends mother, “Pay attention, you can learn something from a fool!”  I worry that in the end the fool will be us!

(Tom Loker served as the Chief Operating Officer of Ramsell Holding Corporation. Prior to joining Ramsell, Mr. Loker was the founder and senior partner of Wild Tiger Holding Company and Thomas Loker Consulting. Visit his website at www.loker.com and his blog at tloker.wordpress.com.)

Santa Rita Solar Grid Costs $11.7 Million to Build, Only Saves $100k per Year

Photo courtesy Living Off Grid, flickr

In July I wrote this short blurb about the solar project in Yosemite…

Just your average government project!

  • 2800 Solar panels
  • Producing 12% of Yosemite’s electricity
  • Saving $50,000.00 per year
  • Cost $5.8 million in stimulus

And you wonder why the federal government is out of money and needs more debt! It will only take 116 years to recover the expense in savings. What is the life of a solar panel?

Could this kind of genius calculation explain the debt crisis?

What is the best is our government, the EPA, is promoting this project on the local news!

And now today in the local paper is an article called, “Santa Rita Jail gets greener through own grid…”by Robert Jordan.

So the salient parts of this article are these…

The solar “grid” cost $11.7 million to build.  The funding came from a Department of Energy grant of $6.9 million, $2 million from the California Energy Commission, and $2.5 million in political extortion, oops I mean a grant from PG&E.

And do you know what this phenomenal project will deliver in annual savings? At least $100,000 per year is the way they put it.  Now $11.7 million, divided by $100,000 equals — I better get out my calculator because this is obviously higher math — Oh yeah… it will take 117 years for the payback for this expense…

It is amazing how much you can spend for the good of the world when it is not your money!

Does anyone need to say any more about this foolishness?

(Tom Loker served as the Chief Operating Officer of Ramsell Holding Corporation. Prior to joining Ramsell, Mr. Loker was the founder and senior partner of Wild Tiger Holding Company and Thomas Loker Consulting. Visit his website at www.loker.com and his blog at tloker.wordpress.com.)

Supreme Court to hear arguments on Obamacare: an enigma, based on a canard, wrapped in a conundrum

March 26, 27, and 28 2012, become the next significant dates in the future of the Affordable Care Act (ACA or Obamacare).  It is on these dates a little over two weeks from now that the Supreme Court will hear arguments both challenging the constitutionality of part of the legislation and arguments as to why the court should uphold the legislation. For most of us on both sides of the aisle, involved in the debate over healthcare reform, we see this as an enigma, for widely opposite reasons, as to how we have arrived today at this point.

For those of you that are interested in this current debate, you can find a number of places to read the arguments, or you can simply read someone else’s interpretation of the arguments.  Here, are some links:

My advice to you is, don’t rely on others interpretations, read the source documents for yourself.  Everyone, including me, are bringing their own bias to their review; some unintentionally, many intentionally.  This has become the partisan issue of this decade.  None of these arguments is a simple read for the non-lawyer.  I would argue that it is the view of a non-lawyer, the view of a common citizen that is now most required to be heard.  The lawyers now are so wrapped up in the history of all judicial actions, and their arguments are both driven by, and necessarily constrained by, the rulings that have preceded; the legal principle of stare decisis—Latin for stand by the decision—the obligation for the court to uphold what has gone before.  It is now, that someone, not a lawyer, needs truly to ask what is the right principle.

I am not a lawyer, and I have my own biases.  I write this, not to tell you what to think, but to tell you how I have chosen to understand this issue.  I hope you will use this as a stimulus to plot your own quest for an answer.  We are at a point in our history that if we do not reengage as citizens, in an active role, in the formation of our governance, we will find that the government that we end up with, will be consumed by forces we do not want, nor can we afford.   The power of our “constitutional republican” form of government is based that the power comes from the people, is enacted by our representative people (the extension of us, not a special or elite class), and is for the benefit of us, the people. We are now at a critical juncture, where we, as a people, need to review the decisions we have allowed to be made and expanded like weeds in an uncultivated field, over the past seventy years.  We need to determine if what we now have accurately reflects what we intended; and if not, we need to no-longer allow the subtle expansion, and extension of federal powers, to continue indeterminately.

I am not arguing if we do, or we do not, agree with the constitutionality of the mandate in the Affordable Care Act.  That argument should come, but it needs to come after we determine if the precedent decisions, beginning with the pivotal case of Wickard v. Filburn reflect what we intended: and if it does not, then the pending arguments will continue to leave us sliding down the slope.  If it does, then we all must now accept the ramifications and understand the fundamental change to our current constitutional republican form of government that will fall out of these next actions.

For a review of the historical actions that have led to the current belief that the Federal Government can enact such a law, feel free to read my prior articles: Health Care Mandate and the Commerce Clause Articles, Entitlement vs. Safety Net: It’s not a matter of degree!, U.S. District Court of Appeals “Reaches” for the answer to the purchase mandate, and ACA, Politics, Mandates and the Commerce Clause.

The Arguments

As the Patient Protection and Affordable Care Act was passed, the controversy and the challenge began immediately.  Within hours of passage, states’ legislatures and attorneys-general began filing actions to block its implementation.  Some of these actions were new state laws that helped limit the laws effect.  But, the more effective challenges were the suits filed by the states to block the federal law’s implementation.

Numerous arguments were originally made to challenge the law.  Arguments were made that the act violated the constitutional right of privacy, violated the free exercise of religion, and even violated the thirteenth amendment prohibiting slavery, along with many others.  As the cases have moved through the judicial system, the plethora of arguments has continually been pared down to a remaining few.  In a little over two weeks, the Supreme Court has agreed to hear a subset of the original arguments.

There are now two main questions pending from the original challenges and two additional questions posed by the court itself.

Remaining Questions

  1. Does the Individual Mandate clause exceed congress’s enumerated powers?
  2. Does the expansion of eligibility of Medicaid to include all legal citizens less than 65 years old and earning less than 135% of Federal Poverty Level (FPL)—approximately $37,500.00 per year—force the states to implement what is federal legislative power thereby violating the separation of powers principle.

Additional Questions

  1. Does the Tax Anti-Injunction Act bar the court from hearing the case?
  2. Is the mandated coverage constitutionality question severable from the remainder of the act?

Supreme Questions

In reading through the briefs and the summaries, available through the links above, I see the arguments breaking down this way. On the side to overturn the legislation, the arguments are framed as to whether, or not, the original intention of the commerce clause in the constitution, grants this right to the federal government, or does it remain as a right of the people i.e. the individual states.  The arguments for the act to be upheld seem to me based on legal tricks and gimmicks to justify the extension of the power based solely on the extensions that have gone before.  Perhaps this is not fair but I believe the fundamental question needs to supersede those decisions that have gone before, with which I think most Americans would also disagree.  I think it is mere trickery to cite one bad ruling as the basis for another if the root decision is in question.

Despite the tricks and histrionics on both sides, the basic argument comes down to, is it the federal government, or the state government, that have the authority to enact  legislation governing personal behavior.  The main argument for this federal right is the precedent cases, not the root argument of what the Commerce Clause actually means.  For me, it is this framing of the debate that is now the problem.  If the arguments are bound by the principle of stare decisis, then I believe the logical conclusion will be a 5 to 4 decision in favor of upholding the mandate in the ACA.  If the issues revert to the principal determination of whether, or not, the commerce clause was framed to grant any of the rights, now assumed by precedent, to the federal government, then I think we will have a 5 to 4 decision overturning at least the mandate portion of the law.  And, without the mandate, most believe that the ACA law becomes moot.

The secondary argument made by those in favor of the mandate follows the “everything now is interstate commerce” logic because if people do not conform to this mandated behavior then their actions become a fiscal drain on the rest of us, because either the industry, or the government now must go provide for their needs, and the cost will get passed back to the rest of us.  But, this argument is a canard.  The cost to us for lack of action by others is a real cost, but it is predicated by a government action of over forty years ago that mandates that we are going to provide the services in the second place when the individual fails to take appropriate steps to be responsible for their own needs in the first place.  By the way, I am not talking about eliminating a safety net.  We need a safety net!  Safety nets should be provided for the helpless.  What we have today is not a safety net, it is an entitlement, and while some helpless get benefit, predominantly it is providing support for the clueless and the worthless.

The recent Birth Control debate is a timely example.  Forget the religious argument; this is mere political theater at this point.  The argument goes like this.

Someone, employers or insurance companies, i.e. us due to cost shifting, must pay for birth control for women because it costs too much and they cannot afford it.  They will have sex and some will get pregnant.  They will then have babies because they cannot afford, or do not want, to get abortions. Then the government will have to pay to birth these children and support the mothers and their children causing a larger fiscal drain than the cost of birth control itself.

This is a canard because the requirement for the cost for the voluntary pleasurable act of sex, a biological drive, which may result in pregnancy and birth of a child, only places the cost of birth and support of the mother, and child, on us, because we have chosen to accept the responsibility of these costs in the first place.  I am not arguing whether or not we should do this.  I am simply saying we made a choice to do this, and to take the responsibility for the act off the participants and place it squarely in our collective laps.  To swallow the argument that one now begets the other is to believe that the requirement for us to absolve the participants of their personal responsibility and accept the burden of their actions is somehow inviolate and must remain so for all time.  This is simply false.

The humanistic, moral and ethical implications aside, we should be under no perpetual obligation not to revisit the original decision as to who is responsible for what in society.  There are many other cultures around the world that do not accept this responsibility at all, and often these acts result in poverty, pain and in some cases death to mothers and children.  We choose to be more humanistic, and believe ourselves more moral and ethical, and have chosen to believe that we are obligated to support those that will not support themselves.  Understand I am not arguing we should not do these things, I am just pointing out that this decision is both cause and effect on many others we now face.  It is political gamesmanship to present one side of a justification as fait a compli, this is routinely done in the body politic these days, and often fools us into limiting the debate and choices, yielding ineffectual results.

Another argument by the supporters of the ACA is based on the following quote,

“Opponents of the health care law say that if it is upheld, then government can force people to buy an American car or eat broccoli.  But, a person can opt not to drive a car or eat vegetables: no one realistically can opt out of health care.”

This argument follows, what is called in sales, “the Reverse Ben Franklin Close.”  In effect, this technique is geared to obscure the argument, by saying that you can be forced to buy a car and to eat broccoli if you are also forced to buy healthcare insurance, but unlike the others, you do need health care.  In effect, leaving the impression that they are not equivalent and therefore, the worry is not valid. The technique, not the argument, obscures the real issue.  Yes, you almost certainly will need healthcare as you live, and your need will grow proportionally to the length of time you live. But, the argument is that we have to pay for your healthcare not the fact that you need healthcare and don’t need broccoli or to drive.  We don’t pay for your car or vegetables.  That is ultimately the key question.  It is not the benefit of the ACA. The question is, at what point does a safety net come into play to serve the needs of the helpless.  How do we define the helpless?  And, how do we filter out the burden of the clueless and the worthless? Currently we have chosen to propound the philosophy that all people are now entitled to healthcare, regardless of their personal choices or life planning.  We do not as yet entitle people to a car of free vegetables.  The worry by some is that this is coming next.

Does the Individual Mandate exceed congress’s enumerated powers?

This question has become the key question and the key argument for, and against, the viability and continuance of this legislation.  Is the federal government authorized to require citizens to purchase health care and in effect penalize them in the form of a tax or a penalty if they do not buy insurance?  The crux of the argument, for this federal power, is a U.S. Supreme Court case that was argued in 1942, Wickard v. Filburn, 317 U.S. 111.  I have written about the case in my article, Health Care Mandate and the Commerce Clause. I will not rehash the case here but encourage you to go read the article and read the link to the case.

In reading this case, and the other cases that piggybacked on top of Wickard to justify the expansion of federal power, I have come to my own conclusions.  As you read those articles, you will find clearly what I believe.  The question is not what I believe, it is what you believe, and more importantly, what do we, the people, believe is the appropriate border line between where the state’s power begins and the federal power ends.

Does the expansion of eligibility of Medicaid to include all legal citizens less than 65 years old and earning less than 135% of Federal Poverty Level (FPL)—approximately $37,500.00 per year—force the states to implement what is federal legislative power thereby violating the separation of powers principle?

This issue in the end is a non-issue.  The crux of this argument hinges on one of the same tenants as the Mandate—where do the federal powers end and the state powers begin.  This argument began at the formation of the constitution in Philadelphia, and has continued to rage since the formation of the government, and the election of George Washington as the first president.  It was the main factor in the initial fractionalization of the founding coalition government in Washington’s first term, into one that had the federalists, headed by the strong central government vision of Alexander Hamilton, on one side, and the republicans, headed by the anti-monarchists, state’s rights principals of Madison and Jefferson, on the other side

Medicaid is a federal program.  In fact, Medicaid is an extension of Social Security, as is Medicare.  But, if you listen to the current administration they want it both ways.  On the one hand, the president calls Medicaid a state program, but, on the other hand, he wants the federal government to set the rules.  The state governors clearly and uniformly call Medicaid a federal program, and since it is breaking the banks of the states, would prefer to remove the expense from their books.  The conundrum is because in 1965, as President Johnson was framing the extension of the Social Security Act, the legislators know that they had to make Medicaid a “state” program or it would violate the separation of powers principles.

Does the Anti-Injunction Act bar the court from hearing the case?

This argument was raised in the case I discuss in U.S. District Court of Appeals “Reaches” for the answer to the purchase mandate.  In essence, there is an argument that the court should not be able to hear the case, because this act prohibits courts from preemptively enjoining any federal collection of tax revenue until after the revenue is collected.  The base argument is the court cannot enjoin the federal revenue stream until there is real harm.  I actually think the premise of this argument restricting courts below the Supreme Court is valid.  This act provides a check on the courts by eliminating a mechanism where lower courts could effectively shut down the federal government by strangling its cash flow.  I do not feel the same way at the level of the Supreme Court, in that, if it also binds the Supreme Court, the law would grant an unequal power to congress to prevent the Supreme Court from ruling on the constitutionality of some laws prior to harm being done. The Supreme Court is supposed to be the peoples effective check on the powers of congress to create bad law. I don’t think most of the justices are inclined to agree that Congress can pass a law that prohibits them from reviewing congressional actions.

Is the mandated coverage constitutionality question severable from the remainder of the act?

This is another interesting set of arguments and important to those arguing for and against the legislation.  When congress wrote this law they specifically excluded a clause that would allow for any section of the code that was found unlawful, or unconstitutional not to affect the other provisions.  So, on the face it would be argued that it was the intention of congress that all part of this law stands together, and if one part falls they all fall.  Of course, the counter argument is that since there is no statement that says that it all stands as one and it is not dividable on the merits then it must be severable.  I believe this argument is window dressing for the most part.  I believe the justices will rule with a significant majority that the law is severable.

In the end, the main piece is the Mandate. If the mandate falls, for the most part, the law falls.  If the mandate stands, than the law stands: another step in the additional extension of power to the federal government will occur and despite the contrite arguments from both sides, this new precedent will become the stage for another expansion later on.  If the mandate stands, Hamilton and his federalists would have been thrilled, and Madison, Jefferson, and their republicans, would have been horrified.

The conundrum is that despite our best intentions, intelligence, humanity, economic analysis, and strong convictions, we have now created a major problem based on fundamental disagreement over what the founders intended and whether we are to stay true to this intention or if we should feel free to change it at will.  Frank Zappa once said, “The crux of the biscuit is the apostrophe!”  (There may be a few of you that actually know what this was in reference too, and for those that do, I apologize for the original context. If you know feel free to post in the comments area. I will post the explanation in a few days if others do not.)  I am using the statement to illustrate that the apostrophe of this conundrum is at the point that helping some people becomes detrimental to all people.  Spock said to Kirk, “Sometimes the needs of the many outweigh the needs of the few, or the one.”  This is a loaded statement, as the needs of the many may be affected in very dangerous and deleterious ways by catering to the needs of the many.  Sometimes, as in this case, society gets to the point where the definition of what is needed needs to be clear and it is imperative to prioritize the fundamental needs and eliminate the extraneous wants.

In the end, we are faced with an enigma, based on a canard, wrapped in a conundrum!  I hope we have the national and personal character to address the problems and find real resolutions.

Note from the Author: I hope this article at least provides a process for you to seek your own answer.  I am sure once again we will be much divided, but perhaps the arguments can become fundamental and appropriate, and no longer tangential, and irrelevant. I ask you to come back and post your thoughts in the comment section.

(Tom Loker served as the Chief Operating Officer of Ramsell Holding Corporation. Prior to joining Ramsell, Mr. Loker was the founder and senior partner of Wild Tiger Holding Company and Thomas Loker Consulting. Visit his website at www.loker.com and his blog at tloker.wordpress.com.)

Obamacare’s Birth Control Mandate: Stupidity or Duplicity?

Do you think they just don’t get it?  In a supposed attempt to find some “middle-ground” in order to make the “middle-men” whole as to the cost of birth control, the administration is acting like we are in the “middle-ages”—all poor and uneducated.  First, the administration’s talking heads took the position that the cost of free birth control would be a savings for employers, now forced to pay for it because pregnancies and abortions are much more expensive.  The employers now have to pay for a product, to prevent a cost that their health plan is paying.  The premise is that paying the lower cost birth control will lower the plan’s coverage cost and the health plan will then, in turn, lower the premium cost to the employers—not hardly!

Also, there is a big assumption that the rate of single mother and unwanted pregnancies will decrease because of improved access to birth control.  I am not sure I agree with this either.  Free or subsidized birth control is widely available, it just is not conveniently available everywhere.  I am not attacking a woman’s right to have access to birth control.  We have a very strong habit, of late, of confusing the discussion of access with no-cost access.  It is the no-cost access I have the most problem with.  The cost is not free, we all end up paying for it anyway, and the system that is based on mandates, despite the method of the mandate naturally inject inefficiencies and vagaries of control, so that a significantly reduced percentage of dollars spent actually go to pay for the good or service. Look at the healthcare debate numbers from the president’s roundtable at Blair House with Republicans in 2010.  By numerous authorities, from both sides of the aisle, only about 35 – 45 cents on the dollar ever make it to real care.  So why do we do it this way?

The government now classifies birth control as preventative care, because Obamacare requires health plans to cover prevention at no cost.  Exercise prevents heart disease, so this should be classified as prevention, as well. Health plans really should cover gym membership at no cost.  And, you know having fresh fruit prevents scurvy—health plans need to cover free fruit.  Listening to peaceful music lowers stress levels, and therefore prevents high blood pressure and the risk of stroke, so good music systems are preventative and should also be covered for free.  And of course a warm, comfortable home is clearly preventative to lots and lots of health related problems so I guess “health plans” should provide this as well.  This is the same issue I have with the insurance purchase mandate and the rationalization of its constitutionality by the extension of federal power justified by pointing to prior extensions of federal power under the commerce clause.

It is not the idea of helping people; women in this case, get access to care that is the issue. It is the duplicitousness of the need for access by extension to now mean everybody else needs to pay for it, and the effort to obscure the nature of the extension logic that I am finding most troubling.  The argument that is being used, now over and over again, goes like this . . . Someone, or some group, needs access to something—or for political gain, we can convince them that they are being discriminated against because they do not have this access and we want to give them access so they will see us as looking out for them, what we are providing is now considered preventative, we passed the law that says if its preventative it must be provided at no cost, ipso facto, you have to pay for this group to get it because it’s the law.

The straw that is breaking the back of many on this issue is now that this administration is saying well, since you are objecting to assuming this cost, we, the government, will find some way to make you whole here, you won’t have to shoulder the cost.  Everything the government does cost the people of the United States money.  No matter how they try to spin this, it costs us money. We are the government and we are the only source of money.  So nothing they can do at the federal level is going to make anyone whole without laying it on the backs of all of us in the long run.  Simply saying OK we will let you get a credit to reduce something you pay us over here, just reduces the income the federal government needs to pay what is already spent ten years ago. Do they really think we believe they will not increase fees somewhere else to get the money?  If they lay it on the back of some other industry, they are going to increase prices that we all pay so once again it is out of our pockets.  There is no escape from zero-sum economics.  Even if they just print new money out of thin air, as they have been doing for forty years now, it reduces the buying power of our currency and prices go up, again we pay.

Finally, it is time we realize that we only have finite resources, and everything we do costs us in one way or another.  Paying for birth control for everyone is just reducing the money we need to pay for everything else.  People are now living much longer and as we crossed from average life expectancy at the mid-seventies to where we are not in the eighties, the average cost of care has rapidly increased.  Now we demand that heal plans no longer just cover basic life-saving procedures, we expect they also cover quality of life items as well. The technologies we have developed to make this real gain in median life span is based on very expensive technologies adding to the costs, and the magic bio-chemical bullets we have developed to fight the war with the other species, like bacteria, and viruses, etc. are increasingly costing more and causing more side effects as these species have evolved to be resistant.  All of this, with some other reasons as well, is causing the steadily increasing cost for our healthcare.  Sometime soon we need to begin to discriminate at what point people are individually responsible for at least some of these costs.

So I wonder are the people coming up with these ideas really this stupid.  If they are not stupid, then do they think we are this stupid?  Or are they simply Machiavellian? My initial reaction is they are not smart enough to be this duplicitous, but perhaps I am mistaken!

(Tom Loker served as the Chief Operating Officer of Ramsell Holding Corporation. Prior to joining Ramsell, Mr. Loker was the founder and senior partner of Wild Tiger Holding Company and Thomas Loker Consulting. Visit his website at www.loker.com and his blog at tloker.wordpress.com.)

America Needs Citizen Politicians

As I watch the current primary political spectacle, and await, with more than a modicum of trepidation, the coming presidential election of 2012, I long for the emergence of a “citizen politician” like those that founded, what once was, this great nation.  Where have they gone?  What has happened to our national values, that we no longer can produce such remarkable and dedicated individuals?  Have we so corrupted the elegant system, designed by the framers, that we simply cannot find those truly fit to serve the nation, instead of serving their own, or some subgroups desires and wishes.  Has the process been so corrupted that the simple citizens we most desire, and who would best serve, will not stand up to our current infinite scrutiny, or will not run because they do not want such public ablation of their character? We once had a collection of people, who felt that it was either their destiny, or their obligation, to serve their neighbors to build a better life for all, and to develop systems to assure that character, integrity, and nobles oblige, were the justifications for their fitness.

Recently, I have wondered, what were the characteristics that defined this group of remarkable men, those who risked and sacrificed so much to build this nation? Over the past year I have read a number of biographies of our founding fathers; men like George Washington, Thomas Jefferson, John Adams, James Madison, Alexander Hamilton, and Benjamin Franklin.  Each in its own way revealed bits of what united these men in such a grand and ambitious undertaking.  In another way, it has led me to wonder if we still have the tools in place to create others like these men, or if the circumstances of our modern world, our changed mores, faith, family, values, and education system have been altered so profoundly that we no longer build the necessary combinations of character, strength, conviction, patriotism, and dedication to generate leaders with a sense of purpose, responsibility, and faith in something grander than themselves with unshakeable and selfless commitment to their country and fellow citizens.  I guess the real question is, are we lost?

Our First President

George Washington was a complicated and interesting man.  All of us, who have studied history in modern schools, have read about Washington as the father of our nation, but the image of Washington that I learned in school both understates his contribution to the birth of this nation and fills our head with minor and false facts (like the story of the cherry tree) that do not provide a true measure of the man. To the continental colonists at the end of the revolution, George Washington, was more than any other, the father of this nation.

As the country was being forged, Washington, and many others just like him, felt a profound sense of duty to the rest of Americans to fight to the death against tyranny and eventually to build a great form of government to perpetually protect the nation’s people from the resurgence of tyranny from both abroad and within.  Today, we often hear as to what the framers felt was the role of faith and God in the creation, prosperity, and future of our nation.  Today, in our modern world of agenda based spin, we hear polar opposite views.  On the one hand, it is stated that the founders believed there is no role for religion in government.  Religion was not to have any part in the governance of the nation. And at the fringe, there are those that profess that it is a violation of the constitution to even allow and discussion, mention, or intimation of religion in any public venue, action, or event.  On another hand, we hear that religion is a clear part of our government, and became the basis for the governing system we chose. Further, at the fringe of this side, we hear that this, or that, religious view was inculcated into the constitution to promote this or that moral value.  Like everything else today, the truth is much more complicated than a sound-bite, and lies somewhere, nuanced, in the middle of the argument.

President Washington felt that National Policy needed to be rooted in private morality, which relied on “the eternal rules of order and right . . . ordained by heaven itself.” It was in consideration of the grand opportunity wrested by the sacrifice of the American people, through the providential victory of the revolution against England, that Washington’s held the view that this opportunity was granted by the unknown machinations of an almighty God. Washington wrote, “The sacred fire of liberty, and the destiny of the republican model of government are justly and considered as deeply, perhaps as finally staked, on the experiment entrusted to the hands of the American people.”

Washington and many of the other founders were big believers in the hands of some higher power guiding them to their destiny.  They also felt that only good and just men could reap the benefit of these grants from some higher power.  They believed in strength, justice, and the power of courage and conviction.  They were humanists, who felt it was their duty to help the downtrodden and the weak.  But, we should not confuse this humanistic view with their additional view that people were also individually responsible for their own destiny and lot in life.  As an example, Washington also wrote,

“Of all the dispositions and habits which lead to political prosperity; religion and morality are indispensable supports.”

Washington also wrote,

“Let no one go hungry away . . . provided it does not encourage in them idleness.”

The New Constitution

In 1787, as the continental congress was meeting to establish the foundation for a new and necessary form of government to control this new nation, there was significant controversy.  Read either of the recent biographies of George Washington, Washington, by Ron Chernow, or of John and Abigail Adams, First Family, by Joseph Ellis and you will see that the current level of histrionics, division, diatribe, and intrigue are nothing new.  Further, most of America had no knowledge of what was transpiring inside the State House in Philadelphia, in 1787, or what kind of government was being developed by the men who had assembled to compose our new nation.  The mystery was so complete that after the vote by the members of the congress in approval of the new constitution, Benjamin Franklin reportedly was approached by Elizabeth Powell as he left the State House.  When she saw Franklin, she is reported to have inquired as to what form of government had been produced by the members inside the convention.  Franklin responded, “A republic, madam, if you can keep it!”

Like politics today, this new constitution was not immediately revered by all.

George Mason, a friend of George Washington, declared that the new form of government “would end either, in a monarchy, or a tyrannical aristocracy.”

Looking at the current state of America and its politics I think many would argue it has met Mason’s fate. It just depends on which side of the political spectrum one is, as to whether or not it is now ended as monarchy or tyrannical aristocracy—Occupy Anywhere anyone?

Citizen Politicians

I think we need to find a way to alter the current political selection process, and fundamentally eliminate the position of professional politician from our culture and revert to the original concept of government of the people, by the people, and for the people.  The “by the people” part was not designed to be rule by a professional political class as we are today.  Just what was the concept of citizen politicians at the time of the founding?

Many of the founders regarded any open interest in power as unbecoming of a gentleman. As a result, people like Washington, Adams, and Jefferson preferred to be drawn reluctantly from private life by the irresistible summons of public service.  Ron Chernow writes in his book, Washington, “George Washington felt even to say the word, president, or to merely broach the topic, even in the strictest confidence with friends would seem to betray some secret craving for the office on his part.” Chernow reports that Washington confessed his quandary to Alexander Hamilton in a letter where he said,

“For situated as I am, I could hardly bring the question into the slightest discussion, or ask an opinion, even in the most confidential manner, without betraying, in my judgment, some impropriety of conduct.”

John Adams and most of the founding presidents, all felt that nobles oblige, should be the guiding sentiment for their service.  As such, they did not believe that a candidate should campaign for the office.  They felt that people should be elected because their prior contributions and actions were so remarkable, as to render the populace unable to see any another as capable of assuming and performing in the office.  As such, it was the fact that they had to go and actively campaign for such a position of power innately under-scored their lack of suitability for the job in the first place.

The solemn and grave nature of properly taking this almighty gift of independence and effectively creating and implementing a new government, worthy of the people who had sacrificed so much for this opportunity, led James Madison to create a strong metaphor for Washington to use to captivate the populace.  Madison wrote,

“. . . to be shipwrecked in sight of the port would be the severest of all possible aggravations to our misery.”

Meaning, that after we had collectively sacrificed so much, cut our ties to England, and now were left with such difficulty and strife if we fail to provide a just form of government for the people would just be the worst sort of failure and pain.  Madison’s view was predicated on the sacrifices and misery suffered by the new Americans in 1787.  How much more has been sacrificed and suffered in this quest to live up to our potential, and love of country and its promise in the past 225 years? Are our current politicians living up to the sacrifice of those who have gone before?

Nobles Oblige Often Led to Financial Hardship and Ruin.

For most of the first 152 years, elected public service was a significant economic burden. Many left political office with their business and personal financial interests in significant disarray.  These individuals accepted the service to their nation as a patriotic duty or to establish a historical place for their family name.  As an example, at the time Washington became our first president, his prior service in obligation to the needs of his forming country had left is estate on the edge of financial ruin.  As he was being elected president, he was left with no choice but to put his extensive land holdings in Ohio up for sale and to seek a loan of 500 pounds from Captain Richard Conway of Alexandria Va. Shortly after he made this initial request, he had to ask for an additional 100 pounds from Conway, to defray the cost of moving to New York and the cost of lodging so he could assume the new presidency.  So committed to the service to his nation, Washington still felt it was his duty, as he had throughout the Revolutionary war, to forgo any salary. Despite his dire fiscal situation, Washington informed congress of his intent.  Luckily for Washington, congress insisted that he accept his salary, so in some small measure, the fiscal burden was somewhat ameliorated.  Once again, when Washington left office, his personal fortunes had continued to suffer as a result of the demands of service to his country.

The Coming Storm

As I look at this year’s presidential primary election, and listen to both sides of the debates, I wonder if we have, in Madison’s words, been left shipwrecked in sight of our port.  I find myself more and more longing for a Washington, an Adams, a Jefferson, a Madison, a Monroe, a Jackson, or a Lincoln to emerge.  I yearn for some citizen politician, motivated by their love of country, their own nobles oblige, some sense of destiny to arise from the depths and steer us from the fate of the looming rocky shore. I desire the rise of a true citizen politician, one who feels it is unbecoming of the character of a gentleman to seek power or political office.  I know there are those who believe that in this larger and more expansive world, politicians must campaign actively and very extensively and obtrusively be in our face to gain election. I wonder, is this really and sadly the case?

We have had a few this political cycle whose names have been floated for office, individuals apparently not overtly seeking election—people like: Chris Christie, Paul Ryan, and Marco Rubio.  Each of them to date has rebuffed the invitation to lead their party in this election for various reasons.  Despite their apparent reticence, there are some who are still actively interested in wresting them as candidates to the national stage.  Despite their resistance, feigned or real, sadly, they are also firmly entrenched as members of the professional political class.  Where are the real citizen politicians?  The ones who would be dragged to this lofty, powerful perch as a result of their sense of duty and obligation?  Can we not find some method to identify them and bring them to the national attention without the need for a popularity contest composed of little more than national character assassination? Though I do which this is not the case, perhaps it is simply a pipe dream to believe once again we have and can find such men.

I now most fervently hope that we will not soon be laying plans for all of our children to be reading Daniel Defoe’s, 1919 work, Robinson Caruso, as our new national survival guide!

(Tom Loker served as the Chief Operating Officer of Ramsell Holding Corporation. Prior to joining Ramsell, Mr. Loker was the founder and senior partner of Wild Tiger Holding Company and Thomas Loker Consulting. Visit his website at www.loker.com and his blog at tloker.wordpress.com.)

Gov. Brown seeks Medi-Cal Cuts: Entitlements vs. Safety Net

That headline in my local paper say, “Brown seeking Medi-Cal cuts: Governor requests flexibility from the White House.”  We should commend Governor Brown for taking the initiative to address the overwhelming costs of Medi-Cal (Medicaid) that is bankrupting our state.  California is in a much worse position than most of the other states because, as the Governor found out when he took office, California is in the top one or two of any state in any measure of the amount of entitlements we are providing to our population per capita. In his first budget, Gov. Brown took on this issue and began the effort of reducing these most generous programs, which may have made sense when we were one of the richest economies in the nation, to the median benefits offer of all the national state programs.  This is a very pragmatic, and still generous, approach considering we are now the top state in the national measure when you look at fiscal insolvency.

We need to address this issue now as the time has run out as our deficit build and we become one of the most cost ineffective places for business in a national economy that is one of the most cost ineffective locations to do business on the planet.  Kudos to Governor Brown for taking these very hard steps directly in the hard face of his own parties’ public ideology and attempting to get to a solution to this massive problem.

But overall the problem is not one of just Medi-Cal in California.  It is a much larger problem, a systemic one.  It is a problem that traverses all the programs including Medicare and Social Security.  Beginning with the Social Security, conceived as a temporary safety net program to help the aged who had their savings and investments devastated by the one-two punch of the collapse of the stock market followed quickly by the depression as a result of the great drought induced dust bowl in the mid-west.  In turn, Social Security and the myriad programs that have followed have evolved from that of a simple safety net. Originally, first seniors, and then others, could look to these safety nets as a small aid to what they could earn and save for themselves to tide them through a short difficult time that may occur beyond their real ability to plan.  Now with the extension of Social Security to include Medicare and Medicaid, these programs are not viewed as a safety measure but as a replacement.

If we look to Medicare as an example, it can be argued that it is a vital insurance program to support the healthcare needs of our aging population and our disabled.  And for some this is clearly the case. But it can also be argued that for many, even though the checks are being written to providers covering their health care needs in later years, if this is really supposed to be a safety net, the government is not paying for their health care; it is paying for the purchase of that flat panel TV when I was forty-five, or the vacations I took, or the new car I purchased every four years, or some other expense I would not have made if I had not had the expectation of the government picking up the tab for my potential catastrophic healthcare needs in my last five years of life.

I know the former discussion is not a pleasant one to have as it brings us back to the point that our actions today have ramifications for tomorrow.  In the generation prior to mine, they had the belief that they needed to save much of their excess money for a rainy day.  We have come to believe that the rain is now offset by our wonderful and blatantly generous Uncle Sam.  So, we are empowered by the change from the safety net to that of an entitlement, to believe we are OK to purchase that vacation home, instead of saving the money because when, not if, we get sick, Medicare will take care of it.  I remember my father preaching to my siblings and I in the 1960s that we should never count on these programs because: a) It was our responsibility to plan and pay for ourselves and family—not our neighbors responsibility, and b) The government will probably not have the money when we need it, as this system just won’t work.

Well thanks for the advice, Dad; I took it to heart and have followed your example.  But despite my savings, we, the citizens of the U.S. and of California are at a point you so correctly predicted, and poor California’s Governor Jerry Brown now has to be the first state leader to start taking away all the things we have been trained to be dependent on.  You see, much of these expenses are no longer about emergencies and simply providing for a base existence. They are now becoming more about quality of life.  It is not enough to provide basic services for the poor; we need to also give them cell phones.

I don’t want to see people suffer, and I don’t want to deprive people of some form of basic existence.  But with the coffers bleeding cash at a pace that is now in excess of what we can produce on an annual basis we need to start to make distinctions between emergency necessary for life services, and those services that provide more for the quality of life!  I commend Governor Brown, for taking these steps.  I know they are not easy for him because of his strong humanitarian heart.  I am glad he recognizes the need to make pragmatic adjustments and take unpopular steps to find a solution.  With this accolade also comes caution.  We need to remember that even Governor Brown is human, and is in a system that will require him to make some decisions that he and the rest of us may not like, simply to get part of this done.  We can expect all the purists to take shots at every single deficiency and change from all sides with no recognition as to the realty of a public and political governmental process.

Regardless, he is acting on what he believes will contribute overall to the solution of this complicated equation for the viability of California and its citizens–and that, I can appreciate.

(Tom Loker served as the Chief Operating Officer of Ramsell Holding Corporation. Prior to joining Ramsell, Mr. Loker was the founder and senior partner of Wild Tiger Holding Company and Thomas Loker Consulting. Visit his website at www.loker.com and his blog at tloker.wordpress.com.)

Lower CA Gas Prices by Drilling!

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In 2004, then Attorney General, Bill Lockyer, updated his 2000 report on Gasoline Prices in California.  Looking back is an interesting read as we watch gas prices rise beyond $4.00 on their way to, as some are predicting, to as high as $6.00, if not even higher.

Evil Oil Companies Reap Big Profits Cause Gas Prices to Spike!

What is fascinating about both the current concern over the rise in gas prices and the report published by AG Lockyer is the consistent amount of spin on what it was that was causing the rise in prices.  As we move into the next few weeks and months, once again we will hear from the media, and many talking heads, how it is the “evil” Oil companies’ fault—how they are making record profits, preying upon the people of California, or on the national scale, the U.S. citizens, to enrich their shareholders and continue to pay huge salaries and bonuses to the 1%’rs and leaving the 99% in a worse and worse position. But there is a big problem with this spin!  For the most part it is just not true.

I have no vested interest in the Oil companies.  I am also not a fan of some of what they do sometimes.  Sure, Oil companies make a huge amount of profits when you look at the overall dollars but, like other such vilified industries and their executives including, big Pharma, and insurance companies among others, the percentage of profit is ridiculously small, when compared to other businesses and most small businesses.  More telling, however, is that the real profit built into the Gas and Oil supply chain has reduced significantly since Lockyer published his updated report in 2004.  The enclosed chart shows the break out of costs for a gallon of gasoline as reported by the California Energy Commission in 2004 and again as of today in 2012.  What is startling is that the “evil” Oil companies’ and refineries have reduced the cost and profit part of the price over 27% while the state of CA has increased their percentage per gallon over 42% and the federal government has also increased their take per gallon by 20%.

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Another, great misconception—misrepresentation—is that the cost per gallon is driven solely by the per barrel price of crude oil.  Well again, if you look at the chart I prepared, you see that if that logic was, in fact, correct, the price per gallon would now be $6.02 per gallon already instead of the $4.04 it is today.  So, there is some disconnect in the price per barrel equivalence to the price at the pump.  Clearly, this is not a direct corollary.  While it likely does have some impact, I suspect there are a number of other things at work that drive the price at the pump. So, one may want to question if the conventional headline as shown at the beginning of this section is true?

What else could be driving up gas prices in California?

One other interesting segment of the Lockyer report is the change in 2004 from MTBE to ethanol.  For many who don’t know, and for those that do not remember, MTBE was the additive to California gasoline demanded by the environmental movement to reduce gasoline’s polluting effects.  With a large amount of money, and huge political activism, the activists forced CA to enact a law requiring this additive.  The cost of refining gas for use in California went up and so did the taxes on gas to help pay for the increased bureaucracy required to monitor compliance.

Now like most things driven by ideology, a number of years later the same environmental factions now came forward to demand the removal of MTBE from our CA gas as it was polluting the environment (it had been found in high concentrations in the water table of Lake Tahoe).  So once again Californians had to foot an increase in the cost of gas as a result of this change and an increase in the cost of the additive (ethanol) as well as an increase in the bureaucracy to manage compliance—oh and let’s not forget increase in fees and taxes. So far I have yet to see an acceptance of responsibility for the initial inclusion of MTBE in the first place, no offer to pay for the removal, and no apology for the mistake from those that promoted the MTBE solution in the first place!

On a side note, you will also be hearing how the profits made in California by the evil oil companies surpass the national average!  Well the percentage is actually less but the price per gallon is a lot more, so of course the total dollars will be higher.  Further, the costs of operating a business in California are intrinsically higher due to higher labor, infrastructure, legal, regulatory and insurance costs.  When you look at all the costs, what is surprising is that overall California gasoline retailers, distributors and refiners have fought to lower their costs significantly over 27% since 2004.  Not the work of evil geniuses!

The Law of Supply and Demand

Recently, some news outlets are questioning why, since the general demand for Gas and Oil in the U.S. is down significantly and we have had a surplus in supply; prices are still rising—not falling as predicted by the law of supply and demand.  Welcome to the One World Economy.  There are those in the progressive movement, evidently our President included, that have long desired the U.S. to become a member of the One World vision—a One world Economy.  For the past 20 years, much of Europe has been experimenting with this vision of utopian fairness.  Looking at the status of Europe today, particularly Greece, France, Italy, and Spain one would really want to ask how this is working out for the citizens of those countries!

The problem with the One World Economy is now supply and demand for our U.S. refined products, regardless of their in-ground point of origin, is based on demand anywhere in the world.  One can take a narrow view and determine that Oil refined in the U.S. should stay in the U.S. but economically that doesn’t work because when “evil” Oil companies ship this product to other markets, that will pay a higher price, it is actually a good thing for the economy because the U.S. adds revenue to its export sales, reducing the amount of money we need to print to pay for our international purchases.  We must remember that the U.S. is a net importer of products; therefore more of our dollars flow out of the U.S. than we get back in sales of our goods and services outside of the country.

As an example, suppose you live in a hose with your wife and one child.  Your Mortgage is $1,000 per month, your other expenses are $1,000 per month, you and your wife both work and you both get paid $1,500 per month.  You are selling your services in excess of what you are spending and each month you gain real asset value of $1,000 each month.  Now let’s assume one of you loses your job.  Now each moth you are buying $500.00 more in goods and services than you are taking in.  All things being equal you can do this for twice the amount of time of when you were both working. When you get to that point when you have spent all the money you accumulated, you look in your checkbook and see you still have checks.  So you keep writing them.  It won’t be long before someone comes and knocks on your door.  We have for the last 50 years been ignoring this very  problem of just writing checks because they were in the book and now have a $12 trillion accumulated trade deficit.  Not only is this a big problem for our general economy, it is a big problem when it comes to real value commodities like gasoline and oil.

Since we eliminated the international gold standard in 1972, countries whose economy is based on net exports of goods and services have currencies, like China’s Yuan, that are based on increasingly real tangible values.  The U.S. economy, being a net importer, has an economy whose currency is more and more based on intangible, perceived value.  While the U.S. dollar is still the benchmark currency, perception of many in the world is changing.  Oil is perhaps now the single most valued commodity.  Its price, like gold before it, is set by world demand. There are those who argue that “petrol dollars” should become the new world benchmark.  In other words it would be the new gold standard.  The day that the dollar is replaced, the U.S. currency will simply get crushed! If you think gas is expensive now…

So companies selling products today have an interesting problem when it comes to U.S. customers.  They can take their production and sell it to us and get paid in a currency that has a total amount of money in circulation of $16 trillion dollars with arguably a real tangible value of only $5 to $6 trillion. Remember they will be selling this valuable commodity to a country that each year is buying much more than it is selling so the tangible value of the assets backing its dollar are continuing to slide down or, they can sell them to China whose currency is now internationally recognized and is relatively stable and is backed by a constantly increasing national asset base due to huge net exports and low manufacturing costs.  Barring a simply patriotic reason, most will sell to the increasing asset value country.

Drill, Baby, Drill!

We can increase domestic production, and we can drill more, and we will find that we will reduce local prices somewhat.  While the President says, that drilling will not solve the problem, he is not telling the whole truth.  We can’t mildly increase our production; if we do then he is correct.  We have to significantly increase production to have the effect we seek. The break point for lowing domestic costs is when we get enough production to reduce the dependency on foreign oil to such a level that the vagaries of their price gaming become meaningless.  There are enough oil reserves in the U.S., with existing technologies to get to it, to replace most, if not all, reliance on foreign sources.  What is necessary to get there, is time and the will of the people.  Unfortunately, we are coming to the point when we simply must face the reality that while protection of the environment is a noble goal it cannot be the only, or preeminent, factor in our decisions.

Finding alternative sources for energy is necessary step and is a proper goal.  But, the solutions found in the alternate sources, can neither cost more than the available domestic oil, gas and coal sources, nor can they require us to collect taxes from some, or all, to subsidize the price to pay for us to use it.  Following the subsidized route is the height of lunacy.  The money we need can no longer come out of thin air as it has for the past 40 years.  Taking money from ‘us’ to pay for purchases by ‘us’ from ‘us’ is not only a zero sum game, it is simply increasing our costs as a nation and making us further uncompetitive with other nations who in turn are happy to produce the goods that we can actually afford to buy.  In the end, we get where we are with Gas and Oil today.  We can produce it, but we just can’t afford to buy it.  So then we have to sell it to countries like China that can.

(Tom Loker served as the Chief Operating Officer of Ramsell Holding Corporation. Prior to joining Ramsell, Mr. Loker was the founder and senior partner of Wild Tiger Holding Company and Thomas Loker Consulting. Visit his website at www.loker.com and his blog at tloker.wordpress.com.)