Sacrifice Should be Shared

The big news in Washington these days is all about raising the debt ceiling. Naturally, this leads to discussions of the federal deficit. How did we get into this mess?

When President Clinton left office we had a thriving economy and a federal budget surplus. We were actually reducing the deficit. But under the Bush administration we had two wars that were kept off the budget. This kept the cost from the focus of the American people. But that was not all. About half the run up in the deficit was brought about by the Bush era tax cuts. Most of us enjoyed this lighter burden to some extent. But, if not for these matters, the United States would not be in the financial mess we are in today.

Recognizing the deficit chickens were coming home to roost, President Obama insisted on including the cost of the wars in Iraq and Afghanistan in the budget. He wanted this financial cost to be laid out in black and white as clearly as the life cost was already laid out in blood. The President should be commended for this openness even if it has not led to a cost savings.

Outside of the defense industry, none of us has enjoyed any particular benefit from war. However, most Americans with an income have enjoyed the benefits of the Bush era tax cuts. Obviously, some have benefitted more than others. The more taxes we saved, the more benefit we personally enjoyed even while the deficit grew ever higher.

Because most all of us enjoyed some benefit, it is reasonable to expect that we will all need to share some sacrifice in bringing the deficit back down. But that sacrifice should be proportionate.

In the present discussions taking place in Washington, one of the groups being singled out for a particularly disproportionate sacrifice is that of federal employees.

As a group, federal employees do NOT enjoy the highest incomes in the nation. Therefore, they were not the ones to enjoy the greatest benefit from the Bush tax cuts. Yet they are being singled out to make some of the greatest sacrifices.

Currently, federal employees are under a mandated two year pay freeze. Inflation erodes their incomes, but this two year pay freeze could be considered a reasonable sacrifice. We all should expect to endure some pain.

However, some in Congress are pushing to extend this federal employee pay freeze to five years regardless of what happens to inflation in the meantime.

But that is not all. Some in Congress are pushing hard to require federal employees pay a greater proportion of their retirement contributions out of pocket with no increase in retirement benefits. This would amount to about a six percent pay cut on top of the pay freeze they are already experiencing.

The most recent twist to come out of this distorted burdening of federal employees is to change the calculation of the retirement benefit. Currently, it is based on the average income of the last three years of earnings prior to retirement. Generally those will be the years of highest earnings. To lower the retirement benefit, some are pushing to change this to an average of the last five years of earnings.

In summary, many in Congress are wanting to mandate that federal employees endure a five year pay freeze, a six percent pay cut, and a lower retirement benefit while still allowing those persons whose tax breaks contributed the most to the federal deficit to continue to enjoy them.

This is not right! Our public servants don't deserve this kind of abuse. If everyone were being asked to endure a 6% higher tax rate, then it could be considered a shared sacrifice. This piling on attack on people who serve the American people is seriously distorted and should not be tolerated.

That's Wade's two cents!

Wade Houston
July 11, 2011

What Does the Mid-Term Election Mean?

It never fails. After every election the pundits sit around wringing their hands agonizing over the results and what it all means. In part, it is because they need something to talk about. In part, their livelihood depends on adding their input.

It also always happens that the winners try to read as much as possible into the election results. They want to convince themselves and the public at large that they have a mandate to push their agenda. The losers try to downplay the outcome and find as little reason to change direction as they can. Wherever possible the losers will blame other factors rather than admit a repudiation of their policies.

It falls to the electorate at large to separate the truth from the spin. Sadly, the electorate is generally so fed up with campaigning they don't want to think about it any more. They would much rather move on to their holiday shopping.

What do I think the Republican gains and Democrat loses in the most recent election means? Several things:

• Obviously, it will be harder for Democrats to push reform and investment in our nation's future. It will require substantially greater effort to find common ground with the Republicans for anything to be accomplished legislatively. Progress will have to take smaller steps.
• Since the number of political moderates in office is being reduced, compromise will be more difficult than before. Immigration policy reform is probably dead.
• The United States was not exempted from the current global phenomenon. The general result of this election was predictable even a year ago as one by one western democracies suffered loses for whichever group was in power. The global economic recession took a toll on the leadership in power in country after country no matter who was in charge when the downturn began.
• The predictability of this outcome vindicates the significant push the Obama administration made for major reform in the most difficult areas in the first few months of the term. The best (perhaps only) window of opportunity was in the first two years.

As a final comment on the predictability of the election outcome, I actually had the majority of this blog entry written in my head months ago. I even considered posting it well ahead of election day. But, I held out for the chance that I could be wrong.

That's Wade's two cents.

Wade Houston
November 7, 2010

Thank You for Health Care Reform

Health care reform is now law. Thank you! Thank you to all those who had a part in making that happen. Thank you to Presidents Truman, Nixon, Ford, Carter and Clinton and others who urged health reform they never got passed during their administrations, but they kept the discussion going.

Thank you to the Congressional Representatives and Senators who voted for the passage. Thank you to President Obama for his exhaustive support. Thank you to all who lobbied, blogged and campaigned for its passage. Thank you to all the citizens who called or wrote their Senators and Representatives in favor of its passage. Thank you to those who gave money to get the message out.

The week the bill was signed into law I paid a visit to my Congressman's local office to thank him for his vote.

The Gospel of Luke reports an account of Jesus healing ten men of leprosy, but only one of them bothered to come back and thank him. I don't want to be one of those who fail to express gratitude.

So, this entry is dedicated to thanking all of you.

That's Wade's Two Cents.

Wade Houston
April 18, 2010

Health Care Battle Not Over

The battle for health care reform is not over -- far from it. Like many others in this country, I feel the current bill before the House of Representatives does not go far enough in reforming our health care system. At the top of my list of dissatisfactions is the fact that some of its most important provisions don't even take effect before 2014. Even so, I think it helps to draw an analogy from the sport of mountain climbing.

If ever there was a task that could be compared with scaling a monstrous mountain, health care reform has got to be that task. Even expert climbers scale difficult mountains in stages. At certain points along they way, they may even drive a piton into the side of the mountain to fasten a safety rope to protect themselves from falling back below that point. In recent years, there has been an emphasis on "clean climbing" which uses no pitons, but even the clean climbing devotees acknowledge that the most difficult mountains still require piton use.

Passing the current health care reform bill represents driving a piton into the health care reform mountain. It is not the summit, but it preserves the progress to this point. There is still much more to be done, but it is dangerous to continue without a safety rope. Clearly, we have come as far as we dare without locking in the progress to this point. The current health care reform legislation needs to pass.

That's Wade's two cents.


Wade Houston
March 20, 2010

The Furor Over a Government Run Public Health Insurance Option

Health care reform is being pushed like never before. Nearly all sectors of our society are clamoring for it. The medical profession wants it. The insurance industry wants it. The business community as a whole wants it. The President wants it. Most important of all, I want it.

Even the people who have health insurance coverage are seeing their costs are higher than they would be otherwise if it were not for the burden of all the uninsured individuals who drive up prices for everyone else. Surely, this is the year health care reform will be passed.

Not so fast! Lots of people want something done, but they don't all agree on what is to be done. Most agree that the ideal would be some form of health care coverage for everyone. The one's who don't support this are the people who would rather exclude anyone who might get in line for medical services ahead of them if they have the opportunity. Instead of admitting their selfishness, they find more socially acceptable reasons to oppose the idea.

A major focus of opposition for many of these people seems to be around a government provided public health insurance option. There are several points they make which on the surface seem reasonable.

* They say a government venture into health insurance would be an unfair competitor to the private insurance industry. The very size of the government insurance would put that program in a position to command price concessions for health care services that private industry could not rival.

* They say the government is attrociously inefficient and a bureaucratic nightmare. They point to the typically long lines of people applying for drivers licenses or car registrations at the Department of Motor Vehicles in most states.

* Some people are simply philosophically opposed to anything that expands the role of government. They are fond of saying that a government big enough to give you whatever you want is also capable of taking everything you've got.

As I said, on the surface, many of these arguments seem reasonable. But look more closely.

First, the government's running of mail and package delivery service in the form of the postal service did not stop other companies like Federal Express, United Parcel Service and other couriers from getting a foothold and thriving. What was once a virtual monopoly in the hands of government lost considerable marketshare to private industry. It could certainly be argued that those private companies are actually all the better for having to compete against the government.

Second, comparing a possible government run public health insurance program to most states' Department of Motor Vehicles is a false analogy. Every vehicle owner or driver is required to go through their department of motor vehicles and only there to obtain appropriate licenses and registrations. There is no private option. When it comes to health insurers, there are lots of options. The DMV analogy resonates with a lot of people because we all hate those long waits. But it is a smokescreen because it does not really apply.

Third, people who embrace the philosophy that the government that governs least governs best are not thinking things through. One example: only government can really look after the nations highway system. It would be a sad state of affairs if it did not. We all benefit because government does take care of our roads. Yet the government does not tell us where to drive or ration how much we can drive. We are at liberty to traverse any open public road available. It is still a personal choice. There are other examples that come to mind, but I won't mention them here.

I am not married to the idea of a government administered health insurance program. If the objectives of having such a program can be fully met in some other reasonsable way, I am fine with that. But that other way needs to be put on the table and discussed. Meanwhile, lets steer clear of scare tactics and false analogies to demonize the public option.

Unfortunately, it seems most Republicans and some Democrats are more interested in opposing any health care reform that contains a government administered health insurance program instead of offering a viable alternative. That is dead end thinking.

That's Wade's two cents.

Wade Houston
June 19, 2009

Why Require Every Adult to Carrry Health Insurance

Before I begin, in the interest of full disclosure, I should mention that I spent four years of my life working in the insurance industry. Initially, I was an insurance agent and later became the agency coordinator for the Quaker Life Insurance Company in Tulsa, Oklahoma. Jim Inhofe, a current Republican senator from that state was the company president. But in those days, he was the mayor of Tulsa and had not yet gone to Washington.

One of the items that was an integral component of the health care proposals made by both John Edwards and Hillary Clinton was a mandate that all individuals have and maintain health insurance. This would be similar to the requirement for vehicle insurance that exists in most states. Naturally, the insurance industry supports such a mandate.

At first glance, one might think the insurance industry's support for requiring everyone to have health insurance would be motivated by the lure of big profits. Actually, that potential cannot be entirely ruled out. However, there is another, more important reason.

Insurance companies operate by collecting money from all their customers and paying claims to those who need them. The company decides what to charge their customers based on how much they expect to need to pay the claims. They spend a lot of time and effort on statistical analysis to balance keeping their respective company's policies competitive while still reaping a profit for their investors. This actuarial science is what separates insurance plans from fraudulent ponzi schemes.

Most of the health care reform proposals call for eliminating the right of insurers to exclude people or to charge them higher premiums because of their existing health insurance problems. This is desirable for everyone except the insurers. As has been mentioned, insurance companies make their money by collecting money from all their insured while paying out as little as possible. Those people who have health conditions that cost more to treat than they pay in for health insurance premiums actually cost the insurance company money. Currently, the only way to control this loss is for insurance companies to be able to exclude offering coverage to those people or to charge them much higher rates. This also provides provides something of an incentive for healthy people to lock in their health insurance before something adverse happens.

If you eliminate the right of insurance companies to exclude the unhealthy, then many healthy people will wait until their expected medical expenses are greater than than the insurance premiums before getting coverage. It makes perfect sense from a personal financial management perspective. But, it will bankrupt the insurance companies!

Only requiring everyone to have insurance as a matter of law whether they are healthy or not will enable insurance companies to remain in business even if they accept people with health conditions at the sames rates as everyone else. That will guarantee the insurance companies have the money to pay the claims for those who need it. You can argue the politics, but some things are what they are regardless of how you feel about it. You cannot make health insurance available to everyone without requiring it for everyone.

That's Wade's two cents!

Wade Houston
June 18, 2009

Stimulating Lies

I support a healthy debate. I believe in honest dialogue. But Republicans in the United States Senate and House are in many cases telling outright lies about the stimulus bill. Some keep repeating those falsehoods over and over with ever louder voices as though doing so would turn a lie into the truth. Chief among the lies they seem to be telling is that this bill will not keep or create jobs. Why?

I think they know that if you repeat a lie often enough some people begin to believe it. Since the American people gave control of both the legislative and executive branches of our government to the Democrats, the Republicans are shouting all the louder to make up for what they lack in numbers. They seem to be counting on the recession lasting well into 2010 regardless of what the government does. In that case, they expect the fickle voter will turn against those in power and reward the vocal opposition at the polls.

On the surface, this seems to be quite a gamble. If the stimulus should have a significant positive impact on the economy by mid 2010, the Republicans will have been definitively on record as having been on the wrong side of the issue. However, the American people are notoriously forgiving when everything turns out alright in the end. Perhaps that is what the GOP is counting on. I am cynical enough to believe they put their collective heads together and decided they have nothing to gain from bipartisanship. Partisan bickering may not cost them much in the end and holds the possibility of greater political reward.

That's Wade's two cents.

Wade Houston
February 13, 2009