Skip to content

Our Biggest Problems & What To Do About Them

November 7, 2012

With the election now over, here is what we need from our duly elected representatives going forward:

Economy – We’ve been in a holding pattern for four years. We cannot allow 8% unemployment to become the new normal. We need to stop bailing out companies and industries we fear are too big to fail. It’s our bailout culture that is at least partially responsible for the mess we’re in to begin with, and there is far too much cronyism and rent seeking when the federal government starts picking which companies get to survive. This goes for stimulus as well. Over the last six years we’ve run from place to place doling out bailout and stimulus money, enriching a few well-connected players and sticking ourselves with historically anemic GDP and job growth.

Finally, stop kissing up to Wall Street. Four years ago president Obama was elected partly to stand up to those who caused the financial crisis. Instead, he used TARP to protect those very same people. And it came at the expense of homeowners and the economy as a whole. Dodd-Frank is a behemoth that adds regulatory complexity while not solving the too big to fail problem. It may even have made it worse.

Health Care – By far the biggest problem with our health care is rising cost. Unfortunately, Obamacare didn’t fix the problem. It expanded coverage and played at the margins, but it amounts to a band-aid to the system and will make the rising cost burden worse, not better. Rising costs show up in ever higher insurance premiums which burden household budgets, but it also threatens to engulf the entire federal budget. In 2008 Medicare started paying out more in benefits than it takes in, and is projected to do so for the rest of its existence. Think about that for a moment.  While we worry about current year $1 trillion deficits and a $16 trillion debt, if we don’t fix health care costs, then by the time I retire and when my kids are grown the federal government will only have enough revenue to pay a few entitlement programs and interest on its debt. That leaves nothing for defense, energy, education, or anything else we currently expect our government to do. Solutions to our health care problem are not one of how many people are covered by insurance, or what things insurance companies should cover. It is about reducing rising costs. If our elected officials talk about anything else in regards to health care reform, they’re not being serious.

Deficit & Debt – See above. 65% of our federal budget goes towards entitlement spending. In 1970 it was less than half that. Any serious discussion of balancing the budget has to include entitlement spending, specifically health care cost control. Every other discussion is just nibbling at the edges.

Education – The demographic group hardest hit by the recession is those with no more than a high school education. And high school dropout rates are flat at best, and rising at worst. As our economy becomes more globalized and tech heavy, more and more jobs require specific skills. If we continue to support a poor education system which doesn’t prepare us for the world we live in, and if we keep filling our employee pool with the uneducated, then we will continue to have high unemployment rates, high social program spending, and employers unable to fill open positions.

Income Inequality – The two years with the highest percentage income inequality of the last 100 years? 1929 and 2007. The years following those peaks were not pleasant. For whatever reason, even as the overall income pie grows and everyone gets better off, bad things happen when the top income gap gets too high. Though the recession has lowered the gap to where it’s now lower than any year of Clinton’s second term, this issue should be on our minds as we make policy. I think fixing the problems I discuss here will go a long way towards addressing inequality.

Family – The US poverty rate has been basically stagnant since the 60s despite numerous and expensive efforts to reduce it. But if you look deeper at the poverty numbers, you find that every single demographic group’s rate of poverty has fallen sharply over this time. So why hasn’t the overall number dropped? Because of the destruction of the two parent family. The poverty rate for single parent households is a whopping 40%, three times the overall rate. Sadly, the percentage of people living in families where the head of household is a single woman has doubled since 1967. A year ago I wrote,

80% of kids in families which earn less than $15,000 a year only have one parent in the home.  Families making over $75,000 are the mirror opposite.  And research suggests our school systems are no match for the disadvantages these kids are faced with in terms of cognitive skills not developed because of poor early childhood experiences.

So long as our society’s families continue to decline, no amount of welfare spending, education spending, or job training programs will be enough. We must look with a critical eye any program or incentive we have which damages families.

These are the issues and policies most critical to fixing our present situation and laying a solid foundation for the future. When people talk about coming together after the election and reaching across the aisle in order to get things done, this is what I see. These are the issue that both the electorate and the elected should be focusing on.

Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: