Is there an answer to gridlock in Washington?

18 03 2010

The Ethics of Compromise and Conflict

 We Americans have become accustomed to instant results. We want conflicts resolved and tied in a neat bow within a maximum of 57 minutes, less commercials.  We also tend to only focus on the immediate problem rather than looking at the long term results of our actions.  Such is the case with the situation in Washington concerning everything from healthcare, restructuring the financial industry, to immigration reform.

 On one level we citizens know that there are structural problems in our economy,  that if not fixed will have possible catastrophic results.  We have a debt that is growing out of control and a budget that is comprised of  Social Security, Medicare, Medicaid, interest on the national debt and the military and homeland security,  making up 80% of expenditures.  In addition to those items we’re in the process of passing a healthcare bill that will add an additional trillion dollars to the deficit over the next ten years.  These are areas that in the past we have been reluctant to even seriously talk about and there’s very little indication that we’re willing to address these areas holistically now.  So, we chip away at the edges talking about earmarks and pork to individual spending cuts without being willing to step up and say, “In order to get this thing under control we’re going to have prioritize what is most important to us and then decide what sacrifices we’re going to have to endure in order to bring about desired changes”.  Congress is quick to condemn the $2000. toilet seat by the military but not willing to confront the challenges of such things as Social Security and Medicare. 

 Fundamentally, there is the philosophical schism between the concept of individual freedom and responsibility and what is the greatest good for the most people.  If we assume that both concepts have a place in a 21st century society, how do we ensure that both are heard and that in some way they can accommodate the others presence.  Currently, that seems like an insurmountable obstacle.  In a NBC news/Wall Street Journal poll taken between March 11-14, only 17% of voters believed that congress was doing a good job.  On the issue of health care voters are pretty well split right down the middle.  Specifically on the report card for congress 38% of those polled believed that congress only wants to stay in office and not solve problems; 28% believed that congress was too close to special interest groups, 19% said that congress was too partisan, and 16% said that congress supports pork.  Not in my memory has congress been held in such low regard and whoever is elected in the fall will not have an easier go of it even if one party has more than 50% of the seats in congress.  If some sort of healthcare bill is passed I anticipate that things will settle down for a while but the day of reckoning is at hand sooner or later.  Everyone seems to know it but no one seems to have an answer.  But lets look at some scenarios.

 In order to change our current situation we will have to change our priorities and adopt painful austerity measures.  Currently, people make statements such as “we need to cut spending and lower taxes”.  Yes, we’ll have to cut spending but where.  Not the $2000. military toilet seat.  That’s a drop in the bucket.  With about 80% of the budget being used for Social Security, Medicare, Medicaid, interest on the national debt, and the military and homeland security amounting to nearly $3 trillion and a current debt of about $13 trillion.  If you sent all the government home and assuming you had enough revenue to pay down the debt after you did all these draconian measures, it would still take about 20 years to pay off the national debt and you’d still have the problem of  funding Social Security, Medicare and Medicaid. 

 Jeb Henserling (R.) from Texas has another answer—limit the national debt to 20% of annual GDP.  The only way it could be increased is by a 2/3rd vote in both houses or a declaration of war.  The current GDP was about $14.4t in 2008 which would limit the national debt to about $2.9t.   Let’s see, with a current debt of about $13t and growing, we would have to immediately pay off about $10t.   Humm, so how do we do that Jeb?   Details, details… 

 On another front we have to decide what our priorities are as a nation.  Do we want to continue to be a consumer oriented country that doesn’t save, doesn’t take care of the poor or provide a good education for all our children.  What would seem in order is an educational Marshal Plan that would teach children all the way from pre-k through college or trade school to be a productive member of society.  But presidents since Jimmy Carter have declared a war on ignorance with little results.  We hear a lot of blame being thrown around including union intransigence, ivory tower experts, parents, and lack of funding to name just a few.  We know that the best determinant of future success or failure of a child is the educational level that a child achieves.  It costs about $7000. per year to send a child to school.  It costs anywhere from $25,000. to $35,000. per year to keep a person in prison, not to mention the cost of policing and healthcare, resulting from drugs and violent behavior.  Then there’s the loss of the economic contributions of poorly educated low wage earners.   Until we effectively address the issue of education we will continue to fall behind other countries in technological training and innovation. 

 But here I am suggesting spending more money when we’re already in the red.  Whatever the answer to our current situation, it will take sacrifices by all of us.  And it will require that we move in a different direction with bold strategies for our future economic and political well being.  We’re in a war to save our political and economic system.  In WWII we were willing to work harder, go into the military, tax ourselves, buy war bonds that often were never redeemed and make sacrifices on the home front.  I think we’re there again and it will take more taxation, more saving on our part, foregoing consumer buying of things we don’t need and making hard choices on spending. 

 This sounds like socialism.  And admittedly there are elements of planned economies and national direction.  And that’s risky and my sense is that we’re not ready to embrace the kind of austerity necessary to turn things around.  But the longer we wait the harder it will be. 

 But there’s another alternative to Washington gridlock and economic disaster.  Remember Ross Perot?  During the presidential debates of 1992 the feisty third party candidate Perot was asked what he would do to change the flagging economy.  His answer in retrospect was both on target but also quite chilling.  He stated that among other things he would bring all the leaders from both parties into his office and lay out his plan which included raising the gasoline tax, cutting spending, social security and other programs, and scrap NAFTA.  After discussing the program with them, if they wouldn’t go along with his proposals  HE WOULD SEND THEM ALL HOME.  At one point he led the polls with 39% of voters and even though he dropped out of the race for a brief time, for personal reasons, still garnered over 19% of the popular vote;   And this with an economy and social environment a lot less problematic than today. 

In the January 28, 2010 issue of the New York Times, David Brooks wrote an op ed entitled The Perot Option stating that Ross Perot or his clone is lurking out there in the weeds and concludes that if President Obama doesn’t become more of a leader and take on both sides of the aisle a new Ross Perot will emerge. And that scares the hell out of me.


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Okay! I’m a Homer on Natural Gas

13 03 2010

 

I’ve been around long enough to know that pretty much everything has political implications.  But PLEASE, someone explain to me why coal is getting preferential treatment as a fuel over natural gas.  And why all the talk about alternative fuels being the wave of the future when there’s little developmental funding available, in particular for the small inventor.  Only large companies can afford to spend the kind of money necessary to do research and to bring alternative fuels to the market.  And most of them, due to the length of the time horizon to bringing them online would rather invest in areas that will bring energy online quicker. 

 My sons have a small company called www.swellfuel.com that for the last three years has been developing a system to make electricity from ocean waves.  In order to test his units he’s had to go outside the United States because the regulations on obtaining test sites take too long to obtain and cost too much to get.  Investors are reluctant to fund projects where they can’t see results in a short time.

 And then there’s the companies that talk the talk but don’t really walk the walk.  They talk about being Green and what they’re doing for the environment, but when you drill down deeper you see that it’s not much of a commitment, but more of a public relations effort.  That in of itself doesn’t seem ethical.

 Growing up in Houston, we had a gas stove in the kitchen and we used gas heating.  It got the job done without a lot of pollution.  So, to all my good friend out there who are engineers and scientists, please, please explain how it can be ethical not to utilize a source of energy, natural gas, that our country has that could make our country fuel sufficient for a long tome to come.


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Sex Education Redux

9 03 2010

 

                                                                                              

Deut. 25: 5-10

“If brothers are living together and one of them dies without a son, his widow must not marry outside the family.  Her husband’s brother shall take her and marry her and fulfill the duty of brother-in-law to her.  The first son she bears shall carry on the name of the dead brother so that his name will not be blotted out from Israel.”

 The scripture goes on to say that if the brother refuses to marry his sister-in-law, she can go before the council of elders and demand that he marry her.  If he refuses she may take her sandal, spit in his face and the man will be known in Israel as The Family of the Unsandaled.  Strange law, huh.  For Israel sex was more about necessity than pleasure.  Women were considered property and had limited rights.  But this law is referenced again later in the old testament where a man refused to marry his dead brothers wife and even when God told him directly to marry her, he refused and as a result, God killed him.

Today the purpose of sex and its relationship to family, covenant, and responsibility is much more blurred.  For those of us who are older, we mostly learned the facts of life in the locker room or the back of a car on a weekend date. If we had “the talk” with our parents it was generally pretty superficial and stressful for all concerned. And as far as the church giving information, it too was generally pretty superficial, stressful, and the message generally was “don’t” or riddled with messages of guilt.  As the culture began to open up and become more permissive we began to get our information from the media, which was usually unreliable.   Since the fifties and sixties the media and behaviors have gone through a revolution and yet we still live in a world where it’s difficult to talk openly about behaviors that are at the core of the human condition.  The culture on the one hand wants us to be responsible and careful, but gives little good information to help young and old alike.

 During the nineties, Bill Clinton’s Surgeon General Jocelyn Elders was making a speech before the United Nations on the world Aids pandemic.  Someone asked her in a Q and A what she thought about teaching people alternate ways of dealing with their sexuality, and in particular masturbation.  Her answer was, “I think that masturbation is a part of human sexuality and perhaps it should be taught.”  For that statement and a public outcry for her to resign, President Clinton asked and received her resignation saying that he did not agree with her on the subject– and this coming from Clinton.  Hardly a month passes without us seeing somewhere on the back pages of our newspapers where a person in some authority like a school administrator has made statements about sex and sexuality and has been asked to resign.  Much of the time the argument is made that sex is not to be taught in school unless it’s about total abstinence.   Those who protest, state that it is either for the parents to teach their children about sexuality or for the church to do so.   Unfortunately, most often neither happens. Today our children have new sources for learning about sex.  They can just turn on the TV, or go to the internet or for many who are latch key kids, learn about it while mom is away at work. 

 Sex and sexuality is more than learning about the nuts and bolts of the act itself.  It’s about learning about responsibility and self worth.  It’s about a young girl learning that she doesn’t need to “put out” and get pregnant to have self worth.  It’s about a young man learning that he doesn’t get his manhood from “scoring” and that if he fathers a child he will be expected to help take care of that child.  Sex has become more of a sport than about relationship.  Sex is depicted as momentary and lacking in intimacy.  There are no consequences.  Even STD’s hold little concern for many. 

 Many young people engage in serial relationships, sometimes ending in marriage and often not.  And what becomes of those multiple relationships.  Among middle class women we know that in breakups women are more likely to seek help from friends, therapy, etc.  while men tend to internalize their feelings and move on.  Even serial relationships and one nighters are often depicted as having little effect on the parties who engage in them. These multiple breakups can have a negative emotional cumulative effect.  In the movie “High Fidelity” with John Cusack and Iben Hjejle, Cusack is in the process of breaking up with Hjejle and tells her that this breakup doesn’t even make the top five of his life long breakups.  It becomes obvious that all of his multiple breakups have taken a toll on his ability to trust and to be intimate.   

 So, what of morality and ethics.  In this situation I equate morality with those taboos of behavior that our religion or family teaching gives us.  Ethics is about the way we treat one another and the covenantal relationships we establish with one another.  For young people the concept of ethical implications of a relationship may be too sophisticated.  Hormones are raging and they’re blinded by their new found power.  Friends and media depict this behavior as normal.  And they can’t see beyond the moment.  That’s why it’s important to give correct and sound information.  Since they’re not mature enough to understand the implications of relationships, it’s important to give them adequate information.  Even though the law of relationships given in Deuteronomy seems quite bizarre to our modern mind, it’s about ethics and not morality.  It was believed by Israel that a man had an obligation to help his brothers’ line continue if he died and not to do so, was an abomination to God.  Women had few rights but this was a right that she had to ensure that her children and her husband line be continued.  It was an ethical issue because it dealt with the realities of the time. 

So, what are the ethics of relationships and sexuality for us today?  To me, it’s that we’re all blessed children of God, worthy of respect and concern.  Sexuality is not just about an act. It’s that even in a moment of passion we consider the full humanity of the other as well as our own selfhood.  Children who are born into loving families where both parents are involved in raising children are more likely to stay in school, stay out of poverty and prison and live a productive life.

 As parents and teachers,  we can’t just see the world as either being like Father Knows Best or a world of internet porn— neither is reality.  Reality is that today 40% of all children are born out of wedlock with 70% of African American babies born out of wedlock to women who often have no network to help them cope and will soon find that the quickest way to find ones self in poverty in America is to start out poor, have a child with no father around and little education.  Reality is that over 60% of college grads in their thirties live in co-habitation relationship. Reality is that 50% of all first marriages end in divorce.  Reality is that there are different sexual expectations between upper middle class persons of all races and those who are poor. 

 When Jocelyn Elders made her statement about masturbation, no one asked her what she meant and how she might suggest teaching.  But we know that living in a masturbatory fantasy world is also not the answer.  I mean, what do we think men and women who frequent porn sites do, just read the articles?    Maybe if we had waited to let her explain herself we might have a clearer understanding about what she meant.  But we closed her off and we’ll never be able to engage her in a more open conversation about what it means to be fully human.


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Is My Bonus too Big?

2 03 2010

Over the past year we’ve all been inundated with articles about large executive compensation packages and in particular about compensation packages to executives in companies that received bail out money from the government.  And this at a time when those same companies were laying off thousands of lower level employees to cut expenses.  Of the eight banks bailed out, Citigroup, Inc.  seems to be the most beleaguered and along with Goldman Sachs and AIG has received the most criticism for their high executive compensation packages.  One of the major arguments in favor of these high salaries and bonuses is that in order to keep good talent you have to pay high salaries.  Some might say and have said that if these are the best minds to run the business, that American business and in particular banking is in big trouble.  The disparity between the top and lower level Citi employees is huge and the anger among the rank and file is well documented.  A blog run by Indeed, Inc., an executive employment website documents numerous postings about Citigroup’s wage levels.  Here’s just one:

 “A Citigroup recruiter called me for a  SENIOR Accountant position @ Citigroup. I was told that the position maxed out @ $35k. For a SENIOR level position. I would hate to see what they pay their entry level people.”   

 From Zacks investment research           “Citigroup Inc.  may cap cash bonuses for 2009 at below $100,000. The 2009 bonus pool at the company is expected to be similar to the 2008 level, which was low compared to the other years. Citi may pay a large part of the bankers’ and traders’ bonuses in stock that cannot be sold for a number of years.

Citi may pay up to 40% of bonuses in the form of deferred cash and stock and the balance in the form of non-deferred cash and IOUs, which will turn to common stock in April.

Currently, Citi is working out the details of its bonus plan. Recently, New York Attorney General Andrew Cuomo asked Citi and 7 other of the largest banks in the nation that received significant federal aid under the Troubled Asset Relief Program (TARP) to provide information on the amount of 2009 bonus packages and their structure. Cuomo also asked the banks to explain the effect the bonus pools would have had if the banks had not received the TARP funds.

 According to Cuomo, the full disclosure and transparency of the bonus information are essential as recent government actions have given rise to public accountability issues, and TARP banks are struggling with these actions.

Citi received $45 billion in bailout money from the TARP at the height of the credit crisis. Later, around $25 billion of that was converted into common stock, representing nearly 34% of its stake held by taxpayers. The company repaid the remaining $20 billion in bailout money in December 2009, freeing the obligatory pay restrictions on its key executives.

  Citi’s plan to cap cash bonuses is to save the bank from people’s fury over the TARP banks’ 2009 bonus plans. However, the bank says may still find it difficult to keep its top employees.”

 From Reuters      “Regulators, lawmakers, and others are trying to determine how changing compensation packages might reduce the chances of future financial meltdowns. The Federal Deposit Insurance Corp is considering charging lower rates for deposit insurance to banks with pay practices that it deems superior.

According to a July report from New York Attorney General Andrew Cuomo, Citigroup as a whole paid $5.3 billion of bonuses for 2008.

 Officials at rival companies told Reuters that Citigroup employees will essentially receive at least 60 percent of their bonuses in cash or stock that can quickly be sold. That level is high compared to some rivals, which could help the bank retain employees.  But some Citigroup employees groused at the relatively low portion of the bonus that will come in cash.

 Loren Steffy in the February 26 Houston Chronicle reports on executive pay for the General Motors Ceo, Ed Whitacre and past interim CEO Fritz Henderson.  Whitacre’s package includes $1.7million a year plus $7million in stock.  Fritz Henderson who for all practical purposes was fired is being given a $60,000. per month consulting agreement plus an expense account.  He is required to work at least 20 hours a month on the job.  Steffy suggests that Whitacre take the job for $1. per year since he received $158million from AT&T when he retired.  The interest on the $158million is about four times the $1.7million he’s receiving now.  By contrast Ford CEO Alan Mulally agreed to accept a $1. salary if Ford needed a federal bailout.  That was not necessary and Ford has gained market share and is expected to soon be in the black.  Mulally’s salary is slightly more than Whitacre’s at $2 million.  Last year GM received about $50 billion in bailout.  And as a result of that bailout you and I are now Whitacre’s employer. 

The media, the public, government regulators and congress are going through their hand wringing dance asking what should we be doing with all the bad guys.  Much of what has happened in the past few years was a long time in coming.  Questions of whether employment contracts should be honored in companies that are either bankrupt or being kept afloat to keep from going bankrupt are being used as a defense of big severance packages.  Arguments about high paid executives going elsewhere if they aren’t paid huge pay packages seems a bit contrived.  Where will they go?  Hedge funds which have shut down over 200 shops in the last two years?  Or, Europe which hasn’t had the bottom fall out yet?  Probably the best place for many of them to get employment would be with lobbyists who deal with the Washington bureaucrats, regulators and politicians who will probably not make any substantive punitive changes except as it may affect those companies and executives who played the game ethically and by the rules. 

My observation is that most relational issues such as this begin as ethical issues and because a minority acts unethically, new laws and regulations are passed in order to close loopholes or deal with unintended consequences.  But the sad truth is that those that want to circumvent the law will find ways to do so, and in so doing will effect the ability of the rest of us to carry on ethical business dealings.


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