My Advice For President-Elect Obama

This week's group writing project at The Finance Blog Network is to give President-elect Barack Obama advice on what to do about the economy, energy policy, education, health care, small business, and retirement/social security.

The Economy
Obviously, at least to me, the most pressing concern is the economy. It's been wallowing in deep doo-doo for at least a year now. In fact, it is my firm belief that we never fully recovered from the recession we suffered in 2000-2001. Jobs never really roared back, and the three things made it appear as though we had pulled out of the slump:

• Housing
• Stock market
• Commodities (oil and gold, most importantly)

As you know, all three of these markets have taken severe lumps. In fact, housing and commodities suffered bubble-bursting, while the stock market, whose bubble burst in 2001, only got back up to its pre-2001 highs, and then fade, then fell precipitously by nearly 50 percent. Just look at your 401k. It's now a 201k, if you know what I mean.

That said, what to do? I think there are several things a president can do to boost the economy. One is symbolic. It's something our current president either can't do, has tried to do and has failed, or simply doesn't want to do, and that's instill confidence in the American public's psyche. US Treasury Secretary Paulson has had difficulties in this area, too, and he's a money-man. He looks truly scared out of his wits whenever I see him on TV.

So, in short, it won't be an easy row to hoe for Obama. He does have in his favor history. While the Great Depression lasted more than a decade, it did end. And ushered in a BOOM time for nearly 50 years (save for a part of the 70s, which was largely led by external forces out of our control (but of course not beyond our sight, though we chose to avert our eyes!)).

The second thing that Obama should do is begin a MASSIVE fiscal stimulus package. I know, it feels wrong to widen the deficit now, since it seems to be rising out of control and our national debt has doubled in 8 years. But economically speaking, it's the right thing to do.

I'm not talking about a repeat of the feeble "stimulus" package pushed through earlier this year, where folks got $300 to spend on...well, does anything you don't need cost $300 any more? The idea there was that people would spend the money on junk they didn't need (people will always spend money for things they need, or they'll steal them. That's the definition of need.). However, not much "extra" spending occurred with this aid.

No, what Obama needs to do is re-build our eroding infrastructure (highways, bridges, docks, energy grid, pipelines, rail) and create new infrastructure in the form of wind, solar, and other "alternative energies," broadband, and other high-tech (but labor-intensive underpinnings). He should also focus on farming. I know, I've pooh-poohed the farm bill, but that was aid for the sake of aid. Nothing productive comes out of giving people money for nothing. This is why welfare, while a necessary safety net, has been a miserable failure and should be a temporary crutch, not a lifestyle.

But I digress. A public works project would get stuff built in return for wages that a lot of people aren't getting right now, because they don't have

J - O - B - S

Jobs are the underpinning, the bedrock, of any healthy economy. A massive government system of projects would employ people, who would then go out and buy YOUR stuff. The money multiplier would be back at work. Consumerism would come back to life.

Did you know our economy is 70-80 percent consumer spending? If that continues to decline, we face issues that no president could rectify.

Energy
I've already alluded to a public works program that includes energy, specifically so-called "alternative energy." Wind and solar are free sources of energy. We just have to get better at harnessing that power. It's easier said than done, though. Just look at fusion. Right. You can't. The only fusion we've been able to effect is destructive (nuclear fusion, or bombs). It's been nearly 70 years. But we have to start somewhere.

Now is as good a time as any. Don't think that just because oil is in the sub-100 dollar range that it will stay there. Oil is becoming more scarce every single day. Remember, "They're not making any more of it." This is a short-term deal. Oil will surpass $100 in less than a year. And that's okay. Because at the end of the day, the price of oil will be whatever the consumer will bear, and if he can bear higher oil, it means (most likely) that he's earning a living again and wages might actually be rising!

So, put on your "incentives" hat, Barack, because you're going to have to convince private enterprise to invest capital (that it doesn't have right now) in these emerging industries. You might want to think, "Co-op" or (shudder) regulated markets with regional monopolies. Gurantee GE that it'll get an 8 percent margin on a 300 million person population base for energy, and I can guarantee that they'll be on board. When things are cookin', open the market.

Education
As you might have guessed with my Kids and Money carnivals, I believe that we don't teach our kids about money. But I'll go farther than that. Our kids have fallen behind nearly every industrialized country. We could be confused with a third-world nation if you looked at our education base. In short, our education system sucks. Here's what needs to be done.

Drop "No child left behind." It's been an utter failure. Go back to the way things were 50 years ago. Reading, writing, and arithmetic. Everything else is gravy. Mashed potatoes are better with gravy, but gravy by itself is pretty gross. That's our education system today.

Turn the pay scale upside down. Administrators, who add very little, if any, value make more than double what senior teachers make. Forget trying to recruit top-notch educators to inner-city schools. Encourage college graduates to become teachers by paying off their student loans over the course of 10 years, raise the starting salaries, and boot out ineffective administrators. Give teachers housing incentives, sign-on bonuses, and other carrots that private enterprises have been doing for decades.

Health Care
One of my main areas of disagreement with the Obama camp is on the subject of health care. They frame it in terms of health insurance, that everybody should have access to affordable health insurance. I disagree. There is no god-given right, nor constitutional right, to health insurance. In fact, if you're in your early twenties, single, with no dependents, you may not need health insurance.

You may want catastrophic health insurance, but do you need a $10 co-pay for a once-a year doctor visit? Seems silly to me to force people who don't want or need insurance to pay for it.

The most pressing issue in the health care industry is rapidly rising costs. I don't know the root of the problem, but I can tell you from personal experience that it's ridiculous for a Tylenol tablet to cost $10, but it does. I don't pay that, but my insurance company does, so you can bet my employer and I ultimately share that cost. It's a waste.

That seems to me to be the root of the problem. Waste. Drug companies seem to be getting richer, but at everyone else's expense. It's a zero-sum game: What the pharmas get, we give.

Small business
Nothing needs to be done here, in my opinion. Unless, that is, you want to talk about eliminating taxes altogether. I don't agree that any business should pay corporate taxes. The shareholders get taxed on profits; taxing the business is double-taxation, and when shareholders go buy something, they pay sales tax.

I really wish somebody of influence could effect the change that needs to be made in our tax system: A tax on consumption. But only for non-necessities. Don't want to pay taxes? Don't buy a boat. Simple.

Social Security
Social security taxes are currently taken out of your pay check as a payroll tax. It's highly regressive, made even worse by the income limit on which it's based. I'm too lazy to look it up, but it's something like $90,000. If you make $1 million, you pay no more than I do in payroll taxes. That, to me, is ludicrous.

• Eliminate the income cap.
• Raise the retirement age.
• Do a means-test. 

All three of these things are politically off-limits. But, as our leader, you have chosen to take the mantle and lead us down the right path. Solving social security (and the even-worse Medicare deficit) is a simple math problem.

Social security was not meant to be a retirement system. It was a safety net. It's been bastardized over time to be a public 401k plan. That's wrong-headed.

I don't believe we should privatize social security. It really should be a small government program that helps retired folks meet ends. It is not a be-all end-all program. And if you're wealthy, you don't need the funds. Yes, I know it's socialism (hence, the "social" part of the name), but this is a case of "Pay me now is cheaper than pay me later."

Sorry for the long diatribe. Probably more than you wanted to know about my "policy prescription" for President-elect Obama. I'm confident that he and his really smart advisers will come up with the programs and policies necessary to get us out of this mess. And if they can't/don't, we can always invade Canada and Mexico.

Money isn't everything. It's the only thing. Wait. That's only for football.
Enjoy life. Spend time with your family.