Despite much more consumer knowledge about the high risks and required cigarette pack health warnings, each year in the U. S. smoking still kills more people than AIDS, alcohol, other drug abuse, car crashes, murders, suicides, and fires - combined! Causing more than 430,000 deaths annually, it's the leading preventable cause of death, reflected in statistics for those dying from heart disease, cancer and stroke, and direct medical costs are estimated at as much as $50 billion annually, according to the U. S. Center for Disease Control.
It's noteworthy that the estimated cost of implementing the healthcare reform bill approved by the U. S. House of Representatives a week ago is $1.2 trillion over the next ten years, broadly criticized by many as much more than we can really afford, even though that's on average a relatively almost acceptable $120 billion annually. The $50 billion direct medical costs from smoking is nearly 42% of that number. My guess is that after the Senate provides their input, we'll end up with final bill approved by the Congress at a lower ten year cost between $950 billion and $1.0 trillion, increasing the smoking associated 42% number to 50% or more.
Smoking is a societal plague for several reasons, aside from the high medical costs for the nation grappling with our high national debt, large budget deficits and near record unemployment, and the high number of fatalities caused by this source. As individual smokers know, it's a very expensive habit at a time when a great many Americans are needing to hunker down financially, including most likely a high percentage of those 46 million U. S. adults over 18 who were smokers in 2008. At a national average cost of roughly $5 a pack and smoking at a rate of 1 1/2 packs a day, the annual cost is more than $2,700. At two packs a day it's $3,650 annually. This is, of course, aside from any medical costs to be incurred treating diseases caused or contributed to by smoking, costs for trying to contain or eliminate the addiction to tobacco, and the costs of dry-cleaning clothes and cleaning the air in homes fouled by the nasty habit.
Another very troubling fact is that so many teenagers are smoking, fully 28% of high schoolers in this country, and at least 4.5 million are addicted users of cigarettes. Furthermore, 6,000 teenagers under 18 reportedly are picking up the habit every single day and nearly one third of these are expected to become regular adult smokers. Finally, for this post, a further significant concern, as far as I'm concerned, is the completely unnecessary and unacceptable littering done by smokers with their cigarettes and cigars and the concomitant fire danger this can pose.
What can and should be done to better fight this plague? The answers are fairly obvious for the most part, but they still bear repeating:
1. Make sure that no smoking is allowed in any of our schools funded by taxpayer dollars and that there is strict enforcement and sanctions for any violations, for both student violators and uncooperative school officials.
2. More effective teaching of the dangers of smoking beginning in the 7th or 8th grades and through high school.
3. High school sports coaches should be encouraged by school officials, if not done so already, to exclude smokers from their teams and to support efforts of smoking athletes to break the habit.
3. Since smoking rates are in general higher for the less well educated, continue current efforts to improve our education system with higher high school graduation rates and more students going on to college.
4. Increase the cost of tobacco products by even higher federal and state tax levels. It's noteworthy that there's a very substantial difference among state sales tax levels. In New York the state has a sales tax of $2.75 per pack, while in South Carolina it's only $0.07 per pack and in Missouri it's just $0.17 per pack. Interestingly, but not surprisingly, South Carolina and Missouri are among the states with relatively high numbers for percentage of smokers.
5. In the final healthcare reform bill to be approved by Congress, make sure there are adequate provisions to financially incent people to stop smoking or at least to reduce their level of smoking, as well as discouraging people to start. Concerned citizens should immediately contact their senators and representatives to pass on their point of view.
6. Insurance companies providing coverage for health, home and autos should be incented by Congress and/or market competition to establish or increase more meaningful discounts for non-smokers.
7. Fines and community service terms for tobacco product litterers should be increased significantly with appropriate publicity in local newspapers and TV news programs.
Saturday, November 14, 2009
Monday, November 9, 2009
Healthcare Reform Update
This past Saturday the U. S. House of Representatives finally passed their massive healthcare plan by a very close vote of 220 to 215, with only one Republican supporting it and 39 conservative Democrats voting against the plan. It is now the U. S. Senate's turn to come up with a bill their chamber can approve. President Obama has for many months been hoping he can sign into law before the end of the year a final bill approved by the Congress, but it's very possible the legislative process will drag into January or February, given the strident opposition and filibustering opportunities available to the Republicans in the Senate.
I mentioned in my post on Healthcare Reform in June that I was confident reform legislation would be approved by Congress and signed into law by the end of the year. I'm still confident, but possibly I may have been a little too optimistic on the timing. I also mentioned in June that I was hopeful the legislation would be the product of genuine bipartisan debate and consensus. Unfortunately it's clear this didn't happen. Looked at narrowly, the approval in the House was a victory for President Obama and the Democratic leadership and a loss for Republicans. However, the result in my opinion was not in the best interest of the American people. A bipartisan bill incorporating the best ideas of Democrats, Republicans, as well as Independents, in a more balanced manner would have been much better.
In fact, the bill could most probably have been significantly improved if it also took into account some of the best features of the health care systems employed in several of the other advanced democracies in Europe and Asia, as covered in Frontline's recent TV presentation, "Sick Around the World." Primary among those countries, as I perceived it, were Japan, Taiwan, the U. K., the Scandinavian countries, Germany and Switzerland. Taiwan used this very approach in effectively reforming their apparently very successful system. Some of the main features highlighted in their broad survey were a generally high degree of patient satisfaction with the systems, good quality care, no medical bills for patients, no bankruptcies of patients resulting from high medical bills, limited and improving waiting times for patients, and much lower administrative costs to operate their systems. In the U. S. administrative costs reportedly were about 16% of total healthcare costs versus an average of about 5-6% in these other countries.
Clearly, huge savings in healthcare costs could be achieved if we could learn from the experiences of these other countries and follow their leads in substantially reducing administrative expenses. Has this been seriously explored by politicians and medical experts advising them? Or have both groups essentially been dissuaded by the private sector healthcare industry and their lobbyists?
It's not too late, but I'm not optimistic about a good bill coming out of the Senate within a reasonable timeframe. I'm afraid serious ideological differences, as well as motivation by Republican leaders to do what they can to deter President Obama from achieving a major legislative victory on a high priority issue, will make it unlikely the Senate will come up with a sensible, pragmatic and bipartisan result that best serves the great majority of the American people. Another obstacle will be the impact of expected campaign contributions for the approaching congressional elections. I hope I'm wrong and that these points can be overcome.
I mentioned in my post on Healthcare Reform in June that I was confident reform legislation would be approved by Congress and signed into law by the end of the year. I'm still confident, but possibly I may have been a little too optimistic on the timing. I also mentioned in June that I was hopeful the legislation would be the product of genuine bipartisan debate and consensus. Unfortunately it's clear this didn't happen. Looked at narrowly, the approval in the House was a victory for President Obama and the Democratic leadership and a loss for Republicans. However, the result in my opinion was not in the best interest of the American people. A bipartisan bill incorporating the best ideas of Democrats, Republicans, as well as Independents, in a more balanced manner would have been much better.
In fact, the bill could most probably have been significantly improved if it also took into account some of the best features of the health care systems employed in several of the other advanced democracies in Europe and Asia, as covered in Frontline's recent TV presentation, "Sick Around the World." Primary among those countries, as I perceived it, were Japan, Taiwan, the U. K., the Scandinavian countries, Germany and Switzerland. Taiwan used this very approach in effectively reforming their apparently very successful system. Some of the main features highlighted in their broad survey were a generally high degree of patient satisfaction with the systems, good quality care, no medical bills for patients, no bankruptcies of patients resulting from high medical bills, limited and improving waiting times for patients, and much lower administrative costs to operate their systems. In the U. S. administrative costs reportedly were about 16% of total healthcare costs versus an average of about 5-6% in these other countries.
Clearly, huge savings in healthcare costs could be achieved if we could learn from the experiences of these other countries and follow their leads in substantially reducing administrative expenses. Has this been seriously explored by politicians and medical experts advising them? Or have both groups essentially been dissuaded by the private sector healthcare industry and their lobbyists?
It's not too late, but I'm not optimistic about a good bill coming out of the Senate within a reasonable timeframe. I'm afraid serious ideological differences, as well as motivation by Republican leaders to do what they can to deter President Obama from achieving a major legislative victory on a high priority issue, will make it unlikely the Senate will come up with a sensible, pragmatic and bipartisan result that best serves the great majority of the American people. Another obstacle will be the impact of expected campaign contributions for the approaching congressional elections. I hope I'm wrong and that these points can be overcome.
Friday, October 2, 2009
Afghanistan War Strategy Revisited
President Obama is still debating with his national security team and certain NATO leaders how the Administration and the Congress should respond to the recent report and recommendations of the U. S. commander in Afghanistan, General Stanley McChrystal, which includes a substantial increase in U. S. troop strength in that country. Obama is definitely right to take his time and make a well considered decision. He's in a very difficult situation and will likely be seriously criticized no matter what he ends up doing.
As was evident in my post on this subject back in December 2008, I've had very mixed feelings about our engagement there for a long time. I have more concerns now than I had then.
Our original mission when the war began exactly eight years ago, in response to the 9/11 attacks, was to find Bin Laden and other high-ranking Al Qaeda leaders, put them on trial, destroy the organization, and remove the allied Taliban regime which supported Al-Qaeda and gave them protection. With NATO partners we've had some success in killing and capturing some mid-level leaders and removing the Taliban regime, but we haven't found Bin Laden or destroyed the organization. And the Taliban appears to be getting stronger and stronger. Now our mission seems to be moving towards a prime focus on nation-building and winning the hearts and minds of the Afghan people.
It's a noble mission, but should that be our role and can we really afford what that entails in terms of much larger resources and a much longer time commitment, given our country's poorer financial position, other international obligations, and, more importantly, our critical domestic policy needs?? I don't think so! According to the Congressional Research Service, we've already spent $223 billion in Afghanistan for war costs alone! Separate from war costs, we've also spent a great deal of money on development aid and it's growing annually. It was $982 million in 2003 and it grew to $9.3 billion in 2008! And what about the immeasurable costs in military casualties, which number seem to be increasing on an almost daily basis?
A year ago we had 48,250 troops in the country. Now the total is very close to 60,000, and General McChrystal wants that increased substantially up to 40,000 more with a goal to make Afghanistan a relatively stable country. It would be nice to have Afghanistan a stable country, but is that realistically achievable, and at what costs and expected timeframe, and, importantly, should the U. S. be paying for the bulk of this?? I think not. How many other "unstable" countries are there in the world with Al Qaeda cells present? There are several dozen in Africa, including especially Somalia. And what about the Palestinian territories? How about Cambodia? We simply can't stabilize every country. And we can't go to war in every country that has Al Qaeda or Taliban insurgents.
Aside from the costs and other factors referred to above, I have big concerns with the widespread corruption in the Karzai government, clear fraud in their recent national election, the problems posed by the powerful, independent and untrustworthy warlords in the tribal regions with their own private militias, and the vast opium fields which heroin, surpassing 90% of the world's production, financing much of Al-Qaeda and the Taliban's total needs.
What to do? We need to make it very clear to the Afghan leaders, like we did in Iraq, that, while we want to continue helping them, we will not have combat troops there for an extended, indefinite period and we need to see more tangible results from them. The results must include a satisfactory clearing of the air surrounding the recent election, a strong and satisfactory commitment evidenced by specific actions to largely eliminating governmental corruption, and more productive negotiations with the warlords to gain their support and cooperation. We also need to develop a more effective program to deal with the opium fields and helping farmers move to other crops that can provide a decent living.
The U. S. and our NATO allies are not the only countries that have strong strategic interests in achieving a stable Afghanistan and that goes also for neighboring Pakistan. We shouldn't continue to bear the brunt of needed military actions, the resultant casualties, development aid, and the direct and indirect financial costs involved. India and China should also play significant roles, and so should the oil rich countries in the Persian Gulf, of course including Saudi Arabia. Isn't this a virtual no-brainer?
As was evident in my post on this subject back in December 2008, I've had very mixed feelings about our engagement there for a long time. I have more concerns now than I had then.
Our original mission when the war began exactly eight years ago, in response to the 9/11 attacks, was to find Bin Laden and other high-ranking Al Qaeda leaders, put them on trial, destroy the organization, and remove the allied Taliban regime which supported Al-Qaeda and gave them protection. With NATO partners we've had some success in killing and capturing some mid-level leaders and removing the Taliban regime, but we haven't found Bin Laden or destroyed the organization. And the Taliban appears to be getting stronger and stronger. Now our mission seems to be moving towards a prime focus on nation-building and winning the hearts and minds of the Afghan people.
It's a noble mission, but should that be our role and can we really afford what that entails in terms of much larger resources and a much longer time commitment, given our country's poorer financial position, other international obligations, and, more importantly, our critical domestic policy needs?? I don't think so! According to the Congressional Research Service, we've already spent $223 billion in Afghanistan for war costs alone! Separate from war costs, we've also spent a great deal of money on development aid and it's growing annually. It was $982 million in 2003 and it grew to $9.3 billion in 2008! And what about the immeasurable costs in military casualties, which number seem to be increasing on an almost daily basis?
A year ago we had 48,250 troops in the country. Now the total is very close to 60,000, and General McChrystal wants that increased substantially up to 40,000 more with a goal to make Afghanistan a relatively stable country. It would be nice to have Afghanistan a stable country, but is that realistically achievable, and at what costs and expected timeframe, and, importantly, should the U. S. be paying for the bulk of this?? I think not. How many other "unstable" countries are there in the world with Al Qaeda cells present? There are several dozen in Africa, including especially Somalia. And what about the Palestinian territories? How about Cambodia? We simply can't stabilize every country. And we can't go to war in every country that has Al Qaeda or Taliban insurgents.
Aside from the costs and other factors referred to above, I have big concerns with the widespread corruption in the Karzai government, clear fraud in their recent national election, the problems posed by the powerful, independent and untrustworthy warlords in the tribal regions with their own private militias, and the vast opium fields which heroin, surpassing 90% of the world's production, financing much of Al-Qaeda and the Taliban's total needs.
What to do? We need to make it very clear to the Afghan leaders, like we did in Iraq, that, while we want to continue helping them, we will not have combat troops there for an extended, indefinite period and we need to see more tangible results from them. The results must include a satisfactory clearing of the air surrounding the recent election, a strong and satisfactory commitment evidenced by specific actions to largely eliminating governmental corruption, and more productive negotiations with the warlords to gain their support and cooperation. We also need to develop a more effective program to deal with the opium fields and helping farmers move to other crops that can provide a decent living.
The U. S. and our NATO allies are not the only countries that have strong strategic interests in achieving a stable Afghanistan and that goes also for neighboring Pakistan. We shouldn't continue to bear the brunt of needed military actions, the resultant casualties, development aid, and the direct and indirect financial costs involved. India and China should also play significant roles, and so should the oil rich countries in the Persian Gulf, of course including Saudi Arabia. Isn't this a virtual no-brainer?
Wednesday, June 17, 2009
Healthcare Reform
Healthcare reform is needed and there will very probably be reform legislation approved by the Congress and signed into law by President Obama by the end of the year. The big question is what will be incorporated into the legislation. Hopefully it will be the product of genuine bipartisan debate and consensus.
While a significant percentage of Americans are apparently reasonably happy or at least satisfied with their current personal healthcare providers and the relative costs, there is no question that there are substantial weaknesses in our overall healthcare system when looked at from an objective and national basis. I don't see how any informed American can honestly disagree with President Obama that healthcare status quo is "untenable." That's really a no-brainer. However, clearly one can disagree with what changes should be made, what it would cost, and how the changes should be financed.
Probably the biggest weakness, as almost everyone knows, is the fact that healthcare is quite expensive for most Americans on an absolute and relative basis and its costs are growing unsustainably fast, with serious consequences for the majority of American families, businesses providing healthcare benefits, the healthcare industry and the nation as a whole, reflected in the troubling outlook for Medicare and Medicaid, the federal budget, and the national debt. What's the evidence? Healthcare costs in the U. S. were at 9% of GDP (Gross Domestic Product) in 1980 and doubled to 18% of GDP in 2008, compared to an average for OECD countries (30 higher income, developed countries) of just 8.5%, less than half of our rate! It is widely considered unsustainable, because if we don't make major changes to correct the trend, the projections indicate that costs will rise approximately 2.5% faster than GDP each year and grow to as much as 50% of GDP by 2080! It doesn't take a rocket scientist to understand that's not going to work.
No matter what else is included in our reform legislation, unless government, businesses, the healthcare industry, and individual Americans all take effective actions to seriously contain costs, we will be in big trouble.
Another major weakness is the fact that more than 15% of our population, about 46 million people, have no health insurance, and, very importantly, millions of other who have some insurance are underinsured, are not covered for pre-existing conditions, are vulnerable to losing it they lose their job or leave their job voluntarily, or are having trouble paying healthcare costs without cutting their tight budgets for other vital needs such as housing, college education for children or savings for retirement. A critical related factor is that a great many families have had to experience personal bankruptcy, or are fearful of going bankrupt, due to highly expensive and critical unforeseen medical operations or treatments that to a large extent may be outside of their control.
On this subject I must say very frankly that I don't think we should feel obligated to find viable solutions and finance healthcare costs for our 12-15 million illegal immigrants, except basic care for their children under, say, 18 years old. Although most of them come here to find work at higher wages, so they can help their poor families living in the countries they came from, providing free or subsidized healthcare is another incentive for many of them. We need more disincentives. If this is adhered to, we will very materially reduce the number of uninsured we need to account for to less than 34 million.
Healthcare reform is a complicated subject and I certainly don't have all the answers, but I feel strongly that components of legislation and actions by stakeholders, meaning all of us, should prioritize: a system characterized by more widespread coverage, high quality care, simplicity, efficiency, fairness and affordability; individual choice of insurance providers and doctors and dentists; and individual accountability with meaningful financial incentives for good healthy behavior within one's own control. By the latter I'm talking about fitness, diet, and exercise to optimize personal health and thereby limiting healthcare expenses.
On the subject of behavior I was impressed by an article written by the CEO of Safeway, Inc., the large supermarket chain, that was printed in the Opinion section of the Wall Street Journal on o6/12/09. He indicated that they have a healthcare plan for their non-union employees where the combined costs for the company and the employees have not increased on a per capita basis for the last four years, compared to a reported 38% increase for most American companies. The key for them, he indicated, is that their plan rewards healthy behavior, influenced heavily by their striking finding that 70% of all healthcare costs are the direct result of behavior! With their particular plan they have determined that the rewards have reduced average annual premiums for individuals by up to $780 and for families by up to $1,560. That's substantial.
In terms of solutions, the most contentious political issue seems to be President Obama's proposal for a government insurance option for Americans unhappy with private insurers' policies currently available. Many Republican leaders, including Newt Gingrich, strongly oppose a government option, claiming it would drive private insurers out of business and fairly quickly lead to an undesirable and unsatisfactory one option universal healthcare situation run by the government. I don't buy that at all, but of course it would depend on how the government option is set up and financed. It also obviously depends on how private insurers would react and adjust.
Not everyone will be entirely happy with the final outcome of the federal reform legislation and the associated resultant actions taken by private insurers, businesses, and state governments. But the outcome should hopefully provide access to an acceptable level of affordable quality healthcare for every American and put Medicare and Medicaid on a well thought-out path towards financial viability over the long term. It's also important that the outcome helps to contribute to a) healthcare costs not growing more than GDP on a consistent basis; b) balance in our federal budgets and sustainable national debt levels; and c) a competitive, healthy, efficient, and innovative healthcare industry over the longer term.
While a significant percentage of Americans are apparently reasonably happy or at least satisfied with their current personal healthcare providers and the relative costs, there is no question that there are substantial weaknesses in our overall healthcare system when looked at from an objective and national basis. I don't see how any informed American can honestly disagree with President Obama that healthcare status quo is "untenable." That's really a no-brainer. However, clearly one can disagree with what changes should be made, what it would cost, and how the changes should be financed.
Probably the biggest weakness, as almost everyone knows, is the fact that healthcare is quite expensive for most Americans on an absolute and relative basis and its costs are growing unsustainably fast, with serious consequences for the majority of American families, businesses providing healthcare benefits, the healthcare industry and the nation as a whole, reflected in the troubling outlook for Medicare and Medicaid, the federal budget, and the national debt. What's the evidence? Healthcare costs in the U. S. were at 9% of GDP (Gross Domestic Product) in 1980 and doubled to 18% of GDP in 2008, compared to an average for OECD countries (30 higher income, developed countries) of just 8.5%, less than half of our rate! It is widely considered unsustainable, because if we don't make major changes to correct the trend, the projections indicate that costs will rise approximately 2.5% faster than GDP each year and grow to as much as 50% of GDP by 2080! It doesn't take a rocket scientist to understand that's not going to work.
No matter what else is included in our reform legislation, unless government, businesses, the healthcare industry, and individual Americans all take effective actions to seriously contain costs, we will be in big trouble.
Another major weakness is the fact that more than 15% of our population, about 46 million people, have no health insurance, and, very importantly, millions of other who have some insurance are underinsured, are not covered for pre-existing conditions, are vulnerable to losing it they lose their job or leave their job voluntarily, or are having trouble paying healthcare costs without cutting their tight budgets for other vital needs such as housing, college education for children or savings for retirement. A critical related factor is that a great many families have had to experience personal bankruptcy, or are fearful of going bankrupt, due to highly expensive and critical unforeseen medical operations or treatments that to a large extent may be outside of their control.
On this subject I must say very frankly that I don't think we should feel obligated to find viable solutions and finance healthcare costs for our 12-15 million illegal immigrants, except basic care for their children under, say, 18 years old. Although most of them come here to find work at higher wages, so they can help their poor families living in the countries they came from, providing free or subsidized healthcare is another incentive for many of them. We need more disincentives. If this is adhered to, we will very materially reduce the number of uninsured we need to account for to less than 34 million.
Healthcare reform is a complicated subject and I certainly don't have all the answers, but I feel strongly that components of legislation and actions by stakeholders, meaning all of us, should prioritize: a system characterized by more widespread coverage, high quality care, simplicity, efficiency, fairness and affordability; individual choice of insurance providers and doctors and dentists; and individual accountability with meaningful financial incentives for good healthy behavior within one's own control. By the latter I'm talking about fitness, diet, and exercise to optimize personal health and thereby limiting healthcare expenses.
On the subject of behavior I was impressed by an article written by the CEO of Safeway, Inc., the large supermarket chain, that was printed in the Opinion section of the Wall Street Journal on o6/12/09. He indicated that they have a healthcare plan for their non-union employees where the combined costs for the company and the employees have not increased on a per capita basis for the last four years, compared to a reported 38% increase for most American companies. The key for them, he indicated, is that their plan rewards healthy behavior, influenced heavily by their striking finding that 70% of all healthcare costs are the direct result of behavior! With their particular plan they have determined that the rewards have reduced average annual premiums for individuals by up to $780 and for families by up to $1,560. That's substantial.
In terms of solutions, the most contentious political issue seems to be President Obama's proposal for a government insurance option for Americans unhappy with private insurers' policies currently available. Many Republican leaders, including Newt Gingrich, strongly oppose a government option, claiming it would drive private insurers out of business and fairly quickly lead to an undesirable and unsatisfactory one option universal healthcare situation run by the government. I don't buy that at all, but of course it would depend on how the government option is set up and financed. It also obviously depends on how private insurers would react and adjust.
Not everyone will be entirely happy with the final outcome of the federal reform legislation and the associated resultant actions taken by private insurers, businesses, and state governments. But the outcome should hopefully provide access to an acceptable level of affordable quality healthcare for every American and put Medicare and Medicaid on a well thought-out path towards financial viability over the long term. It's also important that the outcome helps to contribute to a) healthcare costs not growing more than GDP on a consistent basis; b) balance in our federal budgets and sustainable national debt levels; and c) a competitive, healthy, efficient, and innovative healthcare industry over the longer term.
Friday, June 12, 2009
Executive Compensation Revisited
In a lead article in yesterday's Los Angeles Times Business section, "Plans to Rein in Exec Pay Announced," we read about President Obama's latest plans to clamp down on executive pay. As expected, they have generated support from most Democrats and vocal opposition from many leading Republicans. None of this is surprising. Why write about this and what's going to happen?
My regular readers may remember that I posted two blogs on this subject in past months. On 1/31/09 I commented that the strong and widespread criticism of substantial and inappropriate bonuses paid Wall Street executives were in most cases highly justified. My conclusion then was that meaningful actions to deal with this will most probably be taken by the Congress, the Obama Administration, the regulators, some boards of directors and many shareholder groups. On 8/29/08 my blog commented on the then recent historical trend of excessive compensation, defining what was excessive, who's responsible and what possible actions might be taken.
In my view it's still appropriate to write about executive compensation, because it has a bearing on what's going on in our poor though hopefully slowly improving economy, on a likely changing corporate culture, as well as the pluses and minuses of the federal government's growing influence and control over our overall economy and our vital business community. Executive compensation has had a very significant bearing on our economy because it has in too many cases, through its structuring, led to imprudent high risk taking, which in turn has led to corporate failures, needs for federal taxpayer funded rescues, massive layoffs, and huge adverse impacts on federal and state financial budgets affecting all of us. Furthermore, all of this has been instrumental in contributing greatly to the world-wide recession and clearly been a major factor in falling stock and bond markets, eroding the values of savings and retirement portfolios of tens of millions of American families.
One prominent and controversial part of the Administration's plan is to appoint a "pay czar" to approve compensation for the highest paid employees of major companies, like Bank of America, Citigroup and AIG, as well as others who have received bailout funds from the federal government. Another part involves support for legislation to give shareholders a larger voice in compensation issues. Treasury Secretary Geithner also laid out broad principles on executive compensation, such as tying incentives more to long-term performance to contain short-term risk-taking, particularly by bond, currency and commodities traders. The various restrictions would likely last until the companies repay their bailout moneys and other financial obligations. Geithner stressed that the government does not intend to cap how much executives would be paid.
Ideally, executive compensations should be decided by an effective, independent company board of directors or its compensation committee, guided by experienced compensation consultants, often supported by recommendations of the CEO for compensations for those who report to him or her. The problem has been that to many directors and CEO's didn't do their jobs well, and too many directors were not really independent. Another contributing, but less important weakness has been that company auditors and rating agencies have not generally commented critically on compensation practices.
I think an executive compensation bill will pass, but it will probably require some concessions on both sides. I'd expect it to include more power for shareholder groups to vote, perhaps non-binding, on compensation for the top 4-5 executives and also pressure from regulators and the SEC to enforce more independence of the board directors. I'd expect more companies to expedite repayment of bailout moneys to generate some more freedom in compensation matters. I'm also sure that most company directors in future will be more sensitive to imprudent compensation structures and act more responsibly. Finally, I'd hope the "pay czar" position would be eliminated as the economy gets solidly back on its feet and the several stakeholders have learned their lessons on how best to deal with this.
My regular readers may remember that I posted two blogs on this subject in past months. On 1/31/09 I commented that the strong and widespread criticism of substantial and inappropriate bonuses paid Wall Street executives were in most cases highly justified. My conclusion then was that meaningful actions to deal with this will most probably be taken by the Congress, the Obama Administration, the regulators, some boards of directors and many shareholder groups. On 8/29/08 my blog commented on the then recent historical trend of excessive compensation, defining what was excessive, who's responsible and what possible actions might be taken.
In my view it's still appropriate to write about executive compensation, because it has a bearing on what's going on in our poor though hopefully slowly improving economy, on a likely changing corporate culture, as well as the pluses and minuses of the federal government's growing influence and control over our overall economy and our vital business community. Executive compensation has had a very significant bearing on our economy because it has in too many cases, through its structuring, led to imprudent high risk taking, which in turn has led to corporate failures, needs for federal taxpayer funded rescues, massive layoffs, and huge adverse impacts on federal and state financial budgets affecting all of us. Furthermore, all of this has been instrumental in contributing greatly to the world-wide recession and clearly been a major factor in falling stock and bond markets, eroding the values of savings and retirement portfolios of tens of millions of American families.
One prominent and controversial part of the Administration's plan is to appoint a "pay czar" to approve compensation for the highest paid employees of major companies, like Bank of America, Citigroup and AIG, as well as others who have received bailout funds from the federal government. Another part involves support for legislation to give shareholders a larger voice in compensation issues. Treasury Secretary Geithner also laid out broad principles on executive compensation, such as tying incentives more to long-term performance to contain short-term risk-taking, particularly by bond, currency and commodities traders. The various restrictions would likely last until the companies repay their bailout moneys and other financial obligations. Geithner stressed that the government does not intend to cap how much executives would be paid.
Ideally, executive compensations should be decided by an effective, independent company board of directors or its compensation committee, guided by experienced compensation consultants, often supported by recommendations of the CEO for compensations for those who report to him or her. The problem has been that to many directors and CEO's didn't do their jobs well, and too many directors were not really independent. Another contributing, but less important weakness has been that company auditors and rating agencies have not generally commented critically on compensation practices.
I think an executive compensation bill will pass, but it will probably require some concessions on both sides. I'd expect it to include more power for shareholder groups to vote, perhaps non-binding, on compensation for the top 4-5 executives and also pressure from regulators and the SEC to enforce more independence of the board directors. I'd expect more companies to expedite repayment of bailout moneys to generate some more freedom in compensation matters. I'm also sure that most company directors in future will be more sensitive to imprudent compensation structures and act more responsibly. Finally, I'd hope the "pay czar" position would be eliminated as the economy gets solidly back on its feet and the several stakeholders have learned their lessons on how best to deal with this.
Sunday, April 26, 2009
Foreign Policy Position on Pakistan
Thinking about our continuing controversial political and military involvement in Iraq, though it should be winding down a great deal over the next year or two, and our growing, troubling involvement in and commitments in Afghanistan, I'm one of those who is even more concerned with what's going on in neighboring Pakistan with its 173 million almost entirely Muslim population and the consequent potential impact on our military forces and our limited available financial resources.
What's going on and why am I very concerned? Religious conservatives in the Swat Valley in the northwest of Pakistan close to the border with Afghanistan have been rebelling against the secular laws of the federal government since 1969 when the formerly independent region became part of Pakistan. A consequence of this is that these conservatives have increasingly become sympathetic to the radical Islam Taliban movement whose primary battleground for many years has been Afghanistan. In December 2008 Taliban insurgents captured the Swat Valley, surprisingly without a lot of resistance from the large Pakistan army. Among other anti-social policies in the area, they immediately banned education of girls, use of televisions and the playing of music.
In February this year, in an effort to secure peace in the region, the captive regional government of the area, supported by the weak and fragile government of Pakistan President Asif Ali Zardari and Prime Minister Yousaf Raza Gillani agreed with a leading Taliban cleric that harsh Islamic or Sharia law should replace the current secular laws.
Since that time the Taliban has moved forces into the adjacent Buner District only 60 miles from the Pakistani capital of Islamabad. The U. S. has been suspicious for years that elements in the Pakistani military and especially in Pakistan's Inter Services Intelligence (ISI) agency, though officially denied, have been secretly working against the policies and interests of the Pakistani government in support of some of the insurgent groups.
There is increasingly widespread concern, as evidenced recently by blunt statements by Secretary of State Clinton and some high-ranking British sources, that the Taliban pose a major near-term threat to the rest of the country and its federal government. President Obama's special representative for Pakistan and Afghanistan, Richard Holbrooke said in an interview yesterday that "Pakistan is an emergency situation." We should all be greatly oncerned because Pakistan has nuclear weapons and the Taliban have recognized links to al Qaeda. Our worst fear would be that al Qaeda gets even close to control or access to any nuclear weapons.
The U. S. therefore needs to continue and further increase its political pressure on the Pakistan government and its military leaders, including the head of the army, Ashfaq Kayani, to get much more serious in dealing effectively with this Taliban threat. It's positive that Chairman of our Joint Chiefs of Staff Admiral Mike Mullen has recently talked to General Kayani, and that Mr. Holbrooke has been regularly talking to Mr. Zardari, who is scheduled to come to Washington, D. C. on May 6th to talk to President Obama and Afghan President Hamid Karzai about how to combat the threat that is a continuing danger to both nations and also a potential danger to U. S. interests. Hopefully Mr. Obama will make it extremely clear what we expect and how their subsequent actions will impact continuing U. S. aid and financial support.
That this threat has been allowed to develop as it has is ridiculous! Pakistan has 650,000 active, reasonably well-trained duty personnel in the military, a paramilitary force of 300,000, and reserves of 520,000, giving a combined military force of nearly 1.4 million! The Taliban apparently has a comparatively small force of some 5,000 fighters. What's the problem? As I understand it, the problem seems incredibly to be primarily two-fold: questionable national political consensus and will and, secondly, the fact that the military has 80% of their troops firmly positioned near the Indian border, in anticipation of another possible war with that country, especially in view of the massacre in Bombay in November 2008 committed by Pakistanis, possibly assisted by some ISI insiders. Of course, another major factor in the Pakistani deployment is the longstanding national tensions associated with territorial disputes in the Kashmir region.
It should not be necessary for the U. S. to get directly involved militarily in dealing with this threat, at least with combat troops on the ground. If the Pakistani government and military allow the Taliban to capture the country's nuclear facilities, or significantly increases its control of other regions in Pakistan, the U. S. should seriously consider disabling or destroying the nuclear facilities in collaboration with the other members of the U. N. Security Council and our major allies.
This is obviously a highly sensitive and challenging situation for many reasons. The Security Council would most likely be divided on any appropriate military action. Despite the serious threat, China and Russia would probably veto any U. N. supported military action proposed by the U. S. and perhaps try to conduct bilateral negotiations with Taliban leaders, even though Russia had a bitter war with the Taliban in Afghanistan from 1979 to 1989. China supplied much of the technology used by Pakistan for their nuclear facilities and probably is concerned with maintaining a balance between the military power of Pakistan and India for greater stability in the region.
Considering everything already on their plates, President Obama and Mrs. Clinton will deserve a lot of credit if they can get this matter resolved satisfactorily. Most preferably, this would be convincing the Pakistani leaders not to be unduly concerned with any threat from India, redeploying their forces as needed, and to quickly retake control of their country without requiring any significant U. S. military or financial assistance. Since the Taliban have been active moving fighters and training camps back and forth across the loosely guarded northern Afghan Pakistani border with ease for years as opportunities for their terror and mischief campaigns arose, success in killing or capturing militants in Pakistan will help the U. S., our allies there and Karzai's government in Afghanistan as well.
What's going on and why am I very concerned? Religious conservatives in the Swat Valley in the northwest of Pakistan close to the border with Afghanistan have been rebelling against the secular laws of the federal government since 1969 when the formerly independent region became part of Pakistan. A consequence of this is that these conservatives have increasingly become sympathetic to the radical Islam Taliban movement whose primary battleground for many years has been Afghanistan. In December 2008 Taliban insurgents captured the Swat Valley, surprisingly without a lot of resistance from the large Pakistan army. Among other anti-social policies in the area, they immediately banned education of girls, use of televisions and the playing of music.
In February this year, in an effort to secure peace in the region, the captive regional government of the area, supported by the weak and fragile government of Pakistan President Asif Ali Zardari and Prime Minister Yousaf Raza Gillani agreed with a leading Taliban cleric that harsh Islamic or Sharia law should replace the current secular laws.
Since that time the Taliban has moved forces into the adjacent Buner District only 60 miles from the Pakistani capital of Islamabad. The U. S. has been suspicious for years that elements in the Pakistani military and especially in Pakistan's Inter Services Intelligence (ISI) agency, though officially denied, have been secretly working against the policies and interests of the Pakistani government in support of some of the insurgent groups.
There is increasingly widespread concern, as evidenced recently by blunt statements by Secretary of State Clinton and some high-ranking British sources, that the Taliban pose a major near-term threat to the rest of the country and its federal government. President Obama's special representative for Pakistan and Afghanistan, Richard Holbrooke said in an interview yesterday that "Pakistan is an emergency situation." We should all be greatly oncerned because Pakistan has nuclear weapons and the Taliban have recognized links to al Qaeda. Our worst fear would be that al Qaeda gets even close to control or access to any nuclear weapons.
The U. S. therefore needs to continue and further increase its political pressure on the Pakistan government and its military leaders, including the head of the army, Ashfaq Kayani, to get much more serious in dealing effectively with this Taliban threat. It's positive that Chairman of our Joint Chiefs of Staff Admiral Mike Mullen has recently talked to General Kayani, and that Mr. Holbrooke has been regularly talking to Mr. Zardari, who is scheduled to come to Washington, D. C. on May 6th to talk to President Obama and Afghan President Hamid Karzai about how to combat the threat that is a continuing danger to both nations and also a potential danger to U. S. interests. Hopefully Mr. Obama will make it extremely clear what we expect and how their subsequent actions will impact continuing U. S. aid and financial support.
That this threat has been allowed to develop as it has is ridiculous! Pakistan has 650,000 active, reasonably well-trained duty personnel in the military, a paramilitary force of 300,000, and reserves of 520,000, giving a combined military force of nearly 1.4 million! The Taliban apparently has a comparatively small force of some 5,000 fighters. What's the problem? As I understand it, the problem seems incredibly to be primarily two-fold: questionable national political consensus and will and, secondly, the fact that the military has 80% of their troops firmly positioned near the Indian border, in anticipation of another possible war with that country, especially in view of the massacre in Bombay in November 2008 committed by Pakistanis, possibly assisted by some ISI insiders. Of course, another major factor in the Pakistani deployment is the longstanding national tensions associated with territorial disputes in the Kashmir region.
It should not be necessary for the U. S. to get directly involved militarily in dealing with this threat, at least with combat troops on the ground. If the Pakistani government and military allow the Taliban to capture the country's nuclear facilities, or significantly increases its control of other regions in Pakistan, the U. S. should seriously consider disabling or destroying the nuclear facilities in collaboration with the other members of the U. N. Security Council and our major allies.
This is obviously a highly sensitive and challenging situation for many reasons. The Security Council would most likely be divided on any appropriate military action. Despite the serious threat, China and Russia would probably veto any U. N. supported military action proposed by the U. S. and perhaps try to conduct bilateral negotiations with Taliban leaders, even though Russia had a bitter war with the Taliban in Afghanistan from 1979 to 1989. China supplied much of the technology used by Pakistan for their nuclear facilities and probably is concerned with maintaining a balance between the military power of Pakistan and India for greater stability in the region.
Considering everything already on their plates, President Obama and Mrs. Clinton will deserve a lot of credit if they can get this matter resolved satisfactorily. Most preferably, this would be convincing the Pakistani leaders not to be unduly concerned with any threat from India, redeploying their forces as needed, and to quickly retake control of their country without requiring any significant U. S. military or financial assistance. Since the Taliban have been active moving fighters and training camps back and forth across the loosely guarded northern Afghan Pakistani border with ease for years as opportunities for their terror and mischief campaigns arose, success in killing or capturing militants in Pakistan will help the U. S., our allies there and Karzai's government in Afghanistan as well.
Wednesday, April 15, 2009
Amnesty for Illegal Immigrants?
President Obama will apparently reveal publicly in May his plan for a comprehensive reform of our legislation on immigration to include de facto amnesty and a "pathway to citizenship" for the 15-20 million illegals living in this country. He brought the issue up again at a speech in Costa Mesa, California, on March 18th. House Speaker Nancy Pelosi seems to be strongly in favor of the expected plan. My guess is, therefore, that it will be difficult for opponents to stop the legislation, although it will probably be feasible to influence some of the specific provisions.
Some of my readers may remember that I posted a blog on the subject of Illegal Immigration way back on 9/22/07 and a related one titled U. S. Mexico Border Fence on 4/02/08 in which I gave many of my views on this general topic. While I think President Obama is doing a good job overall so far and I support him on most issues, I will most probably not agree with him on what one can expect to see in his plan, and I intend to pass on my views to his Administration.
I suspect the most sensitive and controversial part of his prospective plan will be the "path to citizenship" to be offered to most illegals, presumably those not convicted of any crime other than breaking the law by entering the country illegally or over overstaying their visas. Keep in mind that the majority of these 15-20 million illegals have broken one or more other laws such as driving a car or truck without a valid license, driving without insurance, lying on one or more employment applications, using fake Social Security numbers, and not filing income tax returns and paying amounts due. Depending on one's definition, virtually any "path to citizenship" is a de facto amnesty, even if the path requires payment of a fine, proper registration with federal, state, and local authorities, payment of income taxes owed, and if the applicants for citizenship have to go to the end of the line.
The history of amnesty legislation in recent times goes back to 1986 when President Reagan signed the Immigration and Reform Control Act which made hiring undocumented workers illegal and provided a blanket amnesty for 2.7 million illegal aliens. There have been six other pieces of legislation since 1986 that have provided amnesty for various groups of illegal aliens. The amnesties were well intended, as President Obama's no doubt will be, but they haven't worked in terms of stopping or even slowing down more illegal immigration, which in most cases was one of the objectives.
One of President Obama's main points in justifying the de facto amnesty plan is that "we can't deport them all." Unfortunately that's probably true. However, we know from our long experience that a big part of the problem has been a lack of proper enforcement of existing laws and regulations and inadequate border patrolling. We also know that the Mexican government has not done very much to help, such as government reforms and initiatives to provide better education and job opportunities for the illegals in Mexico, making it much less necessary and attractive for the illegals to risk their lives trying to cross the border into California, Arizona, New Mexico and Texas.
As I mentioned in my earlier blogs, there are substantial costs and risks associated with the illegals, although there is no question that the great majority of them work very hard, especially in lower wage jobs in construction, picking crops in farming, garden maintenance, and the food service and hospitality industries. The majority of illegals do not own property and therefore do not pay property taxes. In addition, the majority do not pay income taxes, either because they don't earn enough or because they don't file returns in order to help evade detection and their tax liability. Yet their children go to public schools, their families use emergency medical services at our decreasing number of hospitals, and, like the rest of us, use most other municipal and state services, including, unfortunately, for many thousands a lot of time in our court system and space in our costly prisons.
So what should be done, then? Obama's plan to be revealed in May should include a requirement for immediate compliance for businesses in not hiring any illegals, with stiffer penalties for violations, and much more effective border controls. Those actions should not require new legislation, unless it proves necessary for new funding. Obama needs to follow up with Mexican President Calderon to seriously discuss joint efforts to stop illegal immigration as much as possible. I'm confident he will pursue that, though I frankly don't expect to be favorably impressed with the outcome.
In the plan to be presented to Congress there should be a provision to deport those who have come across the border in the recent past, say 12 months, those who have no job, reasonable prospects for a job, or other legal means to reasonably support themselves, and those who have committed any felonies. A "path to citizenship" should be reserved for those who have lived in the U. S. for at least five years, have learned to speak and write English at some elementary or better level, and have a track record of employment and acceptable "citizenship" in terms of obeying our laws and paying taxes. It should not be automatically made available to every illegal, just by paying a modest fine and agreeing to learn English. The third group, those who should not be deported and don't yet qualify for citizenship, should be considered for a guest worker program or an extended visa, depending upon individual qualifications and family issues.
I would support a plan along the above lines that sharply reduces illegal immigration from all countries, deports new illegals and the group mentioned above, is fair to the millions of illegals who have lived here for more than five years and are in good standing with their communities, and reasonably protects the unemployed millions of Americans who are seeking new jobs at this very moment. However, the plan must also be fair and reasonable to the legal American taxpayers and take account of our current very serious national, state and local economic circumstances. This point should not be sacrificed to serve the interests of those politicians who seek Hispanic votes at upcoming elections or those who insist we must demonstrate compassion by offering citizenship to everyone. As also mentioned in the earlier blogs, I still think that the 14th Amendment giving automatic citizenship to children of illegals born here should be repealed or reinterpreted by the courts to take away this benefit.
It's a difficult issue in several respects, but that doesn't justify no action or anything close to a blanket de facto amnesty. The new plan must differentiate between different categories of illegals in a pragmatic, reasonable and fair manner. Furthermore, we must not find ourselves in a similar position five or ten or more years down the road, facing what to do with many more millions of illegals.
Some of my readers may remember that I posted a blog on the subject of Illegal Immigration way back on 9/22/07 and a related one titled U. S. Mexico Border Fence on 4/02/08 in which I gave many of my views on this general topic. While I think President Obama is doing a good job overall so far and I support him on most issues, I will most probably not agree with him on what one can expect to see in his plan, and I intend to pass on my views to his Administration.
I suspect the most sensitive and controversial part of his prospective plan will be the "path to citizenship" to be offered to most illegals, presumably those not convicted of any crime other than breaking the law by entering the country illegally or over overstaying their visas. Keep in mind that the majority of these 15-20 million illegals have broken one or more other laws such as driving a car or truck without a valid license, driving without insurance, lying on one or more employment applications, using fake Social Security numbers, and not filing income tax returns and paying amounts due. Depending on one's definition, virtually any "path to citizenship" is a de facto amnesty, even if the path requires payment of a fine, proper registration with federal, state, and local authorities, payment of income taxes owed, and if the applicants for citizenship have to go to the end of the line.
The history of amnesty legislation in recent times goes back to 1986 when President Reagan signed the Immigration and Reform Control Act which made hiring undocumented workers illegal and provided a blanket amnesty for 2.7 million illegal aliens. There have been six other pieces of legislation since 1986 that have provided amnesty for various groups of illegal aliens. The amnesties were well intended, as President Obama's no doubt will be, but they haven't worked in terms of stopping or even slowing down more illegal immigration, which in most cases was one of the objectives.
One of President Obama's main points in justifying the de facto amnesty plan is that "we can't deport them all." Unfortunately that's probably true. However, we know from our long experience that a big part of the problem has been a lack of proper enforcement of existing laws and regulations and inadequate border patrolling. We also know that the Mexican government has not done very much to help, such as government reforms and initiatives to provide better education and job opportunities for the illegals in Mexico, making it much less necessary and attractive for the illegals to risk their lives trying to cross the border into California, Arizona, New Mexico and Texas.
As I mentioned in my earlier blogs, there are substantial costs and risks associated with the illegals, although there is no question that the great majority of them work very hard, especially in lower wage jobs in construction, picking crops in farming, garden maintenance, and the food service and hospitality industries. The majority of illegals do not own property and therefore do not pay property taxes. In addition, the majority do not pay income taxes, either because they don't earn enough or because they don't file returns in order to help evade detection and their tax liability. Yet their children go to public schools, their families use emergency medical services at our decreasing number of hospitals, and, like the rest of us, use most other municipal and state services, including, unfortunately, for many thousands a lot of time in our court system and space in our costly prisons.
So what should be done, then? Obama's plan to be revealed in May should include a requirement for immediate compliance for businesses in not hiring any illegals, with stiffer penalties for violations, and much more effective border controls. Those actions should not require new legislation, unless it proves necessary for new funding. Obama needs to follow up with Mexican President Calderon to seriously discuss joint efforts to stop illegal immigration as much as possible. I'm confident he will pursue that, though I frankly don't expect to be favorably impressed with the outcome.
In the plan to be presented to Congress there should be a provision to deport those who have come across the border in the recent past, say 12 months, those who have no job, reasonable prospects for a job, or other legal means to reasonably support themselves, and those who have committed any felonies. A "path to citizenship" should be reserved for those who have lived in the U. S. for at least five years, have learned to speak and write English at some elementary or better level, and have a track record of employment and acceptable "citizenship" in terms of obeying our laws and paying taxes. It should not be automatically made available to every illegal, just by paying a modest fine and agreeing to learn English. The third group, those who should not be deported and don't yet qualify for citizenship, should be considered for a guest worker program or an extended visa, depending upon individual qualifications and family issues.
I would support a plan along the above lines that sharply reduces illegal immigration from all countries, deports new illegals and the group mentioned above, is fair to the millions of illegals who have lived here for more than five years and are in good standing with their communities, and reasonably protects the unemployed millions of Americans who are seeking new jobs at this very moment. However, the plan must also be fair and reasonable to the legal American taxpayers and take account of our current very serious national, state and local economic circumstances. This point should not be sacrificed to serve the interests of those politicians who seek Hispanic votes at upcoming elections or those who insist we must demonstrate compassion by offering citizenship to everyone. As also mentioned in the earlier blogs, I still think that the 14th Amendment giving automatic citizenship to children of illegals born here should be repealed or reinterpreted by the courts to take away this benefit.
It's a difficult issue in several respects, but that doesn't justify no action or anything close to a blanket de facto amnesty. The new plan must differentiate between different categories of illegals in a pragmatic, reasonable and fair manner. Furthermore, we must not find ourselves in a similar position five or ten or more years down the road, facing what to do with many more millions of illegals.
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