Thoughts On Obama’s Middle East Speech

You can always tell when President Obama means what he is saying. Obama wrote the speech he gave at the memorial service for Congressman Giffords, was always fired up during the campaign because he believed he could bring change to Washington, and obviously wanted to bridge the gap between the two America's he described at the 2004 Democratic National Convention. But today's speech on the Middle East was clearly written for him, probably by some policy wonk in the State Department, whose job was to make sure the President didn't say anything that would end the negotiations between Israel and the Palestinians before they got started.

Today's speech came at a time when tensions are high in the region because of the recent killing of Osama Bin Laden and what has been dubbed the Arab Spring. With Israeli President Netanyahu coming to Washington, the State Department's envoy to the Middle East, George Mitchell, quit because of the lack of progress. For the last two years all talks have stopped because Israel realized with the world economy going belly up everyone was focused on other things and could leave them alone. Since then Israel has decided to build more settlements on the borders and has used its military to do so.

So all eyes are on Obama and what he will do next. Since the election, Obama and Secretary of State Hilary Clinton, have restored some relations with the Arab countries. But Israel has always been a problem because many of the countries in the nation see America as favoring Israel over the other people living in the region. On the flip side Israel is sometimes afraid of losing America's support and the billions in military aid we have given it over the years. But having visited the country I feel confident in saying the majority of Israeli's not only want peace but would be willing to compromise with the Palestinians and come up with a solution where both can live there.

Obama believes this as well otherwise he wouldn't have said today "At a time when the people of the Middle East and North Africa are casting off the burdens of the past, the drive for a lasting peace that ends the conflict and resolves all claims is more urgent than ever.  That's certainly true for the two parties involved." And went on to call for both sides to agree to the same terms in 1967 when America and the United Nations agreed to recognize Israel as a state. But the problem is we've seen this play before, and Obama knows this policy isn't going to work.

The more I thought about it, I couldn't think of a good reason for Obama even making the speech today. Some people were saying it would put pressure on Netanyahu, but without the U.S. willing to put something strong on the table like taking away military aid or walk away from its trade agreements, there is no reason for him or other future President of Israel to change their position. American President's have tried to get the two sides to mend ties based on these original borders. But even when they have agreed to do so, like during the Clinton administration, both sides wound up breaking the agreement.

On Tuesday, when Obama gave his speech at Booker T. Washington high school in Tennessee, it was awesome. He wanted to show the graduates and future graduates there that in this country anything was possible. He was charismatic, optimistic, did his best to relate to the audience, and he meant every word. Obama is too smart to not realize he's not doing anything that hasn't already been done or tried before when it comes to Israel. While this speech was to set up next week when Netanyahu gets here, it's only going to be Netanyahu and no one else. So after the Israeli President gives his speech to Congress to tell them how great they are, I'm willing to bet both sides will say the discussions went well and hope to continue them in the future.

Did The Republicans Really Win?

Like all political junkies, I wake up early on Sunday's to watch the political talk shows to see what news, if any, is going to be made. This week consisted of the budget battle and the last minute deal that was reached on Friday. So I'm watching Meet The Press and This Week, and the consensus among the reporters was that because the Republicans pushed the Democrats around, and got the cuts they were asking for, they were the winners. But then I wondered: what else is new? While getting an agenda through Congress can sometimes equal a political victory, this policy victory won't equal a political victory for the GOP.

Collectively, Congress has always had low approval ratings. It doesn't matter what they do, people watch the debates on C-SPAN and see the overblown rhetoric used by politicians on the news, and guess what..they don't like it. It gets to a point where both parties are looking like they are trying to save face (which they are) and really aren't doing what they were elected to do, represent the people. The way the negotiations took place this week didn't give American's any more confidence in their government, and instead, showed both sides to be spoiled brats.

We still don't know what the particulars are of the $38 billion that was cut, but who cares?! All the Republicans cared about was appeasing the Tea Party and cried for more cuts after getting what they originally asked for. I'm sure when John Boehner met with Harry Reid and President Obama at the White House, it was pointed out to him that polls consistently showed the majority of Republicans wanted a compromise. But all we got was more rhetoric and statements that argued for more cuts because it will help the economy or because abortions are bad. Both arguments are the crutch Republicans turn to when they know they reached too far, and people are sick of it.

The Republican's also liked to say elections have consequences, which is true. If the Democrats kept the House last year none of this would have happened. A Continuing Resolution would have been passed to keep spending levels where they were and no one could have complained. It's been done many times before. Even though they got their sound bites out there, the GOP never came up with one policy solution to help end the situation. If the government shut down it would have been their fault because they are the ones complaining.

In the meantime, Democrats looked like they didn't even know what they stood for. Even though they still control the Senate and White House they weren't able to get a strong message out. The way Boehner was acting was a gift for them. When he says that Government is the problem, Democrats should have reminded him of TARP (which he was in favor of) and how the program has actually earned America money. It was probably just easier for him to support it while George W. Bush was going to have to sign it into law. While Democrats can't totally claim it was their idea, there is no reason they can't use it to argue against Boehner's assertion that government programs were hurting the economy.

I'm not going to go as far to say the Democrats won, but it's hard for me to believe the Republicans took the trophy. American's want to see their government work for them, and when they see both sides bickering over an issue that really isn't going to help anyone, it makes them feel they don't have the right people representing them. As both parties tried in the aftermath to position themselves as "winning" they need to realize at some point they are going to get booed off the stage.

No Traffic Light Ahead

President's have always justified using force in different ways, whether for humanitarian, economic, or to protect the country. But when the decision is made to use the military, there needs to be clear goals. If you are positive military action is necessary, it should be obvious what you want to get out of it. In Libya though, no one seems to know when the strikes will stop or what will be accomplished by them.

As a communist country, Libya has been a thorn in America's side for decades. The jabs have been over its nuclear weapons, and the times Qadhafi tried to take over other countries in Africa. But recently things were going well. Just a few years ago Qadhafi decided to let inspectors to look at his nuclear facilities and accepted responsibility for the
Lockerbie bombing. But then he started killing innocent protestors.

I can't help but remember what President Obama said during his speech when he accepted the Nobel Peace Prize. "To say that force may sometimes be necessary is not a call to cynicism -- it is a recognition of history; the imperfections of man and the limits of reason." With all the protests going on in the Middle East and North Africa, it was only a matter of time before it became violent, and in Libya's this case the military was needed.

While agreeing to use the military, what bothers me is that there does not seem to be an end in sight. General Ham, who is in charge of this operation, has said there are no plans to go after Qadhafi and its mission is to protect the civilians. But how do you protect civilians without attacking the person who is trying to kill them? At one of the daily briefings, the UN spokesman said they have not decided whether the rebels were going to be considered citizens or casualties of war, because, technically, this isn't a war.

One of the country's leading military experts, (and one of my former professors) Michael O' Hanlon, told me in an email that "I don't know where it ends but I don't favor a military operation to overthrow Qaddafi". He also pointed out that the mission has already gone beyond a no fly zone because Libya's tanks have been taken out. But even without tanks, the government forces are much better armed than the rebels fighting them.

It is also unclear how many people are actually fighting against the government. While next door in Egypt the military held a non-violent coup, there have only been a handful of military officers who sacrificed themselves and chose not to fight. But if Qaddafi is going to be forced from office, the majority of the Libyan people are going to have to sacrifice the most.

Qadhaffi has shown no signs of slowing down and has placed his troops on the country's borders where thousands of civilians are trying to escape. To make matters worse, UN workers are not able to get into the country where there are even more displaced people who need help.

There doesn't seem to be much middle ground anymore. At this moment, both sides seem to be waiting for the other to stop, and no one is putting on the breaks. That's why the coalition supporting this operation is going to have to decide whether or not to try and find Qadhaffi or pull out.

Add Value To Your Buck

It's almost that time of year again, tax season! OK, maybe I'm exaggerating on how exciting this is. The US tax code is longer than War and Peace, but just like the classic book, almost no one can understand it, and almost no one today has read it. But someone has to read the code in order to figure out how much money people owe their government. If only there was a simpler way…

Debating tax policy is almost as bad as actually paying them, but here I go. The last time any serious tax reform occurred was during the Reagan administration. The Tax Reform Act of 1986 reduced individual and corporate taxes almost by half, and indexed those standards for inflation. The number of tax brackets were also reduced. But the Act also included the Alternative Minimum Tax (AMT) which only complicated the code more. The more complicated the code became, the more loopholes were there for people to take advantage of. While less money was coming in, the government was spending more, which increased the national debt. The code has become so complicated, and hard to enforce, only 47% of American's who file for federal taxes actually pay them.

President Obama has said he wants to reform the tax code to make it easier for Americans. But what's the best way to do this? There are a lot of ideas out there. Some say there should be a flat tax where everyone pays the same amount. But that's not progressive. It can also hurt those who do not have a lot of money, while people who earn more won't be paying their fair share. Another idea is to eliminate loopholes and certain credits. This could work, but doesn't go at the heart of the problem, which seems to be the way we calculate how much American's need to pay.

One idea that works for forty other countries (mostly in Europe) is the Value Added Tax (VAT). Instead of pushing a sales tax onto the consumer, items are taxed at a percentage as the product is put together. So if the VAT was 10% it would work like this:

- The manufacturer pays $1.00 for the raw materials, certifying it is not a final consumer.

- The manufacturer charges the retailer $1.20, checking that the retailer is not a consumer, leaving the same gross margin of $0.20.

- The retailer charges the consumer $1.50 + ($1.50 x 10%) = $1.65 and pays the government $0.15, leaving the gross margin of $0.30.

The government gets paid each step of the way, and it is clear how much everyone owes so it is easy to enforce. Overall this reduces the costs to the consumer because they don't have to pay so much at the end. The French implemented a VAT in 1954 and today it counts for half of the government's income.

 

But there are opponents. People argue implementing a VAT can cause large amounts of fraud such as false claims. There have been instances where the individual or business argues that they did not know they had to pay a tax on a certain item. Then of course there is the old fashion "hidden sale" where the consumer is charged something that is completely made up.

 

Despite those concerns, studies show that if a 5% VAT was implemented, and covered 80% of goods people consume, it could generate roughly $260 billion. The Virginia Tax Review estimates that a VAT of 25% could pay for health care reform, exempt millions of American families from income taxes and still raise the revenues necessary to cut into the budget deficit.

 

One of the reasons American's are less inclined to pay taxes now is because we became a individualistic society. When FDR was President, there was a "we are in this together" philosophy. But that has gone away. The book Bowling Alone explains it pretty well. But when you are paying taxes, you are paying for the freedoms that people in the Middle East and North Africa are fighting for. Whether you are rich or poor, everyone benefits one way or another, and those who don't pay their taxes are cheating their fellow citizens.

Just because something is European doesn't make it scary. Paying taxes is important. It goes to Veteran Hospitals, public parks, schools, and keeps our food and water clean. But paying for these services doesn't have to be a burden. Instituting a VAT could bring in more money for areas that all Americans use, and everyone could get a bigger bang for their buck.

 

 

Place Your Bets (carefully)!

What probably should have been bigger news than has been reported is the Consumer Price Index (CPI). It’s fascinating! Really! Just hear me out. The CPI comes out every month from the Bureau of Labor Statistics. It is a short term indicator on how strong or weak the economy is. The Federal Government puts out household surveys around America asking them what they bought in the past month, compares it to last month, and sees which prices rose and which ones fell. Economists need this information to determine the inflation rate, and people on Wall Street need it so they know what areas of the economy to bet on.

When the Obama administration enacted a new stimulus package in the form of tax breaks, I wrote a post explaining why stimulative was too strong of a word. The reality was that Americans were going to use the tax breaks on the basic items that they have to pay for like rent/mortgage, health care, and food. Spending is a major part of America’s economy, especially since we are not building as much as we used to. While the tax cuts will help the overall economy because people will be spending money, the important thing is people won’t feel they have to choose between the items they need to live. Last month the CPI rose 0.5 percent, and the three main areas where people put their money was on energy (to heat their homes), food (to put in their stomachs), and health care (so they won’t get the flu).

When stock brokers look to make money, they look to invest in areas of the economy they think people will be spending their money. Some of these areas are obvious. As the weather gets colder people are going to heat their homes. Since the employment rate fell more people could afford to buy health insurance, and while people always bought food, the reason why the amount of money people spent on it went up is because the price of food went up. But sometimes it’s not so obvious, and looking at a short history of the CPI you can see why.

The chart above shows the average change that the CPI occurred every year from 2000-2010. What sticks out to me here is how volatile it is. From 2002 to 2003 there was a full percent increase, and in real monetary terms we are talking about hundreds of millions of dollars. The highest point, probably not coincidentally, was in 2008, before the financial crisis in 2009, where the CPI turned negative. While the CPI isn’t the only analysis Wall Street looks at, it is an important one. The figures they see here are what give them the confidence to bet with people’s money. But as you can see, because the consumer market is so volatile, it is hard to guess which areas of the economy will be earning money.

Now people may argue the turn of the century is an unfair time to use because the economy wasn’t strong. So let’s take a look back when America turned to Nirvana, the 90’s.

 

  

Today, the stock market ended on the highest note in the past two years. That tells me people who look at this data feel confident that the economy is going in the right direction. Otherwise, they wouldn’t be so willing to invest so much money, in any area. Markets went up because they saw overall manufacturing go up, which means there is a high demand for products and more people will be spending money. Now, it’s just matter of figuring out where.

What gets me is how some conservatives argue that the better the Wall Street is doing, the better America does. That simply isn’t true. If you are lucky enough to have the money to buy stocks right now, yes, you are doing well. But millions of American’s don’t and are choosing to keep a roof over their families, get their family food, or give them health insurance. Fortunately last month, according to this CPI, most families were able to do all three.

The truth is some people are better than others determining which stocks are worth your money. Anyone who tells you they know exactly what will happen in the future is lying. There were people who knew the financial crisis was coming, but even those people couldn’t say when. As the market has been fluctuating since Washington bailed it out, it is important to remember to learn the game before you play, to do your homework and then place your bets carefully.

No Grit

I want True Grit to win best picture. That movie showed that when you have someone on your side who is a determined, anything is possible. Tonight, Obama didn't show any grit. Instead, it was more of a blunt professor telling the class what needs to be done.

Obama spoke about a lot of policy areas both Democrats and Republicans can agree on. The one that stood out was the spending freeze. You can't say it won't reduce the deficit (because it does), and elected officials can't complain about a project being cut that their district or state needs. Other than that, there wasn't much.

The speech was close to 7,000 words and there were hardly any specifics. He spoke broadly about cutting federal spending, energy policy, and the nations infrastructure. But he didn't say what he wanted to do about it, only what that he wanted something done.

When talking about creating jobs, he spoke about working with businesses and reducing red tape. Clear reversals in tone with a new economic team and Chief of Staff coming in. But nothing to get excited about.

When it came to health care, he opened the door to make changes to the law. That is despite the fact when American's find out what is actually in the law, they like it.

A part of me is disappointed that the administration took this route. I like the big speeches that fired me up to go campaign and work for change. I liked the feeling Obama was a guy who wanted to do big things, but none of that was shown tonight.

Instead, Obama was kept expectations low. If Congress passes anything that he can sign into law it is an automatic victory for him. There is an upside to any policy and he can use the bully pulpit to say what he is signing (a bipartisan piece of legislation) louder then anyone else in Washington.

Was it the right way to go. Probably. It's safe and he is worried about winning re-election in 2012. What worries me is that he seems to have forgotton why people got off their couches to vote for him. They were excited about what they thought he could accomplish.

I did not see a person who I would hire to help me seek revenge for the death of a person I loved. In 2008 the left took revenge on the Republicans, but tonight, Obama showed No Grit.

Teaching to Teach

Out of the several issues President Obama will have to tackle these next few years, renewing the No Child Left Behind (NCLB) Law will be one of the toughest. One would think that a piece of legislation that Senator Kennedy pushed through Congress, and was signed by President George W. Bush, that in this new bipartisan era it wouldn't have much problem getting through. But then again, the first vote to be taken in this new Congress is the "job-killing" repeal of the health care law.

The biggest problem President Obama will have trying to re-authorize NCLB will be that both Democrats and Republicans have issues with it, and some are legitimate. When the law was first enacted funding for NCLB was non-existent. States that were trying to implement its policies were unable because there was not enough money in the federal budget. This lead to the second problem: in order to qualify for what little funding there was, states had to device a way which would assess schools. The law never said that standardized tests had to be implemented, but it was the cheapest way to qualify for the federal money.

Since Arne Duncan took over the Department of Education, he devised a new way for states to compete called Race to the Top. The difference here was States had more standards to meet. Yes students still had to take tests, but more charter schools had to be created, and assessments had to be submitted. But in every race there's always a loser. While most states changed their education system in order compete for the millions of dollars being dangled in front of them, most states did not receive any money, or not as much money as they thought they would or should get. When the second round came up, the states that got shunned threatened not to participate and derail Obama and Duncan's image of how schools should be run.

I have no problem with using money to get what you want. It's done all the time. Whether it is to stop people from drinking and driving, regulate pollution in streams and rivers, or building new wind turbines for energy, this is how our current government works and has for a long time. The problem I do have with this policy is that it won't help children learn.

Making students take tests won't get students to understand what they are being tested on. Where Secretary Duncan and school Superintendents around the country should focus its efforts, is figuring out the best methods to teach teachers how to teach, and the best practices that enable students to learn. Then, incentives can be given to states based on what we know works, instead of assuming a one shoe fits all approach. Which brings me to my second point.

The Bill and Melinda Gates Foundation have been studying which teaching practices work best. One of the key findings is that smaller classrooms produce better outcomes for students. Reason being; the teacher is able to give those students the attention they need. But if you're going to give more money to states to hire more teachers and build more schools, you have to make sure the teachers being hired actually know how to teach. The Gates Foundation is looking at what the best teachers are doing now, so teachers of the future can learn from them.

One of the recommendations by the Gates Foundation is to take the students that are seriously struggling and put them into other areas where they can get the help they need. They are not specific on which students they are, only that the students who will be moved should be based on the criteria they develop. But let's assume the students that are moved have learning disabilities.

In the past, I have written about learning disabilities, and while the research being done will indirectly help teachers teach these students, it is still not an issue that is being dealt with. Even the best teachers will have to adjust their methods so the student with a disability can properly learn the material. But shifting them to another room is not the answer. As long as they are willing to work hard, students with disabilities can be in the same classroom as his or her peers, but putting them in another room will only make them feel as if they are below everyone else.

There is no reason why Congress needs to politicize this issue. When NCLB was first enacted in 2001, there were obviously aspects of the bill both liberals and conservatives liked, otherwise, it would not have passed. In the State of the Union Address, President Obama should talk about the success this bill has had since it was first enacted and how it is a way to enact changes to a system that desperately needs it.

Many more studies need to be conducted, and this post does not even begin to scratch the surface of what is wrong with our education system. But once there is a compilation of methods that are proven to effectively teach students, incentives should be given to states to teach, and teach those policies to its teachers.

Obama Should Go Nuclear

This whole talk of compromise is bogus. President Obama was able to pass the tax cuts, don't ask don't tell, and START, because the public was on his side. Polling consistently showed the American people were in favor of these two issues, and Republicans didn't want to look like they were not representing the people before they official gained power. But it will be a lot tougher the next two years and it will be important for Obama to pick specific issues that he can claim victory on.

Controlling the White House gives Democrats the ability to set the agenda and control the conversation. That means it is even more important to pick issues that they know they can win political points with since there will be so few of them coming up. By Obama saying he received a shellacking in this election cycle, he down played any new victories that may occur in the future, that way when he does get his initiatives passed through Congress, it is a bigger victory.

If the Republicans goal is to make Obama a one term president, there is no reason to give them an inch of breathing space. The energy legislation that passed the House this past term isn't going anywhere. While the bill received bipartisan support, it was still a close vote and very contentious. But there are a lot of elements in it that both sides can vote for. One of them is the expansion of nuclear energy.

Obama has consistently said he is in favor of creating more nuclear sites in the United States, and many Republicans have had this on their agenda. The list includes John McCain, Mitch McConnell, and soon to be the Chairwomen of the Senate's Energy and Natural Resources Committee, Lisa Murkowski. There will be plenty of quotes that can be used to contradict what these Senators will be saying if Obama decides to push this issue. But it is one that he needs to use the bully pulpit in order to get what he wants.

The microphone is going to be set on high for this one too. There are a lot of Not In My Back Yard issues when it comes to nuclear power. People either think of Chernobyl or Three Mile Island and do not want an instance such as that to effect their communities. Both of these accidents were caused by human error, unlike the BP oil spill which was caused by human error. That's why the Department of Justice is suing BP believing the disaster could have been avoided. More regulation will be needed for the new nuclear plants, but it is hard to make an argument that current plants and refineries don't need it either.

One of the factors involved with using nuclear technology is where to store the waste that comes from using the material. But while there are currently 104 nuclear power plants operating in the United States, the amount of material that would have to be stored would cover seven yards on a football field. The technology for storing this material has been improved insurmountable since the last two nuclear accidents.

While building new nuclear plants are expensive, there is still plenty of money to be made from building them, particularly with the right incentives that the federal government can provide. In the meantime, the money that is being spent will create jobs. That's why other countries like England are planning to build more of them. And I haven't gotten into the environmental benefits of using more nuclear power.

One of the reasons Obama had such a hard time with the media is because he was not specific enough in what he wanted. The public option was the prime example. The official position was "I'm in favor of a public option, but it does not have to be in the final bill for the bill to be effective." While policy junkies or people who work in the health sector may have understood what he was saying, it was confusing. And it didn't allow him to own the issue and take credit for the pieces of legislation that will benefit people.

The White House needs to keep it short and understandable. Not everyone is a physicist and kept up on the news coming out of the nuclear sector. Next year Obama is going to have to stop trying to teach, and needs to preach instead.

 

 

Put Up or Shut Up

This health care debate gets more and more exciting every day. Now it's the Senate's turn. Who needs Pacquiao vs. Cotto when you get to see Harry Reid whipping the rest of the Democrats to vote for his bill? The best part is that the vote is going to be on another Saturday night. Prime time! There's nothing else on Saturday anyway, and I guarantee you the networks are pissed they won't be able to charge for advertisements on C-SPAN when the vote is taking place.

The Congressional Budget Office (CBO) estimated that the legislation would reduce the federal deficit by $127 billion over ten years. That's also probably a conservative estimate based on how CBO actually calculates the figures. Taxes are also going to be raised by the insurance companies who charge more then $8,500 for individuals and $23,000 for families, which will help key costs low.

I have to admit that I'm a little disappointed in the name. The Patient Protection and Affordable Care Act. That's boring. The bill should be called Put Up or Shut Up.

In 2006 Republicans lost control of Congress mainly because they didn't get anything done, they didn't get their act together. Some Democratic Senators (Lieberman, Landrieu, Lincoln, and Nelson) are threatening to not even let the bill come to a vote. If that happens it won't just look bad for Reid and the rest of the Democratic leadership, it sends the message to the American people Democrats don't have confidence in their own policies. And if they don't, why should the the American people?

The bill to be voted on Saturday has a public option which states can opt-out of. And a public option is the best way to control costs, the majority of the American people know this. The foundations are in both the Senate and House version for the Democrats to be confident in the bill.

When Vice President Biden was on The Daily Show the other night, he was asked, and I'm paraphrasing, "Why is it that the Republicans are able to stop legislation when they are in the minority, and the Democrats can't get anything passed when they have the majority?" Biden's reply: "That's a good point."

So Democrats, it's time to put up or shut up, because that's what this bill represents. You can either show the American people you are capable of running the country or you're not. The outcome of this bill will be the answer.