2009Oct30 Our National (Non)Economic Problems

2009Oct30 Our National (Non)Economic Problems

This week’s poll asked what people think are the most important economic and non-economic problems facing the economy. The poll was not scientific and was driven by radio listeners of the syndicated Don Creech Radio Show (www.DonCreech.com) and subscribers to Investor Resources Week In Review email update.

The economy in general was identified as the most pressing problem by fifty four percent of respondents. Thirty one percent identified the federal debt and budget deficit as the next most pressing problem. We have lived with federal debt for a very long time. The last president to have the national debt paid in full was Andrew Jackson in 1835!
 
We had annual budget surpluses for ten years during the Roaring Twenties and four years in the 1990s after the 1994 GOP’s Contract with America. Those surpluses just encouraged more spending as the GOP lost its appetite for fiscal responsibility.
 
The national unemployment problem and the gap between the rich and poor tied with eight percent each. The official unemployment rate is 9.8% with the worst being Michigan at 15.3%. Including the discouraged and the underemployed in the calculation bumps the rate to nearly sixteen percent.
 
A slow growth economic recovery in the 2% range will not create new jobs. The average work week is now at 33 hours. Employers needing more labor will likely increase the hours worked of current employees rather than hiring new staff. Expiration of the current income tax law next year and the impending imposition of new taxes to pay for new social programs will further erode confidence and ability of business to afford new employees. 
 
The reported 3.5% growth in the third quarter gross domestic product was celebrated as the end of the recession. However, the number is usually revised down in the months following the initial data release. GDP consist of CIG – Consumers, Investment and Government spending. Consumers are still shifting their income to savings with September showing the largest decline in consumer spending this year! Business investment remains confined to some inventory replacement. The “surge” is due to our government spending borrowed money. It is not a sign that the economy has turned a corner towards stronger employment and rosier days.
 
The largest non-economic problem was identified as dissatisfaction with our government and Congress by fifty four percent of the respondents. This was a broad category that included a lack of political leadership, corruption and abuse of power. The Democrat in-fighting over the multiple healthcare initiatives and the voting on an unwritten Cap and “Tax” law regulating global warming has given the public plenty of fodder to stew about. It will be no surprise to see the Democrats lose seats at the mid-term elections next year. The big question is how many will be lost.
 
Poor healthcare and its high cost tied with the decline of the family, ethics, moral and religious values with fifteen percent each. The healthcare issue is the current social and political battle being waged in the halls of Congress and the front pages of the media. There are many arguments against a government run system for the general population. Two arguments against expanded government involvement are the inefficiencies and fraud in the current Medicare program and the many reported problems caring for our vets within the VA Medical system.
 
To remain financially viable, insurance companies must have a sufficiently large base of premium payers to offset the cost of claims, overhead and reserves. TheX-Generation is nine million people smaller than the Boomers. We are facing a critical shortage of potential insureds to share the premium risk. Insurance companies are increasingly strapped with government imposed mandates on who is to be insured and what benefits are to be provided without regard to actuarial risk and cost requirements. Our final outcome, though I do not like it, will most likely be nationalization of our health insurance system.
 
 Finally, the war in Afghanistan tied with the lack of respect for each other at eight percent each.
 
President Obama’s “War of Necessity” has taken a back seat with the media since President Bush is no longer responsible for its resolution. President Obama continues to tout an end to US military involvement by August 2010 and withdrawal by the end of 2011. He does not view the war on terrorism as a military engagement. His lack of priority is apparently filtering down to the general public.
 
The lack of respect issue is very broad and can be easily found on TV and radio shows whether or not politics is the subject. Political rancor is often viewed as disrespectful rather than a debate of ideas. The classroom often has examples of students “dissing” their instructors. Since the 50’s we have been loosening the standards of formality and boundaries throughout our culture. Our respondents show that some of us still hope to have the old fashioned standards used in social intercourse.