Wednesday, November 7, 2012

Congratulations Barack Obama–A Post Election Risk Assessment

Yesterday, Barack Obama was re-elected President of the United States.  To those of you who supported the President, it is my hope that your faith in your cause will be realized in ways that speak to the higher aspirations you believed in.
For me, it is disappointing that this man was re-elected using the most negative and shameful tactics I have witnessed in my lifetime. To those few Obama supporters who supported him with reason and argument, you have my respect.  For the vast, vast majority of you, who used bumper sticker slogans and character assassination, I am deeply disappointed, have lost a little respect, and say to you flatly, you did not serve this country well or with dignity.  I am so tired of hearing the four horseman of the Democratic apocalypse (i.e. Republicans are either 1) Bigoted, 2) Racist, 3) Uncaring or 4) stupid).  These four fundamental characteristics form the foundation of nearly every Democratic attack.  Go back across this campaign and you will see how each has been used either alone or in combination to paint a demonic picture of Mitt Romney in particular and Republicans in general.  This character assassination may have won you the election, but you have lost the respect of thinking people in America.
I fear for our country in a way like never before in my lifetime.  This re-affirmation of this President has put this country at serious risk that will fundamentally change this country and how we see ourselves in ways no election before.

Barack Obama and the Risk of Disaster from this Election

There are several risk areas that I see.  These areas in and of themselves are neither good nor bad, they simply carry with them significant risk of a very undesirable outcomes.  So, here are my predictions for the next four years and beyond that, if realized, will lead to irrevocable steps that will transform this country from a land of opportunity to one of increasing government servitude and European Style Socialism.

Health Care

Mr. Obama has achieved the most sweeping health care reforms since the passage of Medicare and Medicaid in 1965. The reform law takes a big step toward universal health coverage, a final piece in the social contract.  With his re-election, there will be no stopping this flawed entitlement.  It carries a great risk that there will be a drive to bring about universal health care coverage administered by the federal government.  I predict it is only a matter of time as independent health care companies and insurance providers are squeezed and more and more people migrate to a government option. At some point, health care providers will become employees of government and the destruction of our economy and health care system will be complete.  This will lead to rationing of services and delays in testing/treatment.
Beyond the impact on care will be the impact on the relationship between health care workers and government officials. I predict that as this huge segment of the economy transforms to a government run entity, there will be a rise of health care service unions modeled after teacher’s unions.  With such an enormous part of our economy dependent on the Federal Government for their livelihood and with a corruptible health care worker service union, we will see the funneling of public dollars going for those candidates that promise the most benefits to health care workers.  This is likely to become the greatest source of corruption this country has ever known.
Further, there will be a spillover effect for all service employee unions and ultimately all unions.  The union movement will be strengthened overall and, as a result, taxpayers and consumers will likely suffer.

The Economy

Mr. Obama prevented another Great Depression. The economy was cratering when he took office in January 2009. By that June it was growing, and it has been ever since (although at a rate that disappoints).  If President Obama is able to implement his economic agenda by hiring more teachers, firefighters, police officers, it is likely that there will be some short term burst to the economy as those workers spend their dollars.  However, it is likely that small businesses and entrepreneurs, that have generally formed the backbone of classic economic recovery will continue to be under-represented in the recovery.  Because of this, we will get reduction in jobless claims but a lower overall economic growth that is likely to stay below 3%.
The president will continue to push infrastructure projects that will again provide economic impact in those local areas of the country where the infrastructure occurs.  However, there is significant risk that these projects will be done inefficiently and with an eye toward making the participating construction companies more dependent on government officials for their livelihood.  Again, this direct funding by the public sector to these private sector companies means that there will be enormous risk of graft and corruption.  It has the potential of furthering an incestuous relationship between the companies that are recipients of the contracts and the elected officials who direct the funding.  When this happens, “public” officials become even more insulated from the electorate.  Power corrupts and absolute power corrupts absolutely. 


The Federal Debt


Currently we are over $16 Trillion in debt at the federal level.  It is predictable that by the end of this year, we will break through the $17 Trillion barrier.  Of all the risks of this election, this one is the most predictable and has the potential to wreak havoc in ways that are both significant and devastating.  Here the risk is multifold.  The interest on the debt is non-negotiable and represents billions of dollars that is essentially unavailable for spending on anything else.  If interest rates rise, the bite of this would squeeze other programs in ways that limit our options.
The President’s plan is to propose spending cuts with a caveat that for every $2.50 in cuts, there will be a $1.00 increase in taxes.  If this pathway is achieved, then we may see some modest attenuation of the federal debt.  However, one must ask, “At what cost”.  Every dollar that is taken out of the private sector that is used to pay down the debt is a dollar that is unavailable to create economic growth.  One of the proposals that the President makes is to treat Capital gains taxes like ordinary income.  This would raise the effective rate of those taxes from 15% to something around or north of 30%.  What this would do is to create a powerful drag on investments and make the ROI analysis riskier.  This would have a detrimental effect on capital formation and would seriously hamper potential growth from small businesses and entrepreneurs.  So here again, we see small businesses and entrepreneurs impacted leading to less participation in the economy than in previous recoveries.
The other scenario is to inflate our way out of debt.  I predict that this maybe the more likely scenario as budget compromise may prove challenging with the continued divide of Congress.  By purposely generating dollars through the fed, it ultimately would lead to inflation.  This inflation from a federal debt perspective would be good as it would shrink the size of the debt relative to the economy.  However, again one must ask “At what cost”. 
Inflation is a terrible beast that consumes and devastates all, but particularly those on fixed incomes.  In addition it stifles investors because why would I want to lend money to anyone when my future earnings are being paid back in dollars that are worth less?
Make no mistake, because of this election, we will pay for this debt either with an economy that is slower growing than it otherwise would be or through inflation that would be incredibly destructive (or both).

Foreign Affairs

Mr. Obama and his administration have been resolute in attacking Al Qaeda’s leadership, including the killing of Osama bin Laden. He has ended the war in Iraq.
I believe that we have yet to fully realize the consequences of the administrations policies.  The Benghazi attack and attendant follow up reveals a deeply flawed internal communication structure, but worse calls into question the integrity of what is being revealed to the American people.  The current approach toward the middle east and the rest of the world will put our nation at risk in ways that we can not imagine at the present time.  The proposed cuts to the military also puts our national security at risk.
There will be significant risk of an attack on this country that could make 9/11 small by comparison.


The Supreme Court

The future of the nation’s highest court hung in the balance in this election.  The President will make at least one appointment to the bench, possibly two.  These appointments could institutionalize several key trends in this country.  There will be key cases that will run the full spectrum of social issues.  Our society will accelerate its drive toward non-traditional lifestyles.
Perhaps the biggest threat will come in the form of stifling free speech.  Free speech is at risk of being reduced through decisions that will impact how much money can be spent in elections.  This will limit our citizens from being able to hear all sides of an issue, not just the popular side.
Another risk will be that in the name of protecting groups from “hate speech”, the justices will likely codify and sanction attacks on most if not all institutions that espouse traditional values.  The attacks on organizations such as the Boy Scouts will likely extend and expand until anyone who espouses traditional values will be ostracized as “hate-mongering”.

Civil Rights

There is a significant risk that under the guise of extending civil rights, there will be an accelerated drive toward an amoral society.  An “anything goes” mentality and the self indulgent will triumph over the self-less.  We will be at risk of having government take a bigger and bigger role in defining acceptable behavior.  Further, our non-government institutions will either wither away and starve due to lack of funding or support or they will be fully co-opted by the government.
By 2016, we will be well on our way to a society in which the federal government will be more dominant, more of our citizens will be at the mercy of that government for their livelihood and we will be less a society in which an individual can truly succeed without the assistance of someone in the government.  This creates an environment in which corruption becomes likely and a despot become possible.  

A Dark Future?

Perhaps.  I do not say that all of these things will happen, only that we are at risk that they will happen.  Will we survive?  I suppose we will, but this country will likely be a very different one than the one I grew up in, more like France or Argentina and less like the land of opportunity we have known.  There is a significant risk to the “American Dream”.  Like Castro’s Cuba, where paradise is just around the corner and that paradise would be realized except for those terrible Americans who are holding back the people, your government will preside over a deteriorating US Economy while your Democratic leadership will tell you that prosperity is just around the corner if we can just get rid of those bigoted, racist, miserly and stupid Republicans.  If you want a preview of that, look no further than the one party rule of Washington, DC or California.
I usually end this by offering the hopeful “Let Freedom Ring”, but I am afraid that bell may have been rung for the last time, so I will simply signoff with….