Power And Dollar

Obamacare Makes Labor Market More Favorable To Small Businesses

 

Republicans champion capitalism, especially “the pursuit of happiness”.  For that, Republicans consider businessmen to be their safe constituents.  Is enabling small businesses to compete more effectively against the mega corporations something Republican look forward to?  Interestingly enough, Democrats are doing that this time instead of Republicans.  And that is through this Obamacare.

Extending health care to all is the idea of Obamacare.  Having this barrier to health care obviously gives an edge to someone.  In terms of politics (or policy), the question is always about who gets the advantage (or the disadvantage).  Prior the Obamacare days, the advantage is to the employers who can afford the administrative cost of providing a health care insurance to its employees, thus giving them an overwhelming advantage in recruiting and retaining the human resources they need.  This disadvantage suffocates small businesses and self employed.  Ultimately, innovation is sacrificed. 

Plenty of employees make employment decisions based on the health care package.  Many people give up their business dreams and stay as an employee because of the fear of not having health care for their families.  Almost everyone will be covered when Obamacare becomes effective.  Yes, the operating cost is higher for small business owners, however, this increase cost will draw the small business owners much closer to the advantage enjoyed by the mega corporations than if they acquire the health package alone.  In fact, only 38% offer health insurance to employees among the small business owners in 2009 versus 61% in 1993 (read here). 

If America’s small business owners’ talents for success are not willing to move to them and continue to stay in General Motors, ATT and like, then where is the next Google?

March 23, 2010 Posted by | activism, advocacy, america politics, Current Events, 美國, Democrats, economics, Election 2010, health care reform, nonprofits, obama, opinion, politics, Thoughts, US politics, wordpress-political-blogs | 1 Comment

Are These Obama Health Insurance Stocks’ Price Level Sustainable?

Shortly after Obama’s health care reform announcement on 2010.02.22 M, the health care industry stocks started to fall.  Even at closing, google still shows they are down.  However, health care insurance sector, such as Cigna (NYSE: CI http://www.cigna.com) and Aetna (NYSE: AET http://www.aetna.com), recovered very quickly and in factor closes better than yesterday 2010.02.19 F.  Who got the short straw in this latest round of Obamacare drama?  Why?  Didn’t Obama say job is his number one priority in the State of the Union?  Is this some kind of ideological fixation he has? 

If you need more information than CNN gives, then try this summary page.

The google health care index is down because the drug companies’, such as Merck (NYSE:MRK http://http://www.merck.com) and Johnson & Johnson (NYSE:JNJ http://www.jnj.com), stocks are falling.  Obama’s donut-hole fix will affect these drug companies’ financial performance.  On top of that, a lot of their patents are expiring. 

Health insurance companies are doing well because this round of reform is perceived to be creating demand for them.  Anti-discrimination is written in the announcement.  However, it is to “prohibit pre-existing condition exclusions, and prohibit discrimination in favor of highly compensated individuals” (the CNN does not say this.  You have to look it up from the summary link above).  In terms of “pre-existing condition”, that can translate to underwriting, i.e. if an applicant has to be accepted or not.  What it does not say is this: can the pricing of the same product be different to different individuals based on pre-existing condition?  Or based on zip code?  Based on county?  Based on race?  Which health condition is race related have you heard of lately?  Some explanation about “discrimination in favor of highly compensated individuals” is obviously needed. 

Obama knows health care reform did not work in the legislature.  He more likely than not knows his magic does not work on the Republican senators.  Does he believe his proposal will get some moderate Republicans?  If he wants to work getting moderate Republicans, then he would be work on them individually behind closed door.  And we will end up seeing a big announcement with some of these congressmen.  Instead, we see Obama’s proposal.  So, this is HIS proposal.  The other guys are missing.  So, he is making a political move to show to the electorate he has done his homework and tries to paint that the other guys are the real road blocks. 

Yes, they are.  And we have known it for a quite while.  And in fact, they have been encouraged by the voters to be road blocks.  Therefore, Obama better have planned a second move after Republicans’ predicted uncooperative stand.  If you truly believe that the Republican road blocks will not make Obama’s proposal work, then you should ask if these price levels sustain.

February 22, 2010 Posted by | Current Events, Election 2010, health care reform, obama, politics, US politics, wordpress-political-blogs | 1 Comment

Will Haiti Lead 2010 Legislation Agenda: Immigration?

 

One week after Haiti earthquake, CNN finally talks about Haiti refugees, not that there is any yet.  Washington Post started this thread on the 5th after the earthquake.  Obama spoke of “unwavering support” to Haiti exactly because of the cost of refugee management.  Will Haiti refugee make the border security or immigration issue any easier? 

One certain outcome is that support to Haiti will be proportionally to the risk of refugee exodus from Haiti.  Will this be pushed into a fiscal policy management issue instead during the 2010 mid term election?

January 19, 2010 Posted by | Barack Obama, Current Events, Election 2010, obama, opinion, politics, US politics, wordpress-political-blogs | Leave a comment

Obama’s Another Banking Show

Taxing on banks is politically convenient since people are angry against the financial crisis.  Thus, it is a populist solution.  Furthermore, a mid-term election is coming up where the incumbent party is expecting to lose seats.  What is interesting about this item is: who will (and will not) get taxed among these banks?  What other options does government actually have to achieve the stated goals?

Community banks will get excluded.  Community bankers are still very influential in the local communities, i.e. they affect a lot of voting behavior in the congressional districts.  The key about this where is the cut-off point for community banks or non-community banks?  There are more than 8,000 banks in the country.  Of those, the top 3 banks take up about one third of the assets, more than $3T altogether.  About 100 banks are over $10B in asset.  If $10B is the cut-off, then we have 100 banks for this tax.  But is it $10B or $1B for a bank to be considered a community bank?  How much room is there?

The government says it wants to not affect consumers and investors.  That is rhetoric.  We all know it will get passed on to consumers AND investors.  It’s just who gets more of it. 

If eliminating fat cat is the goal, are there options?  There are always options.  The only question is: what kind of trade-offs are there?  A company is able to pay huge sum to executives (still employees) is that there are so few companies occupying the market space that investor have no choice but to part the profit to these critical employees.  Making the profit margin among these companies thinner by taxing is only one way to minimize the profit.  The more market oriented approach is to introduce more competitors in the market, for instance,

1)      Enable smaller banks to eat into the market share of the big markets;

2)      Disable banks from entering too many different markets, such as the old law that says a retail/mortgage bank cannot enter investment banking;

3)      Banks cannot perform house trade with depositors’ money.

Are these above new and bright ideas?  No.  These are all recycled ideas America has already tried and ditched or tried in other industries.  The first one is congruent to the anti-trust law.  The second one is Glass-Steagall Act.  The third one is from insurance industry and pension industry.  Obama can achieve the goal without being overly creative.  This creation simply tells us he is on another political show.

January 11, 2010 Posted by | america politics, banking, Barack Obama, 美國, Election 2010, legislation, obama, opinion, politics, Regulation, wordpress-political-blogs | 2 Comments

Obama’s Public Administration Philosophy

No polling result is available to serve as a reaction gauge to Obama’s Afghanistan deployment speech.  Obama was an anti war candidate.  Now he is making a deployment decision.  Is he contradicting himself?  What is he after?  What does it mean to us?

He is after his re-election, as every politician is.  Having said that, what also went on in his mind must have been the 2010 mid-term election, although he knew (and everyone else knew) that Democrats will lose seats in that election since all president lose seats in the first term’s mid-term elections. 

War is expensive.  Unemployment is still high.  He acknowledges with Eisenhower’s quote very well that “Each proposal must be weighed in the light of a broader consideration: the need to maintain balance in and among national programs.”  After all, war is still a budget item. 

He is not appeasing his own base.  That is for sure.  Is he reaching middle ground?  Considering a much greater proportion of rural area voters have military ties, having a higher expense on military could be Obama’s way to secure a wider base.  But at the expense of sending more people to battle field?

Obama’s speech stresses on one point to justify his approach to this war: the primary nation of nation-building exercise is his own nation.  Will the rural electorate see this as a venue to reward Obama’s core constituency, the urbanites?  Of course, this will be dictated by what Obama will do with the resources or energy freed up by this management approach.

This Eisenhoweran philosophy is simply a reflection of budget constraint.  This is consistent with Nancy Pelosi approach to this portfolio item: war tax.  If you want it, then pay for it.  If you do not want to pay for it, then you probably don’t think it is worth it.  Will the war tax actually fly?  Hard to say.  However, if this Eisenhoweran approach to military conflict will be applied consistently over time and therefore will establish a new foreign policy doctrine, then this war tax idea will eventually take roots.  That will establish another kind of precedence: purpose dedicated tax.  Not that purpose dedicated tax is completely new since social security is funded by a dedicated tax as well.  However, this war tax will definitely take this idea to the next level. 

This is what affects us the most.  America is facing a fiscal crisis and will continue to face a fiscal crisis for decades to come even after paying down the costs incurred by the Bush’s Iraq war, Bush’s Afghanistan war and now Obama’s Afghanistan war, because of the expecting expenses for baby boomers.  Due to this budget constraint, conflicts different interests group will compete harder for this federal budget.  Purpose dedicated tax will then be the weapon for different groups to secure their own funding, especially for new issues, such as green issues. 

If Obama will be employing Eisenhower approach and Pelosi will be playing her cards, they will create a new policy management philosophy that will last long beyond their political accomplishments.

December 3, 2009 Posted by | activism, advocacy, Afghanistan, america politics, Current Events, Election 2010, opinion, politics, US politics, wordpress-political-blogs | Leave a comment

Why Can’t America Happy Talk With Pakistan And Save 2010 Election?

Did anyone foresee that US-India relationship has an impact in 2010 election?  Or that it may cost $20B annually?  US Secretary of State Clinton is visiting Pakistan for three days to have a frank and open discussion and is in no time to have a “happy talk”.  Pakistan is the most important ally to US in the anti-terrorism war.  Therefore, US should be happy to have such an important ally and Pakistan should happy to see it is an important ally to the most powerful country on earth.  What made this strong Pakistan-US relationship to the point where there is no time for happy talk?  What sours the relationship?  Is US able to fix it?  Is US going to find a new friend?

The sore point is about the future of Afghanistan.  US want to remove terrorist heaven in the area and be done with it.  The core interest of Pakistan is its relations with India.  The US’ version of the Afghanistan future is not advancing Pakistan’s interests with India. 

Pakistan, relative to India, has no strategic depth.  Of all its fronts, Afghanistan is the only front where Pakistan can develop, cultivate and incorporate as Pakistan’s back.  That was why Pakistan would have supported US’ interests in Afghanistan during the Soviet Union’s Afghanistan invasion and created resistance forces where Pashtuns, Pakistanis cousins, had the controlling stakes.  If US’ version of Afghanistan is to dilute the influence of Pashtuns, open Afghanistan to more international players (say India) or US itself develops a stronger ties with India and marginalizes Pakistan as a result, then this ally relationship may not be simply a bargaining chip for Pakistan, but actually may become contrary to the self interest of Pakistan. 

US have developed an undisputable interest with India in the eyes of Pakistan.  Both India and Pakistan have nuclear weapons (not just capability, unlike Israel).  However, US scold Pakistan and promise to assist India to develop civilian nuclear abilities (Hyde Act).  Of course, US see India as a counter weight to China.  However, in doing so, US are compromising its anti-terrorism objective by alienating Pakistan. 

If India serving as a counter weight to China is more important than losing Pakistan, then can US find a replacement ally in the area to fight terrorism?  Ironically, the only player adjacent to Afghanistan available in the area is China.  All other countries are either unavailable (Is Iran available?  At what price?) or they have their own problems to deal with, say Turkmenistan, Tajikstan, Uzbekistan.  Do these countries listen more to Russia or China since they love their Shanghai Organization so much?  Do US want to invite China to extend its influence to Afghanistan?  Or have US ever invited China to play in Afghanistan?  Can US impose this arrangement to Pakistan, i.e. can US tell Pakistan to fight a war and strengthen Pakistan’s nemesis at the same time?  Worse, what if this arrangement actually is eroding the supporting base of the Pakistan governing elite?

More likely than not, Clinton’s trip means this relationship management has gone beyond the authorities of Special Representative for Afghanistan and Pakistan Richard Holbrooke.  If this frank and open discussion is meant to be a give and take negotiation, then we can wait and see if a resolution will come.  If this frank and open discussion is meant for Pakistan to rant and move on to live with this arrangement, then this military campaign in Afghanistan will drag on as other NATO allies plan to return home.  If Clinton’s trip is meant to facilitate Obama’s final decision on Afghanistan’s troop level, then considering its fiscal policy consequences and electoral consequences in 2010 and possibly 2012, Clinton is actually carrying one heavy responsibility.

October 30, 2009 Posted by | Afghanistan, Current Events, election, Election 2010, Hillary Clinton, India, politics, wordpress-political-blogs | 1 Comment