In the 1980s, opponents to President Reagan’s policy of cutting taxes to stimulate economic growth coined the term “trickle down” economics. His policies were also popularly known as “voodoo” economics. Reagan’s belief in tax cuts was ultimately justified as the US economy began a long period of strong economic growth.
Today we are seeing a trickle down of a different sort. Our current economic crisis began with a banking crisis last fall. Bad mortgages led to a rise in foreclosures. As these bad loans metastasized like a cancer throughout our financial system, banks were unable to borrow or lend and the economy was in danger of grinding to a halt.
Several prominent banks failed or were forced to merge to avoid failure. Thousands of Wall St. financial workers lost their jobs. At this point, many Americans believed that the crisis was a Wall St. crisis that did not affect them.
Over the next few months, this belief was shattered as the economic pain trickled down. At the same time that the credit markets froze, the stock market crashed. Companies could not find financing to expand and, in many cases, could not even make their payroll. 401(k), pension trust funds, and other retirement accounts were halved in value.
As demand for goods and services plunged, companies began to lay off workers. A friend who is an architect was one of the first victims after it became difficult to fund construction projects. Almost a year later, he still out of work. As layoffs increased, there were more foreclosures and demand dropped further.
My own industry provides a good example of the economic carnage of the past year. I work in the fractional aviation industry. My company sells shares of private jets to individuals and companies who need to fly, but don’t want the hassle and expense of owning their own airplane. We manage the airplane and provide crews for the owners. All the owners have to is let the company know when and where they want to fly… and make sure they pay their ownership fees. Before last fall, this was a thriving and quickly growing business.
After the onset of the crisis, paying the fees became a problem for many owners. Many had lost their shirts in the calamity and could no longer afford even part of an airplane. Owners began selling back their shares. Prospective owners, worried about the state of the nation and the markets, elected not to buy into an airplane. To top it off, government officials began demonizing corporate aircraft as a waste of investor’s money. Suddenly, we had too many airplanes and not enough flying to do.
Not surprisingly, my company decided that it had to lay off employees. As the economic situation continued to deteriorate, approximately one quarter of the company’s pilots were laid off, furloughed in aviation parlance, along with a large number of office employees. The most recent furlough was announced last week. Older airplanes were grounded and deliveries of new airplanes were canceled or deferred to a later date.
Similarly, other general aviation companies were also ravaged. Cessna, a manufacturer of private jets, shut down many production lines and laid off over 8,000 workers, over half of the company. FBOs, private aircraft terminals, also went out of business, or laid-off employees. Charter companies that depended on companies like mine for much of their business folded or downsized. Startup companies like small jet manufacturer, Eclipse, and air-taxi operator, Day Jet, went completely out of business. The aircraft market, both new and used, collapsed.
As employees of these and other companies lost their jobs or portions of their income, other businesses and workers were affected. They weren’t able to buy cars, leading GM and Chrysler into bankruptcy. When they couldn’t pay their mortgages any longer, more banks failed. Their lack of disposable income meant that other businesses, from restaurants to boutiques, had to lay off employees or close their doors entirely.
As the economic situation spiraled out of control, the government passed a stimulus bill. Four months later, the unemployment rate has continued to rise and will continue to rise even further in coming months as more workers, my friends among them, lose their jobs. In fact, many believe that the real unemployment rate is much higher than the official 9.5% because many unemployed workers have dropped off the rolls after not finding a job even after their unemployment insurance runs out. If many companies had not cut pay and hours, many other workers would be totally out of a job.
So trickle down economic theory has worked several times in recent years. Under Presidents Reagan and George W. Bush we saw examples of positive trickle down in which wealthy people and businesses had more money. They used this money to invest in other businesses and buy things. This created more jobs and wealth for the middle and lower classes.
Under President Obama, we are witnessing a negative example of trickle down. The wealthy and businesses have lost millions of dollars in a matter of months. They are frightened of the future and, in any case, have little money left to spend. Consequently, lower and middle-income workers are suffering.
If we can acknowledge the reality of trickle down, then we can make appropriate choices that will enable good things, rather than bad, to trickle down in the future. The option that Presidents Reagan and Bush chose was to put more money in the hands of the American people. They cut taxes. With the government withholding less of each worker’s pay in taxes, they had more money to spend. As businesses paid less money in taxes, they had more money to grow and hire new workers. In both cases, the economy grew, jobs were created, and the government collected more money in spite of taxing at a lower rate. Presidents Harding, Coolidge, and Kennedy also successfully used this strategy.
In contrast, the Obama Administration is taking the opposite tack. President Obama had said last January that without the stimulus bill unemployment could exceed 10%. In reality, the stimulus bill passed shortly after Obama took office, but unemployment is still at 9.5% percent (citation). Much of the stimulus money has not been dispersed. Much of the money that has been spent has been wasted on pork barrel projects. Even worse, the American public has become alarmed at the ballooning deficit.
People realize that the Obama spending spree has a hefty price tag. The money to pay for all of this spending has to come from somewhere. It is widely expected that taxes will be increased on 100% of Americans to pay the bills. In recent weeks, members of Congress have been discussing the possibility of a national value-added tax, which is similar to a national sales tax. The administration is also proposing a national health plan and a cap-and-trade energy tax. Both of these plans would add new taxes that would ultimately be borne by American consumers.
As taxes rise to pay for the increased government spending, consumers find themselves with less money to spend. Businesses find themselves with less capital with which to expand, hire new workers, pay shareholders, and develop new products. As a result, the economy inevitably contracts and more people lose their jobs.
To turn the economy around, we need to put more money in the hands of the private sector. Tax cuts for everyone is the easiest way to do that. If workers and businesses have more money, they will spend and invest more. Banks will, in turn, have more money to loan and credit will become easier to get. Demand for cars and other consumer items will increase and companies will need more workers.
To put it in real terms, if tax cuts for the wealthy enable them to buy an airplane share from my company, then that will put people back to work throughout the economy. Pilots and office staff will need to be recalled to meet the increased demand for flights. Aircraft manufacturers like Cessna will need to reopen production lines to build more airplanes. FBOs around the country will need to hire more workers to service the increased numbers of airplanes flying in. And that is just the immediate impact.
Beyond the aviation industry, the affect would be felt throughout the nation. Newly recalled or rehired workers would need new houses and cars. They would need work clothes and food. They would have more money to spend on entertainment. And their increased income would mean that they would pay more income taxes and sales taxes, helping all levels of government. People would also have more money to donate to charity.
The future depends on President Obama and Democratic majorities in Congress since the Republicans are not able to introduce and pass legislation. Neither do they have the votes to stop the spending and taxes without help from Democratic defectors.
Sources:
http://www.aopa.org/aircraft/articles/2009/090615cess.htm
http://www.heritage.org/Research/Taxes/BG1086.cfm
http://www.heritage.org/Research/Taxes/BG1443.cfm
http://www.politico.com/news/stories/0109/17208.html
http://www.bloomberg.com/apps/news?pid=20601103&sid=ahfK709b4uds
Newark NJ
Monday, July 20, 2009
Thursday, July 16, 2009
Obama Makes History
President Obama made history yesterday. On July 13, 2009, President Barack H. Obama became the first president of the United States to preside over a federal budget deficit of $1 trillion.
According to the Treasury Department, the deficit for the current fiscal year, which started in October 2008, reached a total of $1.09 trillion by the end of June (citation). The rising deficit was due to both increased government spending, such as this year’s stimulus package, as well as falling tax revenues due to business difficulties and rising unemployment.
According to the Obama Administration’s own projections, the deficit will continue to rise. The administration’s forecast is that the deficit will reach $1.84 trillion by the time the fiscal year ends in October. The passage of additional costly programs, such as national health care plan or a second stimulus plan, would drive the deficit even higher.
The federal debt is now equal to 80% of the US gross domestic product (GDP), the annual output of the US economy. Federal debt levels have not been this high since WWII when they reached 120% of GDP as we fought for survival against Japan and Nazi Germany.
Disturbingly, Obama has not revealed any plans for actually repaying the borrowed money that he is spending. His projections show the federal government running trillion dollar deficits well after he leaves office and into the next decade.
Many analysts believe that there are only two possible ways to repay such staggering deficits. One way is to raise taxes. The problem is that the debt is so mind-blowingly large that to raise taxes enough to pay it would cripple the economy.
A second possible course of action is to devalue the dollar. If the government simply prints more money, it will have the money to pay the debt but, at the same time, the money (and the debt) will be worth less in real terms. This will lead to inflation, in which everyone’s money is worth less and won’t buy as much. This also leads to economic problems such as the stagnant growth and high unemployment seen in the 1970s.
A third course of action is that Obama may not believe that action on the deficit is necessary at all. His economic plan hinges on the belief that government spending will produce economic growth. This view has not been supported by reality since unemployment has risen to almost 10% since the passage of the stimulus bill.
Criticism of past government relief plans such as FDR’s New Deal and the Japanese recovery attempts of the 1990s has been that the governments involved did not keep spending long enough. This theory holds that the government should keep spending to maintain the (illusion of) economic recovery. There seems to be no consensus on when, or if, the government can phase out its spending programs.
If Obama holds this view, it is likely that he will make no serious effort to reduce spending. In this case, the government is likely to keep running deficits that are greater and greater until investors who buy US government debt and securities become concerned enough with the risk of their investment to put their money elsewhere.
If countries such as China stop buying our debt, the US might find itself insolvent overnight in much the same way that banks such as Bear Stearns found themselves bankrupt last year. For the United States, however, there will be no bailout package.
Sources:
http://www.courier-journal.com/article/20090713/BUSINESS/907130328/0/ZONE10/Budget-deficit-tops--1-trillion-for-first-time
Orlando FL
According to the Treasury Department, the deficit for the current fiscal year, which started in October 2008, reached a total of $1.09 trillion by the end of June (citation). The rising deficit was due to both increased government spending, such as this year’s stimulus package, as well as falling tax revenues due to business difficulties and rising unemployment.
According to the Obama Administration’s own projections, the deficit will continue to rise. The administration’s forecast is that the deficit will reach $1.84 trillion by the time the fiscal year ends in October. The passage of additional costly programs, such as national health care plan or a second stimulus plan, would drive the deficit even higher.
The federal debt is now equal to 80% of the US gross domestic product (GDP), the annual output of the US economy. Federal debt levels have not been this high since WWII when they reached 120% of GDP as we fought for survival against Japan and Nazi Germany.
Disturbingly, Obama has not revealed any plans for actually repaying the borrowed money that he is spending. His projections show the federal government running trillion dollar deficits well after he leaves office and into the next decade.
Many analysts believe that there are only two possible ways to repay such staggering deficits. One way is to raise taxes. The problem is that the debt is so mind-blowingly large that to raise taxes enough to pay it would cripple the economy.
A second possible course of action is to devalue the dollar. If the government simply prints more money, it will have the money to pay the debt but, at the same time, the money (and the debt) will be worth less in real terms. This will lead to inflation, in which everyone’s money is worth less and won’t buy as much. This also leads to economic problems such as the stagnant growth and high unemployment seen in the 1970s.
A third course of action is that Obama may not believe that action on the deficit is necessary at all. His economic plan hinges on the belief that government spending will produce economic growth. This view has not been supported by reality since unemployment has risen to almost 10% since the passage of the stimulus bill.
Criticism of past government relief plans such as FDR’s New Deal and the Japanese recovery attempts of the 1990s has been that the governments involved did not keep spending long enough. This theory holds that the government should keep spending to maintain the (illusion of) economic recovery. There seems to be no consensus on when, or if, the government can phase out its spending programs.
If Obama holds this view, it is likely that he will make no serious effort to reduce spending. In this case, the government is likely to keep running deficits that are greater and greater until investors who buy US government debt and securities become concerned enough with the risk of their investment to put their money elsewhere.
If countries such as China stop buying our debt, the US might find itself insolvent overnight in much the same way that banks such as Bear Stearns found themselves bankrupt last year. For the United States, however, there will be no bailout package.
Sources:
http://www.courier-journal.com/article/20090713/BUSINESS/907130328/0/ZONE10/Budget-deficit-tops--1-trillion-for-first-time
Orlando FL
Friday, July 10, 2009
What's Ailin' Palin?
When Sarah Palin announced recently that she would resign as Alaska’s governor and leave office a year early, it was probably one of the only things that could have could have bumped Michael Jackson’s death from the headlines, even if only for a moment.
When Governor Palin became John McCain’s surprise pick as a vice presidential nominee last fall, she became the talk of the nation. She electrified conservative audiences with her homespun humor and charismatic speeches. She became the woman that the liberals loved to hate. Her record as a reform governor, her refusal to abort her son, Trig, born with Down Syndrome, and her call to “Drill, Baby, Drill” at a time of record-high oil prices made her a lightning rod for liberal attacks.
To be fair, Palin made her share of gaffes on the campaign trail. In a moment made famous by Tina Fey of Saturday Night Live, Palin claimed that her governorship gave her foreign policy experience since Alaska was so close to Russia. The line turned into “I can see Russia from my house” in a Tina Fey skit, although Palin never actually said those words. Palin faced extremely tough scrutiny and criticism from the media during the campaign.
In contrast, Barack Obama, who also had no foreign policy experience and less executive experience than Palin was given a pass on the many gaffes that he made during the campaign. Referring to babies as punishment for sexual mistakes and the claim that he had visited fifty-seven states “with one to go” were two of his best-known bloopers, but these were largely ignored by the mainstream media. Obama was covered in such little depth, that by the time he was elected, very few people had any idea who he really was or what he stood for other than “change.”
The attacks on Palin soon crossed the line from policy differences to vicious personal attacks. Soon after her introduction to the country, liberal bloggers at the Daily Kos started rumors that Palin’s young son, Trig, was actually her grandson by her daughter, Bristol. In spite of the fact that the rumor was pure speculation, it was covered in the mainstream media as well.
When Bristol Palin was revealed to be pregnant a few weeks later, it should have disproved the internet rumor, but Sarah Palin faced even more criticism and attacks. She was alleged to be a hypocrite and an unfit mother since Bristol was not married.
On the heels of Bristol’s pregnancy came a new scandal. Hackers broke into Palin’s personal Yahoo email account. Her personal email correspondence was then posted on the internet. David Kernell, was arrested and indicted in the crime, which was minimized by the media.
Even long after the campaign was over, Palin and her family still faced attacks. In June 2009, David Letterman joked about Palin’s daughters having sex with former New York Governor Eliot Spitzer and Yankee Alex “A-Rod” Rodriguez. Letterman later apologized for the joke.
Any of these attacks would make most people have second thoughts a life in the public eye. But Palin’s problems were not limited to media attacks on her family. A former state trooper made allegations that Palin improperly dismissed the state Public Service Commissioner because he would not fire a state trooper who divorced Palin’s sister. A month later, Palin was cleared of wrongdoing by the Alaska Personnel Board. This announcement was made the day before the presidential election after the damage to the campaign had already been done.
The ethics problems did not stop there. There have been at least thirteen separate ethics inquiries against Governor Palin. Each complaint has been resolved with no finding of a violation of state ethics law. If Palin had been found to have violated the law, it is safe to assume that we would all know about it as we did during the campaign when the first inquiry was damaging for her.
There are three likely possibilities as to why Governor Palin is resigning. Many people assume that she is leaving office to work on plans for a presidential campaign in 2012, but I think that this is unlikely. If Palin were truly interested in a presidential campaign, she would still have plenty of time if he had fulfilled her full term of office.
Additionally, Palin has consistently joined Mitt Romney and Mike Huckabee as leading contenders for the 2012 nomination. She must realize that a resignation will most likely hurt her chances since many people would perceive her as a quitter. A recent poll indicates that 40% of Republican voters believe resigning will her chances in a presidential run. For a candidate who is already portrayed as an intellectual lightweight by a hostile media, resigning doesn’t seem to be a smart strategy.
It seems far more likely that Palin will either retire from public life entirely or cash in on her fame. After the ordeal that Governor Palin and her family have endured in the past year, no one could really blame her if she decided to withdraw from the spotlight and return to a life of hunting, fishing, and family (of course that isn’t the same as saying that no one would blame her). Her claims that the relentless attacks against her have hurt the state of Alaska make sense in light of the millions of dollars that it costs to investigate each allegation.
In my mind, the most likely scenario is that she will use her newfound free time to enter the private sector. It has been reported that Palin owes legal fees of more than $500,000 from defending the accusations against her (citation). It is likely that she can make millions of dollars from a book. It is also possible that she could host a television show like former candidate, Mike Huckabee. A third possibility is that she might take a position with a conservative organization or think tank. She might even start her own advocacy group for issues that are important to her. Any combination of these is possible.
Entering the private sector would also have the advantage of keeping Palin in the public eye. She could continue to build her image and fight the stereotypes that the media has been creating about her. If she believes that she is well placed to start a presidential nomination, then she will still have that option.
Whatever Governor Palin’s thinking, it does seem that she has made her political future more difficult, if not impossible. It may not be an insurmountable obstacle, but at least for the moment, she is damaged in the eyes of many potential voters.
Sources:
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/09/24/politics/p122617D24.DTL
http://townhall.com/columnists/JohnHawkins/2008/09/19/barack_obamas_top_ten_campaign_gaffes
http://www.zimbio.com/Bristol+Palin/articles/2/Rumors+Sarah+Palin+Fifth+Child+Abound+Internet
http://www.nydailynews.com/news/politics/republican_race/2008/09/01/2008-09-01_bristol_palins_pregnancy_was_an_open_sec.html
http://www.foxnews.com/wires/2008Sep17/0,4670,PalinHacked,00.html
http://www.talkentertainment.com/TalkBack.aspx?art=11460
http://abcnews.go.com/Blotter/story?id=6004368&page=1
http://cnnwire.blogs.cnn.com/2008/11/03/2nd-probe-clears-palin-in-trooper-case/
http://www.adn.com/palin/story/855907.html
http://www.adn.com/palin/story/810569.html
http://www.rasmussenreports.com/public_content/politics/elections2/election_2012/40_of_gop_voters_say_resignation_hurts_palin_s_chances_in_2012
http://news.yahoo.com/s/ap/20090710/ap_on_re_us/us_palin_resignation
Villa Rica GA
July 10, 2009
When Governor Palin became John McCain’s surprise pick as a vice presidential nominee last fall, she became the talk of the nation. She electrified conservative audiences with her homespun humor and charismatic speeches. She became the woman that the liberals loved to hate. Her record as a reform governor, her refusal to abort her son, Trig, born with Down Syndrome, and her call to “Drill, Baby, Drill” at a time of record-high oil prices made her a lightning rod for liberal attacks.
To be fair, Palin made her share of gaffes on the campaign trail. In a moment made famous by Tina Fey of Saturday Night Live, Palin claimed that her governorship gave her foreign policy experience since Alaska was so close to Russia. The line turned into “I can see Russia from my house” in a Tina Fey skit, although Palin never actually said those words. Palin faced extremely tough scrutiny and criticism from the media during the campaign.
In contrast, Barack Obama, who also had no foreign policy experience and less executive experience than Palin was given a pass on the many gaffes that he made during the campaign. Referring to babies as punishment for sexual mistakes and the claim that he had visited fifty-seven states “with one to go” were two of his best-known bloopers, but these were largely ignored by the mainstream media. Obama was covered in such little depth, that by the time he was elected, very few people had any idea who he really was or what he stood for other than “change.”
The attacks on Palin soon crossed the line from policy differences to vicious personal attacks. Soon after her introduction to the country, liberal bloggers at the Daily Kos started rumors that Palin’s young son, Trig, was actually her grandson by her daughter, Bristol. In spite of the fact that the rumor was pure speculation, it was covered in the mainstream media as well.
When Bristol Palin was revealed to be pregnant a few weeks later, it should have disproved the internet rumor, but Sarah Palin faced even more criticism and attacks. She was alleged to be a hypocrite and an unfit mother since Bristol was not married.
On the heels of Bristol’s pregnancy came a new scandal. Hackers broke into Palin’s personal Yahoo email account. Her personal email correspondence was then posted on the internet. David Kernell, was arrested and indicted in the crime, which was minimized by the media.
Even long after the campaign was over, Palin and her family still faced attacks. In June 2009, David Letterman joked about Palin’s daughters having sex with former New York Governor Eliot Spitzer and Yankee Alex “A-Rod” Rodriguez. Letterman later apologized for the joke.
Any of these attacks would make most people have second thoughts a life in the public eye. But Palin’s problems were not limited to media attacks on her family. A former state trooper made allegations that Palin improperly dismissed the state Public Service Commissioner because he would not fire a state trooper who divorced Palin’s sister. A month later, Palin was cleared of wrongdoing by the Alaska Personnel Board. This announcement was made the day before the presidential election after the damage to the campaign had already been done.
The ethics problems did not stop there. There have been at least thirteen separate ethics inquiries against Governor Palin. Each complaint has been resolved with no finding of a violation of state ethics law. If Palin had been found to have violated the law, it is safe to assume that we would all know about it as we did during the campaign when the first inquiry was damaging for her.
There are three likely possibilities as to why Governor Palin is resigning. Many people assume that she is leaving office to work on plans for a presidential campaign in 2012, but I think that this is unlikely. If Palin were truly interested in a presidential campaign, she would still have plenty of time if he had fulfilled her full term of office.
Additionally, Palin has consistently joined Mitt Romney and Mike Huckabee as leading contenders for the 2012 nomination. She must realize that a resignation will most likely hurt her chances since many people would perceive her as a quitter. A recent poll indicates that 40% of Republican voters believe resigning will her chances in a presidential run. For a candidate who is already portrayed as an intellectual lightweight by a hostile media, resigning doesn’t seem to be a smart strategy.
It seems far more likely that Palin will either retire from public life entirely or cash in on her fame. After the ordeal that Governor Palin and her family have endured in the past year, no one could really blame her if she decided to withdraw from the spotlight and return to a life of hunting, fishing, and family (of course that isn’t the same as saying that no one would blame her). Her claims that the relentless attacks against her have hurt the state of Alaska make sense in light of the millions of dollars that it costs to investigate each allegation.
In my mind, the most likely scenario is that she will use her newfound free time to enter the private sector. It has been reported that Palin owes legal fees of more than $500,000 from defending the accusations against her (citation). It is likely that she can make millions of dollars from a book. It is also possible that she could host a television show like former candidate, Mike Huckabee. A third possibility is that she might take a position with a conservative organization or think tank. She might even start her own advocacy group for issues that are important to her. Any combination of these is possible.
Entering the private sector would also have the advantage of keeping Palin in the public eye. She could continue to build her image and fight the stereotypes that the media has been creating about her. If she believes that she is well placed to start a presidential nomination, then she will still have that option.
Whatever Governor Palin’s thinking, it does seem that she has made her political future more difficult, if not impossible. It may not be an insurmountable obstacle, but at least for the moment, she is damaged in the eyes of many potential voters.
Sources:
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/09/24/politics/p122617D24.DTL
http://townhall.com/columnists/JohnHawkins/2008/09/19/barack_obamas_top_ten_campaign_gaffes
http://www.zimbio.com/Bristol+Palin/articles/2/Rumors+Sarah+Palin+Fifth+Child+Abound+Internet
http://www.nydailynews.com/news/politics/republican_race/2008/09/01/2008-09-01_bristol_palins_pregnancy_was_an_open_sec.html
http://www.foxnews.com/wires/2008Sep17/0,4670,PalinHacked,00.html
http://www.talkentertainment.com/TalkBack.aspx?art=11460
http://abcnews.go.com/Blotter/story?id=6004368&page=1
http://cnnwire.blogs.cnn.com/2008/11/03/2nd-probe-clears-palin-in-trooper-case/
http://www.adn.com/palin/story/855907.html
http://www.adn.com/palin/story/810569.html
http://www.rasmussenreports.com/public_content/politics/elections2/election_2012/40_of_gop_voters_say_resignation_hurts_palin_s_chances_in_2012
http://news.yahoo.com/s/ap/20090710/ap_on_re_us/us_palin_resignation
Villa Rica GA
July 10, 2009
Tuesday, July 7, 2009
Preparing for Job Loss
As unemployment in many states climb into double digits, preparing for a possible job loss is on many people’s minds. While a layoff is beyond the control of most people, there are many things that you can do to prepare for the possibility.
An important point is that the earlier you start preparing, the more prepared you will be when and if your layoff comes. Even if you believe that your job is well protected, getting your financial life in order will benefit you, even if you never face a job loss.
The best way to start preparing for financial hardship is to get out of debt. By eliminating your monthly payments, you free your money for other things. Whether your goal is creating a nest egg for an emergency or buying a new house or car, it will be easier to accomplish if you have fewer monthly bills.
Consumer guru Dave Ramsey (www.daveramsey.com) has developed a successful seven-step program to pay off your debts and start building wealth. Unlike many programs, this one costs nothing and is simple to implement. If your layoff is not looming near, this is a great place to start.
If your layoff is imminent, contrary to Dave Ramsey’s advice, my recommendation would be to start stockpiling money. I was laid off (furloughed in airline parlance) in 2005 shortly after I had started taking some of Dave Ramsey’s advice. My debt was reduced to about $1000 when the paychecks stopped coming. At that point, my debt started increasing again because I had little or no money in the bank.
Don’t wait until the last minute to start looking for a new job. A good time to update your resume is before you need it. If you don’t have a resume, start one. You can find simple guides both online (such as http://www.resume-help.org/resume_writing_tips.htm) and in books. If writing your own resume is intimidating, there are many services that will write them for you.
If you believe that you are about to lose your job, start sending out your resumes immediately. Use classified ad sites on the internet and your local newspapers to target your search. Yahoo jobs and monster.com are two popular job search sites. There are also specialty sites for many job fields and geographic areas. Networking with people you know may also lead to possible jobs.
In today’s job market, don’t focus on a job like your old one. Examine your skills and experience and apply for every job for which you qualify. Consider a career change. Even retail or part-time employment can help to pay your remaining bills. Take care that part-time jobs do not conflict with your unemployment payments.
Before you leave your old job, you should also ask your friends and coworkers to provide you with reference letters and referrals. References from your most recent job are more valuable than older ones. An important point to remember is that you should always ask before using anyone as a reference. Make sure that they remember you and have something positive to say about you.
If you are about to be laid off, do not try to maintain your current standard of living. You must immediately set priorities to conserve your cash. Your priorities should be to maintain your home, feed your family, and to find a new job. This means that you should concentrate on paying your mortgage, electricity, heating fuel, and water bills above all else.
Credit cards and unsecured debt are low priority. Failure to pay a credit card will not result in foreclosure, repossession, or loss of electricity or water. The credit card companies can do little more than harass you or cut off your lines of credit, which you shouldn’t be using at this point anyway.
Don’t just abruptly stop making payments though. Talk to your creditors and explain your situation to them. They may be more understanding if you work with them from the beginning. Explain to them that you will pay them back when you are able, but that without a job, you cannot pay.
The Fair Debt Collection Practices Act limits the actions that debt collectors may take. They are not allowed to harass or threaten you. To find out what debt collectors can and cannot do, check with your state consumer protection agency or visit this link:
http://www.federalreserve.gov/boarddocs/supmanual/cch/200601/fairdebt.pdf
Eliminate any payments that are not necessary. Some examples of nonessential spending are cable television, eating out, trendy clothing, and anything that will not help you find a job or contribute to your basic survival. If you have expensive car loans, you may need to consider selling the vehicle and buying an older car that you can pay cash for. This may also allow you to reduce your insurance coverage. You may also be able to reduce your cell phone plan to a more basic service that eliminates texting and other services.
If you have toys, such as boats, motorcycles, or recreational vehicles, consider selling them. You may be able to generate enough money to pay your bills for a few months. If these items are not fully paid for, they should definitely be placed on the market since the loan payments will constitute an unacceptable drain on your cash reserves.
When you do lose your job, do not waste any time in applying for whatever assistance that you can qualify for. This may include unemployment compensation payments, health benefits, food stamps, women-infant-children (WIC) vouchers, and occupational training. Benefits vary by state. Check with your local state offices and apply for everything.
In some cases, you may be required to cash out of your retirement plans and investments before qualifying for assistance. My recommendation is not to do this unless absolutely necessary due to the heavy penalties involved in withdrawing money from 401k or IRA plans. Additionally, if you sell your stocks now, you will probably be selling for far less than the purchase price of your stock. Normally this would result in a tax write-off, but without income the write-off would be worthless. The bottom line is that if you need the money, withdraw it and take the penalty.
Many employees will qualify for COBRA rights under their health care plan. Under COBRA, you can continue your employee health plan for up to 18 months. The problem is that under COBRA, you must pay the entire cost of the plan plus a 2% administrative fee. Since most employers pay a portion of health insurance premiums while you are employed, the total cost of your health insurance will likely be more expensive that what you paid in the past. Through the end of 2009, there is a federal subsidy of 65% of the COBRA premium.
When deciding whether to purchase insurance under COBRA, consider several factors. First, if you have a pre-existing condition, you should probably purchase the COBRA insurance. Pre-existing conditions may make it difficult to obtain individual health plans.
Second, contact local health insurance agents to obtain a quote for health insurance. Don’t try to replicate your employer-paid group plan. Look for a simple major medical plan with a deductible that is as high as you can afford. If you have prescriptions that you must take, do look at the prescription coverage or shop around for a separate prescription discount card.
A final, but not trivial, consideration is maintaining the will to survive. Anticipate the fear and depression that you will face in the coming months. Try to stay positive. Do not try to carry the whole load yourself. Rely on your friends and family. Military survival manuals stress the need to use the buddy system to prevent panic and capitalize on group strength.
The military survival manuals also suggest spiritual avenues toward maintaining your mental strength and will to survive. Pray and remember the times that God has helped you overcome adversity in the past. Seek fellowship in a local church. Attending services, singing, and talking to people can help to boost your morale. Above all, trust God and your family to help see you through the crisis.
Remember that the financial crisis is not permanent, either for the United States or your family. Better times will return. Your most immediate job is to preserve your family and as much as possible of what you have worked for until that day comes.
Sources:
www.daveramsey.com
http://www.insure.com/articles/healthinsurance/cobra.html
http://www.equipped.org/multiservice_ser_manual_1999.pdf
Air Land Sea Application Center, Survival, Evasion, and Recovery, US Government, June 1999, Appendix A
http://www.federalreserve.gov/boarddocs/supmanual/cch/200601/fairdebt.pdf
An important point is that the earlier you start preparing, the more prepared you will be when and if your layoff comes. Even if you believe that your job is well protected, getting your financial life in order will benefit you, even if you never face a job loss.
The best way to start preparing for financial hardship is to get out of debt. By eliminating your monthly payments, you free your money for other things. Whether your goal is creating a nest egg for an emergency or buying a new house or car, it will be easier to accomplish if you have fewer monthly bills.
Consumer guru Dave Ramsey (www.daveramsey.com) has developed a successful seven-step program to pay off your debts and start building wealth. Unlike many programs, this one costs nothing and is simple to implement. If your layoff is not looming near, this is a great place to start.
If your layoff is imminent, contrary to Dave Ramsey’s advice, my recommendation would be to start stockpiling money. I was laid off (furloughed in airline parlance) in 2005 shortly after I had started taking some of Dave Ramsey’s advice. My debt was reduced to about $1000 when the paychecks stopped coming. At that point, my debt started increasing again because I had little or no money in the bank.
Don’t wait until the last minute to start looking for a new job. A good time to update your resume is before you need it. If you don’t have a resume, start one. You can find simple guides both online (such as http://www.resume-help.org/resume_writing_tips.htm) and in books. If writing your own resume is intimidating, there are many services that will write them for you.
If you believe that you are about to lose your job, start sending out your resumes immediately. Use classified ad sites on the internet and your local newspapers to target your search. Yahoo jobs and monster.com are two popular job search sites. There are also specialty sites for many job fields and geographic areas. Networking with people you know may also lead to possible jobs.
In today’s job market, don’t focus on a job like your old one. Examine your skills and experience and apply for every job for which you qualify. Consider a career change. Even retail or part-time employment can help to pay your remaining bills. Take care that part-time jobs do not conflict with your unemployment payments.
Before you leave your old job, you should also ask your friends and coworkers to provide you with reference letters and referrals. References from your most recent job are more valuable than older ones. An important point to remember is that you should always ask before using anyone as a reference. Make sure that they remember you and have something positive to say about you.
If you are about to be laid off, do not try to maintain your current standard of living. You must immediately set priorities to conserve your cash. Your priorities should be to maintain your home, feed your family, and to find a new job. This means that you should concentrate on paying your mortgage, electricity, heating fuel, and water bills above all else.
Credit cards and unsecured debt are low priority. Failure to pay a credit card will not result in foreclosure, repossession, or loss of electricity or water. The credit card companies can do little more than harass you or cut off your lines of credit, which you shouldn’t be using at this point anyway.
Don’t just abruptly stop making payments though. Talk to your creditors and explain your situation to them. They may be more understanding if you work with them from the beginning. Explain to them that you will pay them back when you are able, but that without a job, you cannot pay.
The Fair Debt Collection Practices Act limits the actions that debt collectors may take. They are not allowed to harass or threaten you. To find out what debt collectors can and cannot do, check with your state consumer protection agency or visit this link:
http://www.federalreserve.gov/boarddocs/supmanual/cch/200601/fairdebt.pdf
Eliminate any payments that are not necessary. Some examples of nonessential spending are cable television, eating out, trendy clothing, and anything that will not help you find a job or contribute to your basic survival. If you have expensive car loans, you may need to consider selling the vehicle and buying an older car that you can pay cash for. This may also allow you to reduce your insurance coverage. You may also be able to reduce your cell phone plan to a more basic service that eliminates texting and other services.
If you have toys, such as boats, motorcycles, or recreational vehicles, consider selling them. You may be able to generate enough money to pay your bills for a few months. If these items are not fully paid for, they should definitely be placed on the market since the loan payments will constitute an unacceptable drain on your cash reserves.
When you do lose your job, do not waste any time in applying for whatever assistance that you can qualify for. This may include unemployment compensation payments, health benefits, food stamps, women-infant-children (WIC) vouchers, and occupational training. Benefits vary by state. Check with your local state offices and apply for everything.
In some cases, you may be required to cash out of your retirement plans and investments before qualifying for assistance. My recommendation is not to do this unless absolutely necessary due to the heavy penalties involved in withdrawing money from 401k or IRA plans. Additionally, if you sell your stocks now, you will probably be selling for far less than the purchase price of your stock. Normally this would result in a tax write-off, but without income the write-off would be worthless. The bottom line is that if you need the money, withdraw it and take the penalty.
Many employees will qualify for COBRA rights under their health care plan. Under COBRA, you can continue your employee health plan for up to 18 months. The problem is that under COBRA, you must pay the entire cost of the plan plus a 2% administrative fee. Since most employers pay a portion of health insurance premiums while you are employed, the total cost of your health insurance will likely be more expensive that what you paid in the past. Through the end of 2009, there is a federal subsidy of 65% of the COBRA premium.
When deciding whether to purchase insurance under COBRA, consider several factors. First, if you have a pre-existing condition, you should probably purchase the COBRA insurance. Pre-existing conditions may make it difficult to obtain individual health plans.
Second, contact local health insurance agents to obtain a quote for health insurance. Don’t try to replicate your employer-paid group plan. Look for a simple major medical plan with a deductible that is as high as you can afford. If you have prescriptions that you must take, do look at the prescription coverage or shop around for a separate prescription discount card.
A final, but not trivial, consideration is maintaining the will to survive. Anticipate the fear and depression that you will face in the coming months. Try to stay positive. Do not try to carry the whole load yourself. Rely on your friends and family. Military survival manuals stress the need to use the buddy system to prevent panic and capitalize on group strength.
The military survival manuals also suggest spiritual avenues toward maintaining your mental strength and will to survive. Pray and remember the times that God has helped you overcome adversity in the past. Seek fellowship in a local church. Attending services, singing, and talking to people can help to boost your morale. Above all, trust God and your family to help see you through the crisis.
Remember that the financial crisis is not permanent, either for the United States or your family. Better times will return. Your most immediate job is to preserve your family and as much as possible of what you have worked for until that day comes.
Sources:
www.daveramsey.com
http://www.insure.com/articles/healthinsurance/cobra.html
http://www.equipped.org/multiservice_ser_manual_1999.pdf
Air Land Sea Application Center, Survival, Evasion, and Recovery, US Government, June 1999, Appendix A
http://www.federalreserve.gov/boarddocs/supmanual/cch/200601/fairdebt.pdf
Saturday, July 4, 2009
America! Celebrating God and Country
Oh! thus be it ever, when freemen shall stand
Between their loved home and the war's desolation!
Blest with victory and peace, may the heav'n rescued land
Praise the Power that hath made and preserved us a nation.
Then conquer we must, when our cause it is just,
And this be our motto: "In God is our trust."
And the star-spangled banner in triumph shall wave
O'er the land of the free and the home of the brave!
-Star Spangled Banner (1812)
From its very inception, America and Christianity have been inseparable. Among the first European settlers of American continent were persecuted Christians from a number of countries.
Every school child knows the story of the Pilgrims who arrived in 1620, fleeing both English persecution and Dutch moral relativism. Not so well known is the story of Squanto, the Indian who saved the Pilgrims from starvation.
About ten years before the Pilgrims arrived, Squanto was among a group of Indians kidnapped by English traders and sold into slavery in Spain. Squanto was bought by a Spanish monk who taught him about Jesus. Squanto made his way to England where he was employed by John Slaney, who helped him to return to America in 1618. When Squanto returned, he found that his entire village had been wiped out by a plague. Everyone that he knew was gone.
When the Pilgrims arrived on the Mayflower in 1620, they landed at the location of Squanto’s village. Fields had already been cleared and the land was fertile. However, the Pilgrims landed in December and many of them died before spring.
Imagine their surprise in the spring when they met Squanto, an Indian who spoke English and introduced himself by asking if they had any beer! Squanto adopted the Pilgrims and taught them how to cultivate the land, hunt, fish, and became their guide and intermediary with the surrounding tribes. He lived with the Pilgrims until he died and then left all his possessions to them.
The story is all the more amazing because the Pilgrims had no intention of settling in Plymouth. They had originally set out for Virginia. When they realized that they were far north of Virginia, they set sail again, this time for New York. Strong winds at sea forced them back to Massachusetts.
Governor William Bradford wrote that Squanto “became a special instrument sent of God for good….” Without Squanto, the Pilgrims might well have become a “lost colony” and the American tradition of Thanksgiving to God would never have happened.
In addition to the Pilgrims and Puritans, many other groups seeking religious freedom also made their homes in the New World. There were Quakers in Pennsylvania, Calvinists in Rhode Island, Catholics in Maryland, and Shakers in upstate New York. Baptists, Methodists, Anglicans, Episcopalians and others also made their homes in America. Jews were also welcomed into the colonies.
As Michael Medved points out, the colonists did not seek individual religious freedom to follow their own conscience. Instead they sought purity. To that end, many colonies, and later many states, had official state religions long after the adoption of the first amendment.
In the beauty of the lilies Christ was born across the sea,
With a glory in His bosom that transfigures you and me:
As He died to make men holy, let us die to make men free,
While God is marching on.
-Battle Hymn of the Republic (1863)
On July 9, 1755, George Washington should have been a dead man. Twenty years before the first shots of the American Revolution were fired at Lexington and Concord, Washington was a Lieutenant Colonel in the Virginia militia. During this period of the French and Indian War, he fought with British General Edward Braddock.
The British force was attempting to take the French Fort Duquesne near what is now Pittsburgh and remove the French from the Ohio Valley. They walked into a trap. After crossing the Monongahela River, the British force was attacked by a smaller force of Indians and French soldiers. The British were caught in the open while the attackers fired at them from behind cover.
One by one, the British officers fell dead or wounded. General Braddock took a mortal wound in the lung. Finally, Washington was the only remaining British officer. The Indians took aim at him.
Washington’s horse was shot out from under him twice as the Indians fired round after round at him. Twice he remounted horses left by dead or wounded comrades. In spite of being specifically targeted by Indian sharpshooters, Washington was untouched. He rallied the men who were left and escaped the killing ground. After the battle, Washington found that four bullets had passed through his coat, but none had hit his body.
A few weeks after the battle, Rev. Samuel Davies, later President of Princeton, said in a sermon, “I may point out to the public that heroic youth, Col. Washington, whom I cannot but hope Providence has hitherto preserved in so signal a manner for important service to his country” (Medved, God’s Hand on America).
Years later, one of the Indian chiefs told Washington, “Seeing you were under the special guardianship of the Great Spirit, we immediately ceased to fire at you… The Great Spirit protects that man [Washington] and guides his destinies – he will become the chief of nations, and a people yet unborn will hail him as the founder of a mighty empire. I am come to pay homage to the man who is the particular favorite of Heaven, and who can never die in battle.” (Mac, p.13)
Washington was never injured in battle.
America, America!
God mend thine every flaw,
Confirm they soul in self control,
Thy liberty in law…
America, America!
May God thy gold refine
Til all success be nobleness
And every gain divine.
-America the Beautiful (1895)
Twenty years later, George Washington fought his old comrades in the British army. As his ragtag band of Continentals faced overwhelming odds against a well trained and disciplined foe, Washington and his army were saved again through divine intervention.
On August 29, 1776, the Americans were falling back as the British attacked their fortifications around New York City. The British and their Hessian allies outnumbered the Americans almost four-to-one. The Americans were low on powder and had their backs to the East River. They expected to a British attack at any moment. They expected to be beaten. They expected to hang.
General Washington ordered his men to “firmly rely on the protection of Divine Providence” saying “God has not brought us this far to desert us.” (Mac, p. 31)
The expected British attack did not come. While he waited, Washington formed a plan. He would evacuate his army across the mile-wide river. The plan entailed a huge risk: if the British heard the sounds of the crossing, Washington’s army would be split.
Just one day before, a regiment of Massachusetts fishermen had arrived to reinforce the Americans. These skilled seamen would move Washington’s army to safety. Throughout the night, the men made repeated trips across the river carrying soldiers, supplies, horses, and cannon.
A Tory woman realized what was happening and sent one of her black servants to warn General Howe, the British commander, that the Americans were escaping. The man successfully reached the British lines with his message, but was stopped by a Hessian sentry who did not speak English. The message did not reach Howe until it was too late.
As morning came, much of the army was still facing the British. Major Benjamin Tallmadge described what happened next: “At this time a very dense fog began to rise out of the ground and off of the river, and it seemed to settle in a peculiar manner over both encampments. I recollect this providential occurrence perfectly well, and so very dense was the atmosphere that I could scarcely discern a man at six-yard distance…. We tarried until the sun had risen, but the fog remained as dense as ever.” (Mac, p. 32)
The fog remained until the last boat, carrying General Washington, had departed. As the fog lifted, the British realized that the Americans had vanished. The first British soldiers to reach the American trenches fired on the last boats, but they were already out of range. The American army survived. A few months later, on Christmas night, they would cross another river, the Delaware, to deliver a stunning defeat to Hessians encamped in Trenton.
Was it random chance that held back the British and allowed a thick fog to cover the battlefield for exactly as long as the Americans needed? General Washington apparently believed that it was no coincidence. Even before the incident, he valued and promoted Christianity in the Continental army. The day after he took command, he issued a general order indicating that he “requires and expects of all officers and soldiers not engaged in actual duty, a punctual attendance of divine services, to implore the blessing of Heaven for the means used for our safety and defense.” (Medved, p. 80)
Washington further stated, “ While we are duly performing the duty of good soldiers, we certainly ought not to be inattentive to the higher duties of religion. To the distinguished character of a patriot, it should be our highest glory to add the more distinguished character of a Christian.”
Let tyrants shake their iron rod
And slav'ry clang her galling chains;
We'll fear them not. We trust in God;
New England's God forever rains.
Howe and Burgoyne and Clinton, too
With Prescott and Cornwallis join'd,
Together plot our overthrow,
In one infernal league combined.
When God inspired us for the fight
Their lines were broke, their lines were forc'd,
Their ships were shelter'd in our sight
Or swiftly driven from our coast.
The foe comes on with haughty stride,
Our troops advance with martial noise.
Their vet'rans flee before our youth
And generals yield to beardless boys.
What grateful offerings shall we bring,
What shall we render to the Lord?
Loud hallelujahs let us sing
And praise his name on every chord.
-Chester (Marching hymn of the Continental army)
As the new nation grew into the shining city on a hill (Matthew 5:14 and 1630 sermon by Puritan John Winthrop), it kept its ideals as a nation devoted to God. The Northwest Ordinance of 1787 states that “religion, morality and knowledge” are “necessary to good government and the happiness of mankind” (http://www.ourdocuments.gov/doc.php?flash=true&doc=8). Upon approval of the First Amendment to the Constitution, Congress issued a request for the President to “recommend… a day of public thanksgiving and prayer” to acknowledge “the many signal favors of Almighty God…” President Washington responded by declaring November 26, 1789 to be devoted to “the service of that great and glorious Being, who is the beneficient Author of all the good that was, that is, or that will be” (Medved, p. 83).
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.
-Declaration of Independence
It is widely accepted that the ideas and philosophies that led the creation of the American republic are rooted in the work of theologian John Calvin. As Calvin’s writings helped throw off the oppression of the Catholic Church in the Reformation, they also led to political freedom. Calvin’s acceptance of capitalism helped to end the feudal system of the Middle Ages and led to the Protestant work ethic. This, in turn, led to the creation of a middle class and the ability of commoners to have a greater voice in government. Calvin’s work was carried on by John Knox. Both theologians influenced the Presbyterians and other Protestants who made up the bulk of the Continental army.
Our fathers' God, to thee,
author of liberty, to thee we sing;
long may our land be bright
with freedom's holy light;
protect us by thy might, great God, our King.
-My Country Tis of Thee (1831)
God and the Bible even helped America through its darkest days so far: the days of slavery and War Between the States. While slavery presented an enormous evil, it was also an evil that was common throughout world history.
It was the Christian religion and the Bible that sowed the seeds of equality, which would one day bring the abolition of slavery, as well as eventual racial equality and integration. Jesus taught that men were equal (Matthew 20:25-28). The Biblical book of Philemon broke new ground by teaching that slave owners should consider their slaves as more than property.
Quakers were among the first to oppose slavery. The abolitionist movement made its largest gains with William Wilberforce, an English Member of Parliament and Christian who was instrumental in banning slavery throughout the British Empire in 1833. In America, John Brown, who saw himself as a prophet, became a martyr for the abolitionist movement. The fearless Harriet Tubman’s faith in God inspired her to lead untold numbers of slaves to freedom.
Many, including Abraham Lincoln, saw the War Between the States as a punishment for the sin of slavery. In his second inaugural speech, Lincoln said, “If we shall suppose that American Slavery is one of those offences which, in the providence of God, must needs come, but which, having continued through His appointed time, He now wills to remove, and that He gives to both North and South, this terrible war, as the woe due to those by whom the offence came, shall we discern therein any departure from those divine attributes which the believers in a Living God always ascribe to Him? Fondly do we hope--fervently do we pray--that this mighty scourge of war may speedily pass away. Yet, if God wills that it continue, until all the wealth piled by the bond-man's two hundred and fifty years of unrequited toil shall be sunk, and until every drop of blood drawn with the lash, shall be paid by another drawn with the sword, as was said three thousand years ago, so still it must be said "the judgments of the Lord, are true and righteous altogether" (http://showcase.netins.net/web/creative/lincoln/speeches/inaug2.htm).
God Bless America,
Land that I love.
Stand beside her, and guide her
Thru the night with a light from above.
From the mountains, to the prairies,
To the oceans, white with foam
God bless America, My home sweet home.
-God Bless America (1938)
Even after the War Between the States, it took another hundred years for we the people of the United States to fully realize equality between races, sexes, and ethnicities. Along the journey, God and the Bible inspired people such as the Sojourner Truth, Martin Luther King, Jr. and countless lesser known Christians to spread the word that God had created all men equal.
At the same time that Americans were confronting their racist demons and after the defeat of fascism, they were also fighting the Cold War against an atheistic enemy. The Soviet Union was attempting to export its communist philosophy around the world. Eastern Europe and China fell to the communists and nations around the world, from Europe to Africa to Asia were threatened. According to the Black Book of Communism, communist regimes were responsible for 94 million deaths. (With communist regimes still active in China, North Korea, and Cuba, the number is still increasing.)
The Cold War was America’s longest war. In the end, America was victorious as the Soviet Union disintegrated and oppressed people around the world stood up to take back their freedom. In another example of divine timing, President Franklin Roosevelt removed Vice President Henry A. Wallace from the Democratic ticket in 1944 and replaced him with Harry S Truman.
Harry Truman became Vice President on January 20, 1945 and president a few months later when FDR died on April 12. Wallace was a communist sympathizer (like many New Dealers). If he had become president, he would not have resisted the communist onslaught. In contrast, Harry Truman helped preserve Western Europe and South Korea as well as playing a role in the establishment of the nation of Israel. If Truman had not become president, the world would be a very different place and the toll of communism would have been much higher.
In contrast to other national powers throughout history, America is not an imperialist power. Where other nations have fought and conquered to add to their empires, America fights and conquers, as Woodrow Wilson put it, to make the world “safe for democracy” and the principle that “peace must be planted upon the tested foundations of political liberty.” The conquests of America are today seen as beacons of democracy, stability, and prosperity: Germany, Japan, South Korea, the Philippines, and, in the future, Iraq.
“I just want to do God's will. And he's allowed me to go to the mountain. And I've looked over, and I've seen the promised land! I may not get there with you, but I want you to know tonight that we as a people will get to the promised land.”
-Martin Luther King, Jr.
There have been many other instances of what our Founders referred to as “Divine Providence.” The relationship between Americans and God has been close from the earliest days of our nation. God has both blessed us and punished us. Nevertheless, America has remained the “promised land” and the “shining city on the hill.” It is my fervent prayer that the United States of America will remain, as Abraham Lincoln said, “the last, best hope of earth.”
Happy Independence Day and may God continue to bless and protect America
What our founders and leaders had to say about God and the Bible:
"I tremble for my country when I reflect that God is just; that His justice cannot sleep forever."
- Thomas Jefferson, 1871
“Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other. “
-John Adams
"The foundations of our society and our government rest so much on the teachings of the Bible that it would be difficult to support them if faith in these teachings would cease to be practically universal in our country."
- Calvin Coolidge, 1923
“...The longer I live, the more convincing proofs I see of this truth, that God governs in the affairs of men. And if a sparrow cannot fall to the ground without His notice, is it probable that an empire can rise without his aid? We have been assured, Sir, in the Sacred Writings, that ‘except the Lord build the House, they labor in vain that build it.’ ”
– Benjamin Franklin
“Were my soul trembling on the wing of eternity, were this hand freezing to death, were my voice choking with the last struggle, I would still, with the last gasp of that voice, implore you to remember the truth: God has given America to be free.”
– Patrick Henry
“The Americans combine the notions of religion and liberty so intimately in their minds, that it is impossible to make them conceive of one without the other.”
-Alexis de Tocqueville
"I care not if God is on my side. My constant hope and prayer is that I may be found upon God's side."
-Abraham Lincoln
“We cannot read the history of our rise and development as a nation, without reckoning with the place the Bible has occupied in shaping the advances of the Republic. Where we have been the truest and most consistent in obeying its precepts, we have attained the greatest measure of contentment and prosperity.”
– Franklin Roosevelt
“A nation or civilization that continues to produce soft-minded men purchases its own spiritual death on the installment plan.”
-Martin Luther King
“Without God, there is no virtue, because there’s no prompting of the conscience. Without God, we’re mired in the material, that flat world that tells us only what the senses perceive. Without God, there is a coarsening of the society. And without God, democracy will not and cannot long endure. If we ever forget that we’re one nation under God, then we will be a nation gone under.”
– Ronald Reagan
Sources:
Mac, Toby and Tait, Michael, Under God, Bethany House, Minneapolis, MN, 2004.
Medved, Michael, The 10 Big Lies About America, Crown Forum, New York, 2008.
Kennedy, D. James, What if Jesus Had Never Been Born, Thomas Nelson Publishers, Nashville, 1994.
“God’s Hand On America,” Michael Medved Radio Show Podcast, December 25, 2008.
http://www.breakpoint.org/listingarticle.asp?ID=3694
http://www.answers.com/topic/squanto
http://www.answers.com/topic/pilgrims
http://www.britishbattles.com/braddock.htm
http://www.ushistory.org/valleyforge/washington/george1.html
http://www.britishbattles.com/long-island.htm
http://www.publicbookshelf.com/public_html/Our_Country_vol_2/battlelon_ih.html
http://www.traditionalmusic.co.uk/song-midis/Chester.htm
http://www.ourdocuments.gov/doc.php?flash=true&doc=8
http://www.answers.com/topic/john-calvin
https://www.dordt.edu/publications/pro_rege/crcpi/115756.pdf
http://showcase.netins.net/web/creative/lincoln/speeches/inaug2.htm
http://en.wikipedia.org/wiki/Black_Book_of_Communism
http://en.wikipedia.org/wiki/Henry_A._Wallace
http://en.wikipedia.org/wiki/Harry_Truman#First_term_.281945.E2.80.931949.29
July 4, 2009
Denver Co
Between their loved home and the war's desolation!
Blest with victory and peace, may the heav'n rescued land
Praise the Power that hath made and preserved us a nation.
Then conquer we must, when our cause it is just,
And this be our motto: "In God is our trust."
And the star-spangled banner in triumph shall wave
O'er the land of the free and the home of the brave!
-Star Spangled Banner (1812)
From its very inception, America and Christianity have been inseparable. Among the first European settlers of American continent were persecuted Christians from a number of countries.
Every school child knows the story of the Pilgrims who arrived in 1620, fleeing both English persecution and Dutch moral relativism. Not so well known is the story of Squanto, the Indian who saved the Pilgrims from starvation.
About ten years before the Pilgrims arrived, Squanto was among a group of Indians kidnapped by English traders and sold into slavery in Spain. Squanto was bought by a Spanish monk who taught him about Jesus. Squanto made his way to England where he was employed by John Slaney, who helped him to return to America in 1618. When Squanto returned, he found that his entire village had been wiped out by a plague. Everyone that he knew was gone.
When the Pilgrims arrived on the Mayflower in 1620, they landed at the location of Squanto’s village. Fields had already been cleared and the land was fertile. However, the Pilgrims landed in December and many of them died before spring.
Imagine their surprise in the spring when they met Squanto, an Indian who spoke English and introduced himself by asking if they had any beer! Squanto adopted the Pilgrims and taught them how to cultivate the land, hunt, fish, and became their guide and intermediary with the surrounding tribes. He lived with the Pilgrims until he died and then left all his possessions to them.
The story is all the more amazing because the Pilgrims had no intention of settling in Plymouth. They had originally set out for Virginia. When they realized that they were far north of Virginia, they set sail again, this time for New York. Strong winds at sea forced them back to Massachusetts.
Governor William Bradford wrote that Squanto “became a special instrument sent of God for good….” Without Squanto, the Pilgrims might well have become a “lost colony” and the American tradition of Thanksgiving to God would never have happened.
In addition to the Pilgrims and Puritans, many other groups seeking religious freedom also made their homes in the New World. There were Quakers in Pennsylvania, Calvinists in Rhode Island, Catholics in Maryland, and Shakers in upstate New York. Baptists, Methodists, Anglicans, Episcopalians and others also made their homes in America. Jews were also welcomed into the colonies.
As Michael Medved points out, the colonists did not seek individual religious freedom to follow their own conscience. Instead they sought purity. To that end, many colonies, and later many states, had official state religions long after the adoption of the first amendment.
In the beauty of the lilies Christ was born across the sea,
With a glory in His bosom that transfigures you and me:
As He died to make men holy, let us die to make men free,
While God is marching on.
-Battle Hymn of the Republic (1863)
On July 9, 1755, George Washington should have been a dead man. Twenty years before the first shots of the American Revolution were fired at Lexington and Concord, Washington was a Lieutenant Colonel in the Virginia militia. During this period of the French and Indian War, he fought with British General Edward Braddock.
The British force was attempting to take the French Fort Duquesne near what is now Pittsburgh and remove the French from the Ohio Valley. They walked into a trap. After crossing the Monongahela River, the British force was attacked by a smaller force of Indians and French soldiers. The British were caught in the open while the attackers fired at them from behind cover.
One by one, the British officers fell dead or wounded. General Braddock took a mortal wound in the lung. Finally, Washington was the only remaining British officer. The Indians took aim at him.
Washington’s horse was shot out from under him twice as the Indians fired round after round at him. Twice he remounted horses left by dead or wounded comrades. In spite of being specifically targeted by Indian sharpshooters, Washington was untouched. He rallied the men who were left and escaped the killing ground. After the battle, Washington found that four bullets had passed through his coat, but none had hit his body.
A few weeks after the battle, Rev. Samuel Davies, later President of Princeton, said in a sermon, “I may point out to the public that heroic youth, Col. Washington, whom I cannot but hope Providence has hitherto preserved in so signal a manner for important service to his country” (Medved, God’s Hand on America).
Years later, one of the Indian chiefs told Washington, “Seeing you were under the special guardianship of the Great Spirit, we immediately ceased to fire at you… The Great Spirit protects that man [Washington] and guides his destinies – he will become the chief of nations, and a people yet unborn will hail him as the founder of a mighty empire. I am come to pay homage to the man who is the particular favorite of Heaven, and who can never die in battle.” (Mac, p.13)
Washington was never injured in battle.
America, America!
God mend thine every flaw,
Confirm they soul in self control,
Thy liberty in law…
America, America!
May God thy gold refine
Til all success be nobleness
And every gain divine.
-America the Beautiful (1895)
Twenty years later, George Washington fought his old comrades in the British army. As his ragtag band of Continentals faced overwhelming odds against a well trained and disciplined foe, Washington and his army were saved again through divine intervention.
On August 29, 1776, the Americans were falling back as the British attacked their fortifications around New York City. The British and their Hessian allies outnumbered the Americans almost four-to-one. The Americans were low on powder and had their backs to the East River. They expected to a British attack at any moment. They expected to be beaten. They expected to hang.
General Washington ordered his men to “firmly rely on the protection of Divine Providence” saying “God has not brought us this far to desert us.” (Mac, p. 31)
The expected British attack did not come. While he waited, Washington formed a plan. He would evacuate his army across the mile-wide river. The plan entailed a huge risk: if the British heard the sounds of the crossing, Washington’s army would be split.
Just one day before, a regiment of Massachusetts fishermen had arrived to reinforce the Americans. These skilled seamen would move Washington’s army to safety. Throughout the night, the men made repeated trips across the river carrying soldiers, supplies, horses, and cannon.
A Tory woman realized what was happening and sent one of her black servants to warn General Howe, the British commander, that the Americans were escaping. The man successfully reached the British lines with his message, but was stopped by a Hessian sentry who did not speak English. The message did not reach Howe until it was too late.
As morning came, much of the army was still facing the British. Major Benjamin Tallmadge described what happened next: “At this time a very dense fog began to rise out of the ground and off of the river, and it seemed to settle in a peculiar manner over both encampments. I recollect this providential occurrence perfectly well, and so very dense was the atmosphere that I could scarcely discern a man at six-yard distance…. We tarried until the sun had risen, but the fog remained as dense as ever.” (Mac, p. 32)
The fog remained until the last boat, carrying General Washington, had departed. As the fog lifted, the British realized that the Americans had vanished. The first British soldiers to reach the American trenches fired on the last boats, but they were already out of range. The American army survived. A few months later, on Christmas night, they would cross another river, the Delaware, to deliver a stunning defeat to Hessians encamped in Trenton.
Was it random chance that held back the British and allowed a thick fog to cover the battlefield for exactly as long as the Americans needed? General Washington apparently believed that it was no coincidence. Even before the incident, he valued and promoted Christianity in the Continental army. The day after he took command, he issued a general order indicating that he “requires and expects of all officers and soldiers not engaged in actual duty, a punctual attendance of divine services, to implore the blessing of Heaven for the means used for our safety and defense.” (Medved, p. 80)
Washington further stated, “ While we are duly performing the duty of good soldiers, we certainly ought not to be inattentive to the higher duties of religion. To the distinguished character of a patriot, it should be our highest glory to add the more distinguished character of a Christian.”
Let tyrants shake their iron rod
And slav'ry clang her galling chains;
We'll fear them not. We trust in God;
New England's God forever rains.
Howe and Burgoyne and Clinton, too
With Prescott and Cornwallis join'd,
Together plot our overthrow,
In one infernal league combined.
When God inspired us for the fight
Their lines were broke, their lines were forc'd,
Their ships were shelter'd in our sight
Or swiftly driven from our coast.
The foe comes on with haughty stride,
Our troops advance with martial noise.
Their vet'rans flee before our youth
And generals yield to beardless boys.
What grateful offerings shall we bring,
What shall we render to the Lord?
Loud hallelujahs let us sing
And praise his name on every chord.
-Chester (Marching hymn of the Continental army)
As the new nation grew into the shining city on a hill (Matthew 5:14 and 1630 sermon by Puritan John Winthrop), it kept its ideals as a nation devoted to God. The Northwest Ordinance of 1787 states that “religion, morality and knowledge” are “necessary to good government and the happiness of mankind” (http://www.ourdocuments.gov/doc.php?flash=true&doc=8). Upon approval of the First Amendment to the Constitution, Congress issued a request for the President to “recommend… a day of public thanksgiving and prayer” to acknowledge “the many signal favors of Almighty God…” President Washington responded by declaring November 26, 1789 to be devoted to “the service of that great and glorious Being, who is the beneficient Author of all the good that was, that is, or that will be” (Medved, p. 83).
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.
-Declaration of Independence
It is widely accepted that the ideas and philosophies that led the creation of the American republic are rooted in the work of theologian John Calvin. As Calvin’s writings helped throw off the oppression of the Catholic Church in the Reformation, they also led to political freedom. Calvin’s acceptance of capitalism helped to end the feudal system of the Middle Ages and led to the Protestant work ethic. This, in turn, led to the creation of a middle class and the ability of commoners to have a greater voice in government. Calvin’s work was carried on by John Knox. Both theologians influenced the Presbyterians and other Protestants who made up the bulk of the Continental army.
Our fathers' God, to thee,
author of liberty, to thee we sing;
long may our land be bright
with freedom's holy light;
protect us by thy might, great God, our King.
-My Country Tis of Thee (1831)
God and the Bible even helped America through its darkest days so far: the days of slavery and War Between the States. While slavery presented an enormous evil, it was also an evil that was common throughout world history.
It was the Christian religion and the Bible that sowed the seeds of equality, which would one day bring the abolition of slavery, as well as eventual racial equality and integration. Jesus taught that men were equal (Matthew 20:25-28). The Biblical book of Philemon broke new ground by teaching that slave owners should consider their slaves as more than property.
Quakers were among the first to oppose slavery. The abolitionist movement made its largest gains with William Wilberforce, an English Member of Parliament and Christian who was instrumental in banning slavery throughout the British Empire in 1833. In America, John Brown, who saw himself as a prophet, became a martyr for the abolitionist movement. The fearless Harriet Tubman’s faith in God inspired her to lead untold numbers of slaves to freedom.
Many, including Abraham Lincoln, saw the War Between the States as a punishment for the sin of slavery. In his second inaugural speech, Lincoln said, “If we shall suppose that American Slavery is one of those offences which, in the providence of God, must needs come, but which, having continued through His appointed time, He now wills to remove, and that He gives to both North and South, this terrible war, as the woe due to those by whom the offence came, shall we discern therein any departure from those divine attributes which the believers in a Living God always ascribe to Him? Fondly do we hope--fervently do we pray--that this mighty scourge of war may speedily pass away. Yet, if God wills that it continue, until all the wealth piled by the bond-man's two hundred and fifty years of unrequited toil shall be sunk, and until every drop of blood drawn with the lash, shall be paid by another drawn with the sword, as was said three thousand years ago, so still it must be said "the judgments of the Lord, are true and righteous altogether" (http://showcase.netins.net/web/creative/lincoln/speeches/inaug2.htm).
God Bless America,
Land that I love.
Stand beside her, and guide her
Thru the night with a light from above.
From the mountains, to the prairies,
To the oceans, white with foam
God bless America, My home sweet home.
-God Bless America (1938)
Even after the War Between the States, it took another hundred years for we the people of the United States to fully realize equality between races, sexes, and ethnicities. Along the journey, God and the Bible inspired people such as the Sojourner Truth, Martin Luther King, Jr. and countless lesser known Christians to spread the word that God had created all men equal.
At the same time that Americans were confronting their racist demons and after the defeat of fascism, they were also fighting the Cold War against an atheistic enemy. The Soviet Union was attempting to export its communist philosophy around the world. Eastern Europe and China fell to the communists and nations around the world, from Europe to Africa to Asia were threatened. According to the Black Book of Communism, communist regimes were responsible for 94 million deaths. (With communist regimes still active in China, North Korea, and Cuba, the number is still increasing.)
The Cold War was America’s longest war. In the end, America was victorious as the Soviet Union disintegrated and oppressed people around the world stood up to take back their freedom. In another example of divine timing, President Franklin Roosevelt removed Vice President Henry A. Wallace from the Democratic ticket in 1944 and replaced him with Harry S Truman.
Harry Truman became Vice President on January 20, 1945 and president a few months later when FDR died on April 12. Wallace was a communist sympathizer (like many New Dealers). If he had become president, he would not have resisted the communist onslaught. In contrast, Harry Truman helped preserve Western Europe and South Korea as well as playing a role in the establishment of the nation of Israel. If Truman had not become president, the world would be a very different place and the toll of communism would have been much higher.
In contrast to other national powers throughout history, America is not an imperialist power. Where other nations have fought and conquered to add to their empires, America fights and conquers, as Woodrow Wilson put it, to make the world “safe for democracy” and the principle that “peace must be planted upon the tested foundations of political liberty.” The conquests of America are today seen as beacons of democracy, stability, and prosperity: Germany, Japan, South Korea, the Philippines, and, in the future, Iraq.
“I just want to do God's will. And he's allowed me to go to the mountain. And I've looked over, and I've seen the promised land! I may not get there with you, but I want you to know tonight that we as a people will get to the promised land.”
-Martin Luther King, Jr.
There have been many other instances of what our Founders referred to as “Divine Providence.” The relationship between Americans and God has been close from the earliest days of our nation. God has both blessed us and punished us. Nevertheless, America has remained the “promised land” and the “shining city on the hill.” It is my fervent prayer that the United States of America will remain, as Abraham Lincoln said, “the last, best hope of earth.”
Happy Independence Day and may God continue to bless and protect America
What our founders and leaders had to say about God and the Bible:
"I tremble for my country when I reflect that God is just; that His justice cannot sleep forever."
- Thomas Jefferson, 1871
“Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other. “
-John Adams
"The foundations of our society and our government rest so much on the teachings of the Bible that it would be difficult to support them if faith in these teachings would cease to be practically universal in our country."
- Calvin Coolidge, 1923
“...The longer I live, the more convincing proofs I see of this truth, that God governs in the affairs of men. And if a sparrow cannot fall to the ground without His notice, is it probable that an empire can rise without his aid? We have been assured, Sir, in the Sacred Writings, that ‘except the Lord build the House, they labor in vain that build it.’ ”
– Benjamin Franklin
“Were my soul trembling on the wing of eternity, were this hand freezing to death, were my voice choking with the last struggle, I would still, with the last gasp of that voice, implore you to remember the truth: God has given America to be free.”
– Patrick Henry
“The Americans combine the notions of religion and liberty so intimately in their minds, that it is impossible to make them conceive of one without the other.”
-Alexis de Tocqueville
"I care not if God is on my side. My constant hope and prayer is that I may be found upon God's side."
-Abraham Lincoln
“We cannot read the history of our rise and development as a nation, without reckoning with the place the Bible has occupied in shaping the advances of the Republic. Where we have been the truest and most consistent in obeying its precepts, we have attained the greatest measure of contentment and prosperity.”
– Franklin Roosevelt
“A nation or civilization that continues to produce soft-minded men purchases its own spiritual death on the installment plan.”
-Martin Luther King
“Without God, there is no virtue, because there’s no prompting of the conscience. Without God, we’re mired in the material, that flat world that tells us only what the senses perceive. Without God, there is a coarsening of the society. And without God, democracy will not and cannot long endure. If we ever forget that we’re one nation under God, then we will be a nation gone under.”
– Ronald Reagan
Sources:
Mac, Toby and Tait, Michael, Under God, Bethany House, Minneapolis, MN, 2004.
Medved, Michael, The 10 Big Lies About America, Crown Forum, New York, 2008.
Kennedy, D. James, What if Jesus Had Never Been Born, Thomas Nelson Publishers, Nashville, 1994.
“God’s Hand On America,” Michael Medved Radio Show Podcast, December 25, 2008.
http://www.breakpoint.org/listingarticle.asp?ID=3694
http://www.answers.com/topic/squanto
http://www.answers.com/topic/pilgrims
http://www.britishbattles.com/braddock.htm
http://www.ushistory.org/valleyforge/washington/george1.html
http://www.britishbattles.com/long-island.htm
http://www.publicbookshelf.com/public_html/Our_Country_vol_2/battlelon_ih.html
http://www.traditionalmusic.co.uk/song-midis/Chester.htm
http://www.ourdocuments.gov/doc.php?flash=true&doc=8
http://www.answers.com/topic/john-calvin
https://www.dordt.edu/publications/pro_rege/crcpi/115756.pdf
http://showcase.netins.net/web/creative/lincoln/speeches/inaug2.htm
http://en.wikipedia.org/wiki/Black_Book_of_Communism
http://en.wikipedia.org/wiki/Henry_A._Wallace
http://en.wikipedia.org/wiki/Harry_Truman#First_term_.281945.E2.80.931949.29
July 4, 2009
Denver Co
Thursday, July 2, 2009
The Problems With Universal Healthcare
In recent years, there has been a strong push for a universal healthcare plan in the United States. Many would like this reformed healthcare system to emulate the European national health plans. People across the country see that our healthcare system is in crisis, with millions of people who are uninsured and prices that are skyrocketing.
The American healthcare crisis is actually one of affordability rather than access to healthcare. There are very few people who cannot find healthcare; the problem is that many people cannot afford the healthcare that is available. This is true even though laws require hospitals to treat patients regardless of their ability to pay.
A common myth is that universal government healthcare would be free or cost less than private healthcare. This belief violates several economic principles. First, the money to pay for health professionals, medicines, and facilities has to come from somewhere. If consumers don’t pay for these services directly, they will pay indirectly through higher taxes. Second, as the perceived price decreases, demand will increase. In other words, when people believe that they won’t have to pay for their healthcare, they will use more health services.
As demand increases to exceed the available supply of health services, the government will have to take action. The government will have to limit the amount of services to keep the cost of the healthcare system from exploding. There are several ways to do this. First, they might impose rationing and limit the availability of services. A second option would be increase the amount that patients pay for their healthcare. This could be similar to the health insurance premiums and co-payments that many health insurance policies contain now. A third option would be for the government to do nothing and simply allow shortages to build in the system.
A third problem is that government healthcare will likely create a shortage of healthcare professionals. The government will undoubtedly attempt to rein in costs by imposing price controls. It has already followed this strategy in government healthcare programs that have already been enacted such as Medicare. Medical training, especially for doctors, is a long and expensive process. The motivating factor for many doctors is the financial reward at the end of the process. When the government removes the financial incentive for becoming a doctor, fewer people will choose to become doctors and shortages will result. This is especially likely due the increasing need for doctors in the United States and the Baby Boom generation ages.
These problems can be seen in national healthcare plans around the world. Even highly touted plans such as those in Britain and Canada commonly have long wait times for care that is easily available in the United States. Last year it was revealed that government bureaucrats in England had attempted to solve the problem of long emergency room waits by keeping thousands of patients, some critically ill, in ambulances for as long as five hours before moving them to the emergency room waiting list. This, in turn, meant that the ambulances were not available to help other sick or injured people. It should not be surprising that many Europeans and Canadians who can afford it travel to the United States for health care rather than waiting in line for “free” care at home.
The problems are not just in other countries. In 2006, Massachusetts passed a state healthcare plan. Former Governor Mitt Romney touted the legislation in his bid for the 2008 Republican presidential nomination. More recently, the state has begun to experience many of the same problems plaguing nations with socialized healthcare.
Recent statistics show that visits to emergency rooms in Massachusetts have increased since the health reform went into effect. The percentage of uninsured patients in ERs has not changed (in spite of laws making health insurance mandatory), while the percentage of more affluent patients, who in the past got care at a doctor’s office, has increased.
Similarly, the dramatic increase in the numbers of people seeking care has made it difficult for many patients to see a primary care doctor. This is compounded by the fact that doctors are allotted a certain amount of time that they are paid for with each patient. If they exceed this time, they are not compensated for the extra work.
The Massachusetts government had hoped that the legislation would encourage more employers to provide health insurance for their employees. Instead, the newly insured people of Massachusetts are primarily involved in state paid or subsidized programs. 16% have their health insurance paid by the state through Mass Health, while 41% are enrolled in the subsidized Commonwealth Care. In all, about three-fifths of Massachusetts residents receive free or subsidized health insurance. Approximately 5% of the people of Massachusetts remain uninsured.
The high number of people receiving government assistance for their health insurance has led to rapidly increasing costs for the state. The cost of Massachusetts’ plan has increased by a staggering 42% since 2006. In order to control costs, current Governor Deval Patrick is considering price controls, limits coverage, more exclusions, and an overall spending cap.
The federal government already faces similar problems with Medicare. Medicare is an unfunded liability that poses huge problems for our budget over the next few years. Medicare will soon begin paying out more money than it takes in and will be bankrupt by 2019 unless changes are made to increase Medicare taxes, cut benefits, or some combination of both.
Some countries in Europe may go a step further by limiting the treatment available for the elderly, terminally ill, and infants. The amount of return in the form of tax revenue from these patients is limited, so the government health bureaucracy doesn’t want to spend resources on expensive cures and treatments. In Holland, euthanasia is already common, both for the elderly and for infants with health problems, sometimes without parental consent.
The best way to solve the healthcare crisis in the US is to reintroduce competition. Most Americans are locked into employer health plans with specified co-payments. Because there is no choice of coverage and no price difference between doctors, there is no incentive to shop around for a better deal. Most people don’t even know how much their doctor visits cost beyond the co-payment or deductible.
Employer paid health insurance should be eliminated in favor of health savings accounts (HSAs). Consumers should contribute money to their account and use it to pay for care. If money is not spent, it should stay in the account, earning interest, until needed or until the consumer meets the requirements to withdraw it for other purposes. This would encourage people to shop for a good and inexpensive doctor, and also discourage frivolous claims.
Similarly, state governments should resist the temptation to make health insurance all things for all people. When laws mandate coverage for things that not all people want, it drives the costs up for everyone. For example, not all people want or need coverage pregnancy, sex changes, chiropractors, or “recreational” drugs such as Viagra. People should be allowed to buy simple and cheap major medical policies for no-frills coverage. If such a policy is not available in all states, people should be allowed to cross state lines to purchase it.
Some of the best advances in affordable coverage in recent years have come from the private sector. For example, Wal-mart introduced $4 generic prescriptions and was followed by several other chains. Now consumers can get prescription antibiotics totally free at Publix. Similarly, some stores now offer on-site clinics staffed by nurses for minor healthcare.
Universal government healthcare has been tried around the world and has typically not worked well. If it is enacted in the United States, we can expect to move from our private health system to one that has the efficiency of the DMV, the cost of the Department of Defense, and the bedside manner of the IRS. Is this the change that most Americans are looking for?
Sign the petition to keep the government from controlling our healthcare at:
http://www.freeourhealthcarenow.com/
Sources:
http://www.dailymail.co.uk/news/article-515332/A-E-patients-left-ambulances-FIVE-hours-trusts-meet-government-targets.html
http://blogs.wsj.com/health/2009/04/24/as-insurance-coverage-increases-ers-get-busier/
http://www.npr.org/templates/story/story.php?storyId=97620520
http://www.hschange.org/CONTENT/1021/
http://online.wsj.com/article/SB123811121310853037.html
http://online.wsj.com/article/SB120373015283387491.html
http://www.telegraph.co.uk/news/uknews/1576704/Dont-treat-the-old-and-unhealthy-say-doctors.html
http://www.discovery.org/a/2478
Originally posted April 2009
The American healthcare crisis is actually one of affordability rather than access to healthcare. There are very few people who cannot find healthcare; the problem is that many people cannot afford the healthcare that is available. This is true even though laws require hospitals to treat patients regardless of their ability to pay.
A common myth is that universal government healthcare would be free or cost less than private healthcare. This belief violates several economic principles. First, the money to pay for health professionals, medicines, and facilities has to come from somewhere. If consumers don’t pay for these services directly, they will pay indirectly through higher taxes. Second, as the perceived price decreases, demand will increase. In other words, when people believe that they won’t have to pay for their healthcare, they will use more health services.
As demand increases to exceed the available supply of health services, the government will have to take action. The government will have to limit the amount of services to keep the cost of the healthcare system from exploding. There are several ways to do this. First, they might impose rationing and limit the availability of services. A second option would be increase the amount that patients pay for their healthcare. This could be similar to the health insurance premiums and co-payments that many health insurance policies contain now. A third option would be for the government to do nothing and simply allow shortages to build in the system.
A third problem is that government healthcare will likely create a shortage of healthcare professionals. The government will undoubtedly attempt to rein in costs by imposing price controls. It has already followed this strategy in government healthcare programs that have already been enacted such as Medicare. Medical training, especially for doctors, is a long and expensive process. The motivating factor for many doctors is the financial reward at the end of the process. When the government removes the financial incentive for becoming a doctor, fewer people will choose to become doctors and shortages will result. This is especially likely due the increasing need for doctors in the United States and the Baby Boom generation ages.
These problems can be seen in national healthcare plans around the world. Even highly touted plans such as those in Britain and Canada commonly have long wait times for care that is easily available in the United States. Last year it was revealed that government bureaucrats in England had attempted to solve the problem of long emergency room waits by keeping thousands of patients, some critically ill, in ambulances for as long as five hours before moving them to the emergency room waiting list. This, in turn, meant that the ambulances were not available to help other sick or injured people. It should not be surprising that many Europeans and Canadians who can afford it travel to the United States for health care rather than waiting in line for “free” care at home.
The problems are not just in other countries. In 2006, Massachusetts passed a state healthcare plan. Former Governor Mitt Romney touted the legislation in his bid for the 2008 Republican presidential nomination. More recently, the state has begun to experience many of the same problems plaguing nations with socialized healthcare.
Recent statistics show that visits to emergency rooms in Massachusetts have increased since the health reform went into effect. The percentage of uninsured patients in ERs has not changed (in spite of laws making health insurance mandatory), while the percentage of more affluent patients, who in the past got care at a doctor’s office, has increased.
Similarly, the dramatic increase in the numbers of people seeking care has made it difficult for many patients to see a primary care doctor. This is compounded by the fact that doctors are allotted a certain amount of time that they are paid for with each patient. If they exceed this time, they are not compensated for the extra work.
The Massachusetts government had hoped that the legislation would encourage more employers to provide health insurance for their employees. Instead, the newly insured people of Massachusetts are primarily involved in state paid or subsidized programs. 16% have their health insurance paid by the state through Mass Health, while 41% are enrolled in the subsidized Commonwealth Care. In all, about three-fifths of Massachusetts residents receive free or subsidized health insurance. Approximately 5% of the people of Massachusetts remain uninsured.
The high number of people receiving government assistance for their health insurance has led to rapidly increasing costs for the state. The cost of Massachusetts’ plan has increased by a staggering 42% since 2006. In order to control costs, current Governor Deval Patrick is considering price controls, limits coverage, more exclusions, and an overall spending cap.
The federal government already faces similar problems with Medicare. Medicare is an unfunded liability that poses huge problems for our budget over the next few years. Medicare will soon begin paying out more money than it takes in and will be bankrupt by 2019 unless changes are made to increase Medicare taxes, cut benefits, or some combination of both.
Some countries in Europe may go a step further by limiting the treatment available for the elderly, terminally ill, and infants. The amount of return in the form of tax revenue from these patients is limited, so the government health bureaucracy doesn’t want to spend resources on expensive cures and treatments. In Holland, euthanasia is already common, both for the elderly and for infants with health problems, sometimes without parental consent.
The best way to solve the healthcare crisis in the US is to reintroduce competition. Most Americans are locked into employer health plans with specified co-payments. Because there is no choice of coverage and no price difference between doctors, there is no incentive to shop around for a better deal. Most people don’t even know how much their doctor visits cost beyond the co-payment or deductible.
Employer paid health insurance should be eliminated in favor of health savings accounts (HSAs). Consumers should contribute money to their account and use it to pay for care. If money is not spent, it should stay in the account, earning interest, until needed or until the consumer meets the requirements to withdraw it for other purposes. This would encourage people to shop for a good and inexpensive doctor, and also discourage frivolous claims.
Similarly, state governments should resist the temptation to make health insurance all things for all people. When laws mandate coverage for things that not all people want, it drives the costs up for everyone. For example, not all people want or need coverage pregnancy, sex changes, chiropractors, or “recreational” drugs such as Viagra. People should be allowed to buy simple and cheap major medical policies for no-frills coverage. If such a policy is not available in all states, people should be allowed to cross state lines to purchase it.
Some of the best advances in affordable coverage in recent years have come from the private sector. For example, Wal-mart introduced $4 generic prescriptions and was followed by several other chains. Now consumers can get prescription antibiotics totally free at Publix. Similarly, some stores now offer on-site clinics staffed by nurses for minor healthcare.
Universal government healthcare has been tried around the world and has typically not worked well. If it is enacted in the United States, we can expect to move from our private health system to one that has the efficiency of the DMV, the cost of the Department of Defense, and the bedside manner of the IRS. Is this the change that most Americans are looking for?
Sign the petition to keep the government from controlling our healthcare at:
http://www.freeourhealthcarenow.com/
Sources:
http://www.dailymail.co.uk/news/article-515332/A-E-patients-left-ambulances-FIVE-hours-trusts-meet-government-targets.html
http://blogs.wsj.com/health/2009/04/24/as-insurance-coverage-increases-ers-get-busier/
http://www.npr.org/templates/story/story.php?storyId=97620520
http://www.hschange.org/CONTENT/1021/
http://online.wsj.com/article/SB123811121310853037.html
http://online.wsj.com/article/SB120373015283387491.html
http://www.telegraph.co.uk/news/uknews/1576704/Dont-treat-the-old-and-unhealthy-say-doctors.html
http://www.discovery.org/a/2478
Originally posted April 2009
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