Simple Solutions to Big Problems. Hello? Anyone listening?
March 30, 2009
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Right-wingers were in a tizzy last week (and still were as of Sunday) over a comment made by Secretary Clinton during her recent visit to Mexico regarding the raging drug violence on the U.S./Mexico border. Clinton dared suggest that the U.S. share some of the blame for the growing drug violence due to our own “insatiable demand for illegal drugs”. Apparently, the mere suggestion that the U.S. share any of the blame is a wholly unacceptable thought in Wingnuttia (where Americans never do anything wrong… or have a good excuse for when they do). Is it any surprise that a group that believes in Supply-side economics… the belief that “supply” automatically creates a demand (you know, the way people line up around the block for used cat phlem), would be incapable of understanding how demand drives supply?
Now, if you think I’m going to start harping about “legalization” here, you’re wrong. Though I DO believe marijuana should be legalized because spending so much money and risking so many lives to fight something that is no more intoxicating (and arguably MUCH less dangerous) than alcohol is just stupid, I’m also realistic enough to know that’s just not going to happen anytime soon.
There is also the collapse of our auto-industry, the mortgage crisis, the problem of affordable health care, and the implosion of our banks that we need to focus on before tackling Mt. Intoxica. All huge issues that are going to take much work to fix. But there are simple and relatively inexpensive options that we can institute quickly that would have a big impact almost right away:
1) An anti-drug ad campaign that focuses on how drugs support… not only the violence in Mexico… but the Heroin industry funding the Taliban and al Qaeda. The Federal Government needs to run anti-drug PSA’s (“Public Service Announcements”) on TV and radio the way they did in the 80’s & 90’s, only this time, focus on how the demand for drugs funds the violence in Mexico that threatens to spill over into the U.S., and how heroin use funds the Taliban and al Qaeda’s war in Afghanistan. Show people how their drug dollars are going to fund the people shooting at our soldiers and police. It seems obvious, but when was the last time you heard ANY mention of this fact on TV? Make an issue out of it, to the point where school kids put peer pressure on their friends not to “fund the Terrorists”. The cost of fighting the drug war is FAR more expensive than the cost of fighting the demand here at home. Public opinion is on Hillary’s side on this one, and an ad campaign that makes the Right look foolish for criticizing her would be icing on the cake.
2) Tell the banks and Wall Street, “No bonuses until after you repay your bailout.” Is that really so difficult to understand? Right now, there is a firestorm of controversy regarding financial industries that just accepted Billions in tax-payer dollars paying huge bonuses to employees, many of whom were responsible for them needing bailing out in the first place. Capitol Hill debates whether anyone should EVER be paid such extravagant bonuses. Wall Street defends the bonuses with rhetoric regarding the “need” to pay bonuses to attract & retain top talent”. “You want to pay bonuses? Fine. Just as soon as you’ve paid us back first. Then, you can hand out as many bonuses as you want.” They rationalize the payments saying “tax payer dollars weren’t used. OTHER funds were used” or that they were “legally obligated” to pay the bonuses. You know the drill. For all the bickering on Capitol Hill, I have yet to hear ANYONE say the obvious: “Hey, no bonuses until you’ve paid us back! And in exchange, we’ll give you immunity from lawsuits against you for breech of contract for not paying those bonuses.” I mean, really, is that so hard? And I’d LOVE to hear anyone try and argue against such a common-sense solution without being ripped to shreds by the public.
3) Keep struggling home-owners in their homes and paying back the bank by converting every distressed ARM into a fixed rate mortgage 1.5% above their signing rate. I first proposed this last December, and while it would have less of an effect today since so many people have lost their jobs since then, it still makes enormous sense to keep people in their homes paying their mortgage each month, than to just allow them to be foreclosed on, leaving people with no home and sticking the bank with no money coming in and a house they can’t sell.
There have been some really dumb proposals, like “a one year moratorium on foreclosures” (dumb because there’d be minimal incentive for anyone to pay their mortgage, thus exacerbating the problem) or the “mortgage loan modification program” just passed by Congress that will allow anyone to convert their adjustable rate mortgage to a single fixed rate no matter what your rate was at the time you agreed to your loan. If you were lucky enough to snag a starting rate of just 1% that was within your means even if it went up to 2.5%, and your neighbor agreed to a loan starting at 5% that was still within his means even if it went up to 6% or 7%, why allow him to refinance at a rate that’s LOWER than what he already said he’s capable of paying? That seems wildly unfair to me.
And making the refinance “optional” means there are many people that won’t apply that need it most, either because they aren’t aware of the option or don’t have the time to pursue it.
A fairer solution would be for the government to universally convert every ARM into a fixed rate loan 1.5% above the rate they agreed to at the time of signing (unless the new rate is higher than what they are currently paying). One of the reasons for the banking crisis is that so many people have been forced into foreclosure because they can no longer afford their monthly payments. No money coming in means no money for the bank to loan out. Of course, we want to keep people in their homes and making their mortgage payments, but we need to do it in the fairest and all-encompassing way as possible.
4) Create “Medicare+Plus“, public health insurance that competes with private insurance. – The strongest argument against National Health care made by the Right is “how to pay for it”. Most people can easily understand… and will mindlessly agree when asked… that with all the talk of “trillion dollar deficits” and “multi-billion dollar bailouts”, the government can’t afford another “entitlement program” right now. And if there’s one thing people know, it’s just how expensive health care has become. So, no matter how you frame it, you’re just not going to convince voters right now of the benefits of “single payer health care”. Either you’re going to have to “raise taxes to fund it”… political suicide at this time… or “offer inadequate coverage” that helps almost no one and earns a reputation as not being worth the money the government spends on it.
The simplest solution… one that will eventually move the public strongly in support of National Health Care… would be for the government to offer low-cost insurance that competes with private insurance. The infrastructure is already in place. It’s called Medicare. But Medicare only covers “pre-existing conditions” (be it a “disability” or simply the ravages of old-age). It doesn’t cover accident/injury/illness. Add those coverages and call the plan “Medicare+PLUS“, an alternative insurance program that anyone can buy into for a substantially lower rate than most private insurers offer (say $100 a month). Force private insurance companies to compete and allow “the free market” that republicans so adore to bring down insurance costs across the country. Eventually, as more and more people abandon private insurance for “Medicare+PLUS“, there will come a point (20 years from now?) where people become open to the idea of simply paying for it through taxes. Private insurance companies will continue to exist (as they do in most other countries with National Health Care) by offering “premium services” not covered by the standard system, but at a price competitive with the Public insurance system.
5) Four Ways to help the struggling auto industry. As a car-nut myself raised around the smell of grease & gasoline, there are few issues as near and dear to my heart than the current collapse of the U.S. auto industry. Here are some simple ideas to put them back on the path of financial growth:
- Take over the health insurance burden of the automakers.
- Urge development of “super clean diesel fuel” for better mileage vehicles that keeps oil companies in business.
- Offer free use of all toll roads and HOV lanes to super high-mileage cars for one year.
- Redirect part of TARP funds to automakers so they can offer the 0% interest auto loans banks can’t.
Enroll them all into the new “Medicare+PLUS” program I suggest above. Consider it a “pilot program” to test-drive the new insurance system.
As I’ve mentioned here before, GM spends more money on health insurance that it does on steel, adding more than $1,500 to the price of every car. Then we force them to compete against countries that pay their workers less money and whose health insurance is paid for by the state.
Relieve U.S. automakers of the burden of providing health insurance (given to current employees, their families, and retirees), which would allow them to cut the price on their vehicles, making them more price-competitive with foreign vehicles. The cost would be substantially less than the amount of money we have already spent (and are likely to add to the bill) to bail them out now… a “solution” that does nothing more than delay the inevitable. If the program is successful in helping the Big Three recover, you will see a stampede of companies seeking to sign up for the Federal Health Insurance system, making it widely acceptable very quickly.
While I’m loath to help continue our dependence on fossil fuels in any way, and just as adverse to giving the oil industry ANY federal money for ANYTHING, as long as we continue to fight the idea that the oil companies aren’t going anywhere anytime soon, the longer it’s going to take to make any reasonable progress towards “cutting carbon emissions” or “energy independence”. Sorry, but the cold hard fact is that Americans own roughly 250 million motor vehicles, 99.999% of which run on fossil fuels. If you believe we’re going to stop producing fuel for them in the next 5-10 years, you’re just not dealing in reality. And, of course, both the oil companies and the politicians their money buys will fight their extinction tooth & nail spending the billions they made when gas was $4/gal, to defeat any such move.
But what we CAN do is force them to produce a cleaner fuel that burns in vehicles that get better mileage. And that fuel is diesel.
On average, diesel powered vehicles get 18% better mileage than their gasoline counterparts. But we don’t promote diesel use because it is a MUCH dirtier fuel than gasoline. Already, oil companies make “auto-diesel”, a “low sulfur” alternative to the cheap fuel burned in 18-wheelers. Yet even “auto diesel” is dirtier than gasoline. Mercedes invented a diesel-burning engine technology called “BlueTec” that reduces emissions to U.S. standards, but requires “spraying” tailpipe emissions with a special fluid. Not a practical solution for the everyday driver. VW announced last year the Bluesport turbo diesel roadster that promises an astounding 55 MPG without using hybrid technology. Better than a hybrid, with no batteries to recycle or dump in landfills.
As you can see, the technology already exists to produce super-high mileage vehicles, but its emissions are still too high by U.S. standards. Fuel technology has not kept pace with automotive technology.
The solution: order the oil companies to develop “super-low emissions diesel fuel”, then mandate The Big Three automakers to produce super-high mileage vehicles that run on it. Unlike technologies like “hydrogen” that require new infrastructure (ie: gas stations capable of selling it), diesel cars can start using the new fuel from Day One. And such vehicles will be in high demand, spurring sales worldwide of American cars once again.
Note, the biggest polluters on the road aren’t passenger cars & trucks, it’s commercial diesel vehicles. Burning “Clean Diesel” in them will do more to cut carbon emissions than replacing every single passenger car on the road today with a hybrid.
Right now, there isn’t that much incentive to buy a new high-mileage car. Gasoline is back below $2/gal, and money is tight enough without going out and dropping $20K on a new car. The car companies can barely afford the “cash incentives” of the recent past even in a good economy. People need a better reason to buy a high-mileage car than just “concern for the environment” and the ability to save an extra $30 a month on gas. How about “free use of all toll roads and the HOV lanes for one year for all new vehicles in the top 5% of fuel efficiency?” Save time & money. Might people be more willing to go out and buy a new car in a bad economy if it means they can spend less time sitting in traffic each day? And such a program is win-win if it encourages more people to drive more fuel efficient, greener vehicles. The DoT (Federal Dept of Transportation) already gives states millions of dollars each year to maintain their highways. How much more would it cost to allow a few extra cars to use the toll roads for free? $1000 a car? We already offer a $7,500 tax credit on high-mileage vehicles.
One of the reasons the auto industry is having so much trouble selling cars is because banks aren’t loaning money as easily as they once were, making it more difficult to get an auto loan. Banks don’t offer loans at 0% interest because they make no money off it. Car companies often offer 0% interest loans to help sell their own cars, but it’s getting harder for them to do so when they are losing billions annually.
The simple solution, rather than give the money to banks to make the loans, give some of it to the car companies to make their own loans, bypassing the banks entirely.
Today/Monday, the White House will unveil its “turnaround plan” for Detroit’s automakers. Much of the “plan” is expected to demand a “leaner/meaner” auto industry with a blueprint for how they intend to return to profitability. Both President Obama and Treasury Secretary Geithner refused to give details during their Sunday show appearances, but did suggest that if the automakers were to request more money, the government was going to demand a lot from them to justify it. Nowhere did I hear the White House suggest THEY had ideas to help the auto industry turn things around. And sadly, I expect that will be the case. If so, they are dooming them to fail… which is a damn shame because, as I’ve outlined about, it wouldn’t take a huge investment on the government’s part to help turn things around.
One can only hope people are listening.
March 30, 2009
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