By now, President’s Obama speech should have been dissected by every media outlet.  Delivered so artfully, that most people missed the usurpation of power by the executive branch. 

The executive office is going to make sure the governors spend the stimulus money in the way he dictates.  Gives new meaning to states’ rights.  And who among us caught the single phrase that he was going to provide a universal savings account?  Translate this into no more tax deductibility for 401K’s.

How many businesses will continue to offer matching funds for 401K’s if there is no longer federal deductibility?  If business stops matching, fewer people will contribute to a 401k, and we will all be forced into the universal savings program which guarantees us 3% return on our money.

I would definitely hold onto your wallet!  And not to worry, the tax rate for those making over $200,000 doesn’t increase until 2011.   Why then?  Most people assume it is to allow the Bush 2003 tax rate cuts to expire in 2010, but I believe the President is much more clever.  No one will note the impact of the increased tax rate until 2012, and there will not be enough outrage to deter his re-election. 

We are definitley in interesting times.  I may never go back to work as a physician or small business owner!

How has this recession affected you?  Have you lost your job, had your hours reduced, cut back on spending and finally established a budget (guilty)?  Do you feel more uncertain, less upbeat, angry or merely disappointed? Moved in with relatives after losing your house or decide to give up the apartment?

We have “hunkered down” and are waiting for the next shoe to drop. Instead of the flashy arrogance of dynamism and confidence, our pessimism is pervasive.  We have had stock market collapses before, but the current malaise is far beyond that.  It is as though we have the equivalent of the global economic “black plague” and just as no one at that time knew who was infected and who they could trust, we also do not know who to trust, either in business or government!

For the past several decades, our political leaders have come from Ivy League institutions and somewhat privileged backgrounds (even Clinton) and they have not experienced the toughness of scraping by and how challenging living can be for those of us near the bottom of the economic ladder.  Our political leaders exuded a false buoyancy and overextended our military, overspent and overcommitted our resources and helped themselves and their “friends” to largesse at our expense.   And NOW they want US to allow THEM to remake our political and economic culture!

The road ahead does not lie in the stimulus package, and it was never democrat or republican leaders who forged the path ahead.  It is Carolyn in her basement, and Roger in his garage and Jose in his garden and countless other individual people who know the American dream was never about owning a home.  It is and was about TRYING to be the best you can be!  It was and is “The Cinderella Man” where with family and friends and knowing what counts most is already at our fingertips.  It is knowing that our reliance upon our own resources that will get us through this.  Despite being lulled into intellectual laziness, we are still up to the task.  

Our political regeneration will be the same as well.  It will emerge locally in counties and states as we learn to first control ourselves and how to govern effectively with boundaries in a time of “less”.  Do we trust big anymore?  And if not, why does this congress and administration keeping forcing “bigger is better” upon us?  

There is magic out there and it is within and among us!

On Tuesday, February 17, I had the honor of addressing a group of pre-med and other interested students at Wake Forest University. Luckily, this was not scheduled on a men’s basketball game night, so the attendance was great. I spoke on redesigning our health care system to accomodate universal access, portability, affordability, while promoting personal responsibility and innovation. The illusion that is currently fabricated for the masses is that we can have all the technology and advanced premium care we now have if we move to universal single payer government controlled health care and pay less. Those who “paint” this illusion either deliberately ignore or refuse to acknowledge the failures of other systems abroad. I can provide similar anecdotes for bad outcomes from most other developed countries and the data on infant mortality and age of death are skewed to support that despite higher costs of care we have lesser quality here in the U.S. I exposed some of these myths during this lecture. I cannot help but be concerned for the future of these bright young people entering medicine. The personal and monetary sacrifice they make is tremendous, but will they earn enough to warrant the delayed gratification they are undertaking? I hope we will use the incredible intellect and talent we have in this country to forge our own course, rather than emulate the failures of other countries. When it comes to health care, we are still the shining beacon on the hill that sets the standards for the world. It would be a shame for the U.S. to be unable to export this excellence abroad!

On Friday, February 6, I attended clinical conference at the Department of Ophthalmology at the University of Iowa.  This is a conference held monthly in which a guest speaker delivers 2 lectures and patient cases are presented and the management is discussed with the guest speaker who is typically a physician of some academic repute.  This particular session was on pediatric ophthalmology and the speaker was our own Dr. Scott who had retired.

Now, pediatric ophthalmology and strabismus (eyes crossed creating double vision or lazy eye) happens to be an area that was quite challenging to me as a residence, but in which I have gained much knowledge through practice over many years.  Dr. Scott could also be quite intimidating as a professor and he doesn’t cut anyone any slack.  This is a good thing, because we are dealing with people, especially children.  The interesting thing was that during this conference, I had a greater depth of understanding and knowledge than I thought and I became acutely aware of how much knowledge I had gained over the many years through working with and examining patients.  It was an encouraging observation.

More interesting was to see Dr. Scott in this role of visiting professor when you are not a faculty member or resident of the institution.  One of the cases presented, and the patient was present for us to exam as well, had still photographs presented (as opposed to video).  This presentation is in fairly rapid sequence and the photographs of the eye movements and crossing in different fields of gaze were flashed by.  Dr. Scott asked that the resident return to a previous montage and he pointed out and demonstrated a finding most of the rest of us had overlooked.  It was the most amazing thing to see!  To be cognizant of how rapidly his mind had processed the photographs and information permitting him to reach a management conclusion when the rest of us were still listening to the speaker and gathering information!

What an incredible thing to see a master at work!  It reminds one of what Malcolm Gladwell theorizes in “Blink” when he regards intuition or gut impressions as valid because they are the immediate processing by the brain of our knowledge and experience, and all the deliberation is taking pace on some other level.  I was watching this happen instantaneously before my eyes (no pun intended) and I was so deeply entranced and impressed.  I hope that I am as inspiring to some as Dr. Scott was to me.

Are you feeling more confident with all of these great minds working together to determine how to best get our economy humming again?  The most demoralizing comment made was that “only the government can save” us.  It was government policies and regulations that got us into this mess with Fannie Mae/Freddie Mac removing the risk of bad loans and authorized to bundle mortgage backed assets (securitization) and persuading/coercing lenders to underwrite anyone, regulations never put into place to oversee the credit default swap market and the removal of a study of risk mandated when the Glass-Stegall Act was repealed (this caveat was put into the bill by former Congressman Jim Leach). 

The housing bubble was exacerbated by the low interest rate policy of the Federal Reserve fueling spending in this sector because of the stock market decline of 2000 and the low returns in the bond market.

I am not sure that government intervention would allow the economy to regroup as rapidly as it could – if left alone.  Yes, there would be bank failures and job losses, but would we rebound much faster if allowed to fail and reach the market bottom? 

Economists are in consensus that the policies of both Presidents’ Hoover and Roosevelt sent us from recession to depression and then into the great depression.  The anti-trust, anti-competitive policies and wages frozen higher than the prevailing market rate prolonged the depression by 6-7 years.  We see the same government interference occurring now. 

The treasury continues to back off purchasing bad assets to create a “bad bank” because no one knows how to value these assets.  It is unknown if housing has reached its’ bottom because we continue to have interference in the marketplace. The treasury fears purchasing these tainted assets from lenders which may continue to be devalued and it would be an even worse deal for the taxpayers.  So we have not yet stabilized the housing market but we are seeing evidence of increased borrowing and new mortgages.  Nonetheless, it will take a long time for the existing inventory to evaporate and perhaps 10-20 years until housing prices again escalate. 

So what would stimulate the private sector economy and create jobs?  Assistance to low and middle income individuals in the most rapid manner would be a payroll tax cut.  This would save billions in mailing information to taxpayers and go to those of such low income that they don’t pay income tax. 

A temporary suspension of the payroll tax (FICA) could occur instantaneously and be revisited within 6 months. Additionally, this would help small businesses and could be targeted to those making under $45,000 as single and $75,000 as joint filers.  Even if this money is used to pay down debt or put into savings, both would increase capital assets of banking institutions and help their balance sheets.

Another tactic would be to lower the capital reserves that lending institutions have to have to offset their debt.  This keeps in place the transparency of mark-to-market accounting that accounts and investors appreciate.  Lowering the capital reserve on banks, credit unions and insurance companies would only be temporary in nature.

Temporarily, relinquishing the taxes on funds of multinational companies that are held overseas which could be reinvested into stateside capitol investment or to increase salaries would be of great benefit.  Also, dropping the capital gains and dividend tax rate temporarily would stimulate business growth and job creation.  This tactics would stimulate the private sector and remove some of the uncertainty that is pervasive and would be rapidly infused into the economy.

Government spending on infrastructure such as roads, bridges, smart electric grid updates and broadband or IT infrastructure are all appropriate measures in a stimulus bill.  However, for instance, in the current stimulus package there is only $10 billion on broadband spending.  To get the U.S. up to the level and lower cost (for the consumer) of Japan and Europe, it should approach $50 billion.  The government should not dictate to which company or industry and any taxpayer funds should require more competition so that the price to the consumer is lowered.  Beyond these areas, any spending should go through the correct debate and appropriation process in the regular budget cycle.

I believe the best way out of an economic crises is to unleash the American spirit of creativity, ingenuity and perseverance. 

The government can and has hampered these efforts before.  When we see politicians and former politicians benefiting from the policies they enact, and from the organizations to which they grant access and receive speaking fees, we have to wonder if they are in the best position to direct our economic growth.  Are they trustworthy?  I, for one, think we have overspent and overindulged both on a personal and government level, and we will have to endure some pain until we reach homeostasis. 

The deficit we are leaving for future generations will have to be addressed and I worry that we cannot continue to borrow our way out of this, or print currency which will lead to 1980’s style inflation.  The economy or stock market will not rebound until there is certainty of a market bottom and knowledge of the new regulatory agenda. 

Insecurity is pervasive and worsened by our government’s actions or inactions.