My Advice For President-Elect Obama

This post is part of a group writing project at The Finance Blog Network.  President-elect Obama asked on Change.org for new ideas and advice from everyday people.  My fellow Finance Blog Network bloggers and I thought this would be a good opportunity to take him up on the offer.

Economy

The most important piece of advice I could give to Obama regarding the economy is to not to give in to overly protectionist measures.  People often become restless and demand action, any action, from the government when times are bad.  Citizens and lobbyists from all walks of life will plead for a handout here, a bailout there, a tariff for that industry and barriers to trade for another.  Unfortunately, history has shown this kind of protectionism simply doesn’t work.  Obama should consider all serious proposals and consult with his trusted advisers, of course, but undertaking protectionist measures just to placate the masses would be disastrous for our nation’s long-term economic health.

Energy

I think Obama is on the right track with his alternative energy propositions, although I don’t think what he’s proposed is very realistic.  While I am all for research and investment in promising alternative energy technology, the real-world situation is that we are still a nation wholly dependent on oil to function.  As an environmentalist it pains me to say it, but I would like to see Obama authorize off-shore drilling as a stop-gap measure until our alternative energy investments come to fruition.  Nobody wants to destroy the environment, but idealism won’t put food on our tables or save our economy.

Education

I have long been in support of school voucher as a means to improve our public education system.  The primary problem with our public education system, as I see it, is the same problem any government agency has:  it’s inefficient to a fault because there are no consequences for failure.  Let’s face it:  most people (and the systems they control) become lazy, complacent, and inefficient when there are no concrete rewards for success or punishments for failure.  Allocating more capital to better schools and less to bad schools will provide a strong incentive to the poor schools to improve.  Some people argue starving the bad schools of funds will make them even worse.  That’s nonsense.  The problem isn’t that there isn’t enough money, it’s that there’s no effort to improve anything.  The reality is that a properly-motivated school board and faculty could provide a vastly superior education to all students for less than one-quarter of their current budget.  Never underestimate the power of human creativity to overcome a problem.  Lack of funding simply isn’t a difficult problem to overcome. 

Health care

In theory, I support universal health care; however, I do not support the system as it is currently implemented in Canada and parts of Europe.  I support inexpensive, high-quality emergency health care for everybody.  Nobody should have their house foreclosed on because they can’t afford their cancer treatment, but I do not believe a full-service national health plan on a European scale is sustainable over the long term.  Inevitably, the quality of care will fall even as costs rise.  The real problem, in my  mind, is the health insurance industry.  The insurance industry could be streamlined to improve care and save billions upon billions of dollars every year.  A hybrid approach with private insurance being the primary health care vehicle with inexpensive government care filling in the gaps in coverage caused by pre-existing conditions, unemployment, etc would work best.

Small Business

Small businesses are the driving force of the US economy.  Every effort must be made to help them prosper.  Taxes on enterprising small business owners should be lowered, not raised.  Obama’s proposal to eliminate capital gains taxes on all small businesses below a certain size and income range looks good on paper but in reality probably won’t help a lot of small business owners since they tend to be organized as pass-through entities for tax purposes, anyway.  Filing income taxes for a small business is a veritable nightmare.  The tax code should be streamlined to make it easier for small business owners to file, allowing them to concentrate on actually running their business rather than shuffling paper around.

Retirement/Social Security

Obama should implement a portable 401k that isn’t dependent on your employer.  It would be just like an IRA.  You could open it anywhere you like and give each new employer your account information.  Your retirement contributions would then be directly deposited into your own personal 401k account exactly as it is now.  The change would be seamless and transparent to most companies and individuals.

Obama should also conduct a serious investigation into the solvency of the current social security system and make the painful changes if necessary.  Nobody wants to cut social security benefits or raise taxes, but it just may come to that.  Obama should have the political will to do what’s necessary even if it isn’t popular.  A few more painful but I think necessary changes to social security are

• eliminate the wage cap
• apply a means test so only those who truly need it to get by receive benefits
• return to what social security was intended to be in the first place, a modest safety net to help retirees who need it get by, not a public pension fund