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US State Of Nation: What Is So Wrong?

US State of Nation: What Is So Wrong?

by Elliott R. Morss

Introduction

As I have reported earlier, there are serious problems in banking, education, health, energy and defense in the US. The issues are complex, but there is a common theme running throughout.

Banking

US banks effectively collapsed in 2008. That resulted in a global panic and a stock market loss of $36 trillion. That capital loss caused a drop in expenditures worldwide and the global recession. What was the remedy? To bail out the banks that caused the problem and the passage of the 2300-page Dodd-Frank Bill in 2010. As I and others have asserted, the banks are no safer today than they were before their collapse. Why is this? Table 1 provides part of the answer.

Table 1. - US Lobbying Expenditures - Finance

(mil. US$)

Group

2009

2010

Mortgage Banks

16

17

Commercial Banks

51

51

Private Equity Firms

17

16

Securities/Other Investing Firms

92

101

Venture Capital

8

6

Total

184

191

Source: Open Secrets

Education

The US spends as much as any country per capita on education, but US test scores on reading, math, and science rank 18th among developed nations. And yes, Chinese scores are higher. Table 2 offers part of the reason.

Table 2. - US Lobbying Expenditures - Education

(mil. US$)

Group

2009

2010

US Colleges and Schools

103

108

Teachers Unions

3

5

Total

106

113

Source: Open Secrets

New York Governor Cuomo has pointed out that education has become a business in New York and only the students lack a union. And indeed, most of the lobbying for education is done at the state-local level, and Open Secrets covers only Federal lobbying.

Health

The US spends far more than any other developed nation on health care, and its health outcomes are the worst of any developed nation. Ouch! Why should this be? After all, I have reported that the findings of John Wennberg on how to reduce US health costs and improve performance are reflected in the Obama Health Care Bill. Unfortunately, that is not all that is included in the 1,017 page bill. Before any action suggested by Wennberg can be implemented, the Bill requires "stakeholder" approval. Table 3 gives a listing of the "stakeholders" and their Federal lobbying outlays.

Table 3. - US Lobbying Expenditures - Health

(mil. US$)

Group

2008

2009

Pharmaceutical/Health Products

240

272

Hospitals/Nursing Homes

102

109

Health Professionals

78

85

Health Services/HMOs

63

75

Insurance

153

164

Total

636

705

Source: Open Secrets

Energy

When Obama was elected, there was considerable hoopla about converting to renewable energies, reducing pollution and the US dependence on foreign oil. What has happened since then? As I have reported, very little. US dependence on coal has increased, oil imports continue at high levels, and the US use of renewable energies remains insignificant.

Table 4. - US Lobbying Expenditures - Energy

(mil. US$)

Group

2009

2010

Utilities

174

191

Oil & Gas

133

146

Mining

26

29

Alternative Energy

29

32

Env. Svcs./Equipment

7

8

Other Energy

61

67

Total

431

473

Source: Open Secrets

Defense

In the 20th and 21st Centuries, the US has been at war far more than any other nation. And recently, wars appear to be increasingly unfocused and unproductive. Was Eisenhower right to warn us about the military/industrial complex?

Table 5. - US Lobbying Expenditures - Defense

(mil. US$)

Group

2009

2010

Aerospace/Contractors

58

64

Defense Electronics

44

42

Foreign Policy Advocates

5

6

Defense Manufacturers

36

33

Total

143

145

Source: Open Secrets

I repeat a quote by Robert Borosage:

"The country finds itself constantly at war. New presidents inherit the wars of their predecessors. They are faced not with deciding to go to war, but whether to accept defeat in one already in progress….And slowly, the great power declines from the inside out. The wars are costly, running up national debts. Vital investments are put off. Schools decline. Sewers leak. For a long time, circuses distract from the spreading ruin….Other societies become productive centers, capturing the new industries. Some begin providing better education for their citizens, better support for their citizens. Their taxes, not drained by the cost of wars past and present, can be devoted to what we used to call 'domestic improvements.'

This is a very rich country…. But even wealthy countries must choose. We can afford to police the world - to sustain 800 bases across the globe, to station troops in Korea, in Japan, in Bosnia, in Europe, fight wars in Iraq and Afghanistan, sustain fleets to police the seas…. South Waziristan, Yemen, Somalia, Kosovo, the Taiwan straits, the North Korean border, the seven seas - we can do this. But the result is that we are continually at war. And the wars cost - in money, in lives, in attention. And inevitably, domestic priorities, as well as emerging security threats that have no military answers, get ignored. A rich country, Adam Smith wrote, has a lot of ruin in it. We seem intent on testing the limits of that proposition."

Conclusion

I look at the way China is run. With all its shortcomings, the Chinese Communist party fears the wrath of the people. It knows its hold on power depends on keeping them happy. In the US, do our elected people worry about representing the people's interests? They might rationalize that they are while taking suggestions and contributions from the "interested parties". But they are not. They are passing bad bills that only make things worse.

Does it matter whether the US President is Republican or Democrat? I don't think so. The gravy train works for both parties.

Any reason to be hopeful? The money has to stop. I hope the Occupy Wall Street Movement gains traction.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.