Wednesday, November 5, 2008

My three economic challenges to President Elect Barack Obama

The election is over. Obama won by a landslide, no doubt with the help of many readers of this blog.

But even having won a majority of the popular vote and with his party in control of both houses of Congress, making the kinds of changes that Barack Obama promises won't be easy and will require more than political maneuvering. Especially on the economy, much work and sacrifice will have to be made by the same electorate the ushered Obama to power. Here's my top three things that I think Obama will focus on to right the economy, what it will take to get them done, and a few suggestions for all of us to take heed of.

To ensure our economic future, Obama MUST:

1. Push through Congress meaningful healthcare reform that can actually be implemented. His campaign platform called for an aggressive plan to cover all Americans that is sure to be costly, but the challenges are many. A Democrat-controlled Congress will likely support his plan, but the healthcare lobby still looms large. Obama will have to be careful -- and rightfully so -- to make meaningful reform that is affordable to taxpayers and consumers but doesn't deter investment in the medical sciences or cause a catastrophic loss of jobs in the medical care industry.

Our responsibility -- Get healthier. Obesity, high blood pressure, heart disease, diabetes, cancers, HIV infection: For its wealth and relative prevalence of available medical facilities, America is one of the sickest nations of earth. Many of those ailments are not just extremely costly, but preventable. We'd all do ourselves and the new president a favor by eating better and taking a damn walk every day.

2. Re-regulate the financial markets -- but not too much. Wall Street's become too much like a casino, less a place where people take calculated risks that pay off when sound management or daring innovations are successful and more like a gambling parlor where bettors wager (and often lose) money only to sell their bad debts to the next sucker who comes along. Those suckers ultimately ended up being the American taxpayer and that can't continue. Obama's choice for Treasury secretary will be his most important cabinet pick besides outside Secretary of State.

Our responsibility: Continue investing, but do so responsibly. Panicking, abandoning banks that are still solvent and pulling out of 401(k)s is not the way to go. Neither, however, are irrationally bidding up the prices of IPO shares like during the tech boom, or homes like what happened in the earlier part of this decade. Weaning ourselves off credit won't hurt, either, but I'll come back to that later this week.

3. Mandate a financial literacy curriculum in elementary and high schools. Yes, this is a wild-card that wasn't part of Obama's election platform. But it stands, in my opinion, as the number-one challenge to our economic future. The housing bust and credit crisis both have roots in the fact that American schools continue to churn out workers educated enough to earn decent salaries but woefully equipped to know how to handle the money. Obama fails to make this a national priority at the peril of us all.

Our responsibility: First, make sure you understand the basics of personal finance. Pick up 401(k)s for Dummies or Investing for Dummies. Bookmark this blog. Watch CNBC or read the Wall Street Journal then look up terms you don't understand. Then teach your kids what you're learning. By the time they get out of elementary school, your child should have a savings account, a college fund and understanding that using a credit card doesn't mean the money won't have to be paid back.


Ashley said...

Excellent post, especially about what part we play in fixing this long-term. Don't you think that jobs should run concurrent with increasing financial literacy? I'm amazed at how many of my peers don't care to better their skills, or gain interest in being entrepreneurial. Where does job creation play in your (Obama's) immediate tasks, if at all?

lolly said...

I appreciate that you not only point out what our new President needs to do, but also what we must do. Solution cannot is not up to one person, but to us all. Very thoughtful and insightful Mr. Reed.

Airelon said...

who do you turn to now, to fund any such programs - without a gold standard (which I do not favor), to fund the Treasuries? What country is going to say:

"No problem. We'll fund the strength of the US Dollar, so you can rebuild your economy?"

China has had it with the U.S. shinanigans, and is really pissed at the currency situation.

What it comes down to? Is that I have to protect my wealth. The government is not more effecient at distributing my wealth than I am.

I am searching for every tax shelter I can find, and my number one priority at this point is:

Hide the money

And I can't believe that others who are much more wealthy than I? Won't be doing the same thing.

Butterrfly said...

Excellent post! We voted Obama into the presidency and he certainly has an unprecented amount of work to do thanks to mess he is inheriting from the Bush administration. However, every citizen has a role and responsibility in the prosperity and success of OUR america. Thanks for pointing that out! :o)

Keith T. Reed said...

Airelon, you're exactly right to ask where the money will come from, but where I'm sure we'll disagree is on the idea of "redistribution of wealth."

Truth of the matter is that wealth has been largely redistributed upward -- aided by tax policies -- for the better part of three decades. That's happened without attention to glaring problems with our health care system or to how well-educated our populace is with regard to their own finances. That simply is not a sustainable formula for our economy, and thus doesn't benefit your pocketbook regardless of what tax bracket you fall into.

My honest view is that government spending has to be cut drastically. This country could fund health care reform and a substantial financial literacy curriculum with what we spend in Iraq every month -- and that's not to mention what we're paying in debt service to China. Fiscal discipline has long been missing in Washington and had it been there, I could have my health care and school reform without your need to worry about wealth redistribution.