Bill Clinton’s “Back to Work” Part I
First of all, I absolutely loved this book. I simply could not put it down, I was underlining, writing notes in the margins, referencing previous chapters, I was all over the place. Normally I can only say that about the latest novel by Dan Brown, however President Clinton’s intelligence, experience, and passion for the subject matter leaps off the page. President Clinton lays out a powerfully compelling argument for smart government and a relationship between that government and the private sector through cooperation.
President Clinton makes no apologies for his disagreement with those in the Republican Party and the Tea Party, who he addresses in the book as the “antigovernment movement”, and really takes their policies to task with how they impacted our nation. From the beginnings of true deficit spending under President Reagan to current Tea Party Republicans who want to eliminate the EPA despite scientific evidence of climate change. President Clinton makes the case for why strong government is needed now more than ever. I have to tell you now there is so much good content smashed into this book, that my little book review can’t possibly do it justice. But there were some areas which stood out and I found especially compelling.
Section 1: Where we are…
President Clinton provides a brief synopsis of the financial meltdown, I say brief because others have written entire books only discussing the causes which went into the 2008 collapse. However a significant factor which contributed to the 2008 financial collapse, which President Clinton addresses, was banks were simply overleveraged. In some cases overleveraged to the rate of $40 to $1. What does that mean? For every $1 of capital they had on hand, these overleveraged banks had $40 in investments. These banks simply didn’t have near the capital required to cover the massive loses that they took from risky investments, subprime lending, and the derivatives. How did banks become so overleveraged? The book doesn’t go it that however through some independent research I found that in 2004, under President George W. Bush's administration, the SEC allowed 5 firms (Lehman Brother, Bear Stearns, Merrill Lynch, Goldman Sachs, and Morgan Stanley) to more than double their allowed leverage maximum. The maximum leverage ratio was raised from approximately $12:$1 all the way up to, in the case of Merrill Lynch, leveraging at a $40:$1 ratio.
President Clinton also combats the idea that the Stimulus was a “failure”. A majority of economist agree that the stimulus stopped the recession from becoming another great depression, and held the unemployment rate down 1.5% -2.0% lower than it otherwise would have been without the stimulus. So, why does the Republican charge that the stimulus was a failure go mostly unchallenged? Because Republicans are referring the standard set by the Obama administration, who stated if the stimulus was passed that the unemployment rate would not rise above 8.0%. Well as it turns out, the recession was much worse than most economist predicted and unemployment rose to over 9.0%, so by the standard which the current Obama administration set for the program it has failed in that aspect. Despite the republican claim of failure, the stimulus did save millions of jobs and as President Clinton says in the book it “put a floor under the recession” ensuring it did not turn into a depression and that truely was a success for America.
President Clinton spends a great deal of time in the book talking about “the debt”, and as anyone who has followed the political debate regarding the debt knows there are three ways in which you can reduce the debt: cut spending, cut spending or cut spending…..wait no that is the Republican Tea Party approach. In reality you have THREE tools: cut spending, increase revenues, and grow the economy faster. President Clinton is under no illusions of where the money goes and what are the biggest drivers of our deficit: Defense, Social Security, Medicare, Medicaid, and interest on the national debt. Those are biggest drivers, and President Clinton has ideas to implement in each area (except interest on the debt), which are not normally discussed, that would save money thus lower the deficit. Nothing can really be done about the the interest on the debt. Interest on the debt can only be affected by reducing our debt as a percentage of national income. However here are a few examples of ideas and solutions in those other areas.
Defense – Switch Tricare (a healthcare plan available to all veterans) to a sliding scale based on income as long as we can do it without putting more of a burden on returning veterans who already face higher unemployment rate than civilians.
Allow current non-compete government contracts to be opened to competitive bidding. This could save billions of dollars in the defense budget.
Social Security – President Clinton provides black and white numbers, breaking down the ratios for number of retirees (Baby Boomers) who will be recipients of benefits to the number of American workers who are paying into the system. Right now the ratios are not looking good because of how large the baby boomer generation is, thankfully there is a light at the end of the tunnel which is the generation called “Millennials” a generation even larger than the baby boomers.
To help keep Social Security solvent President Clinton suggests altering the “cap”. There is a collection cap on Social Security taxes of $106,800 (did you know that?). The Simpson-Bowles Commission suggested raising that cap to $190,000 in 2020. Others have suggested removing the cap altogether for employers, or raising that cap to $190,000 sooner than 2020.
Another suggestion is allowing seniors who currently receive Social Security benefits to reenter the workforce without it affecting there Social Security benefits.
Medicare &Medicaid – President Clinton acknowledges the exploding cost of healthcare but dismisses Paul Ryan’s plan to turn Medicare and Medicaid into voucher systems. One of the solutions presented in the book is adoption of the VA sterilization practices nationally, this uniform sterilization practice has shown dramatic reductions in hospital-acquired infection. This lowers costs and increases hospital efficiency.
Additional follow an example put forth by the Mayo Clinic to reduce incentives for providers to run unnecessary test, all doctors are paid on salary. Their income is not affected by how many test they run.
President Clinton does praise Obamacare in one section in particular, the section of Obamacare which requires insurance companies to use at least 85% of premiums to pay for health care services, not profits or marketing. This item is noted especially because in 2009 during the heart of the recession insurance companies sharply raised rates on customers thus increasing profits 56%.
Lastly President Clinton, who has recently had health concerns of his own, suggests to improve lifestyles and stay healthier, referencing the huge amount of money spent on preventable obesity related illnesses.
Stay tuned for Bill Clinton's "Back to Work" Part II...