Right in San Francisco

Deliberate Waste

There is lots of discussion about what the government buys, but little about how they buy it. Stay with me on the mundane subject of buying stuff - there is an important message in the end.    

Back in the day, I led the purchasing function for a Fortune 50 company. Suppliers were selected on the basis of quality, cost, service, and (sometimes) technology leadership, but there were a few exceptions.  Since we sold food and beverages, it was important to forge alliances with minority groups such as the NAACP, the Urban League, and the League of United Latin American Citizens, and the company did this through advertising, sponsorships, and by spending about $100 million with minority suppliers. There was no compromise on quality, but we consciously paid a bit more for a limited period of time as small companies developed. It was the stockholders' money, and we were looking broadly to their long term benefit.

A few years later, I became familiar with San Francisco purchasing policies which, contrary to California law, required the granting of preferences to companies owned and controlled by women and minorities. (But then, San Francisco ignores state and federal law on medical marijuana, illegal immigrants, and whatever else doesn't fit the politics of the city.) My estimate is that this policy - based on the entirely undocumented assertion of underlying discrimination - costs the citizens of the city $25 to $50 million annually.

So, the federal government. It is common for congressmen to lobby for defense contractors and others in their districts, and a recent decision favoring Boeing versus a European consortium in bidding for a $35 billion air refueling tanker program shows a "buy American" bias. In these cases, costs may suffer - but tens of thousands of American jobs are at issue, as well as technological leadership.  

The Obama administration is now taking the next step - promoting a "High Road Procurement Policy", designed with the help of union officials over the objections of business leaders. By law, or perhaps by executive order, some $500 billion of government purchases will go to companies paying above prevailing wages and benefits.  Cafeteria workers; maintenance workers; construction workers; uniform providers; and on and on are to have their bids evaluated based on above-market compensation requirements in order to raise the standard of living of the "working poor" - and to eliminate the advantage of non-union shops.  Obama's off the cuff comment to Joe the Plumber that he wanted to "spread it around" was the most honest thing he said in the campaign. But then, with trillion dollar deficits, what's a few billion more?

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Thanks to Jack Davies for this clever video of "Obama at the Bat".

And for those tracking the House health care vote, here is the Republican National Campaign Committee's list of targeted Democrats and their likely votes. If you live in one of these districts, call their office today.

bill bowen - 3/12/10

  

Reversible Error

What Tom Brokaw called The Greatest Generation built much of America's infrastructure after World War II, laying the ground for unprecedented prosperity and world power. The Boomer Generation spent it - along with all that they could borrow from their children. In pondering the challenge left for the next generation, it is important to understand what is reversible and what they will be stuck with. I'll give it a try.

First, a premise: America's political system allows ebbs and flows, and the current liberal government will pass - perhaps in 2010, perhaps in 2012, perhaps in 2016, but almost certainly not much longer. Much of what the Obama administration is doing offends conservatives and independents, but the focus should be on what cannot eventually be reversed.

    On national security:

-  The defense establishment is fine with Bob Gates' leadership. Reduction of nukes is a good idea, if the Russians can be brought along. Congressionally-mandated weapons systems are being cut back. The balance between conventional and special forces seems to be about right.

-  Eric Holder's attack on the intelligence community - prosecuting interrogators; taking terrorists out of the military/intelligence system -  will make us less safe for awhile, but not permanently;

-  In Iraq/Afghanistan/Pakistan things are getting better under Generals Petreus and McChrystal. Inability to deal with Iran will probably leave the greatest permanent damage. Obama's weakness does not help, but perhaps nothing short of an additional war would.

On Economics:

-  The risk of a government take-over of the insurance industry (single payer; public option) seems to have been averted. Obama's continuing objective of creating a trillion dollar entitlement (bigger even than Bush's unfunded prescription drug entitlement) could probably not be reversed if passed. The other health care stuff is comparatively tactical and can be fixed, and look for the "Health Care Fairness Act of 2011" to correct most of the corruption that Obama and Harry Reid have put into their ugly legislation.  

-  Trillion dollar budget shortfalls (11% of GDP compared to a "sustainable" 3%) with the cumulative deficit rapidly approaching 100% of GDP is the 1000 pound gorilla. Whatever spending cuts can be made, the pending tax increases (income tax rates; capital gains; dividends; businesses; inheritance) are just the leading edge. It is hard to see how the growth of government can be reversed - and it must eventually be fed.

-  With "Cap and Trade" a non-starter now, the EPA can do what it will to punish CO2 generation, but what can be done by executive department edict can be undone the same way.  

- The next president will have a marvelous opportunity at privatization - General Motors; Chrysler; GMAC; AIG; major bank positions; Fannie Mae/Freddie Mac; the student loan system; and whatever else the Democrats grab in the next few years.  

On Social Issues:

-  Immigration is perhaps the next big battle. With 10 to 15 million Democratic-leaning illegal immigrant voters available, Obama will undoubtedly seek an irreversible change to the political balance. With 10% unemployment and a rebellious middle class, this battle may be as big as the health care fight. 

-  The impending overturning of "Don't Ask, Don't Tell" will be irreversible and  forgotten before long.

Net, net - our kids will need to deal with a new round of Iran-inspired nuclear proliferation and significantly less discretionary (after tax) personal income. With the Democrats digging as fast as they can, November cannot come soon enough.  

And for our kids - thanks for the ride.

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This week's You Tube is a short segment of Wisconsin's Representative Paul Ryan (R) at the health care summit, demonstrating his control of the facts and the philosophy.

bill bowen - 3/5/10