Monthly Archives: November 2011

What's the tipping point?

Last week I canceled a trip to be with our grandchildren for Thanksgiving. The tipping point that forced the decision was a combination of unexpected medical co-pays on top of some un-budgeted car repair. While heartbreaking, it was not particularly serious and we expect to visit in a couple of weeks, but it made me wonder. I have made a living as a marketing version of the canary in a coal mine – a preeminent consumer of sorts. For whatever reason, I seem to experience things months or more before others. If something so insignificant could force my decision, could we, the formerly solid middle class, be on the edge of a more dramatic shift?

Hard working families all over our great country are facing tough economic decisions every day. Uncomfortable decisions. Decisions that seem different in scale than they used to be. Admittedly, living within a budget is a responsible and necessary way for each of us to live and manage our money. But what cumulative toll has the horrible economy taken on the type and frequency of such difficult decisions?

The Census Bureau defines poverty as $22,350 annually for a family of four, and near-poor as people within 200% above the poverty line. Officially, one in three Americans is poor or near-poor. Unofficially, it is at least one in two. The real life definition should also include people who are one unexpected event from being without money. Cash poor is not the same thing as poor, but it feels like it for a time and easily can become permanent.

Most of us have have taken some hits in the last few years. Someone in the family was laid off. Someone got sick. Someone entered the work force, but couldn’t find work adequate to pay their college loans. Credit lines dried up with house value. The house didn’t sell. The investment was made worthless. Your health insurance was cancelled, or only offered at a price greater than your house payment. But you endured. Party on.

There are Dominossteps down the ladder for the middle class near poor. Liquidate stocks and savings. Cash in retirement accounts. Sell your house for a smaller house. Sell that house for an apartment. Then a smaller apartment. Give up the life insurance you’ve paid on for twenty years. Give up the private schools. Gave up the extra car. Give up Whole Foods for Publix, then BigLots, then dumpster diving for food. Give up the malls for Walmart, then the charity store. Cancel cable and the newspaper. Unhook the land lines. Postpone preventative maintenance – dental care, health check ups, car tune-ups or new tires, overlook the minor car accident and cash the check. Let the dog die.

The middle class can take some hits. Americans are resilient. We can get smaller and leaner. We can do without. We can ask for help from friends or family. Wishing won’t change it. Remembering accrued disappointment makes it worse.

There must be a point in the spiral – the time or convergence of events, that leaves no options. The moment when all that you have worked for is gone. The time when you change economic classes. When there is no pretending.

A tipping point was first defined in physics as that “small amount of weight to a balanced object that can cause it to suddenly and completely topple.” Al Gore speaks of a tipping point for our environment – when it is too late to avoid the catastrophe that awaits. Is there a tipping point for the middle class? A moment when one extra burden, no matter its size or intended consequence, can cause millions, perhaps, tens of millions of families, to suddenly and completely topple?

What could be the tipping point?

  • This Great Recession is now entering its third year. Extended unemployment benefits, pitiful as they are, are about to expire and we do not have a Congress that will extend them.
  • The temporary payroll tax break is also expiring next month. The jury is out whether the Tea Party will make a deal to extend this tax break for working Americans. In real terms, the disappearance of payroll tax relief will cost the “average” worker about $2,000 next year. Will that be the tipping point?
  • The Bush tax cuts, now in their 10th year, are set to expire at the end of 2012. Included with the 4.6% increase in tax for the wealthy, is a 3% tax increase for most of the middle class – about $2,600 for a family of four – could that be the tipping point?
  • If the Tea Party holds Medicare hostage and Congress doesn’t pass the Medicare “doc-fix” by the end of 2011, something that has been passed every year for almost half a century, doctor and hospital reimbursements will be reduced by 27%. Will your doctor accept Medicare? Will that be the tipping point for millions of our seniors who are barely making ends meet?
  • Gas prices are rising again. Will that tip us?
  • The rising price of rents?
  • Next year’s expected Health Insurance co-pay increases?
  • The rising average credit card rates, fees and penalties? Or debit card charges?
  • Or will it be just one more group of layoffs that causes consumption to drop just enough for business to grind to a halt?
  • Or maybe it will just be something simple happening to one more family. A child who comes home sick from school that causes you to miss work that gets you fired? A speeding ticket that must be paid and causes you to miss a payment on a credit card that causes the rates on all your cards to go to 33.65%, plus late payments and interest on late payments, that can never be caught up? Or your furnace goes out? Or will a parent lose their job and helping them puts your family in the economic spiral?  Or, God forbid, you lose your spouse?

Just a few years ago, the monthly budget’s rounding error for the middle class near-poor was in the hundreds. Now, every penny is counted. They had a stack of credit cards with zero interest rates and seemingly unlimited credit lines. An unexpected expense would just go on the card. Since that time, home values have shrunk and with it, credit lines and flexibility.

The middle class near-poor may not look much different at a casual glance. They may decorate trees for Christmas, but they’ll wrap empty gifts under the tree. 2011 will be another year when Christmas giving will be postponed or homemade. The middle class near-poor are just one more bad thing away from the bottom and none of us are prepared for how to make it there. There is no longer any social safety net. The food kitchens are full and the pantries emptying more quickly than filled. Our government has borrowed all they will borrow and nothing else is expected until after the fall election, or the next.

How long will it take to recover? If all things go well, and they may not, the US economy will take a decade or more just to get back to where we were when Bush left. Another decade to get back to where we were when Clinton left. Given the life expectancy in poverty, two decades will go a long way toward wiping out poverty. The economy can come back more quickly, but only if and only when everyone can have a job and be back in the economy as consumers.

Trying not to leave this story on a gloomy note, there are things you can do.

  • You can join the 99%, occupy and march on Washington and call for repealing laws that caused the grotesque financial inequity in our nation.
  •  You can demand your Congress person do every stinking little thing they can do or spend to get rid of the extra weights on the middle class, the near-poor and those already in poverty. Tell them to stop listening to lobbyists and do what is right for the people they should be representing. Tell them to shut up with the election year fear mongering on issues meaningless to the economy and do something good before we vote them out of office.  Tell them specifically to vote for what’s left of Obama’s jobs initiative, for extension of jobless benefits, extension of the payroll tax cuts, the Medicare “doc-fix” and making permanent the Bush tax cuts for the middle class. Tell them to keep their hands off of Wall Street reform that protects American consumers. Tell them to stop trying to undermine health care reform, but be part of the Congress that will fix it. Tell them to break up the companies too large and with too many lobbyists to fail. Tell them to end special breaks for dirty industries. Tell them to quit wasting money on wars we don’t pay for. Tell them to keep investing in schools and re-training. And most of all, tell them to get to work on the peoples’ business.
  • Watch for the warning signs and stay in touch with those friends who seem to drop out of your circle – they’ll need your friendship.
  • Volunteer and help those who need it now.
  • Get involved with non-profits – each of which is still reeling from the terrible economy and from Bush ending the inheritance tax, but that’s another story. Help people who can’t find work to start a small businesses and teach them how to make it successful. Help feed the hungry. Help teach, mentor and take care of children. Get involved to help seniors and the disabled.
  • If you are in the top 30%, keep giving to charities which help people. Put some of your money toward micro-loans to launch new small businesses.
  • If you are a 1% executive, it is time to fire your lobbyist, take a pay cut and use the money to hire people who need jobs – especially those who have been out of work for a while or been fighting our wars.
  • If you think you are at the tipping point, reach out to agencies who can help you land more softly and not on the street.

Debate Du Jour

cbs-debate-screenshotAfter a long day of college football and poignant play-by-play announcer comments on the rape of children and the effect on Joe Paterno, an estimated 612 channel changes between games – each accompanied by a “where are my glasses moment,” an unrehearsed comedy segment using picture-in-picture mode on our not-wide-enough-screen-TV, and a frustrating trip to NetFlix “New Arrivals” which all pre-date the birth of the parents of our grand-children, we decided on a survivor show: the “CBS News/National Journal South Carolina Republican Debate.”

Eight candidates. Each seeking to find the heart of the Republican voter and ride their hate toward final victory in November to overthrow four long years under the iron-will of the Democrat (insert your preferred insult here) who has spent his entire time in office trying to undo the problems created by the last Republican vice-president and his henchman, George Bush.

Can Cain harass Bachmann saying “9-9-9” or by “Ubeki-beki-beki-beki-stan-stan”? Can Perry remember what he’d forgotten? Can Huntsman get a question from the moderator? Can Santorum get past audience snickers? Can Newt be more sanctimonious? Can Bachmann think of anything new to say? Can Paul continue to sound sensible? Can Romney again calm the debate with the black hole of his personal charisma? And will they, one-by-one, convincingly kiss the “ring” of Jim DeMint? These were the questions we wanted answered.

The subject: national security and foreign policy. The entire debate, including commercials, was an hour and a half. You can watch it at CBS.com, read the transcript, their fact check or winners and losers. Here’s what I heard.

  • Bachmann, Huntsman and Santorum recognize that foreign policy is complicated and that it is dangerous to give simple answers to complicated questions.
  • Romney and Cain recognize that it is best not to answer questions, simple or otherwise, with specifics and that it is dangerous in politics to give answers, simple or otherwise.
  • Newt prefers to agree in general with other candidates so he’s not really on the record, while speaking as if he knows the inside jargon the others don’t.
  • Perry worked very hard this week and delivered a few carefully rehearsed lines reinforced by the extensive experience that he gained as governor of a state where he can see Mexico.
  • Paul spoke his mind clearly and saw no reason to give long answers to questions that were, inherently, absurd.

For specifics on issues, I carefully charted the candidates’ answers below. Enjoy:

Chart: How would you prevent Iran from building nuclear weapons?

Chart: Your appraisal of the combat situation in Afghanistan and how would you change it?

Chart: Sending troops into Pakistan?

Chart: Foreign Aid?

Chart: Thinking outside the box?

Chart: Listening to the right people before making a decision?

Chart: Torture?

Chart: Are we engaged in financial warefare with China?

Chart: Spending?

Chart: The Arab Spring?

Chart: Syria?

Chart: What about Gitmo?

Note: this post was updated on Monday, November 14, 2011 to correct a misspelled word in the torture chart.

We are only represented by pollsters

John Boehner with fingers in his earsYou share your Congressperson with 705,761 neighbors1. How could they possibly represent you?

Article I, Section 2 of the US Constitution states that “The Number of Representatives shall not exceed one for every thirty Thousand2” Clearly, the founding fathers, felt that 30,000 was a pretty good number. Power, true to its nature, was something our Congresses seldom wished to share. Once the House got to 435 members, they kept it that way. Had they stayed with the intent of our fore parents, the next House session would convene with 10,233 members. Wouldn’t that be cool?

The districts would be way too small to require huge campaign spending – now averaging $1,362,239 per winner3. Anyone with a good facebook following could run. Party affiliation wouldn’t have the clout and new political parties could spring up in your block or your college dorm. Candidates would be forced to speak to the mob – and pander to the mob. Instead of representing big bizness, they would have to represent you and your bizness. Candidates would have to address local issues. With an average of only 22,500 of voting age and not in prison in each district, your vote would matter again. Minorities wouldn’t necessarily be minorities in their districts. The House of Representatives could look and sound like us, rather than them. Your representative wouldn’t have to be rich or a career brown-noser to run. And, it would be so much harder for a just say no do nothing Congress to get away with it. Isn’t it pretty to think so?

Other than the obvious out-and-out bribery, lobbyists are represented by the House of Representatives because they know your Congressperson. Lobbyists buy your representatives and their staff meals, take them on trips, pay them to speak at their corporate outings and just hang out with them at the club. We don’t get to do that, because once they go to DC, they only come back for weekends – and they don’t want to hang out with us.

The only way we are represented in Congress is by pollsters. Makes me want to be a bit nicer to them were they to call, but they can’t. Like 26.6% of American households4, I don’t have a landline phone anymore, just my cellphone. In general, little polling is conducted district by district anyway. Most of what my Congressperson knows is what everyone with a landline telephone is thinking, not me and certainly not my neighbors.

In fairness, some Congresspeople have their staff report what people are pissed off about who call their office, email or fax.  Seldom are those reports broken down by voters in their district and none of them account for the wacko robofax, emails or tweets they get from sponsored activism.

We could get together district by district and hire a lobbyist to represent us. Someone who we choose and pay to tell our Congressperson what we are thinking. But that is what we pay our Congressperson to do.

Then there’s that problem with what our representatives are actually doing anyway. Being qualified to serve, no longer requires experience in the complicated machinations of government. No longer do our representatives need an understanding of law, lawmaking and constitutional issues; foreign policy; navigating the bureaucracy; civil service; the workings of the Treasury, or even the difference between the Treasury and the Federal Reserve. No longer do we seek representatives who are curious, smart, resourceful, schooled in history, well-read or well-traveled. Those are skills unnecessary in service to we the people.

These days, Congress is run by professional staffers and lobbyists. The staffers control their schedule, write their speeches and tell them what side of each issue they should be on. Staffers working with lobbyists write all the legislation. If you need something done, best go straight to a staffer, though unelected, there’s a much better chance they’ll represent your issue. That is, if your issue is something that will generate campaign contributions.

1Population based on 2010 Census and after redistricting is completed.
2Slaves were counted as three-fifths of one person.
3 Campaign Finance Institute – By the way, it cost $7,500,0052 per Senate winner. If you took the NY Senate race out of the average, it only averaged $4,737,365 per winner.
4 CDC Survey

Hart to Cain: Don't you dare

Photo of Donna Rice sitting on the knees of Gary Hart on the ship Monkey Business, the climactic image that ended Hart's 1988 presidential campaign.“Follow me around. I don’t care. I’m serious. If anybody wants to put a tail on me, go ahead. They’ll be very bored.”

That was presidential candidate Senator Gary Hart’s famous dare to the press corp in response to rumors of an affair. Funny thing about a dare to journalists, they’ll take it. They still do.

When reporters for the Miami Herald, who were already staking out Hart’s DC townhouse, broke a story about seeing a woman leaving the same evening of the dare, Hart claimed they couldn’t have seen both entrances and didn’t have the facts. Which, of course, led to the publishing of the famous photo of Senator Hart on a Miami dock wearing a tee-shirt from the boat “Monkey Business” and with 29-year old actress Donna Rice* in his lap. A week later he was out of the race.

Last week, another presidential contender dared the press.

During Herman Cain’s tenure as the head of the National Restaurant Association in the 1990s, at least two female employees complained to colleagues and senior association officials about inappropriate behavior by Cain, ultimately leaving their jobs at the trade group, multiple sources confirm to POLITICO.

The women complained of sexually suggestive behavior by Cain that made them angry and uncomfortable, the sources said, and they signed agreements with the restaurant group that gave them financial payouts to leave the association. – Politico story by Jonathan Martin, Maggie Haberman, Anna Palmer and Ken Vogel.

Addressing the National Press Club, Mr. Cain said that he “had never sexually harassed anyone.” He said that, while he was chairman of the National Restaurant Association, he had been, “falsely accused of sexual harassment.” That the charges were “thoroughly investigated” and “it had no basis. As for the settlement, I am unaware of any sort of settlement.” Mr. Cain then began suggesting that the reporters hadn’t done their job — belittling the story and dismissing it as “anonymous sources when there is no basis for the accusation.” When asked at the Press Club if he was going to request that the association release the files to shoot down the allegations, he said, “No, there’s nothing to shoot down.” Then he dared the press, “Enough said, there’s nothing there to dig up.”

One thing you can count on: more will be dug up. Everything will get out. It always does. The working press still does.

Herman Cain had a chance to get in front of this story. Something that occurred 20 years ago is not necessarily damning in politics – Robert Byrd’s membership in the KKK, comes to mind. But Mr. Cain did not get in front of the story. Instead, he dared the press. Blamed the press. Suggested the press is out to get him. Parsed the difference between “agreement” and “settlement.” Blamed the women who had brought the allegations. Suggested it was a liberal lynching. Suggested that the Perry camp had leaked it for political gain. He has said almost everything, but the truth – whatever the truth is. He has acted indignant, angry, patronizing, and dismissive.

I’m no expert on hubris, but I do know a bit about embarrassment. I remember every painful detail of each embarrassing moment going back to when I was five. Had I ever been accused of sexual harassment, it would make my list. Had I been the ceo of the board of a national lobby group, I would have been truly humbled.

Sexual harassment is real. Just the possibility of the perception is enough in my book for a sincere and heartfelt apology. A promise to change ways and learn from the mistake. Pretty much, confess, repent and be saved process that so many of faith embrace.

Mr. Cain is a member of the last generation who lived during the time when propositioning or making sexual innuendo to someone who works for you, was acceptable. There is only one place left in American business where it still is acceptable: the boardroom. And there is only one group who can get away with it: the one percent.

 

* Full disclosure: When this story broke, CNN was desperate for some footage of Ms. Rice as an actress. CNN contacted Porter Creative (now CP+B), the creative firm that had produced the only commercial Donna Rice had ever done. Meg Gerrish, a frequent Dew writer, produced the spot. I was her client at the ad agency. In the spot, Donna played a bride. The spot she was in was for Piggly Wiggly.