Liberal Heart, Moderate Mind: December 2012

In Part 1, proposed anti-Obamacare actions by some food-chain owners were covered in detail. So too was the even larger backlash against these politicized comments.

Since that posting, the scope and damage of the backlash against food chains offering anti-Obamacare shortcuts has proven even larger. As reported by Forbes, 1 the public perception rating for a business or brand known as the "buzz", has dropped dramatically for all restaurant brands playing this game.

Papa John's' buzz score dropped from 32 to 4! YouGov BrandIndex, the market research company responsible for polling the buzz ratings, says this this the sharpest drop of the year, and it brings Papa John's well below Pizza Hut's buzz rating.2 After Papa John's tripled their stock price during the Obama years, to now drop so far below their competitors has to cause some serious re-thinking.

Then there is Applebees' buzz rating. Before Zane Tankel's comments, it was 35. Now it is 5! Even though Zane Tankel doesn't speak for all Appleebees (he runs 40 of them in the New York area), the backlash against his anti-Obamacare comments on a FoxNews interview have harmed the entire Applebees brand.

Jimmy John's has no buzz ratings to compare. But at least one Minneapolis franchisee has a long standing issue with healthcare and public perception.3 Well over a year ago, workers attempting to unionize eventually went public with the franchisee's policy to economically punish workers who call in sick with no substitute. Those whistleblowers were fired. In April of this year, a federal administrative law judge ruled that the fired workers are to be reinstated with back pay. Now the appeals process may drag out for years. In a side note, in Oct 2010, that unionization attempt narrowly failed in an 85-87 vote.

Denny's fared the best. Though Denny's buzz score dropped from 10 to 0, it did rebound back to a 6. Presumably because after franchisee John Metz proposed a 5% Obamacare surcharge to all his customers saying they should then reduce their tip accordingly if they don't like it, Denny's CEO was quick to respond that such views and actions were "inconsistent" with the Denny's brand. It must be pointed out that even with Denny's drop to 0, the resulting rebound stunningly gives Denny's a higher buzz rating than both Papa John's and Applebees. 2

Then there is Darden Restaurants. Their "experiments" with reducing workers to just 28 hours/week in order to avoid any healthcare responsibility under the Affordable Care Act ("Obamacare") have proven a bad choice. We do know that they expect at least some loss. They are lowering their projected profit, citing in part the backlash against their anti-Obamacare experiments.1

On Dec. 6, Darden announced they were done with their experiments, and would proceed no further with the idea of reducing workers' hours. Darden CEO Clarence Otis said "...we are pleased we know enough at this point to make firm and hopefully reassuring commitments to our full-time employees."4 Additionally, they released the following results of their "experiments":

None of Darden's current full-time employees, hourly or salaried, will have their full-time status changed as a result of healthcare reform.

Each of Darden's new and existing restaurants will have full-time hourly employees because that is what it takes to fully deliver the experiences guests expect.

In 2014, all of Darden's full-time employees, including hourly, salaried and executive employees, will have access to the same insurance plan coverage.

3 out of 4 restaurants surrounding this mall are Darden Restaurants

Yet even with all this detail of political games played and lost over "Obamacare" in the food indsutry, the bigger more crucial pictures are still missed.

Business owners, restauranteur or otherwise, are right to complain that they must bear the burden of providing healthcare. Employees are right to complain that access to healthcare requires an indentured servitude to their employer.

As Americans, we pride ourselves on our freedom to choose one's own path, yet we are the civilized nation that establishes a healthcare system interminably tied to a profit-driven industry, then makes access to even that industry a condition of employment loyalty. Many may miss the hypocrisy there, but it only takes a moment of thought to comprehend the absurdity of it all.

There is an underlying entrepreneurial psyche of the nation for each to make one's own way and become a great financial success. Yet despite that proud ever-present element of the American dream, the American economy ironically relies far more heavily on the majority of its citizens to be loyal workers and not entrepreneurs.

It could be argued (however nebulously) that at one time, tying such an elemental need like healthcare access to the employer/employee relationship served the purpose of business owners. When wages allowed one to raise a family on the single income while simultaneously providing the peace of mind over healthcare access for the whole family, company loyalty and thus a stable workforce was fairly well secured.

That was then.

We now have a different economy. Different players. Different culture. Different rules. A different equation all together.

Healthcare tied to one's employer plus global competition plus lower wages and higher healthcare costs. What little tenuous argument there once was for tying healthcare access to the employer/employee relationship no longer serves any useful purpose. Instead, that link stifles the entrepreneurial spirit, and helps further the wealth gap to new extremes. It does not help stabilize a workforce and a nation's economy. It does only harm to the entire nation.

It is such a high-risk endeavor to break free of that reliance on one's employer and act on entrepreneurial dreams and ideas, that few will dare try. Instead, out of necessity, most Americans show a loyalty to their employer for fear of losing what degree of healthcare coverage they do have. Risk losing that and it takes but one serious illness to completely wipe out a lifetime of family savings. Simply put, we have institutionalized a pathway to stagnation.

Now that we also institutionalized sending jobs overseas; first by advancing the technology that allows that to be a serious option, and secondly by writing laws and tax code that actually rewards moving jobs outside of America, we now have a buyer's market for labor. Even for those jobs that cannot be outsourced, the demand for jobs in America is now so high, that even at minimum wage, a business owner has no problem quickly filling any job positions.

Economic structures that prioritize long-term stability of the nation's middle-class work force have been replaced with the culture of short-term top-end financial gain. These ill-conceived priorities have become deeply entrenched in a minority of legislators. So much so that despite mountains of evidence over decades to the contrary, they insist that such an ideology of immediately expanding wealth at the top magically transforms into an abundance of American jobs and growth of the middle-class.

Despite getting 51 votes, Republicans filibustered the Buffett Rule,
requiring 60 votes to pass. The bill would have required a minimum
tax rate of 30 percent on individuals making over a million dollars a year.
Mitt Romney famously paid only 17 percent.

The degree to which these legislators hold themselves in bondage to such absolute ideology is blatantly clear from all the recent budget battles, including the current Congressional "fiscal cliff" fight. Despite saying they also want tax cuts for the middle class as well as the wealthy, they refuse to allow ANY tax cuts unless they can guarantee that the wealthiest Americans get ADDITIONAL tax cuts for their income over $250,000!

What fuels such thinking is a simplistic and absolute interpretation of role of government. It is the idea that government can not do anything well or better than the individual or the "free market".

It is summed up by the oft-repeated quote from Ronald Reagan. "Government is not the solution to our problem, government IS the problem."

Remove that quote from the inaugural address as a whole and place it as a foundational prime directive. This is the fallacious ideology that has infected too many, including some recent legislators.

Take that Reagan excerpt as an absolute, and you create the rage that was core to much of the tea party movement.

As much as Ronald Reagan may have railed against government becoming too big, cumbersome and expensive, the fuller context of his first inaugural speech must be noted. It contained many more than just those twelve words. In fact, those famous words were not even the entire sentence. Play the embedded video above and hear for yourself. The quote begins - "In this present crisis..."

The present crisis he was discussing was a bad economy. Even in stating that government is the problem in that particular crisis, this did not mean Reagan was calling to eliminate or even decimate government role.

But steadfast adherences to such small government ideology since the days of Ronald Reagan have transmogrified into the simplistic manifestos of Grover Norquist and his followers of the no-tax hike pledge. Having a life goal to shrink the size of government until it could be drowned in a bathtub is absolutely ridiculous, yet this is the committed singular mission for Grover. He so oversimplifies this small government/low tax ideology that he even writes "Raising taxes is what politicians do when they don't have the strength to actually govern."

Back to Ronald Reagan, who unlike Grover Norquist, did actually have to govern. To do so effectively, he had to raise taxes multiple times, no matter how much he hated it.

Reagan also clarified in that same inaugural speech, that despite his penchant for smaller government and lower taxes, that government had a vital role.

"Now so there will be no misunderstanding, it's not my intention to do away with government. It is rather to make it work - work with us, not over us; to stand by our side, not ride on our back. Government can and must provide opportunity, not smother it; foster productivity, not stifle it."

"Government can and must provide opportunity." I imagine most who preach the "...government is not the solution to our problem, government IS the problem" quote would be surprised to hear (and maybe even deny) that Ronald Reagan stated those very words in the same speech.

But here is where the big picture comes into focus. Neither of these two quote extractions can be taken as absolutes. Balancing these two seemingly divergent statements gets to the very core of what defines effective government. The two ideas must keep each other in check.

Of course interpreting what defines appropriate balance is the real nitty gritty work of political oversight. Right or left, both statements can be twisted to make one's case. One person's opportunity is another's exploitation. One person's "problem" with government is another's only protection from injustice. Face it. Since long before Reagan, and certainly through today, government HAS been sought as the solution for legislating nearly every viewpoint. Depending upon perspective, government action, or government inaction, could be seen as the problem.

Take the idea of regulating the workplace. Practically any business owner will tell you that complying with all the regulations is burdensome, even if only for the time involved in keeping proper logs to verify their compliance. Yet virtually every regulation protects against some excess or abuse.

Too often the big picture value and need for those protections are not recognized. Complaints and arguments for government reduction tend to follow. This is especially true in the realm of large business where the pressure to increase shareholder profits becomes the primary driver in deciding a business' policy and actions.

Not that actual small business owners never rail against burdensome government regulations over how they run their business. One could find plenty of small business owners who feel that way, but there is a distinct difference between true small businesses and the very large businesses that many politicians lump under that "small business" label. For one, actual small businesses with less than 50 employees, are exempt from "Obamacare" requirements. Those with 25 or fewer employees that do provide such healthcare for their workforce will get significant tax breaks for doing so.

Compare that to the U.S. Small Business Administration's definition of a "small business". For the retail trade they partially define "small business" as having "500 or fewer employees".5

A Wal-Mart store has less than 500 employees.
Should it be classified as a "small business"?

Seriously. Ponder the huge difference between a true Mom and Pop store to a retail store with 500 employees. Even if you divide the total number of Wal-Mart employees by the total number of Wal-Mart stores, you can't reach 500 employees per Wal-Mart store.6 Consider that reality the next time you hear a politician arguing that without tax cuts above $250,000, "small" businesses will be hurt.

When politicians say "small business", they are not necessarily talking about a truly "small" business. Yet the policies they are trying to sell by appealing to the idea of "small" businesses will invariably present great opportunity to one at the expense of the other.

"Government can and must provide opportunity." It always does. The problem with government is that the opportunity it provides almost always comes at the expense of someone else. When it favors opportunity to those who have already reaped great benefits of earlier opportunities, it no longer represents the land of opportunity, but the land of continued opportunity for the few.

This has been part of the problem for some time. Opportunities sway more towards the big guy. The well-established large businesses get legislation written to their benefit. Minimum wage, tax code, double-down on trickle-down economics. No one is saying large business is not entitled to profit. Even big profit. But the wealth gap has grown exponentially out of control. CEO pay is beyond silly, yet workers' wages remain stagnant. Minimum wage is so low, there is not one city in America where a full time minimum wage worker can afford a 2-bedroom apt. If you look back in history, wealth gaps this huge always seek equilibrium. Usually at a high cost.

Take a 2 week vacation from a minimum wage job,
and you fall BELOW the poverty line for a family of 2.
Even with NO hours missed in a year, a minimum wage
job requires food assistance support just to survive.

Yet despite this, we see increasing refusal from politicians to even acknowledge the gap, let alone the consequences for the entire nation. This cold-hearted focus on prioritizing profits at the top had plenty to do with the recent election.

Conservative journalist Chris Ruddy stated the reason Mitt Romney lost was because people didn't like him. Howard Fineman offers this observation:

"The reason that people didn't like Mitt Romney is that he seemed only to care about money. He seemed only to care about profit. He didn't have any communal sense to him that could be applied to government. The Republicans don't see that a pure obsession with free market economics comes across to everybody else in the country who isn't them as too cold-blooded, as too cold-hearted. And the fact that with almost 8 percent unemployment, with the people thinking that the country is going in the wrong direction, that they still voted for Barack Obama, makes it an even bigger rejection of the Republicans and conservatism than they are willing to admit to themselves."7

No communal sense to him that could be applied to government. That description could certainly be applied to far more than just Mitt Romney. Take Congress for example. Especially those who gained their Congressional seat via the tea party wave. Even former Republican US Senator Alan Simpson has noted this trend in his recent interview on The Daily Show:

"Now there's seventy of them - the tea party guys. These are the guys who went to Congress not to limit government, but to stop it."8

He has a real point. Many Republican Representatives have taken the idea of government being the problem in every situation to an extreme. They rejected the very idea of compromise. They complain of government incompetence, and now that they ARE government, they are dead set to prove it.

This anti-government free-market proposal to everything is a serious threat to the entire nation. There have always been a handful of individuals who sought to dismantle government functions and place them in the hands of private profit-driven companies. But up until now, very few of them ever infected the legislative power of Congress.

Simply put, in order to provide and secure the infrastructure that not only allows basic function of a society but that must also be relied upon in order for there to be opportunity to many, it is integral that some functions remain squarely the responsibility of everyone via government control, and not private industry.

This does not mean that there will be no opportunity in doing the work of these functions. The physical labor and architectural design of building roads and bridges is not done by politicians. The work is contracted out to the private sector. Yet their planning, financing, management and responsibility is the work of government. The resulting roads and bridges are thus "owned" by all of us collectively. Every one of us is reliant upon them daily. Goods and services require round-the-clock transport of people and things. Even the car-less city dweller who walks to the corner store and never travels is dependent upon the uninterrupted function of our roads and bridges simply by buying groceries. Turn that basic infrastructure over to the profit-driven private sector, and the whole system collapses.

It's not just roads and bridges. It's also the means to get basic documents, goods, catalogs and more from point A to point B at a reasonable cost. You can't underestimate how vital it is to the entire economy to have reliable low cost delivery always available. Since even before our Constitution, we have had the USPS establishing this vital infrastructure.

Try sending a payment by FedEx or UPS. It will cost closer to $10 than 45 cents.

This indeed creates opportunity. Opportunity for the consumer to order goods by mail that are not otherwise available in their community. Opportunity for small businesses to sell goods to far larger markets. Opportunity for all businesses to mail promotions, catalogs, bills and payments. It even leaves the opportunity for private for-profit delivery companies to deliver all sorts of expedited goods at premium prices.

Note that neither FedEx nor UPS are suffering. But the next time you hear someone grumble that the USPS can't compete, try comparing the flat-rate shipping options of the USPS at around $5 to the rates of FedEx and UPS. Ask them where else they can mail a letter or a check from one coast to the other for a mere 45 cents.

Not just that, the delivery service that those few coins can purchase far surpasses the guarantees of FedEx or UPS.

First, USPS does not refuse delivery to remote rural areas. The other guys have "no delivery" areas because delivering to those far outlying areas would cost them too much. Additionally, USPS makes every effort to forward items mailed to incomplete, or outdated addresses. No extra charge. The other guys? Not so much. You must request such address changes, and you will pay extra for it.

Rather than sticking a 45 cent stamp on that letter or check you need to mail, try sending it via FedEx, and the rate starts at about $10. And that's only if it is being sent to a nearby region. There is real truth to the conservative comment that the USPS can't compete in the free market. Any for-profit letter carrier would instantly price itself out of the market. They couldn't even touch the USPS!

The point that must be stressed here is the vital nature of the service the USPS offers at such low price. You will still hear some arguing that the government has no business being in the delivery market. All services that can be done by the private sector should not have competition from the public sector they will argue.

Of course they have not considered the real effects of implementing such simplistlc absolute ideology.

What happens if the USPS really was privatized? How does the nation handle the jump in cost to mail simple letters, documents, payments or checks from just 45 cents to $10? Even assuming that private letter carriers began to really compete and quickly became more efficient, the sudden existence of the USPS for the purpose of profit rather than vital infrastructure will exclude them from ever offering postage as cheaply as the USPS.

Postage prices would have to be seriously increased and service would have to seriously decline.

First, far out rural areas will lose delivery. Period. No for-profit letter carrier is going to drive a day's drive to deliver envelopes to the farthest reaches of the boondocks. FedEx and UPS don't do it now for premium prices.

Consider that it costs the USPS an average of $0.513 to handle each piece of mail that is undeliverable as addressed.9 Any privatization of the USPS will require postage prices be increased well beyond this cost of operating. Then dropping the policy of trying to forward mail to the correct address would follow. Or a "Cash On Delivery" fee could be implemented on such pieces of mail. One thing that certainly would not happen is the hiring of more employees to verify that every piece of mail is correctly addressed.

But let's even assume that a privatization of the USPS immediately got efficient enough to charge not $10 per envelope, but just $2. A very unlikely speculation given the need to not only continue some semblance of sustaining current USPS service, but also to make room for profit. Nonetheless, let's just go with that conservative estimate of postal rate increase in the event of privatizing the USPS. Consider the shock waves throughout the entire economy.

We may send far fewer cards as a nation than we once did, but imagine how much less birthday money Grandma can afford to put in that birthday card.

Only a small sacrifice you say? What happens to Social Security checks? Will the dramatic increase in postage costs simply be deduced from each SS check? Will it be charged to the government? If so, will those who insisted the USPS be privatized now be just as indignant that the net result is a handing over of billions of taxpayer dollars to private companies? Will the retirement age be increased just so Social Security can meet the increased cost of mailing out checks? Again, will this bother the "free-market" criers as much as the USPS did in the first place? Or will they then seek to privatize Social Security as well?

Consider the effect on the truly small businesses that sprang from online reselling. How will such a large postage price increase affect E-Bay? or Amazon? Did you realize that right now E-Bay even works right with the USPS, offering online printing of shipping labels, and even arranging for your mail carrier to pick up your packages?

What about the cost to businesses for mailing monthly publications? Consider the ultra low discount rates they get from the USPS not only through the media rate, but from bulk mailings. That basic cost of doing business would immediately multiply considerably.

What about the costs for sending out credit card offers? Or membership renewal requests from non-profit organizations? Or recall notices to consumers?

Or what about mailing promotional ads? Well, maybe that approach would still be cheaper for Papa John's, considering their $250 million class action lawsuit for illegal text message ad spamming in 2010.

But with a privatized USPS offering major hikes in postal rates, consider the self-defeating result. As businesses suffer these higher costs, they will do whatever they can to cut back on postal expenditures. That makes the privatized version of the USPS need even more revenues, meaning even more rate hikes. Since it would then be a private company not needing Congressional authority to institute every change, they could raise postage rates or drop services as they saw fit. It would be an economic disaster for the entire nation.

Yet despite these realities of what a USPS privatization would mean, there is still a larger segment than usual of anti-government ideologies calling for such privatization. Considering the title of this piece, you can probably guess that Papa John's CEO John Schnatter is among that crowd.

Schnatter has since backtracked on the anti-"Obamacare" stances and comments since the backlash has proven to cost him more financial damage than his proposed means to "... find tactics to shallow out any Obamacare costs and core strategies to pass that cost onto consumers in order to protect our shareholders' best interests...".10

In his oped piece, Schnatter even tried to imply that he never meant such things,11 but he IS the one who complained about the 11-14 cents per pie he figured it would cost him, and until his oped pieces, he did not reject in any manner the strategy of reducing workers' hours to avoid the "Obamacare" health requirement.

Schnatter's anti-government comments went beyond just his clearly stated opposition to the new healthcare law ("We're not supportive of Obamacare, like most businesses in our industry..."10). Schnatter also compared governmental role in health care to his perceived incompetence of governmental role in the US Postal Service, saying "the worst entity in the world for running the thing is the government."12

I have tremendous doubt however that Schnatter has given even the smallest amount of thought into what privatization of the USPS would really mean. Either for him personally or for Papa John's, let alone how financially damaging it would be for the entire nation.

But John Schnatter is far from the only one with such vacuous anti-USPS thoughts. The folly of this idea has invaded Congressional members. Take the boisterous one-term tea party Republican Representative Joe Walsh for example. Privatization of the USPS was not just an under-the-radar issue like it is for other tea party Congressional members, it was actually a blatant issue in Joe's campaign. Fortunately, his opponent Tammy Duckworth sees the crucial value of our USPS, and she soundly defeated him last month.

Tammy Duckworth soundly defeated tea party one-termer Joe Walsh

But even with a shrinking tea party faction in Congress, the USPS is still under serious threat from Congressional action steering it towards privatization.

In 2006, Congress passed a law requiring the USPS to PRE-fund its pensions benefits by 75 years. That is not a typo. Congress requires the USPS to PRE-fund the pensions of workers who have yet to be born!

To achieve this intensely unique requirement, they are now obligated to pay $5.5 Billion in to this fund EVERY year until that extraordinary goal is reached!13 This is a 10 year plan. This immense and singular burden is now beginning to seriously take its toll.

The resulting financial burden unsurprisingly now has the USPS running deficits. They do not have the power to simply raise the price of stamps, or offer new services like internet cafes, etc.. The USPS is an unusual construction. It is under control of Congress, yet receives no taxpayer money. Its operating funds come from postage and delivery fees. Despite the lack of Congressional funding, Congress must approve all changes.

That is not an easy task. Particularly when there is a Republican faction of Congress dead set on destroying the public sector unions and ideologically bound to the concept of privatization.

With the vice-grip they have placed upon the USPS via the pension pre-funding requirement, the anti-union faction of Congress is not about to release their grip on the American Postal Workers Union, even if it means closing post offices and mail processing plants. Damn the economic damage this may cause, for shrinking government at any cost IS their cause.

The irony is that in the resulting actions to reduce the USPS, rural post offices are the ones that are being shut down. The very ones most relied upon. The ones where FedEx and UPS refuse to go. The ones where the post office virtually IS the town. They are the post offices servicing the places that Sarah Palin would call the "real" America. These are the post offices whose services are being ended, and jobs are being eliminated.

The further irony is that the money the USPS has already paid into their pension fund is already sufficient to fund its pension obligations for decades. Yet Congressional Republicans refuse to allow the USPS to take any hiatus from these annual PRE-funding payments. The resulting shortfall lies squarely on the shoulders of Congress' imposed burden.

So what if the USPS defaults on these annual $5.5 billion payments?

The bottom line is that even though the USPS is responsible for the costs of postal workers' pensions, and even though the USPS pays those future costs in to a pension fund, as federal employees, retired postal workers receiving pension payouts are paid from the US Treasury. Even if the USPS' pension fund contains fewer funds than the pension payments going out, the Treasury makes those pension payments. Taxpayers then make up the difference.

Taxpayers must also pick up the remaining tab if the USPS is not solvent. The USPS has not taken tax dollars in 30 years.

So the questions must be asked. Since the USPS has the funds to cover all operating costs AND already has decades of future retiree's pension obligations covered, why does Congress lock the USPS into this situation? Why reduce the USPS and diminish its service by closing rural post offices and mail processing plants? Why begin dismantling our national Postal Service and do this to the nation and to the postal workers when there is no need? Why set the USPS on a course that will either dismantle it, or require a taxpayer bailout? Note again, it has been 30 years since the USPS required taxpayer money to stay solvent.

Why force the USPS on this course? When it can serve the nation with full function except for one thing and one thing only - Congress' insistence that it do something NO other organization must - first pay for retirees' pensions 75 years from now?

Ideology. Plain and simple.

Remember the words of Ronald Reagan - "Government can and must provide opportunity."

Contemplate the lost opportunity if we close post offices. Contemplate the true scope of lost opportunity if the USPS were to be profitized/privatized. Some company buying out our USPS would have the opportunity to make great profit, but at the expense of the entire economy.

The United States Postal Service IS infrastructure. We ALL need it, even if we are too ignorant to recognize it.

Be it simply earning a living wage from full time work, expecting construction and maintenance of public roads and bridges, or even the vital basic function of the USPS, another extraction from Ronald Reagan's inaugural speech is appropriate.