I am partway through a History Channel documentary called The Crumbling of America:

http://www.history.com/shows.do?action=detail&episodeId=452430

This should be mandatory viewing for American resident. There is an impending disaster and it's not from an asteroid hurtling to Earth and it's not from burning fossil fuels. It's due to decades old roads, sewers and drinking water infrastructure that is disintegrating.

The Global Warming advocates claim that coastal regions will be underwater in 80 years due to a catastrophic rise in sea level.

There are many Americans who won't be that lucky - they may be underwater in 5 - 10 years due to catastrophic levee failure. There may be others killed by contaminated drinking water or collapsing roads and bridges.

What disgusts me even more than the infrastructure decay is that our government had a perfect opportunity to deal with it recently, but blew it.

Our government passed a "stimulus" bill with a price tag north of $800 billion dollars, but less than 10% was allocated to infrastructure projects.

The "Big Dig" project in Boston cost $18 billion. MA needs at least that much to deal with the existing, decaying infrastructure. Proportionately, this means that the country could use $900 billion in infrastructure spending.

Does that number look familiar? It was spent on ACORN and investigating pig odor instead of spending it on capital projects that would have employed construction workers during a real estate depression and that would have restored or even improved our infrastructure.

Now we will be faced with having to spend the money after a disaster hits, rather than preemptively, but make no mistake - it will have to be spent eventually, but it will cost more in dollars and it will cost more in lives lost.

This could have been the moment, this could have been the time, for REAL leadership in DC, for REAL bipartisanship and for REAL change to deal with a national emergency. Instead, we were given more of the same partisan favoritism and lavish, wasteful spending that is typical of corrupt politicians looking out for themselves instead of the voters.

This could have been a momentous undertaking comparable to Eisenhower's Interstate Highway system that would have solved an existing problem and significantly softened the recession's impact. Instead, we had wasteful pork barrel spending on a monumental scale.

What a disgrace.

Many people are not aware that the current system of employer provided benefits was a result of the New Deal wage controls that limited employee salaries. Thus, employers added benefits packages to attract the best candidates. The negative result of this trend was that employees became reluctant to switch jobs for fear of losing a good benefits package and employers became saddled with increasing benefits and human resources costs.

Part 1 of this series discussed the implementation of a Canadian style retirement plan to alleviate some of these costs. This installment offers some health care suggestions.

Congress is currently discussing a "public" or government health insurance option (based on Medicare) that it says is necessary to cover everyone without health insurance, while maintaining that those with employer based plans will be able to keep them if they are satisfactory.

The implementation of a government health insurance plan will result in:

a) Employers deciding that it is cheaper to put employees in the government plan than to purchase private insurance, thereby decimating the private insurance industry. It appears that congress will consider employer provided health insurance as a taxable benefit, thereby increasing the government plan transition rate.

b) Doctors being paid less for patients insured by the government plan (as is the case with Medicare), so there will be less incentive for doctors to treat these patients.

c) Government bureaucrats deciding which patients will be allowed certain treatments in order to reduce the prohibitive costs, thereby rationing health care. Seniors will be the first to be impacted.

d) An increase in the number of doctors who retire and a decrease in the number of medical students due to insufficient compensation, causing shortages and waiting lists.

e) A decrease in pharmaceutical innovation, since the government plan will pay less for expensive drugs. There will be a decrease in medical device innovation for similar reasons.

Ultimately, we will have the Canadian health care system, where my mother's cancer surgery was delayed by a month because the hospital closed the operating room to "elective" procedures, where not as lucky patients die while waiting for treatment and where doctors take three month vacations because compensation is inversely proportional to the number of patients seen during the year, such that seeing those patients may not provide sufficient income to keep the office open.

So, what are some solutions that do not involve a government option, but still provide portable insurance that is employer independent?

We have tax deductible health savings accounts, but I believe it maxes out at $5000, which won't help with a $12,000 family insurance plan.

A problem is having a large enough group over which costs and risk can be spread. I would love to be able to purchase health insurance through AAA (like my car and home policies) or Costco, where I know the plans will be competitive and costs will be controlled.

I just attended a computer consultants group meeting where I discovered that it provides a health care plan in other states, but not in MA due to government regulations. I'm a big proponent of states' rights, but just because a state government can be stupid doesn't mean it should be stupid (see CA).

I would like to see municipalities designated as groups, so that plans could be offered through municipalities. Note that the plans would not be run by the government, but by the private provider.

Other suggestions are welcome. You can post them here.

Many employees work for companies that provide a retirement plan. Private sector employees may have a 401(k). Public sector employees may have a 403(b). Employees who do not have such a plan may contribute to a SEP IRA. There are also regular IRAs, rollover IRAs and Roth IRAs, each of which have specific rules and tax implications.

Wait, there's more!

Employers pay a 401(k) management fee to a financial company, which provides a set of mutual funds to the employees as investment options. The problem is that only a few funds are available (10 - 12), many of them overlap (large cap growth and S&P 500) and there are rarely any funds available to hedge against inflation.

It has been my experience that the financial advisers, who get paid lots of money to come and talk to the employees about their 401(k), generally spout the usual mantra of "stocks are good long term investments" while showing a market chart from 1982 to prove their point, "bonds are less risky than stocks" while ignoring the bond market decimation of the 1970s and 1994, and are quick to say that inflation hedges such as precious metals and commodities are unsuitable for a 401(k) because they are too complicated for most people and there would be too many funds in the plan (ignoring the fact that four of the existing funds are redundant equity funds).

So, what does that leave us with:

a) An inequity between those who have employer based plans (usually with matching contributions from the employer) and those who do not.
b) Extra costs for the employer, who is paying a management fee, plus additional human resources salaries to coordinate the plan.
c) Plans that have restrictive fund selection and are tied to a single institution.
d) Employees who are kept ignorant of proper investing strategies due to the restricted fund selection and advisers who give misinformation.
e) An alphabet soup of different types of IRAs.

In other words - extra costs for employers to provide a benefit that is too restrictive, keeps employees ignorant about investing and is not available to all workers. It also leaves employees juggling multiple IRA and 401(k) accounts.

The solution: Implement the Canadian retirement plan system! (note: this is the retirement plan, not the health care plan)

How does it work? Every year a person can contribute up to 18% of his prior year's earned income to a tax deferred account. That contribution is then credited against the person's taxable income for the current year.

This account can be with a bank, trust company and/or stock broker. The money can be invested in CDs, stocks, bonds, mutual funds and/or exchange traded funds (ETFs). Precious metals and real estate are not possible investments, but there are ETF proxies for these sectors.

The advantages:

a) The retirement plan is tied to the person and not the employer, thereby increasing worker mobility (see future posting about severing health care from employers).
b) It is available to ALL workers, even the self-employed.
c) It reduces employer costs, so more employees can be hired and/or salaries raised.
d) There are virtually no restrictions on investment vehicles.
e) It forces people to become more active investors because more choices are available.
f) It forces financial companies to be more competative because they don't have captive employees that are forced to invest in a single company's funds.
g) It eliminates the financial company double charging - charging a fee to the employer and a fund management fee that employees are rarely aware of.
h) It eliminates the alphabet soup of IRAs and their associated tax headaches.

I know several people whose 401(k) accounts were decimated this past year because the management company refused to offer the US Treasury and precious metals funds that would have helped hedge against the market downturn. Also, the "money market" equivalent fund was invested in Fannie and Freddie paper and one of the three companies that insured the 1.00 NAV went broke, so that supposedly "safe" fund was close to collapsing.

There is no good reason why we should be stuck with the current system. In this case, change is good!

It's been years since we've been able to trust government economic numbers. CPI calculations include substitution factors. Chicken prices are averaged in with beef prices if beef prices increase by too high an amount.

Productivity numbers are based, in part, on ludicrous factors such as a computer with a 2.0 GHz CPU is twice as productive as one with a 1.0 GHz CPU, not withstanding that both systems may be used by secretaries to run a text editor.

GDP numbers are adjusted for inflation, but inflation is usually underestimated. Most of the post-2002 recovery was, in fact, a recession.

I take no credit for this analysis. See: http://www.shadowstats.com/alternate_data to get the details.

The current administration is unfavorable towards dino fuels like gasoline due to perceived harm as a result of greenhouse gas emissions. It is favorable towards electric power for automobiles.

This is well and good. My question is, where will the energy come from to charge 10 million electric vehicles?

Currently, the only answers are the existing coal and natural gas power plants that are already belching their carbon emissions and are near peak production.

The difference is that the energy transfer will go from being directly coupled between the engine and transmission to traveling tens or hundreds of miles along power lines that lose much of that energy to heat. It would be much worse for the environment to convert to electric cars using the current energy infrastructure because we'd be using energy less efficiently.

There is only one power source that is capable of providing enough clean, cheap electricity to power the millions of electric cars that we would want - NUCLEAR!

It is safe enough for France and our administration says it is strategic enough for Iran, so why isn't it good enough for us?

Nuclear power is the only way to divest ourselves from foreign oil and remain economically competitive.

The administration has increased oil and gas exploration costs, rig counts are down 25 - 50% from last year, virtually all the large oil fields are in decline and our government won't allow us to drill offshore, in ANWAR or use the western oil shale. This will guarantee $200 / barrel oil by 2010, if not sooner. We've already gone from $30 to $70 in 7 months - and that is without any increase in economic activity.

The economy is already hurting, even with low energy costs. Just wait until the energy costs spike higher than last year.

Just an added note to the Diesel comments: Switching to Diesel requires no new technology and no new infrastructure. There would ba an additional cost per vehicle of approximately $1000, but Diesels are cheaper to maintain. The payback on the extra $1000 is two years, assuming 20,000 miles driven per year, 40 mpg for Diesel, 30 mpg for gasoline and that both fuels cost $3 per gallon.

Now, while I don't agree with growing food to burn it as ethanol in a gasoline engine, I am in favor of using biodiesel derived from waste oil, such as the oil leftover from the deep fryer at the local fast food restaurant. Biodiesel has fewer mineral contaminants than dino-Diesel so it burns more cleanly.

How do we meet, in fact obliterate, the new CAFE standards for automobile fuel efficiency?

Use Diesel engines in new vehicles. This will increase fuel efficiency by approximately 10 mpg across the board. Current clean Diesels have lower emissions than gasoline engines and we won't need to grow corn to burn ethanol in gas tanks, thereby increasing food and fuel costs.

Let's go one better than just Diesel - how about Diesel hybrids! 70 mpg without breaking a sweat.

It's easy. VW, MB, BMW and Subaru have Diesel cars, mainly in Europe. There is no excuse for government not allowing them to be sold here.