Decide Better!

President Obama intends to announce his decision on plans for Afghanistan on Tuesday. He has taken months to make this decision and consulted with his war council at least nine times. This is a tough decision (see Business Decisions for more on Tough Decisions), and he has been thinking about it for some time. His decision process on Afghanistan has focused attention on the way presidential decisions should be made. Has the president been procrastinating on this decision or deliberating, taking the necessary time to make the right decision? Let’s look at the case for each.

The president has been procrastinating to delay the decision. The Afghanistan decision is a classic tough decision: no matter what he decides it will be unpopular and criticized. Many of his supporters and many from his own party will disagree with sending more troops. Additional funding for an increase will bring more criticism and require support from the Republican Party, as many Democrats will be against it. The chairman of the Appropriations Committee is calling for an additional income tax to fund an expansion of the war. This will make it even more unpopular. If the president decides not to support expansion of the Afghan war, he will be blamed for any subsequent failure of the war and for not having the courage to do what was needed. No matter what he decides, his critics will use it against him, and the division of the American people on the issue will help feed that criticism. Procrastination is common when someone is faced with a tough decision that will be criticized no matter what is decided. The president is procrastinating to postpone the anguish that will come from all the criticism, but in procrastinating, sometimes the situation gets worse, as it may have in Afghanistan.

The president has been deliberating to make the best decision. President Obama has a very different decision-making style than his predecessor, George Bush. President Bush was an instinctive, some say “jump too fast to a conclusion”, decision maker. President Obama’s decision style is the opposite. He doesn’t go with his gut feel; he takes time to think through the alternatives, seek advice, consider the outcomes, and then decide. This more deliberate decision process will usually lead to a better decision because it is more thorough. The decision takes shape over time, enabling a more complete decision that considers all critical factors and assumptions. More deliberate decision making, particularly with tough decisions, is an important characteristic that many Americans look for in a president. A gut-feel decision by the President of the United States scares a lot of people. President Obama’s deliberate decision process on Afghanistan will lead to the best decision because it was thorough, and he took the time to do it right.

In this decision, President Obama will be judged as much on his decision process as the decision itself. After all, since we don’t have the benefit of the information he had in reaching a decision, our confidence in the decision is based on our judgment of the process. So, what is your conclusion: procrastinating or deliberating?

With all the recent attention on Healthcare Reform, it may be appropriate to consider the worst healthcare problem the country faces and think about unanticipated consequences. Medicare will surely bankrupt the American economy! Just like the Ponzi scheme reinvented by Bernie Madoff, Medicare makes promises for future returns on today’s “investments” that it can’t possibly keep. “By paying the Medicare tax today to support the medical costs of today’s retirees, your medical costs will be covered when you retire.” This is eerily similar to Bernie Madoff’s promise that new investors would get the same returns in the future as previous investors, while all the time he was using the new investors’ money to pay the returns to previous investors. The Medicare system is different since it uses the money from those paying taxes today to pay the benefits of those who paid in the past, with the promise that those paying today will get their benefits in the future — oh actually this is the same. The only difference between the two is the size: Madoff had a $50 billion Ponzi scheme while the Medicare scheme is at least $80 trillion!

While the Medicare proposition sounds compelling, here is the problem: the current Medicare liability is more than $80 trillion and the entire US economy is only $15 trillion. The Medicare liability is five times more than the entire US economy! There is no reasonable amount of future Medicare tax that will pay for this liability. Some experts estimate that it might require a Medicare payroll tax of 30% in the future on top of income taxes, bringing the average income tax to more than 50%. Medicare will surely bankrupt the American economy. Those paying Medicare taxes today will be stiffed, just like Madoff’s investors, and will not have the healthcare coverage they were promised.

So a few recommendations. First, legislators should consider the future consequences of health care reform decisions. Second, even though the Medicare problem is messy maybe it should be addressed. Or it could be ignored, just like Madoff’s scheme was until it crashed. Madoff went to prison for his Ponzi scheme, will anyone go to prison for perpetuating the Medicare Ponzi scheme? Third, maybe Bernie Madoff’s sentence should be to run Medicare, since he has the experience to keep it going as long as possible.