The islands of the Philippines were under the colonial rule of Spain for over 300 years. During the three centuries, Spain barred most trade with foreign powers, taking advantage of the natural resources the islands had to offer. But with the Spanish government’s grip on her territories around the world beginning to fade during the 1800s, their tight control on trade began to weaken. In 1834, the Spanish government opened the Philippines to free trade.

The United States established a strong economic interest in the Philippines. By the 1870s, the United States realized over $50 Million in annual imports and exports. The primary imports were hemp, sugar, and tobacco, with later products being rope and cigars. But as tensions grew between Spain and the United States, trade from the Philippines was threatened.

The talk of revolution was heard throughout the Philippines, as some of the citizens were growing tired of Spanish rule. War broke out between the revolutionaries and the Spanish army in 1896. For two years, war broke waged on, with the revolutionary forces naming Emilio Aguinaldo as the President of the new Philippine Republic. Aguinaldo and the Filipino revolutionaries battled with the Spanish standing army, with both sides experiencing numerous losses. In December of 1897, Aguinaldo and the Spanish government agreed to end hostilities, with the Spanish government paying Aguinaldo $800 Million and requiring him to go into exile with his government.

While the Spanish Governor was busy fending off the Filipino revolutionaries, the Spain was having problems in another territory – Cuba. Cuba rebels were battling for independence in 1895, with the United States watching the situation from 90 miles away. The American public was calling for intervention by the U.S. government, especially following the sinking of the cruiser USS Maine. On April 20, 1898, President McKinley signed a joint resolution from Congress supporting Cuban independence. Spain responded by breaking all diplomatic relations with the United States and declared war.

Spanish-American War

During the lead-up to the resolution, Commodore George Dewey was notified of the potential for war with Spain, and that he had to prepare to battle the Spanish fleet stationed in the Philippines. When war was declared, Dewey’s Asiatic Squadron sailed from Hong Kong’s Mirs Bay and entered Manila Bay on April 30th. The battle lasted just over six hours, with the US Fleet sinking seven of the Spanish vessels while Dewey’s vessels received minor damage. With no possibly victory in site and being outside of the protective firing range of the shore batteries, Rear Admiral Patricio Montojo y Pasaron surrendered the bay to Dewey.

The United States welcomed the return of Aguinaldo on May 19th, hoping that his presence and leadership would help cement an alliance between the Filipino rebels and the US Army against the remaining Spanish forces. A series of battles across the islands by the combined forces pushed Spanish control back to just a few key cities. With the successes against the Spain, Aguinaldo declared June 12th as Filipino Independence Day, though neither the United States nor Spain recognized the declaration.

Two months later, the Spanish and American governments entered into the Peace Protocols on August 12th, bringing to an end the four months of fighting around the globe. Due to the delay in communicating with the armed forces in the Philippines, however, the war continued for one more day. Governor-general Fermin Jaudenes y Alvarex secretly negotiated with Dewey and others on a ploy to stage a mock battle for the city of Manila, allowing the Spanish troops to turn over the control of the last remaining stronghold while preserving some dignity of the Governor and his troops. On August 13th, US forces fired towards the city with the Spanish troops putting up little resistance. However, the Filipino troops under Aguinaldo were not informed of the agreement and were denied a role in the battle and the capturing of the city.

In September of 1898, the two warring nations selected their representatives to negotiate a formal peace treaty. During the process, three Articles were considered during negotiations: the independence of Cuba, the cession of Puerto Rico, Guam, and other island territories to the United States, and the future disposition of the Philippines. At first, negotiations on the topic of the Philippines focused the US occupation of Manila, but that changed on October 25th. President McKinley notified the US peace delegation of a change of intent, calling for the cession of the Philippines to the US as well.

This new demand led to a deadlock in the negotiation process. Spain had no intention to hand over that much territory, especially one rich with natural resources as the island nation. But in November, the impasse was resolved when Spain accepted a counteroffer from the United States that contained a $20 Million payment in exchange for all the territories in question. On December 10th, the United States and Spain sign the Treaty of Paris 1898, concluding the Spanish-American War.

On Veterans Day, I was watching “Victory at Sea” on WETA TV. For those of you who are not familiar with the program, it was a series that aired in 1952 and 1953 that used WWII video footage from numerous countries to highlight the role of the Navy during the war. In the episode “Return of the Allies,” the program covers the battles to retake the Philippines from the Japanese in 1945.

The Philippines were a territory and Commonwealth of the United States for 43 years prior to the invasion by Japan, making this campaign to retake the island nation back from the Axis forces not only a strategic maneuver, but also a personal one. One year after the surrender of Japan, the United States granted the Philippines full independence. Though this is history to us, I have a “what if” question. “What if” we kept the Philippines? To get an impression of what US-owned Philippines would look like today, we need to go back and examine the past century of the island nation.

The United States took ownership of the Philippines in 1898 following the Spanish-American War. This transition from Spain was not received favorably by the Filipinos, who battled the rule of the United States during the Philippine-American War. Peace was obtained after a decade of war and regional skirmishes, allowing the US to help shape the new Philippine government and domestic services. The peace was unsettled by the invasion of Japan during World War II, resulting in US forces being repelled from the island nation. After retaking of the Philippines and the end of WWII, the US granted the Philippines full independence in 1946.

If we want to examine what would have happened if the Philippines became a state, we first need to understand how a territory becomes a state. According to the Constitution:

Article IV, Section 3: New States may be admitted by the Congress into this Union; but no new State shall be formed or erected within the Jurisdiction of any other State; nor any State be formed by the Junction of two or more States, or Parts of States, without the Consent of the Legislatures of the States concerned as well as of the Congress.

The lack of a specific procedure in the Constitution is remedied by precedence in the Northwest Ordinance and later with the Enabling Act of 1802. Though not rigid process, the guidelines established by the two documents are:

1. The territory must be organized with a population in favor of statehood
2. 1 Delegate for every 1,200 residents must be selected to attend a Constitutional Convention
3. A State Constitution must be drafted, forming a “republican” government as directed by Article IV, Section 4.
4. The U.S. Congress for admittance into the Union.

This process has been bypassed six times with the formation of California, Kentucky, Maine, Texas, Vermont, and West Virginia.

My intent with this multi-part article is to explore the numerous variables involved with determining if a territory should be admitted as a state. In the case of the Philippines, I’ll explore the possible outcomes if statehood was attempted at three periods during the U.S. administration of the Philippines: 1898, 1935, and 1946.

On Wednesday, President Obama spoke to a joint session of Congress on the topic of health care reform. His hope was to bring to an end the bickering and misinformation surrounding the various proposals in Congress while calling on the politicians to pass legislation before the year is out. During the speech, he addressed what he calls him view of what the health care reform bill should contain. Isolating that portion of the text, I am going through the various proposals and provide you my thoughts on their value.

The plan I’m announcing tonight would meet three basic goals:
It will provide more security and stability to those who have health insurance. It will provide insurance to those who don’t. And it will slow the growth of health care costs for our families, our businesses, and our government. It’s a plan that asks everyone to take responsibility for meeting this challenge not just government and insurance companies, but employers and individuals. And its a plan that incorporates ideas from Senators and Congressmen; from Democrats and Republicans and yes, from some of my opponents in both the primary and general election.

This is a good goal, and probably one most people (from all political spectrums) can support. It would be great if everyone has access to affordable health care insurance if they wish to purchase it. Note the last half of my sentence. It is the personal responsibility of the patient to either seek out insurance coverage or to cover the cost of their medical care out of pocket.

Here are the details that every American needs to know about this plan:
First, if you are among the hundreds of millions of Americans who already have health insurance through your job, Medicare, Medicaid, or the VA, nothing in this plan will require you or your employer to change the coverage or the doctor you have. Let me repeat this: nothing in our plan requires you to change what you have.

I have an issue with this line. True, there is nothing in Obama’s plan that would require your employer to change your coverage. However, if we use one of the House bills that offers a public option as an example, if it is cheaper for the company to pay a fee/fine to the government for not providing health care insurance, then it might be in the company’s best interest to drop the benefit. Nothing required them to drop it, but it does save them money in the long run. In turn, the employee would have to seek out the public option as their alternative form of coverage.

What this plan will do is to make the insurance you have work better for you. Under this plan, it will be against the law for insurance companies to deny you coverage because of a pre-existing condition. As soon as I sign this bill, it will be against the law for insurance companies to drop your coverage when you get sick or water it down when you need it most. They will no longer be able to place some arbitrary cap on the amount of coverage you can receive in a given year or a lifetime. We will place a limit on how much you can be charged for out-of-pocket expenses, because in the United States of America, no one should go broke because they get sick. And insurance companies will be required to cover, with no extra charge, routine checkups and preventive care, like mammograms and colonoscopies because there’s no reason we shouldn’t be catching diseases like breast cancer and colon cancer before they get worse. That makes sense, it saves money, and it saves lives.
That’s what Americans who have health insurance can expect from this plan more security and stability.

There is a laundry list of items in this paragraph, so let me go down the list:

1. Denying coverage – This is a good proposal. One of the issues many people have with obtaining health insurance in their later years are pre-existing conditions that make them ineligible for coverage. If they are fortunate to find coverage, the cost of the plan is higher than a traditional plan. My concern would be the penalties the government would come up with to punish insurance providers who do deny potential patients.

2. Dropped coverage – This is a vague line and Obama needs to explain this section further. If, for example, you leave your job and your employer allows your insurance coverage to last through the end of the month, unless you pay to extend the plan, the coverage will be dropped. If you get sick the last day of your coverage but don’t seek medical treatment until the next day, it isn’t the fault of the insurance provider for dropping your coverage.

3. Coverage cap – This is a good provision. While it can become costly for an insurance provider if the customer is constantly in and out of the doctor’s office, they can buffer their losses with more customers who are healthy and do not see their doctors that often.

4. Out-of-pocket expenses – As one who was in the hospital last year, you really don’t have a good grasp of how much money you have to pay until you receive the bills. The question here is, do you allow the patients to decide what their co-pay amount will be? Is the co-pay limit applied to the total cost associated with treating the ailment, or is it a per-visit/invoice basis?

5. Preventative care – Costs associated with preventative care and routine check-ups should fall under the out-of-pocket provision discussed above. The President would later go on in his speech to say, “I have talked to enough doctors to know that defensive medicine may be contributing to unnecessary costs.” At what point does the President consider preventative care and Defensive Medicine parting ways? And how does he justify making sure insurance companies don’t charge extra for preventative care while at the same time saying he will save money from the practice? This point needs to be clarified.

Now, if you’re one of the tens of millions of Americans who don’t currently have health insurance, the second part of this plan will finally offer you quality, affordable choices. If you lose your job or change your job, you will be able to get coverage. If you strike out on your own and start a small business, you will be able to get coverage. We will do this by creating a new insurance exchange a marketplace where individuals and small businesses will be able to shop for health insurance at competitive prices. Insurance companies will have an incentive to participate in this exchange because it lets them compete for millions of new customers. As one big group, these customers will have greater leverage to bargain with the insurance companies for better prices and quality coverage. This is how large companies and government employees get affordable insurance. It’s how everyone in this Congress gets affordable insurance. And its time to give every American the same opportunity that we’ve given ourselves.

This is basically a reframing of the interstate insurance purchasing plan proposed by the Bush Administration a few years ago, and it is a good idea. If you happen to live in a region where you feel your insurance costs are too high for what you are receiving, you should have the option to seek a better package somewhere else. This insurance exchange might run into some road blocks with a few states law that require a certain set of benefits to be provided under the plan, but the insurance companies are sure to devise special packages to meet those requirements.

For those individuals and small businesses who still cannot afford the lower-priced insurance available in the exchange, we will provide tax credits, the size of which will be based on your need. And all insurance companies that want access to this new marketplace will have to abide by the consumer protections I already mentioned. This exchange will take effect in four years, which will give us time to do it right. In the meantime, for those Americans who cant get insurance today because they have pre-existing medical conditions, we will immediately offer low-cost coverage that will protect you against financial ruin if you become seriously ill. This was a good idea when Senator John McCain proposed it in the campaign, its a good idea now, and we should embrace it.

This is where we start to see problems forming. At what level do we determine who is eligible for these tax credits? Is it someone who is above the exempt tax level but live in an area where the cost of living is high? How about the people who are on welfare? This section of the proposal should be isolated and dealt with tax reform legislation. Coupled with either a flat tax or a higher exemption level, this credit could be more accurately applied than under our current tax scale, especially if Obama’s plan need to calculate the size of the credit “based on your need.”

I do agree that there should be a delayed start to this. Much of this legislation has been rushed to this point, and the last thing we need to do is shock the industry with a fast implementation of the reform. The industry needs to have time to digest the proposed changes while economists and social engineers ponder the impact on the consumer.

That’s why under my plan, individuals will be required to carry basic health insurance just as most states require you to carry auto insurance. Likewise, businesses will be required to either offer their workers health care, or chip in to help cover the cost of their workers. There will be a hardship waiver for those individuals who still cannot afford coverage, and 95% of all small businesses, because of their size and narrow profit margin, would be exempt from these requirements. But we cannot have large businesses and individuals who can afford coverage game the system by avoiding responsibility to themselves or their employees. Improving our health care system only works if everybody does their part.

This is where the Constitutional debate will begin. How can the Federal government require individuals to buy a product or service? The example of the automobile insurance is flawed comparison as well. Unlike health insurance, automobile insurance is needed since you are operating a complex piece of machinery that can injure or kill others. This coincides with the state requiring you to prove you are capable of operating this machinery and authorizing you the to use the vehicle on the public roadways.

Going back to the earlier comment made by Obama (“… nothing in this plan will require you or your employer to change the coverage …”), here is where my example comes into play. If the penalty you are going to place on the company were cheaper than what it would cost the company to provide the medical benefit, their bottom line would dictate taking the penalty. Additionally, who would the companies be required to provide medical benefits to: just full-time employees or does that also include part-time employees?

Both of these issues would have to be reviewed by the Courts prior to being implemented. As we’ve seen in the past, some of the grand domestic programs have been deemed unconstitutional, even though they might have vast public and political support.

This is just a quick overview of the President’s proposal (which may or may not match up with the plans being brought forward by the House and Senate). The President did go on to mention:

But an additional step we can take to keep insurance companies honest is by making a not-for-profit public option available in the insurance exchange. Let me be clear it would only be an option for those who don’t have insurance. No one would be forced to choose it, and it would not impact those of you who already have insurance. In fact, based on Congressional Budget Office estimates, we believe that less than 5% of Americans would sign up.

I do not think that a public option should be required if the bill already provides a tax credit. This is a duplication of efforts and will cost taxpayers more money. I’m not sure if the President understands this, or if he is intentionally trying to appease the left of his party who are demanding that the reform package contain some sort of public option. The President needs to clarify this point.

Earlier this month I discussed the current listening tour by a handful of Republicans as they seek ways to promote the party and to alter their message to reach more supporters. There are many issues both domestic and international where they could improve their approach, especially on issues that are based on morality. With that being said, my first recommendation to the Republicans would be on the issue of abortion.

The landmark ruling in the Roe v. Wade case in 1973 made abortion legal across the nation up till the seventh month. For over three decades, the nation has been caught up in the debate, with groups constantly trying to circumvent or overturn the Courts decision, including amending the Constitution. Unfortunately, their efforts only resulted in the passing of and the Court ruling in favor of Partial-Birth Abortion Ban Act. This act limits the type of abortions performed during the second trimester. However, every election, Republican Presidential candidates are pressed on Roe v. Wade and what they plan to do when they are elected.

There are only two realistic ways that Roe v. Wade will be nullified. The first avenue would be a Supreme Court challenge. Since it was a Court ruling that made abortion legal nationally, a Court ruling can overturn it. Four key Court challenges have failed by just one vote. The second option would be through a Constitutional amendment.

My amendment recommendation would be based on the Tenth Amendment (often tied into the belief of “state’s rights”). The Amendment states: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” This was the basis of the dissent by Justice Scalia during the case of Planned Parenthood v. Casey in 1992. According to Scalia, Roe v. Wade created national law “by foreclosing all democratic outlet[s].”

Using the current minimum wage laws as an example, the Amendment would take the national minimum position stating abortions will be legal in cases of rape, incest, and threat to the mothers’ life. From there, the individual states could pass their own abortion laws and expand the options for abortion to meet the needs and desires of their residents as needed. That way, Vermont could allow abortions for any reason at local abortion clinics while Idaho sticks to the national minimum, for example. In this model, state’s rights are protected under the Tenth Amendment while the due process and equal protection clauses under the Fourteenth Amendment, clauses referenced in the original Roe v. Wade ruling.

In advertising the proposed Amendment, the pitch would be focused on protecting the rights of both the unborn child and the mother. As the recent Gallup poll shows, 53% of the responders stated that they believe abortion should be legal in some cases. Since instances of rape, incest, and threat to mothers’ life is the generally accepted cases by the majority, the Republicans can lock up a significant portion of the voting public while making the dissenters appear to be on the fringe. Additionally, if this proposed Amendment is passed, abortion would slip out of the national debate and become a state issue, decreasing the need for a moralistic debate on the ethical issues on abortion that often makes for awkward debates.

Related articles:
USA Today – “‘Roe v. Wade’: The divided states of America”
Lufkin Daily News – “Blackburn: Republicans legalized abortion”
Lew Rockwell – “Republicans and Abortion”
San Francisco Chronicle – “Republicans Debate Abortion”

The CEO’s of Ford, GM, and Chrysler have enjoyed two days of questioning on Capitol Hill this week as part of a “fact finding” mission by Congress to determine if the three largest American Automotive companies should receive a $25+ Billion bailout package. This bailout is a life-support system through the down economy to keep the companies afloat for a few more months. A drop in sales, a lack of cash on hand, and a national credit crunch formed a perfect storm over the three companies that were already failing to compete domestically with foreign automotive companies, some of which who have built production plants in our nation. Better cars and lower labor costs put the Big Three in a tough position where they had to compromise quality for lower price, and the customers know it.

How did the three companies arrive at this point? I can think of a few. For starters, a sense of complacency existed within the US industry. This isn’t to say that the companies failed to develop new products or try to compete. What I am saying is that they felt that foreign manufacturers were not going to compete on the US Auto manufacturers level domestically. Just a few decades ago, 90% of the cars sold in the US came from the Big Three. So the companies felt that they could charge more for the product and the consumers would buy it. And when the foreign auto manufacturers began to enter into the US market with lower costs, the US manufacturers lowered their price by decreasing basic options to make up the difference.

The labor contracts made with the United Automobile Workers union have also had a hand in the financial crunch facing the auto manufacturers. With labor contracts roughly twice as high as rates being paid to US workers for Toyota, the increased costs must be covered somehow. On top of this, there are extensive benefit packages under the labor contracts that also are incorporated into the costs of new vehicles.

Low fuel prices in the US also added to the current situation. For years, unleaded gas in the US was under $1.00/gallon, meaning there was no real incentive for the manufacturers to develop more fuel-efficient vehicles. Even when gas passed $1.00/gallon, the “gas guzzling” SUV’s started to become popular in our country. One would have to wonder if it were for fuel efficiency standards being passed by Congress over the years if there would have been any serious development in this area by the manufacturers. But that is only in the US.

Overseas operations for the auto manufacturers are fairing better. With cheaper labor, different fuel efficiency standards, and partnerships with European and Asian companies, the Big Three have been able to expand their operations and tap growing markets. Additionally, with fuel normally costing twice as much in many overseas markets compared to the US, foreign produced cars by the Big Three are more fuel efficient than in the US. Under the Corporate Average Fuel Efficiency (CAFE) standards, these foreign produced cars would exceed the domestic standards if the models were imported.  Unfortunately for the US auto manufacturers, there is a history of the foreign-made models not selling well domestically. On the other hand, the Asian manufacturers have been able to sell their models in the US, and with their 30+ mpg fuel efficiency, they easily exceed the CAFE standards where as the US manufacturers tend to end up paying civil penalties (up to the tune of $500 Million) whereas the Asian manufacturers have yet to pay any penalties.

So what are the US manufacturers suppose to do? In your Microeconomic class, a generic company facing a lack of cash and high overhead expenses would typically file for Chapter 11 bankruptcy protection. This would allow the company to restructure the operations, have their debts reduced or eliminated, have contracts voided or renegotiated, and create a plan to resurface from bankruptcy as a more viable operation. In 2008, on the other hand, the first option seems to be to ask for a bailout by the government. This would be a quick injection of cash to sustain operations until the company becomes more profitable. This wouldn’t be a first for the automotive industry as Chrysler sought and received funding from the government back in 1980 (who later repaid the funds with interest).

While Congress debates what approach to take, I have one of my own that I would like to recommend. 

1. Bankruptcy: The auto manufacturer must file for Chapter 11 bankruptcy to be eligible for $10 Billion in US funding. Without bankruptcy, the pressure to make significant change within the business model would not exist, and therefore the potential for a change in course would not exist.
2. Model line reduction: The auto manufacturer must choose one van, one truck, one coupe, and two sedan models they wish to produce, and structure their operations around those five models. Of the sedans, one model must have a fuel efficiency of at least 30-mpg.
3. Overhead: Non-essential plants will be shut down or leased to another company.
4. UAW: All labor contracts will be voided through the courts. The company will then have the option to renegotiate contracts with the UAW or to hire non-union personnel. If contracts are renegotiated, Congress must approve the contracts and the rates are to be in line with industry standards. Additionally, contracts will be for only two years in length to ensure the company has the flexibility to reduced the number of union positions as the positions become obsolete. 
5. Pensions:  Existing pensions for retired employees will be taken over by the Pension Guarantee Fund.  Pensions for existing employees will be capped at current levels and become the responsibility of the union.  From the time of the bailout, future pension benefits will be replaced with 401(k) plans.

These changes will free financial resources for the company to restructure.  It isn’t a guarantee that the companies will be able to fully recover, but it will spark the change needed to at least keep them solvent.  But a bailout isn’t a necessity until existing business options are attempted.  Let’s not try to shortcut the process because of a sharp economic downturn.  Additionally, Congress needs to address existing federal regulations and guidelines in place, such as CAFÉ, to see if they need to be revised or removed, giving the companies additional flexibility to compete and prosper.

Recommended articles:
NeoLibertarian at Large – “Four Little Piggies At The Bailout Trough”
Killer Buffalo – “General Motors and the Free Market: Why bankruptcy is in order”
US News & World Reports - “What Will Happen If We Don’t Bail Out the Auto Industry?”
Houston Chronicle – “Letters: Should we bail out Big 3?”
The Moderate Voice – “Don’t Bailout The Big 3″
CNN Money – “Detroit bailout: 7 key questions”
Seeking Alpha – “Should We Really Bail Out the Big Three Automakers with $73.20 Per Hour Labor?”
CNN Money – “Ford chief denies claims of mismanagement”
CNN Money – “Heated debate over auto bailout”
CNN Money – “How to fix the Big Three”
New York Times – “Let Detroit Go Bankrupt”
Wall Street Journal – “Auto Makers’ Rescue Drive Stalls”
Financial Times – “America must now wean itself off cheap petrol”
NHSTA – “CAFE Overview – Frequently Asked Questions”
Left Lane – “Domestic automakers accept 35 mpg CAFE fuel standard”
CNN Money – “Retired from GM: One worker’s fears”