Fiscal Fact-Check: Deficit, Social Security, and Medicare


Updated March 16, 2015-

America’s economic system is in grave danger. Like your personal finances, fiscal discernment in U.S. public policy is important for our economic recovery.

A Harvard study reveals that massive U.S. borrowing and spending have wasted trillions of dollars in flawed efforts to stimulate the economy.

In addition, the study also reveals government spending causes companies to cut back.

ID-10034937 AmbroAmerican voters should demand what’s best for the citizenry now and for the generations to come.

Consider these salient facts:

The U.S. debt

This month, the U.S. has a $18+ trillion deficit and it’s still climbing.

The debt is tracked by different organizations, which you can watch in real time at two Web sites.

They are www.usadebtclock.com and www.usdebtclock.org.

Countless countries actually own America

In June 2014, according to U.S. Treasury Department data, here were the 10 biggest owners of U.S. Treasurys:

1. China, Mainland – $1268.4 billion

2. Japan – $1219.5 billion

3. Belgium – $364.1 billion

4. Carib Bkg Ctrs 4/ – $308.3 billion

5. Oil Exporters 3/ $262.1 billion

6. Brazil – $253.7 billion

7. Taiwan – $179.4 billion

8. Switzerland – $175.9 billion

9. United Kingdom 2/ – $173.7 billion

10. Hong Kong – $158.2 billion

On the other hand, countless foreign governments own billions of dollars of U.S Treasury Securities.

Social Security now pays more in benefits than it collects in taxes

According to Social Security, there are too few Americans paying into the system, as workers retire. Millions of baby boomers have opted for early Social Security checks because they can’t get a job.

Five decades ago, in 1960, there were 4.9 Americans paying into Social Security for each person getting benefits. Now, there are only 2.8 workers. The Congressional Budget Office says the figures continue to worsen – only 1.9 workers will be paying for each beneficiary in 2035.

In 2012, the average retiree got $1,235. Disabled workers’ average was $1,111.

Some 56 million Americans get Social Security checks now, and the number will skyrocket to 91 million in 2035.

The Social Security situation worsens the federal budget deficit

Because the federal government and its agencies have spent far more than they get in tax revenue – Congress has been raiding Social Security, which used to have a surplus.

Congress justified the raids by ordering the Treasury Dept. to issue two special bonds, which are worth $2.7 trillion, for trust funds. One fund is for retirees and the other is for disability recipients.

Social Security is surviving by tapping into the interest from the trust funds. It’s forecast to be bankrupt in less than 20 years.

“In 2012, outlays exceeded noninterest income by about 7 percent, and CBO projects that the gap will average about 12 percent of tax revenues over the next decade. ” according to the Congressional Budget Office (CBO) Web site.

It gets worse.

“CBO projects that under current law, the DI trust fund will be exhausted in fiscal year 2017, and the OASI trust fund will be exhausted in 2033,” write the budgeters. “If a trust fund’s balance fell to zero and current revenues were insufficient to cover the benefits specified in law, the Social Security Administration would no longer have legal authority to pay full benefits when they were due.”

In 2012, Social Security was forecast to have a $166 billion shortfall, including the $112 billion from the temporary payroll tax reduction. The temporary reduction actually hurts American workers – as a result, they’ll earn less money for their retirement.

Social Security was scheduled to pay out $789 billion in 2012, but only receive $623 in payroll taxes.

Medicare’s fiscal issues are worsening

President Obama and his fellow Democrats claim they’re working to save Medicare. So far, the facts from the CBO show otherwise.

To partially fund ObamaCare, Democrats began taking $716 billion dollars from Medicare for nine years starting in 2013. What’s worse, the ObamaCare legislation implements more than 160 changes adversely affecting Medicare.

It also hurts health services. (See: Healthcare Crisis – What the Plight of Doctors Means to You)

Efforts to save Medicare are stymied by politics.

As a member of Congress, Paul Ryan (R-Wis.), introduced a plan that would upgrade Medicare and change the government’s role by providing senior citizens with grants, net amounts or vouchers – whatever term you choose to use.

Over a nine-year period, the CBO estimated it would have saved $30 billion and recipients would pay an out-of-pocket $6,400.

But 100 percent of the Democrats voted against the plan.

So, Rep. Ryan teamed up with a liberal counterpart – Sen. Ron Wyden (D-Ore.) to come up with a compromise. After Rep. Ryan was named as a running mate for Mitt Romney, Sen. Wyden sought to distance himself for political reasons. But he says he’s still committed to fixing Medicare’s fiscal problems.

Rep. Ryan’s new reform’s key elements:

— Senior citizens will be allowed to stay with the current system.

— No one over 55 would be affected. After 2023, 65-year-olds can choose either the status quo or a government-provided net amount.

— The average out-of-pocket expense to senior citizens will only be $800.

— Medicare would not go bankrupt.

Other issues affect the nation

They include consistently high unemployment or under-employment for workers seeking family wage jobs, sluggish economic growth, uncompetitive school systems, crumbling infrastructure, and increasing poverty (one out of six Americans).

There are pocketbook issues for everyone. Food costs have been climbing even before the drought, and motorists in many areas are suffering from high prices at gas stations.

So it doesn’t help with the administration imposing unnecessary regulations on the petroleum industry, assailed important exploration tax breaks, and hasn’t approved new areas for exploration.

As a matter of fact, both political parties have played a negative role:

— Pres. Bush didn’t veto one pork bill from the Republican-dominated Congress until six years into his presidency. The deficit started under his watch.

— The Obama Administration hasn’t kept one promise made to small business –the nation’s jobs engine – prior t0 the 2008 election. None of his policies has worked to solve the nation’s issues. The deficit continues to explode.

Such fiscal dysfunctions prompt this question: Why do we want to risk burdening our children and grandchildren?

Let’s insist on three Ps – productive public policies – to benefit this great nation. That means understanding the facts and taking steps for fiscal sanity.

From the Coach’s Corner, related issues:

— Nonpartisan Study: Obama’s Tax Plan Hits 53% of Business Earnings

— Is it Too Much to Ask For Civility and Honesty from Mr. Reid and the Press?

— Economic Analysis by noted economist Peter Morici, Ph.d.

“If you ever injected truth into politics you have no politics.”

-Will Rogers

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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

Image courtesy Ambro www.freedigitalphotos.net

Washington: A Balanced Budget Is No Longer Enough

Updated Jan. 11, 2012

A Seattle Times headline is perplexing. True, the headline –“Lawmakers open session, try to close $1B gap” – is a fairly accurate assessment of Washington state’s budget. Not to be laboriously repetitive, but the headline is worrisome. Once again the Legislature faces a budget crisis.

“The economy is the focal point of this year’s legislature as state lawmakers attempt to close a $1.5 billion shortfall in a $34 billion budget at the state capitol in Olympia,” blogged Don Brunell, president of the Association of Washington Business (AWB).

Mr. Brunell is known for his pragmatic reasoning.

“As they deliberate, they must be mindful that Washington is in the midst of an anemic economic recovery which is very fragile,” the AWB president added. “New costs to employers, especially those along Main Street, have a dampening effect on our ability to increase consumer confidence and bring people back to work.”

That’s my sense, too. But the Legislature routinely fails to prioritize first things first. The short-term priority is to balance the 2011-2013 budget. But as a priority, it’s secondary to a bigger quandary – government and budgeting reform, which are needed immediately, as well.

Instead, all budget discussions are about the short-term and relatively insignificant issues grab a disproportionate amount of attention.

Gov. Gregoire wants to focus on a new $3.6 billion transportation package, gay marriage, shorten the school year, abolish social services, release some prisoners before the sentences expire, and increase the state’s sales tax. House Speaker Frank Chopp, D-Seattle, also says same-sex marriage is a top priority.

A significant number of citizens wants to legalize marijuana. Some lawmakers want a statewide ban on plastic grocery bags.

Most of us in business agree education is a priority. But increasing taxes even for education isn’t productive as long as government/budgeting reform is ignored as a priority.

In addition to Mr. Brunell, another thoughtful pragmatist is Jason Mercier. Mr. Mercier is director of the Center for Government Reform of the Washington Policy Center.

Worth consideration is Mr. Mercier’s list of recommended reforms:

  • Enact a constitutional tax and spending limit (with two-thirds requirement to raise taxes) modeled after the original 1993 I-601 formula.
  • Remove as many of the restrictions on lawmakers’ ability to set spending priorities as possible (collective bargaining restrictions on compensation, federal mandates, assumption of auto-pilot budgeting on programs).
  • Reform competitive contracting. Allow agencies to make performance-based contracting more proactive (create a Competitive Contracting Council).
  • Provide the governor discretionary authority to cut spending.
  • Repeal unaffordable programs instead of suspending them.
  • Require at least a 5 percent reserve when adopting the next biennial budget.
  • Require updated four-year budget outlooks to be published after each state revenue forecast or budget adoption.
  • Require completed fiscal notes before bills can be acted on.
  • Phase in a defined-contribution retirement plan that gives state workers benefits that can never be taken away.

Amen. Yes, the Legislature should soberly balance the budget. However, unless the Legislature concomitantly reforms government and the budgeting process, uncertainty will never be alleviated for the state’s businesses and consumers.

From the Coach’s Corner, you might want to consider other public policy columns.

“There is an important sense in which government is distinctive from administration. One is perpetual, the other is temporary and changeable. A man may be loyal to his government and yet oppose the particular principles and methods of administration.”

-Abraham Lincoln

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Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?

Budget Debate: Will Legislature Read Seattle News Media Headlines?

Nov. 28, 2011

The headline on the Seattle PI Web site was startling. It read: “FACT CHECK: Has Wash. cut budget by $10.5B? Hardly.”

The headline and accompanying story questioned what appear to be misrepresentations by Gov. Chris Gregoire when she claimed Washington has slashed $10.8 billion from the state budget in the last three years. The cuts were her justification for proposing a sales tax increase to balance the budget.

My hope in the budget debate is that the Legislature will read such Seattle media headlines, as they meet in a special session this week to debate the budget deficit.

(Actually, the story appeared in the Seattle PI an hour after it first appeared in the Seattle Times. But, inexplicably, the Seattle Times deleted the story less than an hour after the PI story appeared.)

Reporter Mike Baker documented how the hundreds of so-called cuts are really spending increases that haven’t been implemented.

For example, the alleged cuts include:

  • $682 million in cost-of- living increases for education employees
  • $344 million in cost-of-living hikes for pensions
  • $1 billion in education cuts, but it hasn’t really been slashed because of student tuition increases
  • $128 million for an education apportionment payment, but the payment has actually been doled out
  • $69 million for state parks, but in reality the state took in that amount from user fees

Mr. Baker also reminded us that the state is ready to spend around $30 billion from the general fund budget. That’s more money than was spent in the more-recent budget cycle.

Because it was an Associate Press story, it soon appeared on 54 media sites.

The sales tax proposal is controversial for good reason, and why the sales tax debate erupted in Washington state.

Public officials have long violated good government standards on transparency and in spending. On multiple occasions, this column has called for reform and wondered why not transparency for good, open government in Washington state?

We need better public policy – here are a couple of examples:

  • Proposing to cut $160 million from state colleges and universities is unconscionable.
  • Special interests such as the Washington Federation of State Employees should be reasonable and agree to renegotiate labor contracts.

It’s easy to conclude from the Associated Press story that Washington state has a spending problem, not a revenue problem. For example, the State Auditor revealed state government spends $1.8 million for nearly 6,700 unused cell phones is only one example. We need more public officials to create a favorable economic environment.

Given the economy and continuous budget crises, Washington legislators should finally start compromising, stop the longtime practice of shell games and launch legitimate reform. Only then, will thoughtful businesspeople and voters trust Washington state government and consider a sales tax increase.

So, in the budget debate: Will the Legislature read the Seattle news media headlines? It’s time for good government.

From the Coach’s Corner, furthermore, the state can create more tax revenue if it encourages entrepreneurship to create jobs. Here’s What Small Business Owners Need from Washington State Policymakers.

Here’s another no-brainer: How Washington Fails in Filmmaking for Economic Development.

“Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.

-George Washington

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Columnist Terry Corbell is a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?

Only Fiscal Sobriety Will Prevent Further Fiscal Chaos



We’re way past the deadline to demonstrate financial leadership. It’s time for economic fundamentals and teamwork focused on economic patriotism.

As the world’s largest-economy, threats for a double-dip recession will only worsen unless the Unites States stops the fiscal dysfunction. In fact, not only is the U.S. economy is danger, so are world markets.

ID-100204915 sscreationsBusinesspeople experience chaos, chaos and more chaos everyday.

With a $19-trillion-dollar+ deficit, investors and average Americans aren’t confident that the Obama Administration and Congress are competent enough in public policy. Voters are sick and tired about the bickering and finger-pointing.

Virtually all polls show support for ObamaCare and the president himself are plummeting. A CNN poll suggests 53 percent of Americans don’t trust Mr. Obama. Tech experts say the ObamaCare Web site is too risky (Poor security on Obamacare site could sacrifice private info).

Fourteen million Americans are out of work. The catalysts are the economy, advances in technology and business greed for cutting labor costs to show profits.

Despite what the Obama Administration claims, the S&P downgrade of the U.S. credit rating was justified. If a family or a company’s credit situation is lousy and cash flow is poor, they don’t qualify for loans, period.

All of that stimulus spending hasn’t turbo-charged the economy.

“This country has come to feel the same when Congress is in session as when the baby gets hold of a hammer.”

-Will Rogers

The challenges are many:

  • Capital isn’t circulating.
  • Consumers have cut spending.
  • Businesses aren’t hiring.
  • Money isn’t being lent.
  • Despite efforts by the Small Business Administration to promote loans, the majority of small companies don’t have the collateral, credit and cash flow to qualify for a loan.
  • Don’t forget the obnoxious greed on Wall Street, which helped cause the meltdown.
  • Precious little is being manufactured.
  • Many investors have more confidence in gold.
  • The trade deficit is exacerbated by manipulation of currencies by China, India and Japan.

The blame game has become onerous, and few politicians – from the White House to Congress – have offered constructive ideas. What we need is balance and compromise. Move to the middle, please.

To Democrats: Cut spending.

To Republicans: Quit attacking Social Security and Medicare as entitlements instead of lifelines, and reconsider the Bush tax cuts for the wealthy. (Note to Republicans, Democrats aren’t the only culpable spenders. Lest I forget, Mr. Bush waited six years before vetoing any pork bills in a GOP-dominated Congress.)

To both parties: Stop the hometown pork to get re-elected, shun unnecessary risk, and simplify the tax code. Consider all options, including the call by Steve Forbes for a 10 percent flat tax.

To the White House: Wake up to realities. Hire bipartisan economists.

Remember why this nation was founded. At-risk are all of our political and economic liberties.

Now, can we get sober fiscally and agree to roll up our sleeves?

From the Coach’s Corner, here are additional resource links on public policy:

“This country has come to feel the same when Congress is in session as when the baby gets hold of a hammer.”

-Will Rogers

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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

Image courtesy of sscreations at www.freedigitalphotos.net

How Enterprise Washington Helps State’s Businesses

Feb. 28, 2010

In trying to solve a $2.8 billion budget shortfall, Washington state lawmakers have been debating the wrong issues. Instead of debating whether to increase the sales tax or to eliminate tax exemptions for industries, lawmakers would better serve voters if they dealt with the core issue.

The core issue: Developing a healthy economic climate with public policies that help – not hinder creation of private-sector jobs.

Most businesses have had to significantly cut payroll – 175,000 jobs were lost in two years. However, instead of being good stewards of taxpayer assets, many public officials are frantically looking to spend money and generate more tax revenue. The only jobs the state helps to create are government jobs that exacerbate the economic climate.

Worse, state pensions are 74 percent higher per person compared to the private sector. And the Legislature has failed to fund at least $7.9 billion in healthcare and pension liabilities – a financial time bomb set to explode.

Thirty percent or more of your business headaches are caused by onerous government regulations and taxes.

These and countless other issues hurt the economy.

However, there is hope. At the grass roots level, Enterprise Washington (EW) is an organization effectively clearing the air. They know a strong economy will create jobs in a way that helps the environment.

In essence, the EW folks understand the core issue, and they are recruiting and helping business-friendly candidates get elected to office. I recently met with the group’s principles at their Issaquah office and walked away with favorable impressions. And what’s really neat is that they understand it’s important to be open-minded. They recruit both Democrats and Republicans.

It was refreshing to hear the insights of EW President Erin McCallum.

My sense is that you’ll want to know more about EW. Here are Ms. McCallum’s answers to my questions:

Q: What is your success rate?

A: Since EW’s formation in 2007, there are seven more business-friendly lawmakers in Olympia.  

Five GOP include: Sen. Randi Becker, Reps. Kevin Parker, Jan Angel, Bruce Dammeier and Terry Nealey.

Two Democrats: Reps. Reuven Carlyle and Scott White.

EW was instrumental in five of the seven victories (Becker, Parker, Angel, Nealey and Carlyle).  

In each of these races, EW either identified and recruited the business person or ran a significant independent expenditure campaign that helped educate voters about the candidate who was the stronger champion of the economy and the health and sustainability of Washington’s private sector.

Q: How would you describe your mission?

A: Recruiting, training and electing business-minded state lawmakers. 

Q: You have different organizations under your wing?  

A: Yes we do. EW, the mission is described above and EW’s Jobs PAC which is a 527 political action committee.   There is also a legally separate 501 (C)(3), charitable organization called Business Institute of Washington. It is an educational resource for our communities that helps Washingtonians gain a stronger understanding of the significant role our lawmakers play in establishing laws that govern our state. 

Q: Please describe how they’re structured cohesively.

A: EW is legally organized to influence the outcome of elections in key districts (C-6, membership organization, and a 527 political action committee). EW has established these separate entities to accommodate the different reporting requirements for various political expenditures.

As a result of the economic downturn and what a majority of the public sees as government spending run amok, the current political climate is favorable for pro-business/anti-tax candidates.  Business has an opportunity to capitalize on this shifting political climate during the 2010 election cycle.

Q: Briefly, what is the history of your organization?

A: EW grew out of an old business political action committee, United for Washington. We developed our business model using best practices from business communities in other states, and taking examples from currently successful players in Washington state politics. 

Our research has unveiled that successful special interest groups in Washington state have not been friendly to private sector business for some time.

Q: How would you describe the state of politics in Washington?

A: The political stage was set many years ago for what’s happening in Olympia and state government today. For decades, special interest groups outside of the business community have worked tirelessly in recruiting candidates who will champion their issues and helped get them elected.  Our state’s current political climate augurs opportunity for pro-business candidates – Democrat and Republican, alike. And with the new top two primary, business-friendly Democrats are viable again.

Here are some examples of how other special interest groups operate in our state, and how the private sector community has assisted in bringing them to power:  

Organized labor has done an incredible job in helping to elect candidates to champion their issues in Olympia. Organized labor, with SEIU largely driving the effort, has been effective in politics by winning one race at a time. Their efforts have paid dividends for them on shaping public policy.

Other special interest groups such as the Trial Lawyer Bar, WEA, Firefighters, etc., make sure contributions get funneled to close races, usually to Democrat candidates. When business contributes to both parties (often to gain political access) a significant portion of contributions made to Democrat leaders are transferred to competitive races and used against pro-business candidates. Organized labor has been able to rely on a pro-union majority in both the House and Senate to protect its interests.

Q: How many members or supporters does your organization have?

A: EW currently has about 250 members representing businesses from all across the state in a broad range of industries. This year, we are currently in a drive to double our membership.  Any of you who are business owners and who care about the future of our state, please join us by visiting www.enterprisewashington.org and become a member.

Q: A lot of voters think of business-oriented people as Republicans-only, but you have the vision to be nonpartisan.  Please describe how and why you decided on the nonpartisan approach.

A: Business issues do not necessarily cut clearly across political party lines. Also, given our state’s demographics and increase in population, we recognize that voters in this state are fiscally conservative, socially progressive. With Washington state’s two political parties tending to lean more to the extreme we look for balance and middle ground.

Q: What’s your criterion for a political candidate

A: Our state is quite diverse, so the ideal candidate can vary quite a lot depending on the location of the district. Having said that we are looking for business people, both employers and more likely employees, who have strong experience in the private sector and can bring their expertise to the state lawmaking process.

Q: What’s on tap for your association?

A: We are in the midst of a $1.6 million campaign for Washington’s private sector and invite everyone in business in this state to get engaged through EW membership. Unlike public employee unions that can collect political contributions through the monthly dues process, EW must appeal to the greater business community, those who have the most at stake, to make our programs succeed.

Please go to www.enterprisewashington.org and become a member today! Through membership, you can help elect more business minded state lawmakers who will understand and support public policy that supports private sector jobs.

Q: What else would you like to add?  

A: The business community has a choice to make: either get involved and help elect more business friendly lawmakers or face steeply higher taxes. EW is the only organization in Washington state that is tackling the political landscape with the goal of making significant positive changes to the makeup of our state legislature.  Democracy is not a spectator sport so join EW today! Having strong elected lawmakers who understand that it’s the private sector that creates jobs and turn builds healthy and happy communities.

From the Coach’s Corner, here’s more on upcoming state-government developments:

To identify state efficiencies and savings, Washington State Auditor Brian Sonntag has announced his performance audit work plan.

Oxymorons: ‘Healthcare Reform’ and ‘Public Servants’

 

Updated July 4, 2010

Agreed, healthcare is expensive and too many American businesses and workers can’t afford it. Healthcare reform is a great idea if it benefits the welfare of the United States and the citizenry.

So let’s consider the issue and agree on these benchmarks as goals:

  • Increase access to healthcare
  • Provide affordable insurance
  • Improve healthcare quality and optimize the safety of patients 

Unfortunately, Congress failed to achieve such lofty goals with the legislation.

We’ve heard a lot about the requirement for universal participation that would require expensive penalties for nonparticipants. Additionally, in a Boston Globe column, CPA Jamie Downey warned the bill contained 19 tax increases: Tax increases abound in healthcare reform legislation.

Polls show more than half of Americans still oppose the controversial healthcare reforms.

The so-called reform presents new unforeseen costs. Congress has already raised the national debt limit to $14 trillion. The unemployment nightmare is heartbreaking to millions of Americans. And there are “New Threats to Economic Liberty: Cap-and-Trade, Spending Bills.”

The deficit is a quagmire that few in Congress and the Obama Administration lack the wisdom and the will to correct. The economy and job creation should have been the priority.

In a side debate, Senate Majority Leader Harry Reid reportedly said future Congresses cannot repeal parts of his bill. On the floor, Sen. Jim DeMint (R-SC) pointed out hidden changes to Senate rules in the bill cannot be repealed by future Congresses.

In a television interview, Nebraska Gov. Dave Heineman said Sen. Nelson’s maneuver for favortism to his state embarrassed him.

The governor should be embarrassed.

But the tyrannical reform nonsense may become meaningless. Look for the courts to act. The Associated Press reported that seven state attorneys general are investigating the Nelson extortion. They include Alabama, Colorado, Michigan, North Dakota, South Carolina, Texas and Washington.

Being based in the greater Seattle area, I am pleased by the common sense of Washington Attorney General Rob McKenna for opposing the chicanery – besides, forcing Americans to buy anything is un-American.

Nonetheless, the administration and Congress are defied the will of the people.

Healthcare reform is a failure for America and its workers, and is disastrous for business. While the goal is admirable, the resulting emotional and financial stresses on government, employers and workers defeat the purpose. The associated figurative and literal costs are prohibitive. And the means to the end are disingenuous.

Our economic and political liberties are being stolen from us.

So meet your oxymorons: Healthcare reform and public servants.

From the Coach’s Corner, the popularity and legality of the law are still being debated: No, Health Care Reform Is Not Very Popular; ‎Healthcare reform law arguments heard in Virginia courtroom


Seattle business consultant Terry Corbell provides high-performance management services and strategies.