“Our practical choice is not between a tax-cut deficit and budgetary surplus. It is between two kinds of deficits: a chronic deficit of inertia, as the unwanted result of inadequate revenues and a restricted economy; or a temporary deficit of transition, resulting from a tax cut designed to boost the economy, increase tax revenues, and achieve . . . a budget surplus.” John F. Kennedy


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Oct 21 2009

And the Goal of Healthcare Reform . . . is what, exactly?

C.M. Phippen

Exactly what is the problem we’re trying to solve with healthcare reform? There certainly are issues we need to address with regard to our healthcare system, but let’s be clear about what it is we want to solve with the current legislation.

If we’re not sure what exactly we’re trying to accomplish, we shouldn’t be messing with 1/6 of our economy until we are sure. If the goals can be clearly met based on the plan that’s been established, at that point we can move forward; on the other hand, if analysis of the legislation shows a projected failure to meet the objective(s) we’ve set forth, maybe we need to look at some new solutions.

The alternative would be to simply state our hopes about what the plan will accomplish despite all evidence to the contrary, try to push through an ideological bill, and attack and attempt to bury any opposition news along the way.

Is the purpose to bring down costs (as almost everyone agrees is necessary) for consumers and government? Is it to cover everybody, irrespective of cost? Is our goal to ensure the same treatment for all, regardless of ability or willingness to pay? Is it to shift costs within the country from one group to another?

President Obama has said since his days on the campaign trail that his “plan” for health care reform would cut the average cost of premiums for a family by up to $2,500 a year. Cost savings for individuals is then clearly a priority of this administration. Apparently the president hasn’t passed on his secret to Congress, because no Democrat plan in the House or Senate even comes close to doing this.

See the post I wrote late last week, “Baucus Bill and Cost Increases”. Analysis of the bill shows increases in insurance premiums for the average family. Even after factoring in government subsidies, for which only 17 million people would be eligible according to the CBO, there’s a question as to whether those individuals would be paying any less than if nothing were done at all. Everybody else, on the other hand, will be paying substantially more for their own care in addition to paying for those subsidies through taxation.

According to the Cato Institute, the new taxes needed to fund the bill are more than double the amount of the “deficit reduction” being touted by supporters. They have also determined that the ultimate cost to taxpayers, in increased taxes and premiums, totals over $2 trillion in the first ten years. [1]

Defense of increased costs often includes the caveat that these costs are upfront, short-term, and necessary for fixing our healthcare “crisis”. Unfortunately, neither the Baucus bill nor the House bill seem to have incorporated mechanisms for reducing cost over time.

When looking at ten-year projections (2010-2019), the expenses aren’t fully in force until 2013, while tax increases begin immediately. This skews any analysis of actual cost and completely misleads the casual observer. In other words, as bad as current projections look, the ten years from 2020-2029 will be far worse.

Of course, all of these analyses are based on Congressional numbers. When Medicare was instituted in 1965, the estimated projection of cost for the year 1990 was $12 billion and the actual cost turned out to be $100 billion. [2] Healthcare spending since then has increased, on average, 10% a year and government now pays approximately 46% of all healthcare costs in the US. [3]

Why is “reform” that was supposed to shift the cost of healthcare services for the uninsured from the very, very expensive ER to the more moderately-priced doctor’s office going to cost us trillions more than we currently spend? The care received by the uninsured is not ideal; no one said care you don’t pay for should be ideal though.

Okay, so maybe the bills in Congress don’t cut costs; maybe they will increase our deficit far more than we realize and cost the average citizen far more than doing nothing. But there are other considerations, and next post we’ll look at some of them: universal coverage, equalization of treatment, and/or redistribution of healthcare resources.


Oct 20 2009

States’ Rights and the Obama Administration

C.M. Phippen

The Justice Department has announced that it will not pursue prosecutions against the users of medical-marijuana if they are acting in accordance with state law.  This is a fundamental triumph for states’ rights, and refreshing to see it coming from the Obama administration.

The Tenth Amendment to the US Constitution 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. ”

There has been an historic struggle between state sovereignty and a federal government intent on amassing ever-broader power. Occasionally states have refused to adhere to laws passed by the federal government which they felt were outside the scope of federal authority. Because there have been so many intrusions on states rights, we’ve become in many ways immune to them.

Here’s one example, from Hans Bader at Open Market:

The Supreme Court ruled in Wickard v. Filburn (1942) that even home gardens (in that case, a farmer’s growing wheat for his own consumption) are subject to federal laws that regulate interstate commerce. Economists and scholars have criticized this decision, but it continues to be cited and followed in Supreme Court rulings, such as those applying federal anti-drug laws to consumption of even home-grown medical marijuana. Indeed, many court decisions allow Congress to define as “interstate commerce” even non-commercial conduct that doesn’t cross state lines…

Unprecedented recent threats to states’ rights have many governors and state legislators finally willing to stand up and oppose this federal intrusion. In the State of Montana, a law was recently passed which declared sovereignty for the regulation of firearms made and used within that state. A number of other states are considering similar laws.

This is certainly not a partisan issue. The RealID Act of 2005 has never been implemented and probably never will, as nearly half the states have nullified it with their own legislation, thus forcing the federal government to repeatedly extend the deadline for compliance.

Quite a few states, preparing for what they feel is an inevitable federal health care program that nobody wants (not even the Congressmen supporting it, as they’ve included exemptions for themselves), have begun considering legislation that would nullify the plan within their own borders.

Arizona will have a proposal on the ballot in 2010 which would override any law requiring participation in a particular health care system, prohibit fines or penalties for those choosing to purchase health care directly, and would disallow federal prohibition of the sale of private insurance in the state. Florida, Indiana, Minnesota, New Mexico, North Dakota, Ohio, and Wyoming are all considering similar initiatives.

Let’s hope this administration is as supportive of states’ rights when the issue being championed is more about economic freedom than about getting high.

Oct 19 2009

Real Philosophies and Political Appointees

C.M. Phippen

Videos are surfacing right and left (literally) showing public officials saying things that tell us a little bit more about them and their support of individuals and policies they might not want known.  I’ve been less than amused as I’ve watched some, and this morning came across a video presented as damning evidence against Chris Christie, Republican in the NJ gubernatorial race. 

According to the Corzine campaign posted a video Sunday night showing Chris Christie admitting that he raised money for Governor George W. Bush because he thought he’d be the best person to be President of the US.  He also states that his appointment to the job as US attorney for NJ was, in part, based on his relationship with the President, as is the case in any political appointment.

Compare that with this video  (bottom of page, 2nd one down) showing Anita Dunn, White House communications director, telling a group of high school students back in June that one of her two favorite political philosophers is Mao tse Tung.  Mao, the leader of China responsible for the deaths of tens of millions of his own people, led a highly-regarded (at the time) cult of personality that has proven over time to have been destructive to the Chinese culture and economy.  Hmmm . . .

Oct 17 2009

Baucus Bill and Cost Increases

C.M. Phippen

The original purpose of health care reform was presented to us as being all about the money.  We were told that in order to control ever-increasing health care costs we needed to trust the federal government to implement a program that would reduce those costs and make insurance coverage more affordable for more Americans.

The Senate isn’t giving us access to the Baucus bill, but those who’ve analyzed it say it will do anything but cut costs.  Not only will tax revenue need to be raised significantly, but individuals who buy their own insurance plans or receive coverage through an employer will also be paying substantially more if they don’t qualify for government subsidies. 

The projections of costs for the standard family policy, currently at $12,300 per year, is outlined as follows:

2013 – $15,500 under current law, $17,200 with Baucus bill        

2016 – $18,400 under current law, $21,300 with Baucus bill

2019 – $21,900 under current law, $25,900 with Baucus bill

There are a number of reasons for the increases in premium costs.  They include the fact that without universal coverage and with the inability of insurance companies to refuse to cover pre-existing conditions, there is a powerful incentive to wait to purchase insurance until one becomes sick.   This is called cost-shifting, not insurance.

New taxes contained in the bill for medical device makers and pharmaceutical manufacturers also lead to higher costs for coverage, which insurers will have to pass on to the consumer. 

Private insurance companies have long supplemented the reduced rates of reimbursement from government plans, but would have to do so to a greater degree.  Rates to doctors would be cut 25% across the board with no adjustments for inflation.  Hospitals and doctors would still need to cover their costs and if the plan does nothing to attempt to lower the actual cost of providing services, rather only reduces the amount reimbursed for those services, it fails to deal with the real underlying issue. 

A proposed 40% tax on high-value plans further increases the cost of employer-based coverage. argues that as a result of those ridiculously high tax rates, employers will drop the good coverage in favor of less comprehensive health insurance, thus holding costs in check and somewhat reducing the projected rise in premiums.  I’m not quite sure why they tout that as a benefit . . . 

They also claim that as a result of shifting to less expensive coverage, employers will raise pay which will increase federal tax revenue by way of payroll and income taxes.  I’ve seen no data showing that increase in revenue offsets any loss incurred by the employers thus avoiding the 40% tax (money needed to help pay for the bill itself).

President Obama has promised again and again that any health care bill approved by Congress and himself will not increase the federal deficit.  I’d love it to be so, but after seeing the inability of government to adequately estimate the costs of a simple short-term program like Cash for Clunkers, I’m not really sure they have a clue of the real expenses involved in a plan like those being proposed. 

I offer a suggestion:  Any health care bill should contain within it a trigger, whereby if at any time costs are incurred that would increase the federal deficit or place higher burdens on the states, the entire system will revert to the current status quo within 1 year and a new solution which we can afford will be implemented.  Maybe then they’ll be ready to propose a program that actually helps cut costs for the average American family and small business, while still keeping the government budget in check.  Any politicians ready to stand by their words?

Oct 16 2009

Congress: “Do As I Say…”

C.M. Phippen

According to the Housing and Economic Recovery Act of 2008, one of the major changes made to the Truth-in-Lending Act (TILA)  affecting most mortgage loans was to institute a seven-day waiting period after the receipt by the consumer of TIL documents.  At any time during the loan process, upon any changes to the APR, there kicks in an additional three-day waiting period.  The purpose of this legislation was to enable consumers the opportunity to be fully informed of their loan terms prior to signing documents, and to thus minimize the perpetration of fraud by mortgage lenders and brokers.

In a bill currently pending before the House of Representatives, H.B. 554, it would be required that all non-emergency legislation be posted online at least 72 hours before consideration in the House in order to allow the public sufficient time to be aware of exactly what it is they’ll be paying for.  Unfortunately, neither party has been very fond of such legislation while they’ve been in power, and this time is no exception.   

The unprecedented levels of spending by Congress over this past year is placing a tremendous responsibility on all of us going forward.  We, and our children, will be required to pay for and to live with the unintended consequences of the bills that have been passed by Senate and House members who’ve admittedly never read the bills they’ve voted on.  I guess we shouldn’t be surprised that they don’t believe we ought to know what’s in those bills, as most of them don’t either, and it’s their job.

Can you imagine your boss’ response if you told him it was just too hard to understand the documents you’re responsible for so you’d skip reading them?  Maybe you could have the special-interest groups that wrote them give you a written summery to examine; you know, a CliffsNotes version.  Here, Senator Tom Carper explains to a reporter that legislative language is just too difficult to understand, even for a seasoned Senator, so no one he knows actually reads the bills.

If it’s good policy (and I question that it is) to require by law that individuals taking out a mortgage loan have a mandated period of time to review the information before committing themselves to the terms of the contract, why would the same not be true for those who are funding (taxpayers) the “contracts” being entered into by a third-party (Congress) on their behalf?  It seems to me that the necessity of such review periods would be even more important when one is charged with spending someone else’s money.  I‘m sure they‘re just as careful with ours as they are with their own, though, don’t you think?

Not only should both houses of Congress be required to post bills online for public review (how about the same seven days Congress thinks is necessary for a a TIL document that is typically one page long?), but they should also be required to include the estimated costs to taxpayers.  I mean the real cost.  How about implementing one of those mandates Congress placed on the credit card companies as well: include the period of time it will take to pay off the debt if a specific minimum payment level is maintained.  As in the credit card legislation, this should include any interest on debt that must be incurred in order to finance the bill. 

Interestingly enough, the very individuals just “looking out for the little guy” seem to be more interested in protecting him from himself than from themselves, and fail to see just who is the greater threat.

Oct 10 2009

Congress: The Bastion of Fiscal Responsibility

C.M. Phippen

Senator Bob Bennett (R-Utah) was recently called out by members of his own state for an earmark in the just-passed defense bill that took a total of $171 million out of the operations fund of the military for pork spending.  Bennett’s offering to a business in the state of Utah was a $5 million cut for “scrapbook” DVDs to be made for National Guard members.

According to the Salt Lake Tribune, Bennett’s defense is that it will need to be funded from some place and that this is a very, very small percentage of the overall operating budget.  Huh?  Do these guys really take themselves seriously?  It’s $5 million, and no, it doesn’t need to be funded from “some place.”  In terms of the amount of money the federal government confiscates from the 57% of us lucky enough to pay federal taxes each year, no, it’s not a large amount.  On the other hand, it’s not Senator Bennett’s money and the purpose for which it was taken from us wasn’t really for DVDs.  It’s a very nice project that I would support Senator Bennett wholeheartedly in paying for with his own funds if he really feels so strongly about it.

This fiasco reminds me of the horror of remodeling my house a few years ago.  At the end of the process there had been an increase in the billing of each subcontractor by more than 100% of the original bid (with only two small change orders through it all).  Each of them viewed this as just a small amount of money on a massive project and figured they could get away with it.  By the time the home was completed it was seven figures over budget and it had completely wiped us out financially.  If our Congressmen are too inept to realize that 535 people repeatedly sending, “very, very small” $5 million checks to companies in their districts for projects that would never be funded without slipping them into important legislation is enough to bankrupt this country, they don’t deserve the privilege of “serving” us anymore.

Even more disturbing is that this is the exact process the Obama adminstration wants us to believe will reduce costs with regard to health care.  We’re told that only government can cut the waste and inefficiencies of private business in order to save the requisite amount of money needed to pay for the trillions in new spending.  Why, then, is the ever-efficient federal government using $5 million of military operating funds to pay for cute little DVDs?  But I’m sure they’d never play such political games with the health of American men and women (no, only with the lives of servicemen and women?).

Apparently, the way these videos were funded in the past was through private donations from businesses.  That apparently was much more difficult than going directly to a Senator and lobbying for a big, fat, rather a “very, very small” $5 million check.  Businesses and individuals who work for the money they receive tend to be pretty particular about weighing cost v. benefit when spending that hard-earned money, especially in times of recession.  The assumption can be made that there just weren’t too many out there who felt the benefits of this project were worth the cost.  Government, on the other hand, functions with the mantra of  “easy come, easy go,” and a check for $5 million is a drop in the bucket of their sea of corrupt and politically-connected spending.

Maybe I’m missing something, though; maybe there really is a benefit in this whole system.  It just could be that the advantage Sen. Bennett and others like him see in their defense-spending pork projects has absolutely nothing to do with the troops, and profits those who have absolutely nothing to do with ultimately paying the bills.  Ya think?

Oct 10 2009

Peace Prize or Appeasement Prize?

C.M. Phippen

So, the Nobel Peace Prize of 2009 has gone to . . . Barack Obama?  His nomination would have had to have been made within 11 days of him becoming President of the United States.  I’m sure for some that’s enough time to accomplish great things, but most of us consider our accomplishments of lasting import to have required a little more of us than 11 days.  Of course, within that period he gave some great speeches . . .  and words are the weapons of progressives, after all. 

According to Francis Sejersted, chairman of the Norweigan Nobel Committee in the 1990s, “Awarding a Peace Prize is, to put it bluntly, a political act.”  Many of us thought as much, but our suspicions have now been solidly confirmed with the current award.  After all, this is a man who has spent his first months in office trying to force policies on an unwilling public which would make us look a lot more like those who resent us and weaken much of our competitive advantage in the world.  Even for many of those who support Mr. Obama and his progressive agenda, this is just one step too far in throwing themselves at the feet of their unproven secular savior, and the honest just aren’t willing to go there.

Gier Lundestad, secretary of the Norwegian Nobel Committee, said in 2001, ” . . . the committee was  . . . prepared to intervene . . . in regional conflicts around the world in the hope that the Nobel Peace Prize could not only award deeds done, but also provide an added incentive for peace.”  Does anyone see here an obvious attempt to influence Mr. Obama and his dealings with other countries?  He is currently considering whether to follow the recommendations of General Stanley McChrystal, the top US commander in Afghanistan, who has asked the White House for 40,000 more troops and warned that without them, we will likely fail in that country.  Is the awarding of this prize one of those “incentives for peace” spoken of by Mr. Lundestad?

Of course, “peace” is an interesting debate for another day.  I don’t know of a single individual, outside of some Muslim extremists who want to kill all who disagree with them, who doesn’t want peace.  The question is one of whether or not we do the hard things to ultimately achieve it and whether we’re willing to acknowledge that hard things sometimes must be done; things that appear, on the surface, to be anything but peaceful.  You know, it’s kind of like shooting the intruder in your home just before he rapes or kills your wife – not really a peaceful act in and of itself, but one that ultimately provides more peace than the alternative.  This requires the ability, though, to think and see beyond the immediate, beyond stage one.

The awarding of this prize is simply an accolade for a man who is greatly loved around the world by those who resent us, the United States of America, for being the last great bastion of freedom in a world clamoring for nurture at the hand of big brother government.  The anger is palpable toward those in this country who fight against the policies of progressivism, and who want anything but to become like another European state.  After eight years of a man who wasn’t afraid to stand up to evil and extol the virtues of the American way of life, those who despise everything that has made this country exceptional have at long last found their ally, in one of our own.