“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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Feb 27 2010

Question: Healthcare Reform and Cost Cutting?

Okay, I know there are at least a few of you liberals who read this website and I have a serious question for you – what are the mechanisms in the House and/or Senate healthcare bill that will lead to lower medical costs, one of the two major goals of reform?

Feb 25 2010

Healthcare and Transparency

C.M. Phippen

President Obama today is holding his health care summit to “bridge the gaps” that exist between what Republicans think is best for the country with regard to healthcare reform and what the Democrats want to see passed.

In his opening remarks, President Obama said, “I hope that this isn’t political theater where we’re just playing to the cameras and criticizing each other, but instead actually trying to solve the problem.” I couldn’t agree more!

Cameras tend to make congressmen less effective and more prone to grandstanding; on the other hand, we were promised transparency by this administration. Just one question – where were all the cameras when those backroom deals were being made to buy the votes of Democrats to support the healthcare reform bills initially? Just asking.

Feb 24 2010

Debt, Greece, and the US

Greece has had over a week of riots in the streets from government union members as a result of reform attempts to avoid eventual default on the public debt. Their budget deficit in 2009 was 12.7% of GDP and the Greek government has committed to bring it down to 8.7% this year.

The US budget deficit in 2009 was 9.9% and is projected to increase for the foreseeable future. Like the public employee unions in Greece, ours have exerted tremendous pressure on local, state, and federal governments to pay salaries and benefits that are completely unsustainable. I wrote about that last week.

What will it take before our government is also forced to behave responsibly?

Feb 23 2010

Obama, health care, and price controls

C.M. Phippen

Just days before the White House health care summit with Republican members of Congress, President Obama has released a health care plan that, according to the Wall Street Journal, “take[s] the worst of both the House and Senate bills and combine[s] them into something more destructive.”

The bill attempts to control health insurance premiums by allowing a federal board to fix prices. When have price controls ever accomplished anything other than shortages?

Currently, insurance commissioners in each state are responsible for monitoring premiums and overseeing increases. They are concerned not only with the premiums charged, but also with ensuring the actuarial soundness of the companies themselves. Because of this, they must weigh the desires of the public for low cost with the realities of the insurance business and real-world expenses.

Once the federal government is charged with the task of simply holding down insurance premiums without any mechanisms put in place to reduce medical costs themselves, an artificial element is added to the market which can only end in disaster akin to the recent bursting of the housing bubble. To ignore the one issue that could actually solve the problem of rapidly escalating insurance premiums and is, according to our president, one of the goals of health care reform, is simply silly.

Insurance companies will not stay in business if they’re not allowed to bring in enough money to cover their costs and make a profit. If they’re unable to raise rates while the cost of covering claims continues to increase, insurance company bankruptcies will become an epidemic.

Of course, for some this will be viewed as political victory, proof that the free market is unable to equitably balance the needs of all the players in the health care arena. For those who understand economics 101, it is simply further proof that our government officials may be looking out for something other than our best interest.

Feb 19 2010

Pension Shortfalls All Around

C.M. Phippen

In a report released Thursday, the Pew Center on the States tells us that the states are facing an estimated $1 trillion shortfall in their pension funds. Even more alarming is the fact that of the additional benefits promised to pensioners of state governments, things like health care, “only 5% of the $587 billion total liability they have is funded.”

A healthy pension fund would be one in which the level of funding is equal to 80% or more of its liability. Twenty-one states were below that level in fiscal year 2008, which for most states ended midway through the year. This precluded the inclusion of losses to state pension portfolios during the latter part of 2008, but which will be reflected in the as-of-yet unreleased numbers for fiscal year 2009.

Mark Scolforo, writer for the Associated Press:

The exploding financial burden could be a bitter pill for taxpayers, many of whom will not be collecting similar pensions or other benefits when they retire, said David Kline with the California Taxpayers’ Association. About one in five private sector workers have traditional defined benefit pensions, compared with about 90 percent of public-sector employees — including some that do not get Social Security.

In Pennsylvania, a series of decisions by the Legislature and governor have shielded taxpayers from much of the pain for the past decade, but costs of less than $1 billion a year now is projected to climb to about $6 billion annually in the coming three years.

The report said policy makers have exacerbated the problem by expanding benefits, relying on overly optimistic assumptions about investment returns and failing to sufficient fund the programs.

“Even though the actuaries tell the states what they should be doing, the states feel free to ignore that,” said Olivia Mitchell, director of the Pension Research Council at the University of Pennsylvania’s Wharton School. “So putting some teeth behind the requirements is really the problem.”

Pew said states should consider changes that have proven to be effective and politically viable. Among them: setting minimum contribution levels that are actuarially sound, sharing some of the investment risk with employees, cutting benefits, increasing the minimum retirement age, making employees pay more into the system and providing more robust oversight and investment rules.

Remember, this is just the states, and the liabilities are rising. The federal government too has employee pay problems as well as employee pension problems.

The average federal civilian worker made $119,000 in 2008 when combining wages and benefits, while the average private sector compensation was only $59,000. When just wages are taken into account, the numbers are $79,197 for federal workers v. 50,028 for private sector employees. As mentioned above, only a fraction of private sector retirees have any sort of job-related defined benefit pension, while the majority of federal workers receive pensions that allow retirement 10-25 years earlier than private sector employees. This could mean 50+ years of pension for 20 years of work.

According to the Obama administration, 153,000 new federal workers will be added to the payroll in 2010, boosting the number of federal workers to 2.15 million for the first time in history.

The generous pay, benefit, and retirement plans of state and federal workers are going to need to be financed by someone. Because the public sector exists only through the labor and resources of private citizens and corporations, taxes will need to be increased on those citizens and corporations in order to pay the escalating expenses of an ever-expanding bureaucracy.

Remember, the private sector, on whom this burden will fall, isn’t provided such generous benefits and salaries because it’s not economically feasible. Private companies can’t spend more than they make for very long and still stay in business. This is also the sector which will need to save for their own retirement, with whatever funds remain in their paychecks after providing those government employee benefits they themselves don’t have access to. When did government “service” become government largess (or public largess)?

In the middle of the greatest economic slowdown in generations, the federal and state governments increase their liabilities for decades to come with larger payrolls, benefits, and pensions obligations, thus necessitating higher taxes and leading to greater stagnation in the private sector.


Feb 4 2010

Foreigners and Innovation

C.M. Phippen

Foreigners receiving PhDs have, in recent years, constituted nearly half of all such degrees awarded in science and engineering in the United States. In 1997, the percentage was fewer than one-third.

Because the majority of these students choose to stay in the US after receiving their education, this is a boon to our economy and enables us to continue to lead the way in the world in innovation, despite the state of our public schools in the arena of math and science. In 2000 these highly educated individuals made up 37.3% of our work force in their particular fields, a number that rose slightly over the first half of the decade.

Since the start of the recession in 2007, there are concerns that fewer students will be willing or able to stay after graduating. Of 1,203 skilled Indians and Chinese who had returned home after receiving their PhD in the US, 70% of the Chinese and 61% of the Indians said their opportunities for advancement were better in their home country. US companies are now increasingly outsourcing their sophisticated research and development, with over half having already incorporated initiatives to do so, up from 22% in 2005.

With rising taxes, fears of a double-dip recession, and ever-increasing burdens placed on businesses, the opportunities for these highly-educated foreigners become more and more bleak in the US. China and India are the two countries that not only supply us with our greatest numbers of these workers, but 92% of Chinese stay at least 5 years, as do 81% of Indians. As these countries continue to grow at a rapid pace, there becomes more of an incentive for natives to return home and a new type of brain drain could occur here.

Those workers we most need to move us forward as a society, the innovators, may choose to take advantage of our incredible educational opportunities and then, in greater numbers, take their skills back to their home countries. A new way forward or the end of an era for the United States of America?

Feb 2 2010

Global Warming Consensus and Falsehoods

C.M. Phippen

According to believers in anthropogenic global warming, there is a consensus among climate scientists that the earth is in a warming trend and that the warming is man-made and catastrophic.

According Nigel Calder, former editor of New Scientist, “When politicians and journalists declare that the science of global warming is settled, they show a regrettable ignorance about how science works.” He went on to say that, “Twenty years ago climate research became politicised in favour of one particlar hypothesis.” (Italics added) Hmmm, I’ll pick up this issue at a later date.

If we are to believe that there is a scientific consensus, we ought to understand the evidence on which it is based. The past few months have proven that much of the data upon which scientists have relied over the years has been manipulated, inaccurate, and sloppy.

It is important in scientific inquiry for others to be able to access to the data that has been used so the work can be analyzed and conclusions replicated. It seems to be a pretty common problem in climate science that those touting anthropogenic global warming theory have suppressed data, and maybe now we know why.

When the raw data is manipulated, even slightly, major trends can be falsely extrapolated from that data. If scientists refuse to release their data and the information used to adjust it, other scientists are kept from questioning their work and as a result, can make utter falsehoods appear as “consensus.”

Here is an example of how small changes in the way the data is considered can have an enormous impact on ultimate projections. According to Dr. Dick Morgan, former advisor to the World Meteorological Organization and climatology researcher at University of Exeter,

Had the IPCC used the standard parameter for climate change (the 30 year average) and used an equal area projection, instead of the Mercator (which doubled the area of warming in Alaska, Siberia and the Antarctic Ocean) warming and cooling would have been almost in balance. This because many areas of the world have shown cooling, just as many have shown warming over the past decades.

So, simply applying temperature to distorted land mass (Mercator) measurements, makes average temperature variations appear quite extreme when in fact they aren’t. Of course, just reading the IPCC report would give us no indication that this data has been inaccurately represented.

If we were unable to see the information and data used to draw the conclusion that there is much more warming than cooling, on net balance, we would not be aware that the land mass of particular warm countries had been nearly doubled, having the effect of artificially adding weight to a warming trend.

Below are some examples of recently discovered manipulations of data. In each case, the conclusions drawn from the manipulations have helped to form the basis for scientific consensus on catastrophic anthropogenic global warming:

Sea Level
Professor Nils-Axel Morner has written more than 520 peer-reviewed papers on sea level and is considered to be the world’s foremost expert on the subject.

According to Dr. Morner, “the sea is not rising. It hasn’t risen in 50 years.” He goes on to state that if there is any rise this century, it will “not be more than 10 cm, with an uncertainty of plus or minus 10 cm.”

The information we’ve been given by the IPCC predicts a sea level rise of 59 cm by 2100 and Al Gore, in An Inconvenient Truth warns us that we could see 20 foot increases. By the way, not one of the 22 contributing authors on the IPCC’s latest reports is a sea level specialist, according to the professor.

The IPCC data showed no upward trend until 2003. The IPCC “experts” found a single tide-guage in Hong Kong harbor showing a 2.3 mm rise, at which time they adjusted the entire global sea-level projection upward because they, admittedly, “needed to show a trend.”

New Zealand
In November 2009, the raw data gathered by NIWA, which had served as the basis for estimates of temperature increases in New Zealand at the rate of .92°C per century, was analyzed by outsiders and it was discovered that the official data didn’t line up with the raw data. Old temperatures, as far back as 1850, had been manipulated downward and more recent temperatures had been manipulated upward.

The effect of these changes was astronomical. When the raw data was actually looked at by unbiased scientists, it showed no appreciable change in temperature (0.06°C) over the past 150 years.

This was discovered when scientists at the New Zealand Climate Science Coalition were able to obtain both data sets (raw and adjusted) from an associate of Dr. M. James Salinger. Salinger had been at NIWA and, before that, CRU; coincidence?

Over the years, requests were made for the data to no avail, and it wasn’t until this unnamed associate passed it on for scientific review that the discrepancies were found.

NIWA eventually responded by stating that modifications were made to adjust for the movement of weather stations, and named one weather station that had been moved in 1928. They refused to release the data showing how much of an adjustment was made and why (was data collected at the two sites over time in order to determine temperature differentials?), and have given no information of other station site changes.

Himalayan Glaciers
In the IPCC report of 2007, claims were made regarding the disappearance of all Himalayan glaciers by 2035. The average Himalayan glacier is 300 meters thick and at a melt rate of 5 meters a year, much faster than anything we’re currently seeing, it would take 60 years for the average glacier, to disappear, nowhere close to the 28 years in the report.

This information was based on a speculative statement made by a scientist back in 1999. Anyone familiar with glaciers who applies a minimal level of scientific inquiry to this question would have easily found this analysis to be flawed. Even if that weren’t done, not only was this figure never published in any peer-reviewed journal, but its source was never investigated before its inclusion in the UN report.

When the claim was previously criticized, Rajendra Pachauri, the IPCC chairman, referred to the criticism as “voodoo science.” Funny, because it turned out that voodoo science was a whole lot more accurate than the “science” being done at the U.N.

Professor Murari Lal, who oversaw the chapter on glaciers in the IPCC report has conceded that he isn’t an expert on glaciers.

Misinformation is easily disseminated when not one of the scientists drawing the actual conclusions and overseeing the aggregation of information is an expert in the field.

Weather-Related Loss and Rising Temperatures
The IPCC has stated that there are increasing weather related losses tied to rising temperatures which are being driven by human activity. Despite overwhelming evidence to the contrary, the IPCC chose to use one non-peer reviewed paper to support claims that are contradicted by every scientifically rigorous, peer reviewed paper that exists.

A graph included in the IPCC report which shows these increasing weather related losses is attributed to Muir-Wood et al. 2006 and, according to Roger Pielke Jr., “That paper was not published by the IPCC deadline for inclusion, nor was it peer reviewed, nor did it include the graph shown above, nor did it strongly support the claims being made. But it was highlighted anyway.”

He goes on to explain that in 2008 that paper was included as a chapter in a book, where its conclusions completely contradict those made in the IPCC report.

Pielke himself has said,

I am shocked to see such a figure in the IPCC of all places . . . I am amazed that this figure made it past review of any sort, but especially given what the broader literature on this subject actually says. I have generally been a supporter of the IPCC, but I do have to admit that if it is this sloppy and irresponsible in an area of climate change where I have expertise, why should I have confidence in the areas where I am not an expert?

He goes on to say that the claims made by the IPCC weren’t simply in violation of their procedures, but were wrong and “based on knowledge that just doesn’t exist.”

Anyone interested in scientific, and just plain intellectual, rigor ought to read what comes out of this political body with a pretty big grain of salt . That is precisely what an ever increasing number of scientists are doing, joining the ranks of the ordinary Americans who’ve understood all along that for some, truth all too often appears to be one of the least important pursuits of this investigation.

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