Free Markets, Free People

Monthly Archives: October 2009

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How To Make $1.5 Trillion Look Like $894 Billion

Actually, it isn’t that hard.  And the Democrats demonstrate how to do it in the House Health Care bill. James C. Capretta explains:

For starters, the gross cost of expanded Medicaid coverage and a new entitlement to subsidies for health insurance is much higher than Democrats are suggesting, according to the cost estimate released yesterday by the Congressional Budget Office (CBO). The Democrats report a lower number by netting out the taxes some individuals pay when they don’t enroll in insurance as well as the tax payments from employers who choose to “pay” rather than “play.” But that accounting confuses tax increases with spending reduction. The gross spending increase from the entitlement expansions in the revised House bill is $1.055 trillion over ten years, not $894 billion.

Remember, this is about what it will cost taxpayers. And netting out those who “pay” doesn’t lessen the cost or necessarily mean the revenue collected will go toward paying for this expanded health care.

Secondly:

In addition, as I noted previously, House Democrats have conveniently decided to take the so-called “doc fix” out of the larger health-care bill and pass it as a standalone measure, at a cost of $250 billion over ten years. The House health-care bill is bursting with other Medicare-related provisions. What could possibly justify separate accounting for the physician fee fix? In fact, there is no justification, other than budgetary smoke and mirrors. House leaders are splitting the costs of their scheme into two bills and pretending that this maneuver somehow brings down the overall cost to taxpayers. It doesn’t. In reality, House Democrats are still planning to spend $250 billion on Medicare physician fees, and that should be made clear in any honest accounting of what’s afoot here.

So a quarter of a trillion dollars in cost is going to be excluded from the pending health care bill and passed separately. This defines the terms “smoke and mirrors” when it comes to the real cost of this “reform”. And you can count on Democrats using every little procedural and legislative trick in the book to make this appear to be something it isn’t from a cost stand point – as demonstrated by this particular exclusion from the larger bill.  This is, along with global warming, is one of the biggest con jobs ever foisted upon a people.

Finally, there’s the other spending in the health-care plan. There’s loads of it. Higher Medicaid matching funds to buy off selected governors. A new program aimed at encouraging more physicians to enter primary care. Prevention spending. And apparently just about anything else House Democrats could think of to spend taxpayers’ money on. When it’s all racked up, these programs cost $230 billion over a decade. And that’s not even including the extra spending on Medicare drug coverage, which is obscured in CBO’s accounting by provisions which allow the government to set payment rates for certain products.

The 900 billion that President Obama set as an upper limit that would not add a “dime to the deficit” isn’t even close to being met. The cost curve and the deficit curve, as demonstrated above, will definitely go up. But there’s political cover here because the CBO has scored this bill under the 900 billion “won’t add to the deficit” threshold. Of course the CBO can’t score a separate bill that hasn’t been written yet (“doc fix”) nor can it add it to the bill it just scored. And, of course, the CBO estimate for 10 years assumes the legislation will be enacted precisely as it is written and remain unchanged for those 10 years – and we know that won’t happen as well.

But that won’t stop Obama and the Dems from claiming they’ve met the goal of not adding to the deficit when this monstrosity passes. Just hide and watch.

And they’ll also claim they have the revenue to pay for all of this:

On the tax side, Democrats are planning to saddle those with incomes exceeding $500,000 per year with a new 5.4 percent surtax. That would raise $461 billion over a decade, according to the Joint Tax Committee. But there’s also the penalty tax imposed on individuals who don’t sign up for health insurance. That raises $33 billion There’s also the employer “pay or play” mandate, which brings in $135 billion. And finally, there are the taxes on medical device manufacturers and many others. These provisions raise an additional $100 billion over a decade. All in, therefore, House Democrats want to raise taxes on Americans by $725 billion over the period 2010 to 2019 to partially pay for their health-care scheme.

Again, the assumption is that all of these will remain constant revenue streams. Of course, they won’t. The rich will find a way to avoid the tax eventually as will individuals taxed for not getting insurance. And employers will certainly find a way to avoid the penalty of “pay or play”. Plus, I’d be willing to bet that medical device manufactures and other providers will eventually be exempted from their tax when a outcry is heard from those who benefit from their products that the cost is too high. While these revenue streams won’t dry up, common sense says they will be vastly reduced.

And that leave them with what? It leaves them with little choice but to do what everyone has said they’ll be forced to do:

The Democrats close the remaining gap (excluding the physician fee spending) by cutting Medicare and Medicaid spending by about $550 billion over ten years and starting up a new, budget-busting long-term care program that brings in $72 billion in excess premiums in its early years.

The plan is $550 billion in cuts over 10 years. The reality, because the other revenue streams will begin to dry up, will be much higher.

That reality will eventually mean what as costs spiral upward alarmingly?

Rationing.

And who stands the biggest chance of becoming the victim of that rationing?

Those who use the most health care.

And as a demographic, who are they?

The elderly.

“Death panels” anyone?

~McQ

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How Out Of Touch Is The GOP?

Maybe a better question is “how far out of touch is the RNC” since Dede Scozzafava was their candidate?

Dede Scozzafava, the Republican and Independence parties candidate, announced Saturday that she is suspending her campaign for the 23rd Congressional District and releasing all her supporters.

[…]

Ms. Scozzafava told the Watertown Daily Times that Siena Research Institute poll numbers show her too far behind to catch up – and she lacks enough money to spend on advertising in the last three days to make a difference. Mr. Owens has support from 36 percent of likely voters in the poll, with Mr. Hoffman garnering 35 percent support. Ms. Scozzafava has support from 20 percent of those polled.

Now I have no idea if that means Mr. Hoffman will win (if the 20% Ms. Scozzafava had were really GOP supporters then he should win in a walk – but given Scozzafava’s more liberal leanings on many issues such as card check that’s a toss up), but what this indicates is the rank-and-file GOP voters aren’t at all satisfied with the RNC’s strategy or choices (as an aside, the fact that Scozzavafa hasn’t enough money left to spend on advertising says, at least, that the RNC knows it was supporting a loser). It seems to me to be a pretty in-your-face repudiation of this “big tent” theory of theirs which says “we’ll compromise our principles to boost our numbers”. Instead they seem to favor the “here’s our tent, if you like what we stand for, you’re welcome to come in” approach.

It’ll be interesting to see how the RNC and the establishment GOP types react to this mini-revolution. Given their tone-deafness of the past, they’ll ignore it and pay the consequences in 2010. But I see that as a very, very interesting turn of events.

~McQ

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Travesty In Honduras

There were so many ways to get this right, and one clear to way to completely blow it. The Obama administration chose to blow it, and to blow it big, by embracing an imbalanced dictator-wannabe whose efforts are supported by the worst offenders of representative democracy and individual freedom in the region:

Zelaya prodly shows off his tinfoil curtains to US Assistant Secretary of State Thomas Shannon

Zelaya prodly shows off his tinfoil curtains to US Assistant Secretary of State Thomas Shannon

The interim leader of Honduras says he is ready to sign a pact to end its crisis which could include the return of ousted President Manuel Zelaya.

Roberto Micheletti said the agreement would create a power-sharing government and require both sides to recognise the result of November’s presidential poll.

Mr Zelaya said the deal, which requires the approval of the Supreme Court and Congress, would be signed on Friday.

The opponents had earlier been told by US Assistant Secretary of State Thomas Shannon that they had to reach an accord in order to ensure international support for the election on 29 November.

Afterwards, Mr Micheletti announced that a power-sharing deal had been reached that included a “significant concession”.

“I have authorised my negotiating team to sign a deal that marks the beginning of the end of the country’s political situation,” the interim leader told a news conference.

“With regard to the most contentious subject in the deal, the possible restitution of Zelaya to the presidency” would be included, he said.

Mr Zelaya described the accord as a “triumph for Honduran democracy”, and said he was “optimistic” of returning to power.

Fausta calls the above analysis “tactful” and translates the local press reaction as “Micheletti caves under US pressure and agrees to Zelaya’s return” and lists the following terms of the deal:

Noticias 24 lists the main points of the agreement (my translation: if you use this translation please credit me and link to this post):

1. The creation of a reconciliation government.
2. Rejection of political amnesty.
3. Recognition of the November 29 elections.
4. Transferring control of the Armed Forces from the Executive to the Supreme Electoral Tribunal.
5. Creating a verification commission to enforce compliance with the agreement.
6. Creating a truth commission to investigate the events before, during and after June 28, the date of Zelaya’s removal.
7. Requesting that the international community end all sanctions against Honduras and that they send in observers to the presidential election.
8. Supporting the proposal for a vote of the National Congress with the approval of the Supreme Court of Justice to reinstate all the Executive Power prior to June 28, that is, restoring Zelaya to power.

Although Zelaya’s restoration is largely symbolic (e.g. while he is returned to his office, the election in a few weeks will still occur, and the Supreme Court Electoral Tribunal [Thanks, La Gringa – ed.] now has power over the military instead of the President), the very fact that he is allowed to re-enter Honduras without being immediately arrested, much less that he will be able to call himself President once again, is perhaps the greatest shame of Barack Obama’s young presidency. Without Washington’s bullying of the duly constituted authorities in Honduras, the country would have been held up as an example of independent democracy done right, making a definable break with the banana republics of the past. Instead, the US entered the fray on the side of a criminal Chavista and used our considerable power to retard Honduras’ institutional growth.

There have been times in America’s past where the decision to throw our lot in with certain regimes was questionable at best. In the world of realpolitik, however, it is sometimes necessary to chose the least bad to defend against the infinitely worse. Much of our assistance and meddling in South and Central America, aimed at rebuffing the spread of communism, can be chalked up to that realpolitik. Yet never have we sided against the rule of law in order to defend the wishes of dictators. That is, until now.

Honduras will emerge from this escapade with its dignity and political institutions intact. Unfortunately, that will be despite our best efforts, not because of them.

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“Your Taxes Won’t Go Up By A Single Dime”

Wasn’t that the promise? Well Americans For Tax Reform have looked at the 1990 pages of the House monstrosity and found 13 taxes that will indeed raise yours by much more than a “dime” [HT: United Liberty].  Here are just three of them.  You can take a look at the entire list here. [pdf]

  • Employer Mandate Excise Tax (Page 275): If an employer does not pay 72.5 percent of a single employee’s health premium (65 percent of a family employee), the employer must pay an excise tax equal to 8 percent of average wages. Small employers (measured by payroll size) have smaller payroll tax rates of 0 percent (<$500,000), 2 percent ($500,000-$585,000), 4 percent ($585,000-$670,000), and 6 percent ($670,000-$750,000).
  • Medicine Cabinet Tax (Page 324): Non-prescription medications would no longer be able to be purchased from health savings accounts (HSAs), flexible spending accounts (FSAs), or health reimbursement arrangements (HRAs). Insulin excepted.
  • Individual Mandate Surtax (Page 296): If an individual fails to obtain qualifying coverage, he must pay an income surtax equal to the lesser of 2.5 percent of modified adjusted gross income (MAGI) or the average premium. MAGI adds back in the foreign earned income exclusion and municipal bond interest.

As everyone has been saying since the beginning of the debacle, there is no way this can be paid for without increasing taxes – and not just on the rich. Why that seems to fall on deaf ears in some circles remains a mystery to me. While the taxes may not effect everyone, they certainly effect a large portion of the public. For instance:

  • Excise Tax on Medical Devices (Page 339): Imposes a new excise tax on medical device manufacturers equal to 2.5 percent of the wholesale price. It excludes retail sales and unspecified medical devices sold to
    the general pulic.

Does anyone want to try to make the argument that the 2.5% tax at the wholesale level will be paid at that level and not passed on to the consumer? Yeah, I didn’t think so.

For the masochists out there, here’s the House bill, all 1990 pages of it in pdf form.  Make sure you consider the purpose: “To provide affordable, quality health care for all Americans and reduce the growth in health care spending, and for other purposes.”

“… and for other purposes”. When you see that, you should know to grab your wallets and hold on tight.

~McQ

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CBO Says Public Option Would Cost More Than Private Insurance – Don’t Believe It

And the Politico presents that little nugget this way:

The public insurance option would typically charge higher premiums than private plans available in the exchange, according to the Congressional Budget Office analysis of the House bill.

That surprising conclusion raises doubts about Democratic promises that a government-run insurance plan would provide a lower-cost alternative to consumers. At the same time, it calls into question Republican charges that the plan amounts to government takeover of health insurance — because only 6 million people would enroll in the plan, according to the CBO.

Nonsense. As has been pointed out any number of times, it depends on how robust the public option is, how it is configured and whether or not it uses public money. If, for instance, it was structured as some would like – Medicare – there’s no question that what the GOP charges would be true. And, this is the House bill before the vote. What I think is may happen is this version of a “public option” may be in there as a place holder to get the bill passed out of the House with the idea that a more robust version will be added during the markup with the Senate version (assuming it gets passed). CBO has most likely scored this particular House version properly for now but don’t believe for a second that ends this.

In this fight, every trick in the book is being used, and if you believe this is the final version of the public option, I have some ocean front property in Kansas in which you may be interested.

This isn’t about a sales job, folks.  It’s about a con job.

~McQ

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White House Stuck On Stupid

Well, über defensive and stupid, to be more accurate. At least with its war on Fox News there was some calculated ability to garner sympathy and support from the fevered progressive masses. Taking on one of the most reputable reviewers of the car industry, when it’s giving you good news, is just plain idiotic:

It is an odd, and we’d say regrettable, pattern of this White House that it lets itself get dragged down into fights with specific media outlets.

[…]

But in addition to Fox News, now The White House is going after highly-respected and influential car site Edmunds.com.

They’re actually using The White House blog to dispute the site’s analysis of Cash-For-Clunkers (via Detroit News).

The post is snarkily titled: “Busy Covering Car Sales on Mars, Edmunds.com Gets It Wrong (Again) on Cash for Clunkers”

For its part, Edmunds.com responded with a sober yet forceful smackdown. After pointing to the obvious flaws in the White House’s (defensive) thinking, they put the once-venerable office to shame:

With all respect to the White House, Edmunds.com thinks that instead of shooting the messenger, government officials should take heart from the core message of the analysis: the fundamentals of the auto marketplace are improving faster than the current sales numbers suggest.

Isn’t this a piece of good news we can all cheer?

I’m not sure which is more pathetic: the fact that the White House clearly lost a blog war, or that it is stupid enough to get involved in one in the first place.

Venezuela – Hugo’s New Shower Rules

Hugo Chavez and his socialist government have handled everything so well that they’ve decided to go green and show the world how it is done:

Turn out the lights, shorten the shower to three minutes, buy a portable generator.

That is President Hugo Chávez’s message to the citizens of energy-rich Venezuela, where the “socialist revolution” has brought power cuts, water shortages and collapsing public services.

Heh … Chavez actually did try to push the green theme in his radio address discussing showering and turning off the lights. But it was a facade designed to hide the fact that the infrastructure is collapsing. As you might imagine, that’s sparking more than a little unrest:

“We’re accused of wasting electricity, but the fact is the government didn’t plan, didn’t invest and didn’t carry out maintenance,” Aixa Lopez, president of the Committee of Blackout Victims, told the TV news channel Globovisión.

In fact, as with all marginal leaders, Chavez blames all of his problems on others:

In early 2007, after winning re-election, Chávez decreed the nationalization of those parts of the electricity industry still in private hands — notably the Caracas power company EDC. Since then, there have been seven national power outages. In most parts of the country, weary consumers have grown used to frequent, unscheduled blackouts lasting hours.

This month, the president admitted there was a crisis in both the power and water industries. This came on the heels of a similar admission regarding healthcare. He put the blame mainly on the El Niño phenomenon for producing drought — Venezuela is 70 percent dependent on hydro power for its electricity — and on consumers for their wasteful habits.

Much of his ire was aimed at shopping malls because, he said, they foment capitalist values. “They’re going to have to buy their own generators,” he threatened, “or I’ll cut off their electricity.”

Ordinary Venezuelans have been urged to use less water and turn off the lights. “Some people sing in the bath for half an hour,” Chávez told a recent cabinet session, broadcast live. “What kind of communism is that? Three minutes is more than enough!”

Formal water rationing has now been introduced, government departments have been told to reduce their electricity consumption by a fifth, and the president has created a new Electricity Ministry in a tacit admission that the state has failed to manage the power industry correctly.

In fact, both the Water and Electricity Ministry are in a shambles:

According to Víctor Poleo, who was deputy minister for electricity at the beginning of the Chávez era, despite huge sums of money allocated, little has actually been done.

“My guess is that of every $100 pumped into [electricity] generation and transmission since 2003, $75 has been stolen by the politicians,” Poleo said.

Venezuela is a oil rich state from which 90% of its foreign earning are garnered. Chavez called his socialist economy “bulletproof”. However, it is now deep in recession:

Worse still, its shrinking economy has done little to blunt inflation, which is running at close to 30 percent a year — around three times the regional average. And the economic downturn is having a predictable effect on the government’s popularity, just as it gears up to fight crucial legislative elections next year.

The latest data from polling company Datanálisis shows voters evenly split, for the first time since mid-2004, over whether the president has been good or bad for “national wellbeing.” Only 17.2 percent say they would vote for him if the presidential election were imminent — down from over 31 percent in September.

Of course, as the article points out, the opposition is “incoherent” and unable to provide unified opposition at this point. But those sorts of things have a way of rectifying themselves if the economic and infrastructure problems continue. Chavez may have figured out how to position himself to be president for life on paper, but remaining president for life with the problems Venezuela is now beginning to face (and may see compounding) may be tougher then he thought.

~McQ

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GDP Growth – Real or Memorex?

My guess is you’re looking at GDP numbers that are about as accurate as the stimulus saved and created job numbers the administration put out recently.  Or perhaps a better way of saying it is they’re as deceptive as those job numbers.

The GDP is the combination of consumer, investor and government spending.  We know pure consumer spending is down.  We know that investor spending is down.  And we also know that government spending is way up.  That spending has spending has urges some consumers to spend – cash for clunkers and the $8, 000 incentive for first time home buyers.  But a spurt of government spending which encouraged a spurt of consumer spending does not a recovery make:

The nation’s gross domestic product expanded at an annual rate of 3.5 percent in the three months ending in September, matching the economy’s average annual growth rate from the last 80 years. But the end of government programs to encourage spending on things like cars and houses, alongside employers’ continued reluctance to hire more workers, means the recovery may not last, economists say.

The recovery will happen when investors invest, businesses hire and finally, consumers buy – not for a quarter, but in a constant and increasing manner. Until that happens, until we see the job numbers begin to lessen considerably, this is just a lot of hoopla over a quarterly blip driven by government spending.

~McQ

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Harry Reid: Good For Me, But Not Thee

Democrats have become rather adept at including things in bills which the Republicans don’t support but because of the overall bill in which they’re included, can’t vote against.   The hate crime legislation is a good example – it was included in a bill which authorized defense spending.

Apparently Republicans are trying to play the same game now:

Senate leaders remained at an impasse Wednesday over adding tax provisions to a bill that would extend unemployment insurance benefits to millions of jobless workers.

The impasse:

But Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., remained at loggerheads on what other amendments the chamber might consider. Republicans have been pushing for amendments on the community group ACORN and on the E-Verify system that checks potential employees’ immigration status.

Turnabout is fair play in politics, but Harry Reid finds this all to be just a terrible bother:

Reid called those amendments “vexatious,” “argumentative,” and “not relevant.”

Of course when Reid is adding hate crime legislation to a defense appropriation bill, it isn’t at all vexatious, argumentative or “not relevant”. It was simply business as usual.

~McQ

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Pelosi To Trot Out The House Health Care Nag Today

I think this is one of those “gift horses” one would really want to look in the mouth. It has a whole lot of government, but very little in the way of health care improvement.  I can’t wait to see the hokey name they dream up for the bill.  Whatever it is, the opposite will most likely be true.  And, as noted in other posts, it will leave a significant portion of the uninsured, well, uninsured, even though that was supposely the entire reason for all of this nonsense.

The final product in the House, reflecting many of President Barack Obama’s priorities, includes new requirements for employers to offer insurance to their workers or face penalties, fines on Americans who don’t purchase coverage and subsidies to help lower-income people do so. Insurance companies would face new prohibitions against charging much more to older people or denying coverage to people with health conditions.

The price tag, topping $1 trillion over 10 years, would be paid for by taxing high-income people and cutting some $500 billion in payments to Medicare providers. The legislation would extend health coverage to around 95 percent of Americans.

What do you get for your trillion dollars? Higher debt, fines and penalties galore, cuts in Medicare, etc. etc.

Of course this is the House version, and the Senate version would include prison time for those who “choose” not to participate and a hefty tax on those “cadillac” plans which dare to offer those paying for them better benefits than average.

Both, of course, will offer a form of the “public option”, aka, government health insurance, with the House bill making it a mandatory part of the bill while the Senate version has an opt-out clause for the states (but, of course, no “opt-out” clause for the individual).

I’m sure the House vote will be very close because a number of blue-dogs are going to be seeking cover in a “no” vote. So Pelosi will be closely counting noses before a vote is taken. In the Senate, it is more problematic for the Democrats. The usually dependable Olympia Snowe (dependable for the Dems) has said she won’t vote for a bill with a public option and that has been seconded by Joe Lieberman (who, as usual, is being called everything but a child of God by the left). Mary Landreau and Ben Nelson are also not in favor of such a provision. So Reid is short of the 60 votes he needs to end debate.

That leaves the Senate with the nuclear option – reconciliation. But that too has its perils and pitfalls for them.  Bottom line though is your future is being determined by a bunch of people who have no interest or desire in anything but gathering power for themselves.  They’re about to vote in a costly and bureaucratic nightmare which will, by all indications, make health care worse for the vast majority of Americans.

And, unfortunately, there isn’t much that can stop them.

~McQ

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