Free Markets, Free People

Daily Archives: December 23, 2009

California Bailout – Not Only “No”, But “Hell No”

I wondered why Arnie was recently extolling the virtues of all things Obama and telling us what a super  job he’s been doing.  It’s about the only transparent thing I’ve seen out of anything to do with government this entire last year:

Facing a budget deficit of more than $20 billion, Gov. Arnold Schwarzenegger is expected to call for deep reductions in already suffering local mass transit programs, renew his push to expand oil drilling off the Santa Barbara coast and appeal to Washington for billions of dollars in federal help, according to state officials and lobbyists familiar with the plan.

If Washington does not provide roughly $8 billion in new aid for the state, the governor threatens to severely cut back — if not eliminate — CalWORKS, the state’s main welfare program; the In-Home Health Care Services program for the disabled and elderly poor, and two tax breaks for large corporations recently approved by the Legislature, the officials said.

Tough beans. California spent its way into this deficit mess, it can cut spending to work its way out of the mess. Joe Sixpack in New Jersey has no responsibility for the profligate tofu eaters in the California legislature that have gotten the “Golden State” in the fiscal shape in now enjoys. And Joe shouldn’t be stuck with bailing them out. Joe’s state has problems of its own.

It is about time that fiscal reality began to dawn not only at a federal level, but at state levels as well. And that means living within a budget and keeping it balanced, just like millions of Americans are required to do on a daily basis. The fact that California has lived beyond its means doesn’t mean the taxpayer, via the federal government, is there to solve the problem when California can’t afford its profligacy anymore.

Bailing out California would also set a horrible precedent.  49 other states facing cuts in services or getting a hand out are going to be in line demanding theirs.  Whether it is 8 billion, 80 billion or 800 billion, the federal government has no business sending money it doesn’t have to a state that so poorly managed its finances. This was the state that was built on liberal ideas. Now they have to face the reality that those ideas cost real money. Money they don’t have. Let them figure it out and live with the results.

And Democrats, if you do decide to bail them out, you’re just adding a another deeply etched line to your electoral tombstone in 2010.

~McQ

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The Obama Administration – A Minor Rant

As I recall, one of the things the left most enjoyed calling George Bush was “liar”. Of course all politicians fall into that category from time to time (some stay in it most of the time), but few are as blatant as this:

In the interview, Obama vigorously defended the legislation, saying he is “not just grudgingly supporting the bill. I am very enthusiastic about what we have achieved.”

“Nowhere has there been a bigger gap between the perceptions of compromise and the realities of compromise than in the health-care bill,” Obama said. “Every single criteria for reform I put forward is in this bill.”

Really? “Every single criteria?” Like the public option? And though he’ll deny it, it was one of his criteria. So was “no mandates”. You may remember the debate with Hillary Clinton where he rejected her call for them.  Then there was universal coverage.  This bill leaves 18 million uninsured. Wasn’t that, after all, the entire reason for the reform? I’m sure fining or jailing those who don’t get insurance was high on his criteria list as well.

All that to say that this monstrosity isn’t anything like what he touted nor does it meet most of his previous criteria. It’s a 2000 page abomination, and regardless of the shine he or anyone else tries to put on it, it is legislation that is ill formed, poorly thought out (if it is thought out at all), filled with bribes and something we simply can’t afford. The CBO has already halved its estimate of the savings it will bring.

Speaking of the CBO, two things from the Director’s blog:

The estimate includes a projected net cost of $614 billion over 10 years for the proposed expansions in insurance coverage. That net cost itself reflects a gross total of $871 billion in subsidies provided through the exchanges, increased net outlays for Medicaid and the Children’s Health Insurance Program (CHIP), and tax credits for small employers; those costs are partly offset by $149 billion in revenues from the excise tax on high-premium insurance plans and $108 billion in net savings from other sources.

By now anyone but the most blinkered partisan hack should be able to interpret the CBO report properly. It’s a simple formula – 10 years worth of revenue against 6 years worth of spending. In fact, divide 817/6 and take that times 10. What do you get? 1.361 Trillion. That’s the true net cost of this over 10 years. That is what it will cost – plus – from 2020 to 2029. It won’t bend any cost curve down.

And don’t forget, most of the savings are to come from Medicare – 500 billion over 10 years, remember? So, the CBO wonders:

Based on the longer-term extrapolation, CBO expects that inflation-adjusted Medicare spending per beneficiary would increase at an average annual rate of less than 2 percent during the next two decades under the legislation—about half of the roughly 4 percent annual growth rate of the past two decades. It is unclear whether such a reduction in the growth rate could be achieved, and if so, whether it would be accomplished through greater efficiencies in the delivery of health care or would reduce access to care or diminish the quality of care.

The CBO avoids the biggest problem in this “plan” – the political will to do it. And while it gives us a choice of options – “greater efficiencies” or rationing and “diminish[ing] the quality of care”, there are few who’ve objectively observed government operate anything over their lifetime who’d pick “greater efficiencies”. So if those savings are realized – certainly not a given as demonstrated by the lack of political will to make hard decisions on much less controversial items in the past – they’ll most likely be realized by rationing and/or a diminished quality of care.

Or to quote myself and any number of others – I told you so.

So while the country founders economically and real unemployment approaches 18%, Obama and the Democrats are screwing around with something that doesn’t even kick in for 4 years? Is it any wonder that his approval rating has approached all time lows for a new president?

One of the criticisms of the Bush administration is it was “isolated” from the main stream of America.  In the case of the Obama administration, it seems disconnected from that main stream.  “Tone deaf” doesn’t even begin to describe this crew who seem both unaware and unaffected by the real problems facing Americans – polls be damned. For someone who seemed to have his finger on the popular pulse during the campaign, Obama appears to have completely lost it since. He touts the “financial rescue” as his most significant accomplishment during his first year, claiming the 787 billion stimulus as the vehicle of that accomplishment. But as most know, the majority of that money has yet to be spent and that which as been spent has had little or no effect. As mentioned, unemployment remains at record highs. And credit is still difficult to get, businesses have no incentives and plenty of disincentives (health care reform, cap-and-trade/EPA regulations, etc) to not hire or expand, and economy’s only positive quarter (now revised down twice to 2.2% from 3.5%) came from government spending. That is not a “financial rescue”. That’s a bandaid on a sucking chest wound. Meanwhile his administration is in Copenhagen waving more money we can’t afford around in an effort to buy off third world dictatorships who were in search of the payoff from the pseudo-science of “global warming”.

Then, in the Senate, 100 to 300 million bribes were the order of the day to get Senators who claimed to be “standing on principle” off their lofty perches and back to the money-grubbing reality that is politics in the US today.

This is “hope and change”?

As one friend – who was anything but a George Bush fan – said recently it absolutely makes him “pine” for Bush. And trust me, that means he is less than impressed with the man he voted for presently in the White House.

~McQ

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