Free Markets, Free People

Daily Archives: March 26, 2010

Krugman needs to get out more

I’ve seen Paul Krugman write some pretty dumb things over the intervening years.  Jon Henke used to take particular delight in pointing them out in the earlier days of QandO.  But I have to admit I’ve never seen anything quite as clueless as this statement by the man:

All of this goes far beyond politics as usual. Democrats had a lot of harsh things to say about former President George W. Bush — but you’ll search in vain for anything comparably menacing, anything that even hinted at an appeal to violence, from members of Congress, let alone senior party officials.

Hey Paul, they made a whole movie about assassinating Bush.  They even wrote about it in the New York Times.  We even had a Nobel peace laureate, Betty Williams, weigh in on the “love”:

“I have a very hard time with this word ‘non-violence’, because I don’t believe that I am non-violent,” said Ms Williams, 64.

“Right now, I would love to kill George Bush.” Her young audience at the Brisbane City Hall clapped and cheered.

Most excellent, right Paul? Nothing at all menacing about that and it certainly doesn’t at all appeal to violence (well unless you think the act of “killing” is somehow a non-violent act).

And, as Greg Polowitz suggests, google “kill George Bush” and be properly chastized.

Not that I actually expect Krugman to do so – it would take an effort and, of course, it would puncture his narrative like nothing before.  But just for grins, why not make a short pictoral trip down memory lane that clueless Krugman could have made had he at all cared about the accuracy of his claims.

For instance, here’s a favorite of mine:

Straight, to the point, and with an option I’m sure some would have hoped law enforcement might have availed themselves. Of course the crowds last weekend were just littered with signs like that, weren’t they?

No? Well how about this one?

A bit rambling and long.  You have to go all the way to the third line to find the “Kill Bush” sentiment.  At least he refrained from spelling out the “F bomb”.  I suppose that’s more Joe Biden’s territory anyway.  So again, were these the type of things to be seen in the crowd on Sunday?

No again?  This then?

A little more subtle than the others.  That “nuance” liberals love I guess.  So is this more like what has Krugman saw or heard about?

Or did it have more to do with urban legends that he and the left have chosen to believe (even while the vast majority of the supposed incidents seem to have no foundation in fact or require true super human feats of strength – such a chucking a rock through a window 30 stories above the street)?

Oh, I know why Krugman doesn’t remember any of this – you see, this was when dissent was the highest form of patriotism.

Apparently, that’s not the case anymore.

~McQ

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CBO: Debt will be 90% of GDP by 2020

I’m sure this is a CBO report (the “gold standard” remember) that Democrats and the administration will try to ignore.  Especially since adding to the debt so significantly with ObamaCare.

President Obama’s fiscal 2011 budget will generate nearly $10 trillion in cumulative budget deficits over the next 10 years, $1.2 trillion more than the administration projected, and raise the federal debt to 90 percent of the nation’s economic output by 2020, the Congressional Budget Office reported Thursday.

In its 2011 budget, which the White House Office of Management and Budget (OMB) released Feb. 1, the administration projected a 10-year deficit total of $8.53 trillion. After looking it over, CBO said in its final analysis, released Thursday, that the president’s budget would generate a combined $9.75 trillion in deficits over the next decade.

Of course that’s a static assessment that assumes nothing changes over the next few years.  Or said another way, if left to their devices, this is precisely what Democrats and this administration plan for our future.  And all the denial in the world won’t change that.  This is a plan for fiscal ruin.

To put it in a more easily understandable context:

The federal public debt, which was $6.3 trillion ($56,000 per household) when Mr. Obama entered office amid an economic crisis, totals $8.2 trillion ($72,000 per household) today, and it’s headed toward $20.3 trillion (more than $170,000 per household) in 2020, according to CBO’s deficit estimates.

That figure would equal 90 percent of the estimated gross domestic product in 2020, up from 40 percent at the end of fiscal 2008. By comparison, America’s debt-to-GDP ratio peaked at 109 percent at the end of World War II, while the ratio for economically troubled Greece hit 115 percent last year.

So, is it time to demand those calling the path we’re on “unsustainable” (i.e. Timothy Geithner, Barack Obama  and the Democratic Congress) to put up or shut up?  As usual, we continue to hear Democrats blather on about PAYGO, but we continue to see them ignore it in legislation they pass.  It appears, given the budget numbers, they also plan to ignore it in the future – wouldn’t you say?

Look at that per household figure from 2008.  It was already outrageous and yet within the next 10 years they plan on tripling it to $172,000. 

Anyone have any idea of the effect such debt will have on our economy?

For countries with debt-to-GDP ratios “above 90 percent, median growth rates fall by 1 percent, and average growth falls considerably more,” according to a recent research paper by economists Kenneth S. Rogoff of Harvard and Carmen M. Reinhart of the University of Maryland.

Hey, when you have the fiscal policy of Greece or Argentina, what do you suppose the end result might be?

~McQ

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The BFD – its first week

So, how is ObamaCare being greeted by the real world since it was signed into law Tuesday?  Well, pretty much as expected by those who were paying attention (and that wouldn’t include the unicorns and moon pony crowd).  For instance, employees at Verizon were greeted with a statement by the company explaining its interpretation of the law and what that would mean in terms of future coverage:

In an email titled “President Obama Signs Health Care Legislation” sent to all employees Tuesday night, the telecom giant warned that “we expect that Verizon’s costs will increase in the short term.” While executive vice president for human resources Marc Reed wrote that “it is difficult at this point to gauge the precise impact of this legislation,” and that ObamaCare does reflect some of the company’s policy priorities, the message to workers was clear: Expect changes for the worse to your health benefits as the direct result of this bill, and maybe as soon as this year.

You may recall that Caterpillar said that the bill would cost them $100 million more in health care coverage in the first year alone. That ought to make them highly competitive.

Verizon is also being punished for offering retirees health benefits:

Mr. Reed specifically cited a change in the tax treatment of retiree health benefits. When Congress created the Medicare prescription drug benefit in 2003, it included a modest tax subsidy to encourage employers to keep drug plans for retirees, rather than dumping them on the government. The Employee Benefit Research Institute says this exclusion—equal to 28% of the cost of a drug plan—will run taxpayers $665 per person next year, while the same Medicare coverage would cost $1,209.

In a $5.4 billion revenue grab, Democrats decided that this $665 fillip should be subject to the ordinary corporate income tax of 35%. Most consulting firms and independent analysts say the higher costs will induce some companies to drop drug coverage, which could affect about five million retirees and 3,500 businesses. Verizon and other large corporations warned about this outcome.

Or, instead of discouraging employers from dumping retirees on the government, the new plan encourages it and essentially punishes those who don’t. In fact, you could say that the entire bill encourages companies to dump employee coverage. If they’re of a certain size and don’t offer coverage, they are fined $750 per employee. Compare that to the thousands of dollars in cost for coverage plus the expense of administering an employee health insurance program. If you’re running a company in an economy mired in recession, what is one of the primary things you try to do? Cut costs. You have 50 employees and you’re spending $5,000 each on health insurance or $250,000 plus the cost of administration of the program. You can dump it all and pay a fine of $37,500. What would you do?

Oh, and there’s this little goodie to encourage companies to act quickly:

U.S. accounting laws also require businesses to immediately restate their earnings in light of the higher tax burden on their long-term retiree health liabilities. This will have a big effect on their 2010 earnings.

Of course it will. And that will have a significant impact on the economy and first quarter earnings.

Some companies, however, have an alternate plan:

Consumers Energy, a Michigan gas and electric company with 2.9 million customers, said it will not take a big first-quarter charge because, like most utility companies, it can try to recover the added costs from its customers through rate hikes.

The increased costs are going to be paid by someone – customer, taxpayers – it’s all the same in the end.

And that’s pretty much where the states are right now as well. South Carolina just tallied up its new unfunded mandate:

The expansion represents a 4.4 percent increase in the $20.9 billion the state would have spent on Medicaid during that nine-year period, adding roughly $100 million a year to the state’s costs.

The state is looking at a 1 billion dollar shortfall next year – the unfunded mandate adds $914 million to the shortfall over the next 10 years. Any guess who will end up paying for that?

It should be clear, given the Verizon info that the intent is to move people off employer based insurance and on to something else. I’ve always been a proponent of individual health insurance purchased by families individually in a free and competitive insurance market like we do any other insurance product. It immediately solves the portability problem and it drives cost down. What we’re seeing here is a manipulation of tax code pointed at effectively ending employer insurance programs but with a different aim in mind – single-payer government run insurance.

The intent to again offer legislation to establish an public option, voiced by Harry Reid and House Democrats makes that point rather clearly. Democrats will try to pass that before November – bet on it. Should they succeed, then all the parts would be in place to move in that desired direction. Meanwhile, unsurprisingly the promise of “if you like your plan and if you like your doctor you can keep them” appears to be a hollow one. The law incentivizes drastic changes in plans to avoid costs and taxes and in many cases, it is clearly smarter for a business to dump health care coverage altogether.

As for 95% of us not seeing a dime in new taxes – that too was a load of nonsense as most of us knew. Unless you live in the 57th state where none of this has any impact, the new unfunded mandates promise increased taxes – states, unlike the federal government can’t print money and thus have to either cut spending or increase taxes. Since the increased spending is being mandated, it leaves them little choice, does it?

~McQ

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