Free Markets, Free People

Daily Archives: April 23, 2010

Is it the fault of multiple generations of public schooling?

Or is it the constant demonization of capitalism?

This does’t particularly shock me:

Sixty percent (60%) of U.S. adults nationwide say that capitalism is better than socialism. A new Rasmussen Reports telephone survey finds that 18% disagree, while 21% are not sure.

How can you not be sure?  As I see it, you can only not be sure if you really don’t know what each of  them are -seriously.  That 18% disagree isn’t a big deal.  That 21% don’t know, is a big deal.

But what’s up with this?

However, it’s important to note that just 35% believe a free market economy is the same as a capitalist economy. In fact, despite tepid support for capitalism, 77% of Americans prefer a free market economy rather than a government managed economy. That’s consistent with the 75% who say that business is better at customer service than government.

So 17% of that 21% (one assumes those with a definite positive belief in socialism (18%) would know that captalism is a free market system) like a “free market economy” but don’t know what the hell that really means?

Ye gods … They know “free market” is good and preferable, but capitalism has been so demonized by politicians, academics and activists that they don’t associate it with “free market”.

~McQ

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Shocking news: ObamaCare will increase the nation’s health care costs

Yes, yes, I know – it comes as a complete surprise.  No question, we all thought having more covered by insurance, no pre-existing conditions, no caps on payouts and lower premium costs – all the while run by our efficient government – would surely lower costs.  It’s just logical, right?

President Obama’s health care overhaul law will increase the nation’s health care tab instead of bringing costs down, government economic forecasters concluded Thursday in a sobering assessment of the sweeping legislation.

You know, you want to laugh at this because most people who gave up on moon ponies and unicorns when they were 8 knew that what was promised by this bill wasn’t possible.  But it is hard to laugh at this level of mendacity.  Isn’t it interesting that now suddenly the truth begins to filter out – after the fact, of course.

USA Today, in true sycophantic fashion, tries to lessen the blow to the administration by calling it a mixed verdict. It also notes it is the first look at the legislation by “neutral experts”. That’s because it was so important to rush this bill through without giving anyone time to read or analyze it – you know, so the benefits could kick in … in 2014.

And what do these experts find? Well it is less than a “mixed verdict”. As I read it, it’s an outright condemnation of the law.

[T]he analysis also found that the law falls short of the president’s twin goal of controlling runaway costs. It also warned that Medicare cuts may be unrealistic and unsustainable, driving about 15% of hospitals into the red and “possibly jeopardizing access” to care for seniors.

Translation: this goes to the central political point about the bill. Who among the politicians in DC are going to be willing to take on the necessary cuts to Medicare promised by the bill (to “pay” for it) and alienate one of the most powerful demographic election blocs?

The Medicare actuary says no one.

The report acknowledged that some of the cost-control measures in the bill — Medicare cuts, a tax on high-cost insurance and a commission to seek ongoing Medicare savings — could help reduce the rate of cost increases beyond 2020. But it held out little hope for progress in the first decade.

“During 2010-2019, however, these effects would be outweighed by the increased costs associated with the expansions of health insurance coverage,” wrote Richard S. Foster, Medicare’s chief actuary. “Also, the longer-term viability of the Medicare … reductions is doubtful.”

Of course they are, and anyone but the moon pony crowd knew that going in. It’s like the promise of eliminating “waste, fraud and abuse”. If there was any appetite or ability to do that, don’t you think the estimated $60 billion a year in Meidcare waste, fraud and abuse would have been eliminated by now?

And what if they did make the cuts?  Anyone, what is the likely reaction of health care providers?  Uh, “we don’t take Medicare/Medicaid patients anymore”? That is exactly what will happen.  That means those with government insurance coverage won’t be able to find access (unless that too is eventually mandated). 

A separate Congressional Budget Office analysis, also released Thursday, estimated that 4 million households would be hit with tax penalties under the law for failing to get insurance.

The U.S. spends $2.5 trillion a year on health care, far more per person than any other developed nation, and for results that aren’t clearly better when compared to more frugal countries. At the outset of the health care debate last year, Obama held out the hope that by bending the cost curve down, the U.S. could cover all its citizens for about what the nation would spend absent any reforms.

The report found that the president’s law missed the mark, although not by much. The overhaul will increase national health care spending by $311 billion from 2010-2019, or nine-tenths of 1%. To put that in perspective, total health care spending during the decade is estimated to surpass $35 trillion.

The administration doesn’t even argue the point, claiming that’s a bargain for insuring 95% of the country. Of course, what USA Today doesn’t point out is that 75% of the 4 million households that will be hit with those tax penalties average less than $60,000 a year individually and families making less than $120,000 a year.

Also keep in mind that the CBO analysis and estimate are based in the assumption that absolutely everything in the bill goes as planned – to include the Medicare cuts. Or said another way, the $311 billion “cost’ is a joke and it will most likely cost far more than that.

The CBO also looks at Medicare:

In addition to flagging the cuts to hospitals, nursing homes and other providers as potentially unsustainable, it projected that reductions in payments to private Medicare Advantage plans would trigger an exodus from the popular program. Enrollment would plummet by about 50%, as the plans reduce extra
benefits that they currently offer. Seniors leaving the private plans would still have health insurance under traditional Medicare, but many might face higher out-of-pocket costs.

That brings us back to the politics and the polite word used -‘unsustainable’ – to mean the cuts just aren’t going to happen.

USA Today ends its article with this:

In another flashing yellow light, the report warned that a new voluntary long-term care insurance program created under the law faces “a very serious risk” of insolvency.

What they’re talking about is this:

One other interesting note from this study was a paragraph on the new Community Living Assistance Services and Supports insurance program for home care, known as the CLASS Act.

While it produces a $38 billion net savings through 2019, that’s mainly because you have to pay five years of premiums before you can start taking advantage of the program.

After that, the Medicare Actuary doesn’t like the way it looks in financial terms.

“Over the longer term, expenditures would exceed premium receipts, and there is a very serious risk that the program would become unsustainable as a result,” the study says.

“Unsustainable” – pay 5 years of premiums before you get the first benefit and the “expenditures would eventually exceed premium receipts”. Sounds exactly like every other program I’ve seen designed and engineered by politicians. That’s why we’re in the freakin’ fiscal mess we’re in now.

And the moon pony crowd keeps believing you can get something for nothing and that we can fix crap like this to where it will actually work and cost less too.

Repeal it.

~McQ

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A tale of two states

I’ve been mentioning what’s going on in the state of New Jersey as a positive example of what is necessary to reign in government and government spending.  Hard decisions have been made there and, in an epic battle with public service unions (specifically the teacher’s union) Governor Chris Christie seems to be prevailing.

Not so in Illinois where, amazingly, the public service unions held a big rally yesterday and chanted “raise my taxes”.

Any guess why?

Thousands of protesters bused down by labor unions and social service advocates rallied at the Capitol today in an attempt to pressure state lawmakers into raising the income tax to avoid more budget cuts.  A spokesman for Illinois Secretary of State Jesse White estimated the rally crowd at 15,000, with more than 12,000 marching around the building. That would appear to make it the largest Capitol protest since the Equal Rights Amendment crowds a quarter-century ago. Bus after bus pulled up on streets surrounding the Capitol complex and dumped sign-waving protesters clad in purple, green, red and blue shirts that represented a show of strength from a variety of public employee unions and dozens of groups that formed what they named the “Responsible Budget Coalition.”

“Responsible Budget Coalition” my foot.  “I want my job, benefits and perks unchanged coalition” is more like it.

Their goal, of course, is to pressure Illinois lawmakers into raising income taxes to continue spending at the level that is leading Illinois into bankruptcy.

Illinois has a $13 billion dollar budget deficit.  $2 billion in cuts to education have been proposed.   But Democratic Governor Pat Quinn would rather raise income taxes thantake on his base (public service unions such as the teacher’s union) by make those hard and tough choices necessary to reign in the deficit.  And, one assumes, because Illinois educators have done such a great job in the past (ranking 32nd out of 50 in 2005-06 and dropping 3 more to 35th isn 2006-2007).

So Quinn has come up with a budget plan that rests on “5 pillars” : 

Creating Jobs, Cutting Costs, Strategic Borrowing, Continued Federal Assistance and Increased State Revenues.

Quinn claims he can create 439,000 jobs in the next 6 years by using $6 billion.  The same “shovel ready” game plan that’s worked so well on a national level is now the panacea for Illinois unemployment.  He also is going to give small businesses a $2,500 tax credit for employees they hire.  Yeah, that’ll cover the cost of new hire, won’t it?  In fact, his entire jobs creation plan is a recreation of the Obama plan which has done zip to spur job creation.

But now we get to the fun part – Cutting costs (well, not really).

Cutting Costs

State Employees and Operations – The Governor’s plan includes more than $203 million in savings through employee furlough days, renegotiated employee contracts, employee health insurance savings and additional travel restrictions. The state will also change the way it does business, including reviewing, reducing or re-bidding all contracts over $1 million; historic procurement reform; and consolidating state office spaces.

Pension Stabilization – The state’s current public pension system costs are growing significantly, adding to the mounting deficit. Without bold reform, the system will fall apart, forever disrupting thousands of lives. Stabilizing the system so that existing employees and retirees will keep their current benefits, while new hires become part of a streamlined pension system will save approximately $300 million in the first year.

Health and Human Services – Services such as home care for older adults, child care and community mental health services will be reduced by $276 million. Scaling back prescription drug assistance and group health coverage for state retirees, combined with a managed care pilot program for seniors and adults with disabilities who are enrolled in Medicaid will save the state $325 million.

Performance Metrics – The state will implement rigorous performance metrics that will improve accountability and performance, and will make sure programs run more efficiently. A new Web-based system will be designed for collecting and reporting performance updates.

Education – Education will see approximately $1.3 billion cut from general state aid, special education, student transportation, grants and universities.

Now – this is a state with a $13 billion dollar deficit – correct? Count up the “savings” and cuts proposed here. Approximately $2.2 billion dollars. $2.2 billion in “savings”.  [As an aside - note the cuts in health care.]

So what about the rest of the deficit number? Well, of course, the answer is “strategic borrowing”. Oh, and an increase in the state’s income tax by 33%.

The excuse?

Well the state “owes” vendors, providers, colleges and universities $5 billion dollars, and it is high time the taxpayers paid these bills. Additionally, the Governor, knowing very well that Democrats have now become the party of public service employees (and that necessarily means preserving their jobs, salaries, benefits and perks) contends it is the duty of the Illinois tax payer to cough it up for education:

Governor Quinn challenged lawmakers to pass a 1 percent income tax surcharge to support education. The surcharge will help restore educational funding, while also enabling the state to get caught up on the millions of dollars owed to public schools, community colleges and universities.   “We can’t afford to deny reality or delay action any longer. We don’t have time for any more partisan battles, parliamentary maneuvers or political expediency,” said Governor Quinn. “As we tackle this budget, let’s remember: We are fighting for our children, our communities, and the future of our state.”

What he’s actually fighting for is the continued support of the public service unions.

And thus the well timed astro-turf “populist” uprising among the beneficiaries of misspent Illinois tax dollars.

A tale of two states.  One facing up to the fiscal reality of the day, and the other in the middle of trying to deny reality and maintain the status quo.  Certainly everyone understands that at some point, some tax increases may have to be considered.  But is it too much to ask the state to show some good faith and cut the bloated and costly state apparatus that is unable at this point to run in anything but a deficit?  A $13 billion deficit is no small potatoes for a state budget.  Proposing $2.2 billion in cuts and then wanting to put off $1.3 billion of those with a tax increase doesn’t demonstrate any seriousness at all about cutting the size and cost of state government.

While the bussed in protesters may have been many, according to the report, the Illinois taxpayers are many more.  Time to lay down the law to your lawmakers.  Cut spending.  Take a tip from New Jersey.  Make the hard choices and do the tough job of cutting the size and cost of government.  Otherwise, if the public tantrum the public service unions throw is allowed to work,, you can expect to be on the hook from now on ensuring those jobs, salaries, benefits and perks are forever maintained, while you watch the cost of government continue to spiral out of control.

~McQ

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