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Daily Archives: December 13, 2010


Boom! Flap, flap, flap … ObamaCare has a flat (update)

I’ve been waiting on this one and today a US District Judge in Virginia issued his ruling about  ObamaCare:

A federal judge in Virginia has declared the Obama administration’s health care reform law unconstitutional.

U.S. District Judge Henry Hudson is the first judge to rule against the law, which has been upheld by two others in Virginia and Michigan.

Virginia Attorney General Ken Cuccinelli filed the lawsuit challenging the law’s requirement that citizens buy health insurance or pay a penalty starting in 2014.

He argues the federal government doesn’t have the constitutional authority to impose the requirement.

I’m not sure the AP description is entirely accurate.  I believe he ruled only the individual mandate was unconstitutional.  However, I don’t believe he ruled the entire law unconstitutional. 

Here’s Bloomberg’s report:

U.S. District Judge Henry Hudson in Richmond, Virginia, said today that the requirement in President Barack Obama’s health-care legislation goes beyond Congress’s powers to regulate interstate commerce. While severing the coverage mandate, which was to become effective in 2014, Hudson didn’t address other provisions such as expanding Medicaid.

Hudson, appointed by President George W. Bush found the minimum essential coverage provision of the act “exceeds the constitutional boundaries of congressional power.”

Regardless, if the ruling stands, it cripples ObamaCare.  The mandate is one of the principle ways that the administration and Democrats “justified” the cost of the law.   And by the way:

Constitutional scholars said unless Congress changes the law, its fate on appeal will probably hinge on the views of the U.S. Supreme Court’s more conservative members.

Hello lame duck Congress?   That’s not going to happen in the 111th and it certainly won’t happen 112th.

Oh, this is going to be fun to watch.   More to come as it continues breaking.

UPDATE:  Pertaining to the “severability” argument put forward in the comment section, Judge Hudson said specifically when talking about the individual mandate:

"The Court will sever only Section 1501 [the individual mandate] and directly-dependent provisions which make specific reference to 1501.

 

~McQ


Deciphering Paul Krugman’s latest message

Get your “Captain Krugman” decoder rings out and follow me through this Paul Krugman piece.

Today the line of attack on what he calls the “Obama-McConnell tax cut deal ” is to put forward the argument that the reason we’re in this mess to begin with is because of the debt carried by American families. Yes, that’s right – you did it, now shut up and take the medicine. Oh and the banks – yes, the banks because they “abandoned any notion of sound lending and because everyone assumed housing prices would never fall”.

Yeah, you guessed it  – not a thing about the Community Reinvestment Act, Congressional pressure on banks to lend to very marginal borrowers or Freddie Mac and Fannie Mae.  It was you, dear citizen … and the banks.  The government?  Sparkly clean by omission.

Anyway, because that debt is so high in relation to income and the families are in the middle of trying to deleverage that debt, they’re not spending much – or as much as is needed to kick start the economy, in Krugman’s opinion (they might if they had more but then that means even deeper tax cuts and Krugman ain’t going there).  And of course there’s that problem with high unemployment to factor in as well.

So, backing into this favorite theme of the past two years (Deficit?  Screw the deficit – spend, spend, spend), what or who should be spending to get the economy going?

Why yes Sparky, he means the government.

What the government should be doing in this situation is spending more while the private sector is spending less, supporting employment while those debts are paid down. And this government spending needs to be sustained: we’re not talking about a brief burst of aid; we’re talking about spending that lasts long enough for households to get their debts back under control. The original Obama stimulus wasn’t just too small; it was also much too short-lived, with much of the positive effect already gone.

It’s true that we’re making progress on deleveraging. Household debt is down to 118 percent of income, and a strong recovery would bring that number down further. But we’re still at least several years from the point at which households will be in good enough shape that the economy no longer needs government support.

But wouldn’t it be expensive to have the government support the economy for years to come? Yes, it would — which is why the stimulus should be done well, getting as much bang for the buck as possible.

Remember that last phrase because that’s the point of the post.  Now, with all of that background, Krugman says that this “Obama McConnell tax cut deal” will provide some stimulus but not the sustained stimulus Krugman says is needed from government.  And that first stimulus was too small – even though it was much larger than Krugman said was necessary at the time.  Nope  a massive stimulus is still needed no matter what we have to do to pump that money out there (even while the Fed is trying to sponge up the multi-trillion dollar spill of cash they tossed out there before):

The point is that while the deal will cost a lot — adding more to federal debt than the original Obama stimulus — it’s likely to get very little bang for the buck. Tax cuts for the wealthy will barely be spent at all; even middle-class tax cuts won’t add much to spending. And the business tax break will, I believe, do hardly anything to spur investment given the excess capacity businesses already have.

This is the point where cognitive dissonance smacks right into the Krugman “reasoning”.  A) he wants a new and much bigger stimulus – that’s no secret.  B) he claims this bit of stimulus (tax cut deal) will “cost” more (deficit) than it will deliver (bang for buck).  C) you can’t be trusted (shades of Clinton) to spend your own money the way the government would (perfectly, of course – properly, with no waste, and at exactly the right time and in the right place – having a coughing fit yet?).

For such a supposedly gifted economist it is like he missed Econ 101 in favor of Propaganda 101.  Either that or he really does believe, in the face of much evidence to the contrary, that a government spending money in a recession always returns “more bang for the buck” than does an individual (millions of individuals) in a market being allowed to keep and spend more of his money.  I am forever at a loss to explain that sort of thinking.

Pushing money out into an economy just to be getting it out there isn’t going to solve our economic problems.   In fact, if government has to be the big consumer of loan money to do so, guess what there’s less of for the private side of things?  Can you say “vicious circle”?And what does Krugman think a pure borrowing-based second stimulus plan is going to do to the debt?  Given the “bang for the buck” we received with the last stimulus, what makes Krugman think this one would be a better deal and superior to letting people keep more of their own money?

What I expect, instead, is that we’ll be having this same conversation all over again in 2012, with unemployment still high and the economy suffering as the good parts of the current deal go away.

The long and short of it is, this about isn’t economics, it’s about politics.  What Krugman wants is anything he can call economic improvement because he knows that Obama and the Democrats are in awful political shape.  His belief is if the Obama administration will quickly pass a huge stimulus and pump money into the economy, things will look somewhat better than they do now and he can make rosy predictions that should help carry the day for Obama’s re-election in 2012.  If it all collapses after that, who cares?  There will be plenty of time to make stuff up on the fly again and, of course variously blame the Republicans, the American people and, of course, the banks for any problems the economy may suffer.

~McQ


Bernie Sanders–“when is enough enough?”

Yes, our token socialist (declared socialist that is), during his filibuster of maintaining the current tax rates (i.e. calling for a tax increase), asks the question of the “crybaby rich” – “when is enough enough?”

He goes on to lambast the “rich” for being “greedy” and “addicted”.  Here, listen for yourself:

But, in fact, who is the “crybaby” here?  Who is “greedy” one calling for more and more money that he hasn’t earned and can only get by taking it from those who have?  Who is it who is “addicted” to spending and refuses to acknowledge it, instead projecting all of his vices on those who actually work to earn their riches?

This sort of class warfare is destructive.  Both literally and figuratively.  Primarily it attempts to set the rest of America against those the Bernie Sanders of this world arbitrarily designate as “rich”.  The purpose of such attacks is to dehumanize them and rationalize taking their money without guilt.  It is also designed to deflect the issue to a lack of revenue vs. an addiction to spending and an outright greed for other people’s money.

And those who parrot the line that this will “cost” the government x amount of money are just as guilty.  This isn’t costing the government one red cent.  This is about keeping the tax rates we’ve had for over a decade current.  Anticipated revenue based in a hoped for change in the tax rates is not a “cost”.  Spending anticipated revenues before they’re authorized or collected isn’t a “cost” either – it’s a criminal breech of the public trust and addiction that needs to be stopped immediately.   We aren’t in the fiscal shape we’re in from a lack of revenue – we’re in the shape we’re in because people like Sen. Bernie Sanders have spent other people’s money recklessly and without a thought to the future. And it turns out they’ve hocked our future and the future of our children and grandchildren through their profligate behavior. It is they who are the problem – not the "rich".  It is we, the people of the United States who should be asking of Bernie Sanders, “when is enough enough”?  The answer is “you had enough a long time ago and you’ll get no more – from anyone”.

If anyone is a crybaby, addicted and greedy, it is the man in the video.  And it is men and women like him who need to be run out of DC post haste.

~McQ

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