Free Markets, Free People
The following statistics were released today on the state of the US economy:
Factory orders dropped a disappointing -0.5% in June, with non-durable goods down -2.0%. Durable goods rose 1.3%, but only because of aircraft orders, with other durable components mainly negative.
Initial jobless claims rose 8,000 in the July 28 week to 365,000. The 4-week moving average dropped 1,750 to 365,500. Continuing claims fell 19,000 to 3.272 million. The 4-week average dropped 11,000 to 3.299 million, the lowest in six weeks.
The Bloomberg Consumer Comfort Index fell to -39.7, the lowest reading in five months.
The Challenger Job-Cut Report counts 36,855 layoffs for June, which is the lowest since April, 2011.
June chain-store sales reports are very positive so far today. A number of retail chains are raising guidance in reaction. Today’s results are the first increase since March for the ex-auto, ex-gas retail sector.
When government leaks sensitive national security information to the press, of course.
President Barack Obama has signed a secret order authorizing U.S. support for rebels seeking to depose Syrian President Bashar al-Assad and his government, U.S. sources familiar with the matter said.
Obama’s order, approved earlier this year and known as an intelligence "finding," broadly permits the CIA and other U.S. agencies to provide support that could help the rebels oust Assad.
What is it that occurs in early November? And who needs a little boost?
Perhaps you remember the “clever” accounting trick (also known as double counting) that the Democrats used to claim that ObamaCare would save money?
You know, it would cut Medicare by 500 billion (after the election, of course). You were supposed to believe that was a net cut in spending, remember? Of course it wasn’t. It was simply shifting the money to “pay” for other areas of ObamaCare. There was no “net” savings.
Well the newest projection by the CBO is that it will actually be 716 billion over 10 years (2013 to 2022) and it will essentially gut Medicare. Of course the old folks will have voted before it goes into effect.
The result of the shift of the funds? The Foundry has it:
- A $260 billion payment cut for hospital services.
- A $39 billion payment cut for skilled nursing services.
- A $17 billion payment cut for hospice services.
- A $66 billion payment cut for home health services.
- A $33 billion payment cut for all other services.
- A $156 billion cut in payment rates in Medicare Advantage (MA); $156 billion is before considering interactions with other provisions. The House Ways and Means Committee was able to include interactions with other provisions, estimating the cuts to MA to be even higher, coming in at $308 billion.
- $56 billion in cuts for disproportionate share hospital (DSH) payments.* DSH payments go to hospitals that serve a large number of low-income patients.
- $114 billion in other provisions pertaining to Medicare, Medicaid, and CHIP* (does not include coverage-related provisions).
*Subtract $25 billion total between DSH payments and other provisions for spending that was cut from Medicaid and CHIP.
The effect will be fairly substantial and should be obvious to even the most staunch ObamaCare supporter:
The impact of these cuts will be detrimental to seniors’ access to care. The Medicare trustees 2012 report concludes that these lower Medicare payment rates will cause an estimated 15 percent of hospitals, skilled nursing facilities, and home health agencies to operate at a loss by 2019, 25 percent to operate at a loss in 2030, and 40 percent by 2050. Operating at a loss means these facilities are likely to cut back their services to Medicare patients or close their doors, making it more difficult for seniors to access these services.
In addition, as MA deteriorates under Obamacare’s cuts, many of those who are enrolled in MA (27 percent of total Medicare beneficiaries) will lose their current health coverage and be forced back into traditional Medicare, where Medicare providers will be subject to further cuts. The Centers for Medicare and Medicaid Services chief actuary predicted in 2010 that enrollment in MA would decrease 50 percent by 2017, when Obamacare’s cuts were estimated at only $145 billion. Now that the cuts have been increased to $156 billion (or possibly $308 billion, as the Ways and Means Committee estimates), MA enrollment will surely decrease even further.
But Obamacare’s raid of Medicare doesn’t stop with cuts; it includes a redirection of tax revenue from the Medicare payroll tax hike in Obamacare. The payroll tax funds Medicare Part A, the trust fund that is projected to become insolvent as soon as 2024. Obamacare increases the tax from 2.9 percent to 3.8 percent, which is projected to cost taxpayers $318 billion from 2013 to 2022. However, for the very first time, Obamacare does not use the tax revenue from the increased Medicare payroll tax to pay for Medicare; the money is used to fund other parts of Obamacare, much like the $716 billion in cuts are.
That in addition to the fact that Medicare still has 37 trillion in unfunded mandates.
Also note the tax increase in the last paragraph (yes, that would be a middle class tax increase) and how the funds will not support the program with the 37 trillion problem.
Now we can argue all we want about the existence or non-existence of “death panels”, but here we have exactly what was predicted prior to this abortion of a law being passed. Rationed care (“… cut back services to Medicare patients or close their doors, making it more difficult for seniors to access these services.”) driven by these cost cuts are defacto “death panels”.
As the Foundry concludes:
With a raid on Medicare of this magnitude, President Obama’s assertion that his new law is protecting seniors and Medicare is astonishing. The truth is that Obamacare does the opposite.
But hey, this is the same President who claims his economic policy is working too. See previous post for the reality of that claim.
The reason this cut takes place in 2013 is obvious. If seniors were aware of its impact, you know how they’d vote.
Whether you do or don’t support Medicare isn’t the point, it’s the bald faced lies that have been put forward claiming something that isn’t at all true. And now the numbers are out that prove that.
Again, something which should be front and center as a major issue in this political season.
But it won’t be.
Market Watch writer Al Lewis opines:
The Great Depression that Federal Reserve Chairman Ben Bernanke claims to have averted has been part of the background radiation of our economy since at least 2008.
It’s just that like radiation — it’s invisible.
Uh, no. It’s no. It is simply a word, a description, that most of the media refuses to use.
Here, try it out. “Depression.” See, it’s not so hard.
In fact anyone who takes an objective look at what we’ve been suffering has concluded that while our current condition may not fit the arbitrary definition of whatever is considered a depression today, our economy certainly isn’t in any condition to be called recovered or even “recovering”. In fact, it is a disaster:
In a new research note, JPMorgan points out that since 1970, Japan, Finland and Sweden have all gone through what the U.S. is currently going through. And all three of them had recoveries stronger than America’s. The above chart compares the economic recovery — as measured by real GDP per capita — of each nation at different points after the trough of their recessions. And the U.S. is in dead last after 12 quarters from the bottom.
Take a particular look at Japan. That is the economy during the “lost decade” that we’re currently underperforming. Says JP Morgan’s Michael Feroli:
The poster child for slow growth coming out of a debt-fuelled financial crisis has to be Japan, which ever since the early 1990s has had trouble getting a head of steam. The recession which kicked off Japan’s “lost decade” lasted from 1991 to 1993. Including the recovery experience from that recession is sobering: we are currently faring worse than Japan at the same point in their lost decade.
So what’s the plan? How are we going to work ourselves out of this position? What policies will we institute to begin the actual, not pseudo, recovery? Well, it’s an election year. Don’t expect to hear the hard truths from this administration. Instead, prepare to be reminded “its working”. That in spite of reality:
As the economy reels, the national debt approaches $16 trillion, and we hear fears of Congress jumping off a fiscal cliff by year-end. Many states and local governments are struggling with massive deficits, too. Three California cities have filed bankruptcies.
U.S. companies are warning of slower growth amid Europe’s meltdown, yet the Dow Jones Industrial Average has crossed the 13,000 mark, and some observers are predicting new highs for the index soon.
The rising stock market is as counterintuitive as interest rates falling to new lows after the U.S. lost its triple-A debt rating last year. It isn’t that investors aren’t wary. It’s just that every place else makes them more wary. This isn’t the definition of a recovery.
No, it’s not. But then Lewis doubles down with stupid:
The cure for our battered economy has been to allow our disasters to occur more slowly through taxpayer bailouts and extraordinary interventions from the Fed. So far, this strategy has worked. We have averted a sudden crash in favor of a depressingly slower one.
As we said from the very beginning, you can either let the economy takes its course and suffer the results quickly, get over it and recover, or you can find a way to extend it to where the effect may not be as dramatic but will linger and linger and linger.
We chose the latter path and it hasn’t at all worked out the way it was predicted (remember, at this point, unemployment was supposed to be in the 5% area if the stimulus was approved and 8% area if it wasn’t – so it’s hard to say “it worked”, isn’t it?).
The spin says the downturn was softened. But again, I point to the promises vs. the reality. We are no better off in terms of unemployment than it was claimed we’d be if we didn’t go an additional trillion dollars in debt.
And the economy isn’t recovering, it’s bouncing along the bottom of a trough with the possibility of going even lower if Europe implodes.
Yet the only plan I’ve seen or heard about is to repeat what failed previously with the Fed talking about a QE3 while we’re already awash in about 10 trillion dollars in funds it has already injected. I don’t know about you but I simply haven’t much confidence in Ben Bernanke’s assurances that he can wring all that cash out of the system without triggering another economic downturn or hyperinflation. History is not on his side.
I think Ace points to the truth of the matter that the media and politicians simply won’t touch:
This is the worst "recovery" by any nation since 1970, and it could be partly due to a category error: We’re not recovering from a recession, we’re still in the depths of a depression.
That’s right, it isn’t the “worst recovery”. There hasn’t been a recovery. There have been “bright spots” here and there which quickly faded, but overall, we’re in the same place economically we’ve been for months and years. And it isn’t an “invisible” depression to the unemployed and those who’ve given up hope and dropped out of the job market. It is very visible. And most likely they remember the promises and the results.
Of course, instead of facing this and holding politicians accountable, our media will continue to play to the distractions, the nonsense and the irrelevant instead of asking the hard questions, demanding answers and informing voters.
Unfortunately, such is life in America today.