Free Markets, Free People

Law Of Unintended Consequences


“Green” UK – A Cautionary Tale

A bit of ego, a little dab of moral vanity, a smidge of hubris all driven by an agenda and you have the perfect definition of the political class worldwide.  Of course I understate the smidges, bits and dabs by quite a bit. But that class has a problem.  Other than boring economic stuff they are apparently lacking a great moral cause.   So, it appears, they’ve decided to make one up with predicable results.

Dominic Lawson brings us up to date with the goings on in the UK beginning with helping us understand where the “green” movement has gotten them:

I was irresistibly reminded of this by Ed Miliband, the energy secretary, in his launch of plans to cut carbon emissions by switching to “renewables” for more than 30% of our energy use. This, he claimed, would “rise to the moral challenge of climate change”.

Miliband is of the generation of politicians struggling to find a great moral cause. Earlier in the Labour administration Tony Blair thought he had found it with wars of choice far from home, but that has, to put it mildly, lost its lustre. Now it is the “war against climate change”, given additional moral potency by the notion that the greatest concentration of sufferers from global rising temperatures would be among the world’s poorest.

Given the mostly positive press the fulminations of one Al Gore has received, what pol worth his salt could resist the call to save the world. “Go Green” young man and don’t dally because the earth has a fever!

And so Britain has tried to lead the effort. With high flying rhetoric and an aim to save Africa (really? Yup, so says Lawson), British politicans have bravely decided to throttle back their emissions and, apparently, kill their steel industry. Of course other than see the last vestiges of that industry leave forever, Lawson wonders, in the big scheme of things, if it’s worth it:

The UK is responsible for less than 2% of global carbon emissions – a figure set to fall sharply, regardless of what we do, as a result of the startlingly rapid industrial-isation of countries such as China and India: each year the increase in Chinese CO2 emissions alone is greater than those produced by the entire British economy. On the fashionable assumption that climate change is entirely driven by CO2 emissions, the effect on global temperatures of Britain closing every fossil fuel power station would be much smaller than the statistical margin of error: in effect, zero.

You see, Lawson, like many, has figured out the unfashionable truth – unless the big 3rd world emitters play ball, whatever dinky emitters like the UK do won’t amount to any net change. Whether or not you believe in AGW or not, running your economy on the shoals for no net gain seems something only a politican would do. And you’re right.

But those great moral crusades are beckoning and the political flesh is weak. Who wants to show up and serve their time in the spotlight with nothing but mundane governing to do. Politicians are driven to make a difference:

Gordon Brown claims: “Britain is leading the world in the battle against climate change.” Such remarks are regarded as absurd in the chancelleries of Europe: if you do take as a measure of such commitment the proportion of domestic energy already supplied by renewables, the UK occupies 25th place in the European Union league table, above only Malta and Luxembourg.

Never the less, “leading” certainly has had an effect, at least domestically. With a yawning energy gap promising huge problems in he very near future, the UK is leading by committing itself to 7,000 offshore wind generators.

Two problems with that. One they should have learned from Germany:

Indeed, Paul Golby, who runs the British operations of E.ON, Europe’s biggest wind-power producer, has told the government that a 90% fossil fuel or nuclear back-up will be needed for any of the National Grid’s future wind-power capacity. As Martin Fuchs, his German boss, pointed out: “The wind, sadly, does not blow where large quantities of power are required . . . on September 12 last year wind power contributed 38% of our grid power requirements at all times, but on September 30 the figure went down to 0.2%.”

Yes that’s right – wind is so unreliable that it must be backed up with more conventional methods of power generation up to the 90% mark. And:

The powerful wind-turbine lobby in Germany constantly harps on about the number of jobs “created” by its subsidised investment, quite ignoring the number of jobs destroyed by high-cost energy, or indeed the greater number of jobs that could be created if the same amounts were invested in more profitable activities. This is why the Bremen Energy Institute argues that “wind energy macro-economically has a negative employment impact”.

Peachy. Germany isn’t the only one that has learned “green” means fewer jobs, not more. Spain has also learned that lesson. A study of what has happened in Spain since it took essentially the same path as the UK in 2000 yielded these results:

* For every green job financed by Spanish taxpayers, 2.2 real jobs were lost as an opportunity cost;
* 9 out of 10 green jobs created by Spain over the past 10 years are no longer in existence today;
* Since 2000, Spain has spent €571,138 ($753,778) to create each “green job,” including subsidies of more than €1 million ($1,319,783) per wind industry job;
* Those programs resulted in the destruction of nearly 113,000 jobs elsewhere in the economy and;
* Each “green” megawatt installed destroyed 5.39 jobs in non-energy sectors of the Spanish economy.”

And what about all that wonderful green energy promised by the UK wind machines? Well, unfortunately it’s very expensive:

Miliband claimed last week that the result of his proposals would be an increase in costs to energy users of about 17%. However, the business and enterprise department admitted last year that Britain’s existing “climate policies” – even before Miliband’s latest Big New Idea – would add an extra 55% to energy bills. It’s obvious where this will lead: to the exit from Britain (and, indeed, Europe) of much of what remains of energy-intensive manufacturing industry – the euphemistic jargon term is “carbon leakage”.

Sure enough, that’s precisely what is happening:

Jeremy Nicholson, the director of the Energy Intensive Users Group, which represents such industries as steel and aluminium, is exasperated beyond measure: “A future administration will have to say in public what ministers and their officials already admit in private, that the renewables target is neither practical nor affordable. Outsourcing our emissions is not a solution to a global problem. Politicians need to understand that unilateral action will come at a terrible cost in terms of UK manufacturing jobs, investment and export revenue, for no discernible environmental gain – is that really what they want?”

Apparently so, since that is precisely the road the US and UK, without either China, India or the rest of the 3rd world, is headed.

What about the “exasperated” steel and aluminum industuries in Britain?

Well their demise has already begun:

Thousands of British steelworkers and their families are holding a protest march Saturday in a town in northeast England where the looming closure of a Corus steel plant threatens to throw families into poverty.

[...]

Closure is expected to result in the loss of 2,000 jobs at the plant, and another 1,000 elsewhere.

But others say the status of the plant, known as Teesside Cast Products, as one of the main regional employers means its closure will result in a loss of local high street spending that could balloon into nearly 10,000 job losses.

Aluminum too:

On the day Nicholson said this to me, last Thursday, Anglesey Aluminium, the biggest consumer of electricity in Wales, announced that it would cease production, precisely because it could see no prospect of signing up to a long-term supply of electricity at a rate at which it could make a profit. And on the day of Miliband’s announcement, a group of Labour MPs presented a “Save Our Steel” petition, saying: “We need to make sure we act before the light goes out.”

It may well be that the English steel mills will become unable to compete globally, even at current domestic energy prices; but deliberately to make them uncompetitive is industrial vandalism – and even madness when the consequence of Miliband’s Martin Luther King moment may be the lights going out not just for producers but for all of us in our homes. This is worse than a futile gesture: it is immoral.

Indeed. But the moral vanity and hubris involved in the belief one is “saving the world” apparently trumps any concern for the lives of others and the reality such policy brings in its execution.

The immoral part, as it pertains to the US, is we know this from watching what has happened in Europe and elsewhere. Yet apparently, if the administration has its way, we’re going to see the same immorality visited on us here shortly.

~McQ


Democrats Unveil Their “Affordable” Health Care Plan

And yes, that’s right, just because Democrats put “affordable” in the title doesn’t mean it is anything close to being affordable (unless another trillion in spending is something you find affordable). In fact, you can almost count on the opposite being true.

Another vitally important point to keep in mind is that trillion we’re batting around like we’re talking about spending ten bucks, is a government estimate. Anyone remember the government estimate about the cost of Medicare and how that turned out?

The Democrats are claiming the CBO “scored” this bill and it came up under the “affordable” column.  But the RNC says the CBO didn’t actually score the language in the bill:

In the second paragraph of CBO’s letter, it says, “”It is important to note, however, that those estimates are based on specifications provided by the tri-committee group rather than an analysis of the language released today.” So they scored what Democrats asked them to score. Not the actual bill.

Yes, in this infernal rush to get a bill out, we obviously couldn’t be patient enough to have the CBO score what the bill actually said vs. what the committees declared the bill would say. And we all know how honest our Congress is about such things, don’t we? Last but not least, the politics of the thing. Here’s a graph to show you how the planned appropriation of your money will take place:

houseDemHC Note carefully when the costs will actually begin to kick in. Yes, when Obama is safely in his second term and hopefully, at least as the Democrats reason, still with a Democrat majority Congress (since both the 2010 and 2012 Congressional elections shouldn’t be effected). Note the slope of the curve after that. Philip Klein, who put the chart together, explains:

It’s important to keep in mind that the most costly aspects of the legislation involve providing subsidies to individuals to purchase health care ($773 billion) and to expand Medicaid ($438 billion), but it takes several years for those provisions to kick in. As you can see from the chart below, that means that the costs start out relatively modest but ramp up over time. In the first three years of the plan the cost of the subsidies and Medicaid expansion is just $8 billion; in the first five years, it’s $202 billion; but in the last five years, it’s $979 billion. Put another way, 17 percent of the spending comes in the first five years, while 83 percent comes in the second five years. What this means is that the American people see $1 trillion over 10 years and they think that means the bill would cost about $100 billion a year — but the reality is more than double that. In the final year of the CBO estimates, 2019, the spending hits $230 billion.

Another important note – at the end of 10 years, that line on the graph isn’t going to drop to zero. It’s going to continue to climb. That’s “affordable?” If so, Democrats have given new meaning to the word.  And all of it to be paid for by taxing the rich.

Yes, in the midst of an economic crisis, the con artists in Washington are at it again.  They’ve co-opted “affordable” to sell their snake oil, ignored the impact of such a bill in a weak economy but carefully weighed the politics of it, and have decided that funding it on the back of “the rich” won’t have any adverse consequences when it comes to the economy and its health.

You can see this train wreck coming from miles and miles away, can’t you?

~McQ


A Closer Look At European Health Care

We continue to hear how wonderful it is as compared to the horrible US system.

But is it? One of the fundamental truths of any health care system is you have infinite demand meeting finite resources (beds, doctors, availability, etc). Whatever system a country has, that truth doesn’t change.

So, regardless of system, there is going to be some sort of rationing. It is unavoidable and inevitable.

Now add a desire to control and cut costs associated with the provision of health care to the mix (the promise of every one of these government systems). On the one side, as European nations have done, access to health care is expanded to include everyone. On the other hand, these same nations attempt to control health care costs.

The result? Very mixed. France is always held up as the exception to the rule that government health care can’t be both good and inexpensive. But a closer examination seems to indicate that it isn’t an exception at all:

A World Health Organization survey in 2000 found that France had the world’s best health system. But that has come at a high price; health budgets have been in the red since 1988.

In 1996, France introduced targets for health insurance spending. But a decade later, the deficit had doubled to 49 billion euros ($69 billion).

“I would warn Americans that once the government gets its nose into health care, it’s hard to stop the dangerous effects later,” said Valentin Petkantchin, of the Institut Economique Molinari in France. He said many private providers have been pushed out, forcing a dependence on an overstretched public system.

Why have private providers been “pushed out”? Because government has provided health care “cheaper” than do private providers (and obviously at a loss given the deficit). Notice I said “cheaper”. That doesn’t necessarily mean “better”.

And the same thing is being seen in other European health care systems which are considered “models” of government run health care:

Similar scenarios have been unfolding in the Netherlands and Switzerland, where everyone must buy health insurance.

“The minute you make health insurance mandatory, people start overusing it,” said Dr. Alphonse Crespo, an orthopedic surgeon and research director at Switzerland’s Institut Constant de Rebecque. “If I have a cold, I might go see a doctor because I am already paying a health insurance premium.”

Cost-cutting has also hit Switzerland. The numbers of beds have dropped, hospitals have merged, and specialist care has become harder to find. A 2007 survey found that in some hospitals in Geneva and Lausanne, the rates of medical mistakes had jumped by up to 40 percent. Long ranked among the world’s top four health systems, Switzerland dropped to 8th place in a Europe-wide survey last year.

Dr. Crespo’s point is simply an astute observation of human nature. If something doesn’t directly cost the user, why would the user ration the use of such a benefit?

The use, however, still costs someone or something. The doctor must be paid, the institution must be paid, etc. So in the end, the only way to control costs is to cut payments. Eventually, the incentives to enter the health care field become less attractive (unless you like long hours, overrun waiting rooms, minimal time with patients, being second-guessed by a bureaucracy and making much less than a private system allows for compensation) and there are fewer that enter the field. Hospital beds then drop, hospitals merge and there are fewer specialists available to serve the population as Switzerland is discovering.

And then there’s the lack of innovation to face.

Bureaucracies are slow to adopt new medical technologies. In Britain and Germany, even after new drugs are approved, access to them is complicated because independent agencies must decide if they are worth buying.

When the breast cancer drug Herceptin was proven to be effective in 1998, it was available almost immediately in the U.S. But it took another four years for the U.K. to start buying it for British breast cancer patients.

The promise that has been made in the US is health care reform will return the decision making to the doctor. But that’s simply a false promise given the priorities of the reform we’ve been promised. It is to cut cost and make care “affordable” to all. Somewhere is a bureaucracy in waiting which will decide what “affordable” means – and it won’t include your doctor.

So you can expect innovation to begin to slow. Why invest billions when a bureaucracy will decide whether or not it’s a medicine or treatment worth the cost. The same bureaucracy will also decide what it will pay for your innovation. Of course, if the innovator can’t recover the cost of development and make a profit as incentive toward more innovation, the probability exits the developer will simply stop such research.

“Government control of health care is not a panacea,” said Philip Stevens, of International Policy Network, a London think-tank. “The U.S. health system is a bit of a mess, but based on what’s happened in some countries in Europe, I’d be nervous about recommending more government involvement.”

Words of wisdom most likely to be ignored by our legislators here. And the unfortunate thing is it will not only destroy an excellent health care system here, but, given the level of government spending forecast, tank the rest of the economy as well.

~McQ

[HT: Carol D]


Questions and Observations #3

For new readers, the title is what the shortened “QandO” means.

  • Whether you love her, hate her or really don’t care, it is hard too argue against the assertion that  Sarah Palin effectively ended any national aspirations she might have had by announcing her pending resignation (assuming there isn’t some extremely compelling private family reason for doing so). The first thing any political opponent is going to say is “she quit on the citizens of Alaska, will she quit on you?”
  • The story about the Washington Post selling access to the Obama administration isn’t just about the WaPo. Seems to me there had to be some a) knowledge of the plan and b) cooperation from the White House for it to have been as far along as it was. After all, the first “salon” was scheduled to be held at the publisher’s home in 2 weeks. Is anyone exploring that angle?
  • How concerned is Saudi Arabia with the probability of Iran acquiring nuclear weapons? Apparently enough to make it known they’ll turn a blind eye to any Israeli incursion which crosses the kingdom in order to strike Iran.
  • Apparently the scales have finally fallen from Colin Powell’s eyes concerning Obama and the direction he’s taking this country. Formerly Powell’s message was that American’s wanted more government and were willing to pay for it. He now says he’s concerned with the number of programs, the legislation associated with them and the cost of the additional government they’ll entail. “We can’t pay for it,” he’s now saying? Better late than never, I suppose, but this just underscores my disaffection with Powell politically.
  • Speaking of Sarah Palin, apparently the federal investigation rumors (FBI looking into irregularities concerning the sports complex in Wasilla, etc.) and pending indictment are false. An FBI spokesman in Alaska has said there is no pending indictment or ongoing investigations of her. Concerning the ongoing rumor he says, “it’s just not true”.
  • The after effects of the recent “election” in Iran continue to eat away at the foundation of the “Islamic Republic”. The Association of Researchers and Teachers of Qum split with Ayotallah Khamenei declaring both the election and the new govenrment “illegitimate”. That is a very public and unprecedented challenge to Khamenei’s power. Additionally Moussavi’s campaign has released a report that outlines the election violations in detail. These are very serious challenges to the regime’s legitimacy.
  • Speaking of Iran, it appears that while the world is ready to ratchet up the pressure on the regime in light of its brutal put down of pro-democracy protesters, the Obama administration is apparently prepared to block any sanctions agreed upon at the G8 summit. I swear I can’t figure that bunch out – support the dictator in Iran and mischaracterize a legal use of constitutional power in Honduras in support of another would-be dictator there.
  • The law of unintended consequences continues to operate unabated. Governments, desperate for revenue, have raised property taxes all across the country. Homeowners, knowing their home values have plummeted, are filing an unprecedented number of appeals. Those appeals are costing the governments huge amounts of money in refunds and attorney’s fees. However, homeowners should note that if they don’t appeal, the government will gladly screw them to the wall with an unjustified tax increase. Makes you feel all warm and fuzzy inside, doesn’t it?

~McQ


Happy “Dependence” Day

I‘m sorry, but the more I get into the monstrosities coming out of Washington DC, the less I see “independence” as a reality. Just a quick read through Waxman-Markey (and a quick read in anything but easy given the size of the bill) will tend to make you a bit pessimistic about “independence”. Consider the mundane topic of shade trees:

SEC. 205. TREE PLANTING PROGRAMS.

(a) Findings- The Congress finds that–

(1) the utility sector is the largest single source of greenhouse gas emissions in the United States today, producing approximately one-third of the country’s emissions;

(2) heating and cooling homes accounts for nearly 60 percent of residential electricity usage in the United States;

(3) shade trees planted in strategic locations can reduce residential cooling costs by as much as 30 percent;

(4) shade trees have significant clean-air benefits associated with them;

(5) every 100 healthy large trees removes about 300 pounds of air pollution (including particulate matter and ozone) and about 15 tons of carbon dioxide from the air each year;

(6) tree cover on private property and on newly-developed land has declined since the 1970s, even while emissions from transportation and industry have been rising; and

(7) in over a dozen test cities across the United States, increasing urban tree cover has generated between two and five dollars in savings for every dollar invested in such tree planting.

So now the federal government will issue guidelines and hire experts to ensure you plant shade trees properly:

(4) The term ‘tree-siting guidelines’ means a comprehensive list of science-based measurements outlining the species and minimum distance required between trees planted pursuant to this section, in addition to the minimum required distance to be maintained between such trees and–

(A) building foundations;

(B) air conditioning units;

(C) driveways and walkways;

(D) property fences;

(E) preexisting utility infrastructure;

(F) septic systems;

(G) swimming pools; and

(H) other infrastructure as deemed appropriate

And Waxman-Markey is indeed a “green-job creator” of a bill – it creates an entirely new job category – Federal House Inspector. Yes, that’s right, in order to sell your house in the future you must passed a federal housing inspection which will certify your home has the minimal energy rating necessary. And if not, you’ll be required to bring it up to par by replacing appliances (water heaters, air conditioning, etc) or repairing (leaky windows, etc) whatever the inspector finds before you can put it on the market.

Have a candelabra in your dining room? Don’t you dare put any more than a 60 watt bulb in there.  You need to also bone up on what you’ll be allowed to do with outdoor lighting, water dispensers, hot tubs and other appliances, not to mention wood burning stoves and water usage.

Yup, if this piece of legislation makes it through the Senate, we need to seriously rethink the name we give the 4th of July. “Independence” will no longer apply. And, given the level of intrusion this bill brings to our lives, you can just imagine what’s in store for us in any health care legislation passed by this administration.

Happy Dependence Day, folks.

~McQ


Climate Change Update – Falling Dominoes

For the American taxpayer, under the shadow of the recently passed House cap-and-trade (Waxman-Markey) bill, the news continues to be grim. However for the traitorous “deniers”, aka skeptics, who believe the whole climate change hysteria to be an economy killing farce, things are looking better.

For instance India has announced it will not participate in the Western world’s attempts to kill their own economies:

India said it will reject any new treaty to limit global warming that makes the country reduce greenhouse-gas emissions because that will undermine its energy consumption, transportation and food security.

Cutting back on climate-warming gases is a measure that instead must be taken by industrialized countries, and India is mobilizing developing nations to push that case, Environment Minister Jairam Ramesh told the media today in New Delhi.

“India will not accept any emission-reduction target — period,” Ramesh said. “This is a non-negotiable stand.”

Heh … fairly blunt and straight foward wouldn’t you say? Of course, China took the same stand a couple of weeks ago. I call that good news because it is another country which has decided to put its economy first and this nonsense second. When two countries which are or expected to be very soon the two leading emitters of CO2 say “no”, it makes it rather ridiculous for the rest of the world to say “yes” given the consequences vs. payoff, doesn’t it?

And the US cap-and-trade legislation? Well India sees that as a “no-go” as well:

But last week, the US House of Representatives backed a “border adjustment tax” to equalise carbon emissions charges between domestic production and imports from states that do not cap emissions. The legislation is likely to face tough opposition in the Senate.

Mr Ramesh denounced as “pernicious” US efforts to impose “trade penalties” on countries that do not match its carbon reduction moves.

Meanwhile in the EU:

The European Union risks driving industry out of the region if it continues to push for deeper cuts in carbon dioxide emissions than other economies, according to the chief executive of Eon, one of the world’s biggest renewable energy companies.

Wulf Bernotat, Eon’s chief executive, told the Financial Times that the EU was imposing higher energy costs on its industry than competing regions, and criticised the US for doing “basically nothing” to cut its carbon dioxide emissions.

He added that if there were no international deal to cut emissions agreed at the Copenhagen meeting at the end of the year, the EU would have to rethink its plans to take a lead in fighting the threat of climate change.

“It is a European political issue whether the European Union can continue to lead the policy process if the rest of the world is not joining in,” he said.

“We are adding additional costs to our industries, and if other countries don’t follow, then those industries will move to lower-cost regions.”

Yeah, like India or China … or Mexico. That’s the irony of this nonsense. We have a president and Congress who’ve made a cottage industry of demonizing corporations who “outsource” jobs while they pass legislation that encourages corporations to outsource jobs.

And for those who worship at the feet of Al Gore, another inconvenient truth is to be found in a recently published paper from the Journal of Atmospheric and Solar-Terrestrial Physics:

The Abstract states:

Daily temperature and pressure series from 55 European meteorological stations covering the 20th century are analyzed. The overall temperature mean displays a sharp minimum near 1940 and a step-like jump near 1987. We evaluate the evolution of disturbances of these series using mean squared inter-annual variations and “lifetimes”. The decadal to secular evolutions of solar activity and temperature disturbances display similar signatures over the 20th century. Because of heterogeneity of the climate system response to solar forcing, regional and seasonal approaches are key to successful identification of these signatures. Most of the solar response is governed by the winter months, as best seen near the Atlantic Ocean. Intensities of disturbances vary by factors in excess of 2, underlining a role for the Sun as a significant forcing factor of European atmospheric variations. We speculate about the possible origin of these solar signatures. The last figure of the paper exemplifies its main results.

The paper concludes:

In concluding, we find increasingly strong evidence of a clear solar signature in a number of climatic indicators in Europe, strengthening the earlier conclusions of a study that included stations from the United States (Le Mouël et al., 2008). With the recent downturn of both solar activity and global temperatures, the debated correlations we suggested in Le Mouël et al. (2005), which appeared to stop in the 1980s, actually might extend to the present. The role of the Sun in global and regional climate change should be re-assessed and reasonable physical mechanisms are in sight.

Shorter conclusion?

“It’s the sun, stupid”.

~McQ


CBO, Entitlments, Health Care Reform and the Deficit

One more time into the breach. The CBO has issued a warning to Congress about entitlement spending. Again. Here’s a key paragraph:

Almost all of the projected growth in federal spending other than interest payments on the debt comes from growth in spending on the three largest entitlement programs–Medicare, Medicaid, and Social Security.

Most of you know that Medicare and Medicaid have an unfunded future liability of 36 trillion dollars. That’s about 3 times the annual total GDP of the US economy. And they are the very same type of “public option” program – i.e. government insurance – that the left says is so very necessary and crucial to real “health care reform”.

In other words, the left’s argument is that adding at least 47 million (presently uninsured), plus the possibility of adding 119 million who are shifted to the public option from private insurance (private insurance, btw, doesn’t have any effect on the deficit whatsoever since we, the private sector, are paying for it) will somehow make the deficit picture better?

I’m obviously missing something here.

With the public option, we’re adding a new entitlement (47 million who presently supposedly can’t afford insurance, meaning taxpayers will subsidize theirs). Assuming it is set up originally to be paid for by premiums, at some point, like Medicare and Medicaid, and every other government entitlement program I can think of, it will pay out more than it takes in. How can it not? It is a stated “non-profit” program and it will include subsidies. At some point, another revenue stream is going to be necessary as it burns through the premiums with its payouts.

Well, say the proponents of government involvement in your health care, we’re going to save money by doing preventive health care. Yes, preventive care is the key to lower costs because a healthier population is one which visits the doctor less. While that may seem to be at least partially true (you’d think a healthier population would, logically, visit the doctor less) the part that is apparently missed when touting this popular panacea is the cost of making the population healthier (and the fact that the assumption of less visits isn’t necessarily true) doesn’t cost less – it costs more:

If health care providers can prevent or delay conditions like heart disease and diabetes, the logic goes, the nation won’t have to pay for so many expensive hospital procedures.

The problem, as lawmakers are discovering to their frustration, is that the logic is wrong. Preventive care — at least the sort delivered by doctors — doesn’t save money, experts say. It costs money.

That’s old news to the analysts at the Congressional Budget Office, who have told senators on the Health, Education, Labor and Pensions Committee that it cannot score most preventive-care proposals as saving money.

So with that myth blown to hell, we’re now looking at a government plan which will add cost to the deficit by subsidizing the insurance of 47 million and (most likely) many more, plus a plan to use a more costly form of medicine as its primary means of giving care.

But, back to the entitlement report – or warning. The CBO says that unless entitlements are drastically reformed (that means Medicare, Medicaid and to a lesser extent, Social Security) we’re in deep deficit doodoo:

The most frightening findings in this report are the deficit and debt projections. In this year and next year, the yearly budget shortfall, or deficit, will be the largest post-war deficits on record–exceeding 11 percent of the economy or gross domestic product (GDP)–and by 2080 it will reach 17.8 percent of GDP.

The national debt, which is the sum of all past deficits, will escalate even faster. Since 1962, debt has averaged 36 percent of GDP, but it will reach 60 percent, nearly double the average, by next year and will exceed 100 percent of the economy by 2042. Put another way, in about 30 years, for every $1 each American citizen and business earns or produces, the government will be an equivalent $1 in debt. By 2083, debt figures will surpass an astounding 306 percent of GDP.

The report also finds high overall growth in the government as a share of the economy and of taxpayers’ wallets that provides an additional area of concern. While total government spending has hovered around 20 percent of the economy since the 1960s, it has jumped by a quarter to 25 percent in 2009 alone and will exceed 32 percent by 2083. Taxes, which have averaged at 18.3 percent of GDP, will reach unprecedented levels of 26 percent by 2083. Never in American history have spending and tax levels been that high.

Here’s the important point to be made – these projections do not include cap-and-trade or health care reform.

Got that? We’re looking at the “highest spending and tax levels” in our history without either of those huge tax and spend programs now being considered included in the numbers above. Total government spending, as a percent of GDP is now at an unprecedented 25%. And they’re trying to add more while this president, who is right in the middle of it, tells us we can’t keep this deficit spending up forever.

Fair warning.

~McQ


Questions and Observations #2

For new readers the title is that for which the shortened “QandO” stands. This is the second in a series of questions and observations.

  • In the “you can’t make this up” department, China will block the sale of Hummer for “environmental concerns”.  I guess that’s their nod to the rest of the world after flatly refusing cut CO2 emissions in the future.
  • Ezra Klein is suddenly for smaller government, specifically the elimination of the Agriculture Committee. Of course the only reason he’d like to see it given the deep 6 is because it has, in Klein’s opinion, badly weakened cap-and-trade by extracting “a truly mind-boggling array of tax breaks, exemptions, and straight subsidies”. I guess Klein would like to temporarily make government smaller to make it larger.
  • Yes, Michael Jackson is dead – but for heaven sake, do we have to devote every minute of the news day to running “Thriller” vid and spreading rumors about the possible cause of his death? Is this what “news” organizations have become?
  • Apparently we’re still stalking the North Korean ship enroute to either Singapore or Burma. For those who are waiting for us to confront it and board it, that’s not going to happen. The “tough” UN resolution only provides for boarding if the North Koreans agree. And, while we can demand that they then go to the nearest port for inspection, the North Koreans can refuse that as well. The plan, it seems, is to convince the refueling port the NoKos pull into to refuse to refuel the ship. Then, when the NoKo ship runs out of fuel, put it under tow and then inspect it. As I understand it – they can then inspect it legitimately. Amazing.
  • Waxman-Markey, aka cap-and-trade, survived an earlier test vote that moved the bill to the floor for a 5pm vote. As I recall the margin was 5 votes. It is a job destroyer in the middle of a recession. The Center for Data Analysis of the Heritage Foundation figures it will cost 50,000 jobs in the transportation equipment sector alone. Their data for other sectors is available here.
  • House liberals have staked out a bit of ground on the health care bill saying they will not vote for it if it doesn’t include a public option – period. That is actually good news as the public option does seem to be in trouble. Any bill showing up without it will most likely not get the 80 members of the Congressional Progressive Caucus to vote for it. Add in the Republicans and the Blue Dogs, and it may be in very serious trouble without just the sticker shock of 1 to 3 trillion dollars of cost.
  • Mark Sanford? He should resign. The affair is between he and his family. He should resign because he was derelict in his duty and he misappropriated government funds to pay for his trip to Argentina.  Kinda like Bill Clinton should have resigned, not for the affair, but for lying under oath to a grand jury and attempting to obstruct justice.

~McQ


Will Waxman-Markey Inspire A Trade War?

Apparently it will according to some who have actually beaten their way through the entire bill and read the contents:

The Ways and Means Committee’s proposed bill language (pdf) would virtually require that the president impose an import tariff on any country that fails to clamp down on greenhouse gas emissions.

Of course in this full bore onslaught of major life changing legislation which the Democrats seem determined to push through the Congress as quickly as they can (citing the imminent crisis it will foment if they don’t), this issue seems to be lost in the shuffle:

“This is a sleeper issue that lawmakers have not been paying enough attention to,” said Jake Colvin, vice president for global trade issues at the National Foreign Trade Council, which represents multinational corporations like Boeing Co. and Microsoft Corp. advocating for an open international trading system.

“The danger is, you focus so much on leveling the playing field for U.S. firms, that you neglect the potentially serious consequences that this could have on the international trading system,” Colvin said.

Ya think?

Nancy Peolosi is aiming for a vote in the House this Friday, before the July 4th recess. That obviously will mean very, very limited debate, if any. As NRO notes:

Not content to tempt political fate by imposing huge carbon taxes on the American middle class, Democrats have added a provision which imposes stiff tariffs on our trading partners if they don’t adopt aggressive carbon restrictions of their own.

You heard correctly: progressives have authored a bill that earns the mortal enmity of domestic energy consumers and our most crucial trading partners at the same time. Economy-killing climate policies and a trade war — together at last!

The devil is in the details:

Leaks from Hill offices indicate that the president would now be forced to impose the carbon tariffs — and could only opt out of doing so with permission from both chambers of Congress. Carbon-intensive imports would be subject to penalties at the border unless the country of origin requires emission reduction measures at least 80 percent as costly as ours. (The original Waxman-Markey bill had a threshold of 60 percent.)

Brilliant. Of course, some are going to argue that such measures surely will not be in the Senate version and not survive the reconciliation process when the two versions are merged. With this Congress I wouldn’t bet the farm on that.

There’s some talk that the blue dogs are going to oppose this bill. Obviously you would expect the GOP to oppose it as well. Are there enough other Dems to oppose so as to defeat it? Pelosi may not be the sharpest knife in the drawer when it comes to many things, but over the years she has learned to count votes I’m sure.

Bottom line: this bill is an economy killer, plain and simple. But it is also a progressive wet-dream shared by Pelosi. She is going to do everything in her power to push it through the House.

~McQ


Cap and Trade – The Plan to Raise Gasoline Prices

And apparently force you into those electric cars the government is dumping all that money into.

According to API president Jack Gerard, in a letter he sent to members of Congress, the plan included in Waxman-Markey is pretty darn clear:

The legislation will drive up individual and commercial consumer’s fuel prices because it inequitably distributes free emissions “allowances” to various sectors.  Electricity suppliers are responsible for about 40% of the emissions covered by the bill and receive approximately 44% of the allowances – specifically to protect power consumers from price increases.  However the bill holds refiners responsible for their own emissions plus the emissions from the use of petroleum products.  In total refiners are responsible for 44% of all covered emissions, yet the legislation grants them only 2% of the free allowances.

Upon reading that I assume anyone with the IQ of warm toast can see where that is headed. It is a targeted tax on oil and gas which will be passed on to the consumer in just about every conceivable way possible. Both at the pump and in the cost increases rolled into products we buy due to increased transportation costs, etc.

Electricity, however, whose coal plants are supposedly one of the primary producers of CO2 and very much responsible for the emissions problems we supposedly have get a pass. Does that even begin to hint that this legislation isn’t just about controlling CO2 emissions?

In fact, it shouts it out fairly clearly doesn’t it. Keep the proles happy by ensuring their power to the house is subsidized and stick it to them at the pump where government (who now has a stake in the game) wants consumers buying “green” cars. Don’t you just love it when a plan begins to come together?

Moving on, Gerard’s letter lays out some sobering numbers:

This places a disproportionate burden on all consumers of gasoline, diesel fuel, heating oil, jet fuel, propane and other petroleum products. An analysis of the Congressional Budget Office Report indicates that it could add as much as 77 cents to a gallon of gasoline over the next decade. And, according to the Heritage Foundation this legislation could cause gas prices to jump 74% by 2035. That means, at today’s prices, gasoline would be well over $4 a gallon.

Of course by 2035 we’ll all be riding around in vehicles powered by uincorn methane. And everyone knows that unicorn methane is nontoxic, environmentally friendly, smells good and is eco friendly.

That said, there is the cap and trade plan as it pertains to one vital segment of our economy in all its simple glory. It will force you to pay outrageous prices to use petroleum products in order to move you to the desired, but not yet available, means of conveyance. In the meantime, and until it is available, you’ll just have to suffer with the cost increases.  Also remember that government estimates of cost are notoriously conservative and the real cost of such legislation is likely to be much higher than anticipated.

And don’t laugh too hard when they try to sell that to you by saying they’re attempting to save the planet. They’re exempting coal fired power plants for heaven sake. Trust me, this isn’t about emissions. If it were, they wouldn’t treat natural gas the way they do in the legislation as the letter points out.

After all, they’re the government and they’re there to help.

~McQ