Free Markets, Free People

Government


Where the money goes

Once again, it’s time to look at the state of the Federal budget, and get our heads around how well—or badly—we’re doing as a republic. The short answer is…not well. Let’s take a look at a simple chart of the last full year of federal spending and receipts, which is Fiscal Year 2012. The chart is clickable, so you can see a full-sized version.

2012 Federal Budget

We spent $3,795.55 billion, while taking in $2,469 billion in taxes and receipts. That gave us a deficit for the year of $1.326.55 billion.

Much of the spending is required by law. Mandatory spending includes Social Security, Medicare, Medicaid, and retirement benefits for the military and federal workers. In addition, interest on the national debt of $227.73 billion must also be paid, by law. Overall, $2543.51 billion in spending was legally required. That’s 67% of all federal spending.

Keen observers will note that revenues of $2,469 billion do not cover that amount of mandatory spending. So, we missed being able to pay for required spending alone by by $74.51 billion. Essentially, we borrowed money to pay one-third of the interest on the money we’ve already borrowed.

Actually, we’re pretty lucky when it comes to the whole interest payments deal, because the average interest rate on the debt is hovering at around 2%.  Every additional percentage point in that interest rate translates to about $115 billion dollars in additional interest charges every year. If interest rates were to rise to the historical average of 6%, that would add about $575 billion per year to cost of servicing the debt. That would raise the annual debt service costs from $228 billion to $803 billion. That’s about $44 billion more than we currently pay for defense. So, let’s hope for a weak, struggling economy, right? Gotta keep those interest rates at historical lows.

Anyway, the remaining spending is all discretionary, so, we chose to spend another $1,252.53 billion in discretionary spending. $759.11 billion was spent on killing foreigners. Everything else the Federal Government does—all of the executive departments, science and medical research, the Judicial branch, and giving money to heathen foreigners to try and make them our friends—cost us $492.42 billion. Giving money to the heathen foreigners—also known as foreign aid—accounted for about $38 billion for the year, or 1% of federal spending.

So, what can we extrapolate about the future? Well, we know that, even if interest rates stay steady, mandatory spending on entitlements will rise as the huge population bolus that is the Baby Boom generation begin retiring. Without either significant new taxes and/or significant entitlement cuts, re. That means that, in the not-too-distant future, revenues will not cover even the cost of mandatory entitlement spending.

We can—and probably will—ameliorate this by slashing defense. It’s what the Europeans have done, after all. There’s this huge chunk of money that goes to defense, and it gives us a defense budget larger than the defense budgets of the next 19 largest nations combined. Obviously, we will be told, we’re acting like a bunch of paranoid maniacs, so we can cut defense by at least half, and still have a huge defense establishment in world terms. So, we got that going for us.

So, that’s the situation for FY 2012. In a couple of months, we’ll get a final accounting of FY 2013, and we’ll see where we stand. Revenues were significantly higher in 2013, and spending growth doesn’t appear to have kept pace, so the deficit probably fell to somewhere in the vicinity of $800 billion.

That’s progress, I guess, though one year does not make a trend. Let’s see how much Obamacare is gonna cost us next year, assuming it isn’t delayed because of all the fail.

Anyway, please feel free to show this spending chart to your ignorant friends.

UPDATE: Here’s a more detailed look at federal spending in 2012 by government function:

Government Function Amount (billions)
Social Security $778.574
National Defense $716.300
Income Security $579.578
Medicare $484.486
Health $361.625
Net Interest $224.784
Education, Training, Employment and Social Services $139.212
Veterans Benefits and Services $129.605
Transportation $102.552
Commerce and Housing Credit $79.624
Administration of Justice $62.016
International Affairs $56.252
Natural Resources and Environment $42.829
General Government $31.763
Community and Regional Development $31.685
General Science, Space and Technology $30.991
Energy $23.270
Agriculture $19.173
Allowances $0.125
Undistributed Offsetting Receipts $-98.897
TOTAL $3,795.547

These are total spending amounts by function, and include both mandatory and discretionary spending in each line item.


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ObamaCare – let the race to the bottom begin

Doctors in New York aren’t particularly happy about ObamaCare:

New York doctors are feeling queasy about ObamaCare — and many won’t participate in the new national insurance program because they fear they’ll go broke, The Post has learned.

“ObamaCare is going to send me more patients to see and then cut the payments to provide the care — that’s what’s going to happen,” predicted Donald Moore, a primary-care doctor in Prospect Heights, Brooklyn. “I will not accept it.”

Moore claims that President Obama made a big mistake by requiring uninsured residents to obtain medical coverage from for-profit insurers through the ObamaCare health exchanges instead of through public health programs like Medicaid.

Under tremendous pressure to keep costs down and profits up, Moore said he’s concerned that commercial insurers will pay doctors less for patient visits and services than either Medicaid or Medicare.

Many doctors, he argues, won’t be able to cover their costs with such skimpy fees.

Moore scoffed, “Who’s going to sustain the losses? The insurance companies? It’s basically going to be a race to the bottom.”

No kidding.  And that’s precisely what was predicted here long ago.  Just because you have insurance doesn’t mean a doctor is going to take you on as a patient.  Result?  The same solution – packed and overcrowded emergency rooms.  Hospitals going broke treating everyone who comes through the door on the pittance their insurer pays for the treatment.

And how do doctors feel about the beginning of ObamaCare?  Well they’re not sure at all how it works:

Despite a much publicized rollout, many other doctors said they haven’t decided whether to become ObamaCare providers, because they haven’t been notified by insurers or the state about ­reimbursement rates.

“I have not spoken with anyone who has made a decision to participate in the exchanges. We simply don’t have any information about which we can make a decision,” said Dr. Paul Orloff, president of the New York County Medical Society.

“We have no idea what the reimbursements will be or what the claims-form process will entail.”

Until they are, why would any sane medical practice take on new patients?

Finally:

The Medical Society of New York State is conducting a survey of doctor concerns about the program and asking whether they will accept patients who buy policies.

“There’s a real question about how many doctors will participate. Doctors are concerned about being left holding the bag,” said Sam Unterricht, an ophthalmologist and the president of the state medical society.

The clumsy launch of ObamaCare in New York and elsewhere — with computer glitches and sketchy information — worries the medical community, he said.

“It’s really shaky right now,” Unterricht said.

Spooked about the payments they’ll receive under ObamaCare, other doctors said they’ve stopped hiring staff for their medical practices.

“I’m apprehensive. I’m certainly not hiring anyone new,” said James Reilly, an obstetrician who has delivered 4,000 babies and heads the Richmond County Medical Society.

“We want to see the impact on the bottom line,” said Reilly, who has a 12-member staff and pays a hefty $200,000 annual medical-malpractice insurance premium.

Yes, the enthusiasm for the new system is, well, overwhelming, isn’t it?  Of course they want to see the impact on the bottom line – they’re small business owners.  Government is involved in price fixing and they’d like to see if they can live with the fixed price or not.  If any other entity was involved in doing what the government is involved in here, they’d have been arrested.

But hey, when government decides it can make legal for itself what is illegal for you (consider the lottery, for instance) then you know you’re on the fast road to total decline.  The sign posts are whipping by so fast, no one can even read them anymore.

~McQ


Well goodie – no more debt ceiling – at least till February

In a brilliant move, the GOP has managed to not only be unable to impose the debt ceiling, it has apparently found a way to capitulate and make it temporarily unlimited:

There’s no actual debt ceiling right now.

The fiscal deal passed by Congress on Wednesday evening to re-open the government and get around the $16.4 trillion limit on borrowing doesn’t actually increase the debt limit. It just temporarily suspends enforcement of it.

That means Americans have no idea how much debt their government is going to rack up between now and February 7, when the limits are supposed to go back into place and will have to be raised.

17 days for this?

Really?

And they wonder why people call them the “stupid party”.

~McQ


ObamaCare: Patience is not an American virtue

Experts tell you that you have about 2 seconds to have your webpage download (or at least begin to download) or the person who clicked the link is likely to move on.  We Americans are not a patient people.

So how has that impacted the ObamaCare debacle?  Well, since the disastrous launch of the exchanges, there’s been a huge drop off in attempts:

The number of visitors to the federal government’s HealthCare.gov Web site plummeted 88 percent between Oct. 1 and Oct. 13, according to a new analysis of America’s online use, while less than half of 1 percent of the site’s visitors successfully enrolled for health insurance the first week. …

Based on a sample of two million users — or 1 percent of all online users in the U.S. — which Millward Brown Digital has permission to track, it suggests that the rush of traffic administration officials cited as the cause of the site’s problems trailed off within a matter of days.

Of the 9.4 million unique visitors to the site during the launch’s first week, according to the analysis, roughly a third attempted to register, and a third of that number — 1.01 million — completed registration. Ultimately, roughly 36,000 Americans signed up for an insurance plan online, the report said.

Not that I’m upset, but 36,000 out of 9.4 million is just incomprehensible incompetence at work.

Yet Kathleen Sebelius still has the “full confidence” of the other incompetent in office – one Barack Obama.  No surprise there.  No accountability either.

Meanwhile for those that do manage to get through, sticker shock is sure to await them.

~McQ


Is prosperity about to become a thing of the past?

You tell me.  Robert Samuelson:

The presumption of strong economic growth supported the spirit and organizational structures of postwar America.

Everyday life was transformed. Credit cards, home equity loans, 30-year mortgages, student loans and long-term auto loans (more than 2 years) became common. In 1955, household debt was 49 percent of Americans’ disposable income; by 2007, it was 137 percent. Government moved from the military-industrial complex to the welfare state. In 1955, defense spending was 62 percent of federal outlays, and spending on “human resources” (the welfare state) was 22 percent. By 2012, the figures were reversed; welfare was 66 percent, defense 19 percent. Medicare, Medicaid, food stamps, Pell grants and Social Security’s disability program are all postwar creations.

Slow economic growth now imperils this postwar order. Credit standards have tightened, and more Americans are leery of borrowing. Government spending — boosted by an aging population eligible for Social Security and Medicare — has outrun our willingness to be taxed. The mismatch is the basic cause of “structural” budget deficits and, by extension, today’s strife over the debt ceiling and the government “shutdown.”

You know, we keep saying this is “unsustainable”, yet we keep refusing to face the problem head on and do anything about it.

This little bit of political theater isn’t going to change that and we all know it.  The last paragraph identifies the problem.  What apparently isn’t understood, though, is government is not the solution.  And big government simply makes the problem worse because it sucks down more and more of the GDP.

The solution is both painful and difficult.  And, of course, no one wants to face that fact, certainly not any politician.

So the can gets kicked down the road – as you know it will before any of this ever begins.  None of the politicians want to be “the ones” in power when all of this collapses.

For whatever reason, after WWII, we decided to change the purpose of government from “night watchman” to “Santa Claus”.  Maybe it was the horror of war.  Maybe it was the huge surge in post-war prosperity, but like the story of the goose that laid the golden eggs, we’re about to kill the goose.

So what does that mean?

As economist Stephen D. King writes in his book “When the Money Runs Out: The End of Western Affluence”:

“Our societies are not geared for a world of very low growth. Our attachment to the Enlightenment idea of ongoing progress — a reflection of persistent postwar economic success — has left us with little knowledge or understanding of worlds in which rising prosperity is no longer guaranteed.”

And that fact alone makes any recovery from this mess even less likely.  We’ve been able to stumble along and put off the inevitable because we have managed to have “persistent postwar economic success”.  But if you look at economic projections for the future, they don’t show the historical growth that America has enjoyed since the ’50s.  They show European type “growth”.  They show slow growth as the “new normal”.   Why?

Lindsey attributes U.S. economic growth to four factors: (a) greater labor-force participation, mainly by women; (b) better-educated workers, as reflected in increased high-school and college graduation rates; (c) more invested capital per worker (that’s machines and computers); and (d) technological and organizational innovation. The trouble, he writes, is that “all growth components have fallen off simultaneously.”

As it seems now, Greece is our future.  Nothing, politically, is going to be done about it, despite the current political theater.  Neither the politicians nor the citizens want to face reality.  And as it is shaping up, it isn’t a matter of “if”, but “when” it all folds in on itself like a wet cardboard box.

~McQ


The dirty little secret of the ObamaCare scam

Remember, it’s called the “Affordable Care Act” officially, but in reality, it is anything but that.   The purported purpose of the act was to provide a means for people and families to buy affordable health insurance if they weren’t insured.  But, in fact, reality is proving this to be the usual smoke and mirrors government usually manages to produce.   Not only is the insurance more expensive in many cases, it has a higher deductible as well.  From the Chicago Trib.

Adam Weldzius, a nurse practitioner, considers himself better informed than most when it comes to the inner workings of health insurance. But even he wasn’t prepared for the pocketbook hit he’ll face next year under President Barack Obama’s health care overhaul.

If the 33-year-old single father wants the same level of coverage next year as what he has now with the same insurer and the same network of doctors and hospitals, his monthly premium of $233 will more than double. If he wants to keep his monthly payments in check, the Carpentersville resident is looking at an annual deductible for himself and his 7-year-old daughter of $12,700, a more than threefold increase from $3,500 today.

“I believe everybody should be able to have health insurance, but at the same time, I’m being penalized. And for what?” said Weldzius, who is not offered insurance through his employer. “For someone who’s always had insurance, who’s always taken care of myself, now I have to change my plan?”

Do a little math. You are someone who hasn’t been able to afford health insurance in the past. The $1,000 a month you had to pay for your family is unaffordable. So you opt into this system assuming the premium will be lower (Well, you don’t “opt” in, you are required to enroll and pay). And to your joy, it is. Only $500 a month, something you can barely afford, but at last you have insurance.

But wait, there’s more:

To promote the Oct. 1 debut of the exchanges, the online marketplaces where consumers can shop and buy insurance, Obama administration and Illinois officials touted the lower-than-expected monthly premiums that would make insurance more affordable for millions of Americans. But a Tribune analysis shows that 21 of the 22 lowest-priced plans offered on the Illinois health insurance exchange for Cook County have annual deductibles of more than $4,000 for an individual and $8,000 for family coverage.

Those deductibles, which represent the out-of-pocket money consumers must spend on health care before most insurance benefits kick in, are higher than what many consumers expected or may be able to stomach, benefit experts said.

By comparison, people who buy health insurance through their employer have an average individual deductible of just more than $1,100, according to the Kaiser Family Foundation.

An $8,000 family deductible.  So instead of paying $13,100 a year for family coverage that you couldn’t afford (along with a $1,100 deductible you might have been able to struggle through)  you get to pay $14,000 (including deductible) before the insurance you have begins to kick in.

What a deal.  And that, of course, assumes that you can find a doctor that will take your insurance.  Of course that likely won’t matter since unless you have a health care emergency over $14,000 you’re going to be paying cash anyway.

Oh, and don’t even think about saying “screw it” unless you want the IRS on your rear end.

Haven’t enrolled yet?  Get on it, dude.  And good luck (you may up having to pay the penalty anyway because you can’t find a way to enroll):

CNN senior medical correspondent Elizabeth Cohen has been trying for two weeks to sign up for ObamaCare.

Unfortunately as she reported on Monday’s New Day, despite trying for fourteen days including at hours that were claimed to be “off peak,” she still hasn’t been able to establish an account.

~McQ


I’m pretty sure this is illegal

A tour group to Yellowstone Park was in the midst of their tour when the government shutdown occurred. Apparently, there was some nastiness. They were sent to the Old Faithful Inn at Yellowstone, and, as near as I can tell, illegally imprisoned.

The seniors quickly filed back onboard and the bus went to the Old Faithful Inn, the park’s premier lodge located adjacent to the park’s most famous site, Old Faithful geyser. That was as close as they could get to the famous site — barricades were erected around Old Faithful, and the seniors were locked inside the hotel, where armed rangers stayed at the door.

“They looked like Hulk Hogans, armed. They told us you can’t go outside,” she said. “Some of the Asians who were on the tour said, ‘Oh my God, are we under arrest?’ They felt like they were criminals.”

Well, they certainly seem to have been treated like criminals. They were lawfully present in the Park when the Park Service closed it, they were rounded up and sent to a park facility where they were required to remain indoors under armed guard, for two days. I’m no lawyer, but I’m pretty sure that constitutes a case of false imprisonment, to wit, the “illegal confinement of one individual against his or her will by another individual in such a manner as to violate the confined individual’s right to be free from restraint of movement.” If so, since the Park Rangers were acting in their official capacity, this should also constitute the crime of violating civil rights under the color of authority. I suspect that if I had been in that group, I would be in jail right now for openly defying the Park Rangers.

If these people don’t launch a massive lawsuit against the government, then they’re fools.

Frankly, I’m beginning to suspect the Second Amendment has some other purpose than protecting our right to hunt.


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Debt accumulation for the past 2 years higher than GDP

I’d like to say this is astonishing, and it would be if a Republican was in the White House because our press would make it so.  But with Obama? Meh:

“President Obama said that increasing the debt limit does not increase the debt,” the minority side of the Senate Budget Committee says in a statement. “But when the Treasury department started using so-called extraordinary measures to avoid a breach of the debt ceiling in May, 2011, the debt limit stood at $14,294 billion.

“Today it stands at $16,699 billion, which was reached when Treasury started using extraordinary measures in May of this year.  That’s a $2,405 billion increase in 2 years.

“Meanwhile, the economy, as measured by GDP only increased by $1,199 billion between the second quarter of 2011 and the second quarter of this year.

“So the debt increased twice as much as the economy over the last two years, the very definition of unsustainable.  The growth of a nation’s debt cannot for long exceed the growth of its economy – which is precisely what is happening now.”

Ya think?!

If you need a picture, try this:

And, of course, they’re asking for more.  So here’s the question: If we give them more, what will they want next?   Answer: Why more, of course.

So at some point, you have to say “no” don’t you?

Well common sense says you do, but apparently for this crowd, that sense isn’t at all that common.

So we do the circus thing, year after year after year and we build charts like this?

Hell, that’s the chart of a 3rd world country.

And the word that should be plaster across the top of it is “unsustainable”.

Meanwhile, in DC, they continue to wrangle over more debt.

~McQ


Poll: GOP gets most of the blame for shutdown, but Obama approval dips to 37%

Not that I care, particularly, who gets the blame in all of this.  Frankly I’m with the “a pox on both your houses” group that finds the entire Congress and the President to be equally at blame.  But then there’s the “I’m fine with the shutdown and it is important for the GOP to make the spending point” that finds me mostly on the GOP’s side.

Look, we’ve seen the government shutdown before.  And despite all the scare rhetoric, we’re not going to default on our debt.  Nope, this is about how inconvenient this bunch who continues to want to run up debt can make this shutdown seem to the voters.  The idea, obviously, is to have them screaming and whining enough to push the GOP into their usual position – the dying cockroach, where they give in and let the Democrats have their way.  Result?  The usual – more spending and more debt.

Anyway, to the AP poll:

The Associated Press-GfK survey, out Wednesday, affirms expectations by many in Washington — Republicans among them — that the GOP may end up taking the biggest hit in public opinion from the fiscal paralysis, just as that party did when much of the government closed 17 years ago. But the situation is fluid nine days into the shutdown and there’s plenty of disdain to go around.

Overall, 62 percent mainly blamed Republicans for the shutdown. About half said Obama or the Democrats in Congress bear much responsibility.

“About half” blame the Dems and Obama. Yet, Obama’s approval ratings drop by 10 points from his previous low of 47%. Hmmm. Must be more to it than “about half”, huh?

But the media spin machine prefers to lay it on the GOP.

As for ginning up support to pressure the GOP to cave, there’s still a ways to go:

More than 4 in 5 respondents felt no personal impact from the shutdown. For those who did, thwarted vacations to national parks, difficulty getting work done without federal contacts at their desks and hitches in government benefits were among the complaints.

And the “impact” with the worst optics (and mostly blamed on the administration)?  The Gestapo like tactics of the Park police and the “Barrycades” at national monuments and parks.

More results:

— Sixty-eight percent said the shutdown is a major problem for the country, including majorities of Republicans (58 percent), Democrats (82 percent) and independents (57 percent).

— Fifty-two percent said Obama is not doing enough to cooperate with Republicans to end the shutdown; 63 percent say Republicans aren’t doing enough to cooperate with him.

— Republicans are split on just how much cooperation they want. Among those who do not back the tea party, fully 48 percent say their party should be doing more with Obama to find a solution. But only 15 percent of tea-party Republicans want that outreach. The vast majority of them say GOP leaders are doing what they should with the president, or should do even less with him.

— People seem conflicted or confused about the showdown over the debt limit. Six in 10 predict an economic crisis if the government’s ability to borrow isn’t renewed later this month with an increase in the debt limit — an expectation widely shared by economists. Yet only 30 percent say they support raising the limit; 46 percent were neutral on the question.

I didn’t look into the numbers on the poll, but I’d bet it is a bit Democrat heavy.  That said, it’s interesting that a majority within that poll said Obama isn’t cooperating enough.  That’s right, that’s over half.  Somehow that’s buried in all of this (and yeah, that’s not just ‘about half’, that’s over half).

And the real story within the poll:

Most Americans disapprove of the way Obama is handling his job, the poll suggests, with 53 percent unhappy with his performance and 37 percent approving of it.

The point?

It seems to me the “blame” is pretty evenly divided.  I guess you can claim the GOP is getting most of it, but when you see an already low presidential approval rating drop by 10 point in the matter of a couple of weeks right in the middle of this nonsense, it’s hard to claim that 53% of the voters aren’t blaming the President.

However, if your messaging is directed toward blaming the GOP, well, you just sort of bury that in the story.

~McQ


Competence, incompetence and the Obama administration

USA Today nails it:

President Obama’s chief technology adviser, Todd Park, blames the unexpectedly large numbers of people who flocked to Healthcare.gov and state websites. “Take away the volume and it works,” he told USA TODAY’s Tim Mullaney.

That’s like saying that except for the torrential rain, it’s a really nice day. Was Park not listening to the administration’s daily weather report predicting Obamacare’s popularity?

Park said the administration expected 50,000 to 60,000 simultaneous users. It got 250,000. Compare that with the similarly rocky debut seven years ago of exchanges to obtain Medicare drug coverage. The Bush administration projected 20,000 simultaneous users and built capacity for 150,000.

That’s the difference between competence and incompetence.

Yup … and all we’ve seen, for years with this current administration, is exercises in incompetence.

I remember when the word of the day for Democrats during the Bush years was “incompetence”.  They had to work very hard to try to sell it.

Well, the sales job now would be a walk in the park.  Except the parks are closed.

Incompetence – look in the dictionary and you’ll see this administration depicted.

Worst. Governance. Ever.

And that covers a lot of territory.

~McQ