Monthly Archives: March 2010
And yes, if you’re wondering, I’m being highly facetious with the title.
But that’s the growing consensus among our political leadership – at least that brand of it which believes such taxes are actually paid by the institutions themselves. And you have to love the reasoning:
The U.S. and European governments are moving toward a consensus on taxing large banks to cover the cost of any future bailouts rather than asking taxpayers to foot the bill, as happened regularly in past banking crises.
The tax proposals vary. Germany and Sweden would use the money to fund a “resolution authority” that would use the money to shut troubled banks whose failure would put the broader economy at risk. Others, such as France, would assess the fee after a crisis passed.
What’s wrong with that, you say? Well anyone – if you’re going to be bailed out and you know it, where the aversion to risk come from? Why not play with other people’s money a little more if there’s no death penalty for doing so? If you are a assured a fail-safe position, why not go for broke?
It seems to provide a perverse incentive to do exactly what you don’t want to see happen.
Our leadership is split on how they should approach it. I bet it doesn’t take you much time to figure out what part of the leadership sides with France’s concept and which would like to see an ongoing tax fund. You’re right, the administration wants to see assessments made after the fact and the Congress prefers a slush fund they can plunder an ongoing fund established (Unsurprisingly Ezra Klein of juicebox mafia fame finds this the most satisfying solution of the two).
Either way, it’s going to cost you money.
And instead of leaving the banks with the threat of punishment by the market for stupid risks (failure), they’ll collect money from you in the form of higher fees and other costs and pass them on to the government so it can subsidize their bad behavior and then wonder why its regulations didn’t work.
Oh, wait, we’ve already wondered about that, haven’t we? I know, let’s make even more regulations.
The core problem? It, like health care, remains unaddressed.
Former Federal Reserve Chairman Alan Greenspan said the recent rise in Treasury yields represents a “canary in the mine” that may signal further gains in interest rates.
Higher yields reflect investor concerns over “this huge overhang of federal debt which we have never seen before,” Greenspan said in an interview today on Bloomberg Television’s “Political Capital With Al Hunt.”
“I’m very much concerned about the fiscal situation,” said Greenspan, 84, who headed the central bank from 1987 to 2006. An increase in long-term interest rates “will make the housing recovery very difficult to implement and put a dampening on capital investment as well.”
When investors go to bonds, they’re looking for security. If they want higher risk, stocks are ready when they are. What Greenspan is talking about is this:
The Treasury Department sold $42 billion in 5-year notes on Wednesday at 2.605%, higher than traders had anticipated. Bidders offered to buy 2.55 times the amount debt being sold, the lowest since September. That metric of investor demand also compares to 2.74 times on average at the last four sales of the securities, all for the same amount. Indirect bidders — a class of investors that includes foreign central banks — bought 39.6% of the offering, compared to an average of 49.6% of recent sales and the lowest since July. Direct bidders, including domestic money managers, purchased another 10.8%, versus 9% on average. After the auction, yields remained sharply higher in the broader government-bond market as corporate and other higher-risk debt drew investors away from Treasurys. Yields on 10-year notes, which move inversely to prices, rose 13 basis points to 3.81%.
“I don’t like American politics and what’s happening,” Greenspan said.
Historically, there has been “a large buffer between the level of our federal debt and our capacity to borrow,” he said. “That’s narrowing. And I’m finding it very difficult to look into the future and not worry about that.”
Well join the club – I don’t like what’s happening either. Nor do a whole bunch of other Americans. And a clue to our addled leftist friends – it has nothing to do with the race of our president. Instead it has to do with the ideology that he and Democratic leadership are pursuing to the detriment of the country and its solvency.
Back to the line I italicized in Greenspan’s statement. What does it mean? The obvious – continued economic problems, continued high unemployment and slow expansion. The message? The debt is out of hand, and it isn’t being addressed in any meaningful way.
The Obama Administration is asking for $2.8 billion to help with ongoing disaster efforts in that Caribbean nation, responding to the devastating earthquake that struck Haiti in January.
“This request responds to urgent and essential needs,” wrote President Obama in a letter sent to Congressional leaders last week. “Therefore, I request these proposals be considered as emergency requirements.”
Let me translate that for you: “Therefore, I request that these amount of money needed for these proposals not be paid for, with the cost of the bill simply added to the deficit.”
That’s what “emergency” spending means in the Congress. It doesn’t go on the yearly deficit figure, but it does get added to the overall federal debt.
Now for those who are going to scream, “but Bush did it with the war”, I agree. Yes, he did it. And doing that was wrong. Clear enough? So whether it is for war or relief, it needs to be “on budget” – that’s if all the nonsense for Obama and the Democrats about PAYGO is to be believed.
Last week Democrats in the House approved a $5.1 billion emergency disaster bill to pump more money into FEMA. While there weren’t any pork barrel items attached to that bill, the Democrats did add on a $600 million Summer Youth Jobs initiative, along with $60 million for a small business loan program.
And the $5.1 billion disaster aid had the necessary verbiage to keep it “off budget”.
“EMERGENCY DESIGNATION – SEC. 102. Each amount in this Act is designated as an emergency requirement and necessary to meet emergency needs pursuant to sections 403 and 423(b) of S. Con. Res. 13 (111th Congress), the concurrent resolution on the budget for fiscal year 2010.”
In other words, the cost does not have to be offset.
Unacceptable. Unacceptable when George Bush and the GOP did it. Unacceptable when Barack Obama and the Democrats do it.
They need to understand and be reminded that such avoidance of the PAYGO law requiring new spending be offset by cuts elsewhere is to be followed to the letter. Certainly there may be real emergencies, but the money spent is just as real. If we have emergencies that require immediate spending, then fine – give Congress some time (90? 120 days?) to find the offsets. But this nonsense about whatever they decide to call an “emergency” is off budget – to include wars – has to stop and stop now.
The money spent is real, the debt becomes larger – the fact that politicians pretend it doesn’t add to the deficit is insane and borders on criminal fraud and is certainly no better than Enron accounting.
One of the more persistent myths about the push for universal health care is its provision will solve our medical care problems and improve our overall health. Well there’s one problem with that – medical care depends on the availability of medical care providers, and we have a shortage of those. So while everyone may have insurance, insurance doesn’t guarantee access.
Massachusetts offers a snapshot of how giving more people insurance naturally drives demand. The Massachusetts Medical Society last fall reported just over half of internists and 40 percent of family and general practitioners weren’t accepting new patients, an increase in recent years as the state implemented nearly universal coverage.
The entire push of the new law is to shift the country from seeking care when they’re sick to seeking preventive care to help prevent sickness. That means a shift from primary care physicians who are essentially gate-keepers (to specialists) to primary care physicians as, well, the primary care source for the patient. One problem – primary care physicians only make up 30% of the physician population. Couple the shift in emphasis with the addition of 30 million newly insured and you can do the numbers yourself.
So how is this going to be reversed? Well here’s the plan:
Yet recently published reports predict a shortfall of roughly 40,000 primary care doctors over the next decade, a field losing out to the better pay, better hours and higher profile of many other specialties. Provisions in the new law aim to start reversing that tide, from bonus payments for certain physicians to expanded community health centers that will pick up some of the slack.
Or, in other words, government plans on incentivizing primary care with “bonuses” and essentially deincentivizing specialists. The obvious hope is some specialists will go back to school and become primary care physicians. But there’s a culture at work within the physician community which is going to resist that. The other hope is more will choose primary care in medical school. Again, that cultural hierarchy will, at least initially, resist that. The hoped for result is a flock of primary care physicians and far fewer specialists. Market forces? Ha! And ignore those doctors who aren’t taking any new patients or are dropping out of the insurance game altogether to charge annual fees for unlimited visits and consultation.
Anyway, the grand plan, once this shift begins taking place, is to take a team approach to your care in something you will lovingly call your “medical home”:
Instead of the traditional 10-minutes-with-the-doc-style office, a “medical home” would enhance access with a doctor-led team of nurses, physician assistants and disease educators working together; these teams could see more people while giving extra attention to those who need it most.
I don’t know about you, but that’s pretty much how my care works now. I see a PA. She refers me to my primary care physician only if there’s something out of the ordinary for which his expertise is needed. Otherwise it is the rest of the team that takes care of me. The only thing this law changes is the number of people out there seeking this sort of care as far as I can tell – and oh, yes – this system has been in place with my physician for years. So somehow I’m missing how what they’ve been doing for years has been inadequate, but now that government thinks it is a good idea and it will suddenly take care of all our problems concerning access, and improved care, etc.
Your “medical home” will also include the following. Now I’m a bit of a student of human nature – but this too seems to be a bit of a fantasy:
Rolling out next is a custom Web-based service named My Preventive Care that lets the practice’s patients link to their electronic medical record, answer some lifestyle and risk questions, and receive an individually tailored list of wellness steps to consider.
Say Don’s cholesterol test, scheduled after his yearly checkup, came back borderline high. That new lab result will show up, with discussion of diet, exercise and medication options to lower it in light of his other risk factors. He might try some on his own, or call up the doctor — who also gets an electronic copy — for a more in-depth discussion.
Tell me – if Don is concerned about such things and willing to search out and consider options to help his condition, don’t you reckon he might already be on WebMD or a similar site right now doing that? And if Don isn’t likely to do such a thing, is this “custom Web-based service” likely to entice him to log on and do so?
That’s the whole fallacy behind preventive care – it assumes that if it is offered it will be sought out and its recommendations followed – without exception. The assumption is that Don, who has never followed the advice of his doctor about his cholesterol will suddenly do so because we’ve shifted the emphasis of his care to prevention and provided him access to information.
And, with the shortage of doctors and increased demands on their time, how likely is Don to really get that “in-depth discussion” he wants from his doctor? Yeah, not very. So how likely is Don to get frustrated with all of this and revert to his old and more comfortable (albeit less healthy) lifestyle? Meanwhile, doc has lots of new patients admitted into the “home” that his “team” is trying to deal with preventively or, doc is simply not taking any new patients because he or she can’t spend the time necessary with those already in the practice.
The point? As with most things centrally planned, it sounds good on paper. But such plans tend to discount human nature. They also tend to be overly optimistic. And lastly, they usually underestimate or ignore the true numbers involved in favor of some fantasy result where everything works as planned despite those numbers. That’s what we see here.
As I mentioned on the podcast last night, I’ve quit looking at how Democrats or Republicans react to a particular poll. Their reactions are all too predictable. If the Dems are for something by 86%, the Reps will be against it by 90%. Nothing to learn there. Nope, I pretty much zero in on how the independents feel about a particular issue to try to figure out who has the most support. And as I’ve mentioned, more and more the independents seem to be siding with the GOP. That’s not good news for the Dems, no matter what Chuck Schumer thinks.
That brings us to another key to electoral success. Key demographics. We heard so much made of the “young vote” in 2008. They were a key because they actually turned out for once and voted mostly Democratic. One of the most coveted demographics, however, is that of the elderly – over 65. That’s because they always vote.
So, with that given, let’s take this poll if FL as an example of what’s happening out there. Yes, it’s a temperature check of the citizens of that state at this time. We all recognize it can change. With that disclaimer out of the way, the usefulness of this poll is found in the information about how independents view recent events. It also contains info on the key elderly demographic. For objective observers there are no real surprises.
Florida voters dislike the new healthcare law so much that President Barack Obama and the state’s top Democrat, U.S. Sen. Bill Nelson, are paying a hefty political price, according to a new survey and analysis by Mason-Dixon Polling & Research.
Only 34 percent of Florida voters support the new law while 54 percent are against it, according to the poll. Opposition is significantly strong among two crucial blocs: those older than 65 and voters with no party affiliation. Seniors disfavor the bill by a 65-25 percent margin, while independents oppose the law 62-34.
The poll, conducted last week, is the first to be taken in Florida since Obama signed the healthcare reform bill into law.
If you’re wondering why the president continues to try to sell this thing and why Nancy Pelosi has told Democrats headed out on Easter recess to do the same, this Florida poll gives you a nice indicator. Independents as a whole oppose the bill almost 2 to 1 and elderly independents show the same level of opposition. It certainly doesn’t appear that the president’s umpteen speeches or the assurances of Congress that this bill is wonderful have met with much success. Apparently only the Dems bought into the Bill Clinton assurance that everyone would love them once they passed that law.
Why they think that’s going to change if they just push a little harder, especially with the corporate write-downs in the news, is beyond me (and why is Henry Waxman keeping those write-downs in the news with hearings?).
A couple of other results from the poll to mull:
It shows that Floridians have a more negative than positive view of Obama by a margin of 15 percentage points. And they oppose his so-called “cap-and-trade” global warming legislation as well as the new healthcare law.
Why are FL voters opposed to cap-and-trade?
Only 35 percent believe global warming is proved, while 57 percent say it isn’t an established fact. By a 34-50 percent spread, voters oppose the cap-and-trade legislation. And five times as many voters believe it will raise the cost of fuel.
And I have to say I believe the majority to be correct on all counts.
This has had an effect on the numbers for Democratic Senator Bill Nelson as well. His approval rating has dropped a significant 18 points. His only saving grace is he has until 2012 before he must again run. The bad news may be he’ll be on the same ballot as Obama. As for his sudden unpopularity, this was the reaction of his spokesperson:
“If there’s a dip in the polls, it’s due to this inaccurate and unfair bashing for sticking up for these seniors,” McLaughlin said.
Of course it is – and they’re too dumb to know it, aren’t they Mr. McLaughlin? It is that persistent little thread that I see throughout the Democratic reaction (the dumb rubes are being hornswoggled by the slick Republican pitchmen) to bad poll numbers that indicates they’re still deceiving themselves. The old “it’s not the message, it’s the delivery” fantasy that Dems continue to believe.
In the meantime, the polls continue to tell the same tale, over and over and over again.
Call in number: (718) 664-9614
Yes, friends, it is a call-in show, so do call in.
The new health care law: Unintended consequences already popping up? And, as Chuck Schumer predicts, will this be a winner in November for the Democrats?
US credit: Moody’s is warning of a downgrade in our country’s credit rating if we don’t commit to some pretty drastic changes. Treasury bonds didn’t sell well this week. Meanwhile we’ve enacted a massive new entitlement and Social Security is now officially in the red. What does it all mean?
Fear and anger: Is it real? Is it as real as the Democrats would have you believe?
UPDATE [Dale]: The podcast is available at BlogTalkRadio
And no, I wasn’t asked to put this up. In fact, I knew nothing about this book until I literally discovered it all on my own from a random link referral. The author has no inkling this is coming. Or that I know about the book. However, having read McPhillips for years, I’m sure that it is an excellent read.
Congrats, McP. I look forward to reading it.
Sen. Chuck Schumer (D- Outer Space) has made a prediction that just doesn’t ring true for me.
“I predict that by November those who voted for healthcare will find it an asset and those who voted against it will find it a liability,” Schumer said on NBC’s “Meet the Press.”
Uh, yeah, I don’t think so.
Anyone been following the first effect of this bill? Billions of dollars in new charges against the earnings of businesses who were able, previously, to write off a subisdy and all of health care coverage they paid (for prescription drugs for retirees) that they can no longer do.
Now you’re probably saying, “libertarian dude – I thought you were against all government subsidies”. I am. And there’s nothing different about this. I’m actually rather pleased to see the subsidy ended. However that’s not the point of the post. This development runs counter to two promises the administration and Congress made concerning this bill -a) your coverage wouldn’t change and b) it would cost less.
In fact, given the fact that accounting laws require companies to immediately restate their earnings when the law changes and they take on an increased tax burden. What the likes of AT&T, Deere and Caterpillar are doing is complying. That means a) if you work for AT&T or the others your coverage will change (most likely it will end and they’ll end up on Medicare’s much less generous drug program) and b) it will cost more.
How much more? Well, if you look at the loss Caterpillar will take, it works out to about $1,200 dollars per employee. That 100 million they’re talking about in increased cost has to be made up somewhere. If that’s true about all large companies – even those with union contracts which aren’t ending anytime soon – then that equals one heck of a lot of PO’d pensioners. Certainly not a good sign for those that voted for this, is it?
As I covered previously, Verizon has sent word to its employees that coverage may cost more. That gives the company a couple of choices – it can maintain the level of coverage and raise the price to meet the increased cost, or it can cut benefits to match the present cost. Either way, either a) or b) end up being incorrect.
This has Democrats a little flustered. And Henry Waxman, (D-Odius) has decided that these evil corporations must answer to him for this since all those billions in charges they’re having to take against earning wasn’t the intent of this legislation – so he’s going to have hearings to get to the bottom of this. After all, according to Waxman, in the letter he sent to these businessmen their findings just can’t be right (I mean, face it, these businesses want to take a hit against earnings of billions of dollars just to show the Dems up, huh?):
“They also appear to conflict with independent analyses. … The Business Roundtable, an association of chief executive officers from leading U.S. companies, asserted in November 2009 that health care reform could reduce predicted health insurance cost trends for businesses by more than $3,000 per employee over the next 10 years…”
You’ve got to love it – Waxman’s strongest case is an association comprised of some CEOs who “asserted” – got that? “asserted” – that health care reform “could” – again, “could” – reduce cost trends.
In other words, instead of actually doing the work of checking with authoratative sources that could have actually run the numbers and vetted the requirements of the law, he, Waxman, went with the assertions of a bunch of CEOs because they said what he wanted them to say. Reminds you a bit of the IPCC, doesn’t it?
Another entity with a bit more credibility has actually taken a look at the law and its impact and come up with this interpretation:
The Employee Benefit Research Institute says this exclusion—equal to 28% of the cost of a drug plan—will run taxpayers $665 per person next year, while the same Medicare coverage would cost $1,209.
In a $5.4 billion revenue grab, Democrats decided that this $665 fillip should be subject to the ordinary corporate income tax of 35%. Most consulting firms and independent analysts say the higher costs will induce some companies to drop drug coverage, which could affect about five million retirees and 3,500 businesses.
And that brings us back to Schumer. Why does Schumer think that it will be all unicorns and rainbows for those who voted for this monstrosity?
“It’s going to become more popular and here’s why,” Schumer said. “The lies that have been spread, they vanish because you see what’s in the bill.”
“The No. 1 lie that bothers people is that you’ll lose your insurance if you have it now and are pretty happy with it,” Schumer said.
Yeah, well, so far, not so good on that front, huh Chuck?
And fyi – polls aren’t supporting the Schumer claim either. Most are running against the bill. The one mentioned in the article with the Schumer quotes has it 50-46 against. My guess is that was before the news broke about the charge offs and the effect on pensions.
But hey, it’s all theirs now and they can whistle past the graveyard if they want too – it’s not going to change what happens in November one bit.
Premise: The federal state, via the Constitution, claims the ability to require via mandate (and penalties if the mandate isn’t obeyed) that individuals buy a specific product from private companies. That’s the premise at work in this new health care refom law.
Question: If that premise is upheld, what can’t the federal state require an individual to obtain/purchase if it so commands by law?
Discussion: I’m leaving it up to you to carry on this discussion. I’m of the opinion that the ability of the federal government to mandate such behavior is unconstitutional and will eventually be found to be so. But if it isn’t, then I’ll have to back off my previous statement that this law isn’t a “fundamental change in the relationship between the federal state and the individual” and instead simply an expansion of what has gone on previously. If upheld, it would be a fundamental change – and not one for the better.
Charles Krauthammer seems to think so. Looking down the road, with trillions and trillions of dollars in deficit spending by government building the debt to unprecedented heights, common sense says we, as a country, have got to either cut spending drastically, increase taxes drastically or a combination of both. But the word “drastically” remains common to any solution. Krauthammer describes a national sales tax as a VAT (a VAT isn’t the same as a national sales tax, but for the purposes of this discussion, understand that’s what he’s actually talking about – a consumption tax). He calls it the “ultimate cash cow” and Democrats are hungrily eyeing it – in fact they’re hungrily eyeing every potential revenue source. When Nancy Pelosi was asked about a consumption tax, she replied “everything is on the table.” They understand how fiscally unsustainable their present course is, but are committed to it for a reason – and it has to do with a matter of philosophy as Krauthammer lays out:
Obama set out to be a consequential president, one on the order of Ronald Reagan. With the VAT, Obama’s triumph will be complete. He will have succeeded in reversing Reaganism. Liberals have long complained that Reagan’s strategy was to starve the (governmental) beast in order to shrink it: First, cut taxes; then, ultimately, you have to reduce government spending.
Obama’s strategy is exactly the opposite: Expand the beast, and then feed it. Spend first — which then forces taxation. Now that, with the institution of universal health care, we are becoming the full entitlement state, the beast will have to be fed.
And the VAT is the only trough in creation large enough.
As a substitute for the income tax, the VAT would be a splendid idea. Taxing consumption makes infinitely more sense than taxing work. But to feed the liberal social-democratic project, the VAT must be added on top of the income tax.
Step 1 – expand government. Step 2 – say “you’ve got them (the government programs), you like them (an assumption played large), now you have to pay for them” and expand taxation. One of the utilities of passing this huge new entitlement first is to justify step 2. The reverse Reagan, as Krauthammer points out.
You remember the advocates of the Fair Tax don’t you? They too wanted a national sales tax – but as a replacement for the individual income tax and as a way to abolish the IRS. Unlike that, the new tax would be imposed on top of the individual income tax and, most likely, the IRS would be further expanded (more than just the 16,000 agents to monitor and enforce your health insurance compliance) to oversee the collection of these taxes.
So look for the “crisis” to hit within a few years. Government will continue to build the unsustainability case even while they continue on their purposefully unsustainable course. And, once the “crisis” (blamed, of course, on the previous administration(s)) is at the proper level of manufactured fear and panic, they’ll attempt to push through a nominally small national consumption tax (2 or 3%). If they succeed, game over. Just like the income tax (which history tells us the proponents never thought would rise above 2%), they’ll incrementally raise that tax over the intervening years as they continue the fan the “crisis” flames – a crisis of their own making. The desire would be to raise that tax to the 15 or 20% range (like Europe) to pay for the welfare state they’ll continue to try to expand. And, of course, as is their history, they’d even overspend on that. The fiscal crisis would remain, the GDP would tank, productivity would fall off terribly as more and more money is taken out of the private economy and we’d eventually find ourselves in much the same financial shape we are in now with no way to recover.
Yes, that’s conjecture – but it is based in history and precedent. Name a government entitlement that isn’t in the red or headed into the red. Entitlement spending dwarfs discretionary spending and continues to grow and consume more and more of the government’s budget as a percentage. This health care debacle will be no different. And as that proves out to be a money pit, the government is going to have to find new streams of revenue. Some sort of new taxation is absolutely inevitable, and I’m in agreement that the easiest to implement and immediately collect on is some sort of national consumption tax. And if and when they ever pass that, the road to our fiscal ruin will finally be fully paved.
I’ve seen Paul Krugman write some pretty dumb things over the intervening years. Jon Henke used to take particular delight in pointing them out in the earlier days of QandO. But I have to admit I’ve never seen anything quite as clueless as this statement by the man:
All of this goes far beyond politics as usual. Democrats had a lot of harsh things to say about former President George W. Bush — but you’ll search in vain for anything comparably menacing, anything that even hinted at an appeal to violence, from members of Congress, let alone senior party officials.
“I have a very hard time with this word ‘non-violence’, because I don’t believe that I am non-violent,” said Ms Williams, 64.
“Right now, I would love to kill George Bush.” Her young audience at the Brisbane City Hall clapped and cheered.
Most excellent, right Paul? Nothing at all menacing about that and it certainly doesn’t at all appeal to violence (well unless you think the act of “killing” is somehow a non-violent act).
And, as Greg Polowitz suggests, google “kill George Bush” and be properly chastized.
Not that I actually expect Krugman to do so – it would take an effort and, of course, it would puncture his narrative like nothing before. But just for grins, why not make a short pictoral trip down memory lane that clueless Krugman could have made had he at all cared about the accuracy of his claims.
For instance, here’s a favorite of mine:
Straight, to the point, and with an option I’m sure some would have hoped law enforcement might have availed themselves. Of course the crowds last weekend were just littered with signs like that, weren’t they?
No? Well how about this one?
A bit rambling and long. You have to go all the way to the third line to find the “Kill Bush” sentiment. At least he refrained from spelling out the “F bomb”. I suppose that’s more Joe Biden’s territory anyway. So again, were these the type of things to be seen in the crowd on Sunday?
No again? This then?
A little more subtle than the others. That “nuance” liberals love I guess. So is this more like what has Krugman saw or heard about?
Or did it have more to do with urban legends that he and the left have chosen to believe (even while the vast majority of the supposed incidents seem to have no foundation in fact or require true super human feats of strength – such a chucking a rock through a window 30 stories above the street)?
Oh, I know why Krugman doesn’t remember any of this – you see, this was when dissent was the highest form of patriotism.
Apparently, that’s not the case anymore.