Free Markets, Free People

Monthly Archives: July 2012

Happy Dependence Day!

My how things change over the course of 200+ years.

Back at the beginning of this experiment, people rejected a large and intrusive government.  They’d been the victims of one and threw off that yoke.  They acclaimed freedom as their goal and chose liberty as their battle cry.

When they finally got around to forming their own government, they carefully wrote a document which I’m sure they figured was an iron-clad guarantee that this country’s future would never see the same sort of tyranny they’d suffered under.

I just wonder what they’d think of this sprawling, debt ridden and intrusive mess we have now?  I wonder what they’d think of over half the population getting some sort of compensation from government. 

I wonder what they’d think of a Supreme Court Chief Justice more worried about what they’ll say about him and the court on the cocktail circuit and in the media than he is about upholding the Constitution, his sworn duty.  I think I know.

And I’m pretty sure I know what they’d think of this:

Our nation’s current debt, nearing $16 trillion, and our annual budget deficit of $1.2 trillion, indicate that our government’s addiction to spending is nowhere near its limit.

Of that $16 trillion debt, the U.S. owes more than $5 trillion to foreign nations, an all-time high. So much for independence. We’re now a debtor nation, and unless we get our fiscal house in order, that debt will endanger our nation’s prospects for long-term growth.

If that sounds alarmist, consider this: In August 2011, Vice President Joe Biden visited China. This wasn’t just any diplomatic visit — it was the supplication of a debtor, in which Biden undertook to reassure our Chinese debtors that their investment is sound.

Biden assured his hosts that they had "nothing to worry about" when it comes to the U.S. honoring its obligations. It wasn’t the first time a high-ranking U.S. official has had to offer soothing words to our creditors, and at this rate it won’t be the last.

Let’s be clear.  This administration isn’t the cause of all that debt.  It’s just the latest (and the worst) to add to it, to the point that our debt now stands at more than our GDP.  We are indeed a debtor nation.

That’s not at all how this began is it?  Nor was that ever the plan.

I’m also pretty sure I know how they’d feel about the level of intrusion government now routinely practices (and increases) in this country.  For example:

IRS officials on background tell FOX Business the U.S. Supreme Court ruling on health reform gives the IRS even more powers than previously understood.

The IRS now gets to know about a small business’s entire payroll, the level of their insurance coverage — and it gets to know the income of not just the primary breadwinner in your house, but your entire family’s income, in order to assess/collect the mandated tax.

Plus, it gets to share your personal info with all sorts of government agencies, insurance companies and employers.

And that’s just the tip of the iceberg. "We expect even more lien and levy powers," an IRS official says. Even the Taxpayer Advocate is deeply concerned.

As government takes more and more control of your lives, it intrudes deeper and deeper into them:

The TAO [Taxpayer Advocate Office] says that the “IRS will need to determine a taxpayer’s compliance with the individual [insurance] mandate and assess a penalty if coverage is inadequate.”

However, the penalty isn’t based on just your personal net income. The penalty will be based on an entirely different number that is more than just your paycheck earnings — your ‘household income.’

“This determination is based on a concept of ‘household income,’” TAO has said, adding, “this may differ from the income reported on the taxpayer’s return, because it is a composite of all of the income reported by members of a taxpayer’s household — information that may not be readily accessible to the IRS."

If the IRS finds you have fallen short of the law, it would hit you with a penalty tied to your household income (which may be that of an individual or several family members).

Under the new health law, the IRS penalty would be based on “modified adjusted gross income,” not adjusted gross income that you normally report at the bottom of the first page of your tax form 1040, before you take deductions or personal exemptions.

The modifications add back in things like non-taxable interest and excluded foreign income to this number.


Health reform’s insurance mandate says if you do not have “adequate” insurance, you’ll have to pay a fine as part of your tax return. If your business doesn’t provide “affordable” coverage,  that business may have to pay a fine to the IRS, too, as part of its tax return filings.

The TAO has noted Americans must now tell the IRS under the new law:

    *Insurance plan information, including who is covered under the plan and the dates of coverage;
    *The costs of your family’s health insurance plans;
    *Whether a taxpayer had an offer of employer-sponsored health insurance;
    *The cost of employer-sponsored insurance;
    *Whether a taxpayer received a premium tax credit; and
    *Whether a taxpayer has an exemption from the individual responsibility requirement.

The TAO has warned: “This is different from the type of information the IRS typically deals with, and some taxpayers may feel uncomfortable about sharing it with the IRS.”

In fact, it is incumbent upon you to prove to the IRS that you have “adequate coverage”, whatever that ends up meaning. And:

The TAO has also reported that “obtaining this new information will require the IRS to communicate with entities and government agencies that it may not deal with now,” including:

    *New state-run insurance exchanges;
    *Insurance companies; and
    *Government insurance programs.

But remember the sales pitch – government will make health care simpler, more cost effective and better.

Congratulations to all the simpletons out there who bought into this scam and ended up foisting this intrusive monstrosity on the rest of us.  In fact, thanks to all, who through out the 200 years it has taken us to to get to this point, worked so hard to achieve it “for the common good”.  </sarc>  Nice mess you’ve given us.

As for the rest of you, happy Dependence day!



Twitter: @McQandO

Speaking of your health care, the obese should prepare for another government mandate

Given that ObamaCare has been upheld, the following shouldn’t take many people by surprise:

In a move that could significantly expand insurance coverage of weight-loss treatments, a federal health advisory panel on Monday recommended that all obese adults receive intensive counseling in an effort to rein in a growing health crisis in America.

The U.S. Preventive Services Task Force urged doctors to identify patients with a body mass index of 30 or more — currently 1 in 3 Americans — and either provide counseling themselves or refer the patient to a program designed to promote weight loss and improve health prospects.

Under the current healthcare law, Medicare and most private insurers would be required to cover the entire cost of weight-loss services that meet or exceed the task force’s standards.

And, of course, all that will be “free” and cost absolutely nothing because ObamaCare has magically lowered costs in the insurance and health care world.

Read those three sentences carefully.  You can see the coming disaster easily through this fairly simple example.  Government has a solution to obesity.  More government.

First BMI is a crock of crap.  Anyone who has spent a day looking into it knows that.  Yet the government stubbornly holds on to the standard.  I’m 6’ and 188 pounds.  My BMI is 26 which makes me “overweight”.  Sorry, that’s BS.   And if you have any muscle mass at all, you can most likely count on being overweight even if you’re in the best shape of your life.

But BMI is what we’re going to see used to determine who that one-third are, and the bottom two-thirds?  Well they have a role too.  They will be paying for that top one-third’s “intensive weight loss services” for which the law mandates insurers pay.

What are those standards of treatment?

The task force concluded after a review of the medical literature that the most successful programs in improving patients’ health were "intensive, multicomponent behavioral interventions." They involve 12 to 26 counseling sessions a year with a physician or community-based program, the panel said.

Successful programs set weight-loss goals, improve knowledge about nutrition, teach patients how to track their eating and set limits, identify barriers to change (such as a scarcity of healthful food choices near home) and strategize on ways to maintain lifestyle changes, the panel found.

The programs set goals?  Anyone who is past the age of 20 and with an IQ above room temperature knows that programs setting goals are useless.  Unless the person for whom the program is setting those goals is willingly and totally committee to change, it won’t work.  Ask any ex-smoker or alcoholic.

But, cynic that I am, I see opportunities here for all sorts of waste, fraud and abuse.  It is found in the phrase “community based programs”.  The new growth industry?  “Intensive, multicomponent” weight loss companies contracted to the government to provide “behavioral interventions” and facilitate weight loss.  Because otherwise, doctors have to do the sessions and we all know that’s going to happen, don’t we?  We;’re so overstocked with them and they have so little to do.

And don’t you just love the phrase “behavioral intervention?”  Sounds … ominous?

Finally, the government is still pushing diet regimes that don’t solve the problem.  Look at the sample menu here on this 1,600 low calorie menu.  Note the carbohydrates and sugars in that menu (sugars aren’t noted, but it has juice and fruit).  If you want to lose weight it is those you must cut out.  Not salt.  Not even fat.  The body converts carbs and sugars to glucose.  And it burns glucose before it burns fat.  If you load up on things that produce glucose and the body doesn’t burn It all, it then stores the rest as fat.  So you want a diet that reduces glucose production and has the body burning stored fat.  That is how you lose weight.  That means removal of grains, bread, potatoes, pasta, etc.  You should also avoid starchy vegetables like corn.

That menu is loaded with them.   Personal experience.  Go low carb and you’ll see weight drop off and quickly (like 7 pounds in a week).  At some point, you can begin to add a few carbs back in when you go to maintenance mode.  There are or may be some initial unpleasant side effects to going low carb, but you get over them fairly quickly.

But government continues to push a “balanced” diet loaded with all the things that actually help make us fat.

If any weight is lost using their plan it will be excruciatingly slow and if you think someone is going to stick with a diet like that I’ve linked for very long, you don’t know human nature.   If you’re going to motivate someone to lose weight, you’d better show them some pretty real and dramatic progress fairly quickly or you’re going to lose their interest in about 2 weeks, a month at the most.  Because here is ground truth about diets:

A common argument that many experts wield against carbohydrate restriction is that all diets fail, the reason being that people just don’t stay on diets. So why bother? But this argument implicitly assumes that all diets work in the same way—we consume fewer calories than we expend—and thus all fail in the same way.

But this isn’t true. If a diet requires that you semi-starve yourself, it will fail, because (1) your body adjusts to the caloric deficit by expending less energy, (2) you get hungry and stay hungry, and (3), a product of both of these, you get depressed, irritable, and chronically tired. Eventually you go back to eating what you always did—or become a binge eater—because you can’t abide semi-starvation and its side effects indefinitely. -Taubes, Gary (2010). Why We Get Fat: And What to Do About It (p. 209). Random House, Inc.

By the way, that’s a great book and I recommend it highly. 

Anyway, I didn’t mean to wander off into a diet discussion, but it only helps reinforce my point.  Government, as of now, is touting exactly the wrong stuff to fight obesity.  Yet it plans, obviously, on taking the lead, having doctors prescribe the weight loss programs and require unwilling “obese” people to take them.  And all of it will ‘cost less’ – never mind the golden opportunities for waste, fraud and abuse.

Yes, friends, now that the government owns health care, it has a plan for all you fatties out there.   Whether or not you really want to lose weight that’s another choice (freedom) you’ll probably lose.  Mandatory obesity screening and a prescribed program of weight loss coming you’re way whether you want it or not.  And all at a nominal cost, of course.  Because, you know, health care costs have been reduced now that we all have to have insurance or pay a tax.

Welcome to your new world.



Twitter: @McQandO

Economic Statistics for 3 Jul 12

The following statistics were released today on the state of the US economy:

Auto sales will be released throughout the day today. First reports are from Chrysler, whose sales rose 20% to 144,811 vehicles. Nissan posted a 28% sales gain, to 92,237 new vehicles. More figures will be released later today.

In retail sales, ICSC-Goldman reports bad weather reduced same-store retail sales to a year-on-year 1.4% increase, though sales rose 0.2% on a weekly basis. Redbook reports weak 2.2% sales growth both on a weekly basis, as well as in the 4-week moving average. Both Redbook and ICSC-Goldman sales results are the worst in a year.

US factory orders rose a better-than-expected 0.7% in May. Ex-transportation, orders were up by 0.4%, reversing 2 months of decline.

Dale Franks
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The tax that isn’t a tax because 75% of it falls on the middle class

If you’re wondering why the administration is so adamant about claiming the health care mandate isn’t a tax, all you have to do is look at this chart:




Even a quick look makes it clear that 75% of the taxes to be paid will be paid by those making $120,000 or less.  That, my friends is a middle class tax increase of epic proportions– something this president promised wouldn’t happen on his watch.

Of course it doesn’t fully kick in until 2016 (it starts in 2014), but let’s be clear, it is going to kick in (thanks to John Roberts).

And, if you’re wondering what that means in terms of money, well, here’s a repeat of the chart of the tax from the list of 20 taxes (of about half a trillion) this monstrosity levies (and don’t forget, it is the amount or the percentage of AGI – whichever is highest):




Yet what do we get from the dopes at the Romney campaign?  Well first they agree it’s not a tax it’s a penalty.  What’s one of the first maxims of politics?  When you’re opponent is self-destructing, shut up and get out of the way?

Yeah, they do neither.

Then what do we hear today?

For an issue that’s supposedly potent against Democrats, Romney’s campaign is declaring a cease fire. This, even as the law polls unfavorably and it proved to be a motivating force for Republicans and disaffected independents in the 2010 midterms.

Now on the one side, I have some sympathy, since the following paragraph touts what I’ve been recommending – don’t get distracted:

It’s becoming clear that Romney has decided to focus on the economy at the expense of everything else, even issues that could play to his political benefit. He’s avoided criticizing the administration’s handling of the botched Fast and Furious operation, even as it threatens to become a serious vulnerability for the president. He’s been silent in responding to Obama’s immigration executive order, not wanting to offend receptive Hispanics or appear like a flip-flopper.

Got it.  But let’s not put blinders on.  The health care tax (and don’t let them get away with calling it  anything else) and Fast and Furious are political gold.  You don’t have to necessarily concentrate on them, but let’s see a little multi-tasking, for heaven sake.  Use them even as the campaign concentrates on the economy. You don’t freakin’ call “cease fires” in politics on issues in which all the rounds are outbound toward your opponent.

This is about broken promises (flip-flopping in some cases – remember when candidate Obama argued against imposing a mandate?) and new taxes.  Two very unpopular issues in politics (oh, and for the Republicans agreeing with the administration that the mandate isn’t a tax – STFU, will you?)

Finally, those two charts are something the Romney campaign should have as a part of just about everything they release.  They disallow dissembling by the administration.  It’s a tax, it’s going to begin to hit in 2014 and it is a tax on the middle class.

Use it often and relentlessly.


Twitter: @McQandO

Why is the Navy willing to pay $27 a gallon for biofuel?

This sort of stuff drives me crazy.  Why is Secretary of the Navy Mabus fooling around with this sort of nonsense under the guise of being “necessary for national defense” when we’re in the middle of a oil shale revolution that shows the US with the most proven oil reserves in the world?  Secondly and just as important, why during times of tight budgets is he willing to pay $27 dollars for biofuel when conventional fuel costs $3.60?


A U.S. Navy oiler slipped away from a fuel depot on the Puget Sound in Washington state one recent day, headed toward the central Pacific and into the storm over the Pentagon’s controversial green fuels initiative.

In its tanks, the USNS Henry J. Kaiser carried nearly 900,000 gallons of biofuel blended with petroleum to power the cruisers, destroyers and fighter jets of what the Navy has taken to calling the "Great Green Fleet," the first carrier strike group to be powered largely by alternative fuels.

Now I know it says “blended”.  Apparently it’s a 50% blend, because:

For the Great Green Fleet demonstration, the Pentagon paid $12 million for 450,000 gallons of biofuel, nearly $27 a gallon. There were eight bidders for that contract, it said.

Oh, and you’ll love this:

The Pentagon paid Solazyme Inc $8.5 million in 2009 for 20,055 gallons of biofuel based on algae oil, or $424 a gallon.

Because, you know, that 8.5 million couldn’t have been used to improve the lot of our troops, could it?


Solazyme’s strategic advisers, according to its website, include T.J. Glauthier, who served on Obama’s White House Transition team and dealt with energy issues, but also former CIA director R. James Woolsey, a conservative national security official.

If you’re not disgusted, you’re not paying attention.

Meanwhile the administration has refused to approve the Keystone Pipeline and has just essentially reinstated the offshore drilling ban that stood for 27 years.

Hint: The military is not and should not be a proving ground for ideological goals.  It is the blunt instrument of foreign policy.  It is a well oiled machine (note the word!)  But it is an institution that cannot afford stupid profligacy like this.

Cruisers and fighters don’t run on chicken fat.  They run on petroleum.  Something we’d have plenty of if this bunch would get the hell out of the way.


Twitter: @McQandO

Economic Statistics for 2 Jul 12

Here are today’s statistics on the state of the economy:

The ISM manufacturing index shows a contacting manufacturing sector for the first time since July 2009, falling to 49.7 in June. New orders, at 47.8, show contraction for the first time since April 2009, and point to the possibility of a slower July, as well. Inventories and prices also fell.

Markit Economics’ PMI for the US slowed to 52.5 in May, vice 54 for April.

Construction spending rose a better-than-expected 0.9% in May, following a 0.6% rise in April. On a year-over-year basis, spending was up 7.0%.

Dale Franks
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US manufacturing slows for first time in 3 years

A report out today says:

U.S. manufacturing shrank in June for the first time in nearly three years, adding to signs that economic growth is weakening.

Production declined, and the number of new orders plunged, according to a monthly report released Monday by the Institute for Supply Management.

The slowdown comes as U.S. employers have scaled back hiring, consumers have turned more cautious, Europe faces a recession and manufacturing has slowed in big countries like China.

"This is not good," said Dan Greenhaus, chief economic strategist at BTIG, an institutional brokerage. Though the report "does not mean recession for the broader economy, it is still a terribly weak number."

But the “private sector is doing fine”.



Twitter: @McQandO

ObamaCare: The fallout

I’ve read all the pundits and listened to all the talking head elite tell us how incredibly nuanced and subtle the Chief Justice was by approving the law as a tax.  In fact one described him as “"a chess master, a statesman, a Burkean minimalist, a battle-loser but war-winner, a Daniel Webster for our times."

I say “BS”.  He sold out.  He ended up being more worried about the perception of the court and his legacy than upholding the Constitution of the United States.  And I’m not the only one who feels that way.  The Wall Street Journal also throws a punch or two at Roberts:

His ruling, with its multiple contradictions and inconsistencies, reads if it were written by someone affronted by the government’s core constitutional claims but who wanted to uphold the law anyway to avoid political blowback and thus found a pretext for doing so in the taxing power.

If this understanding is correct, then Chief Justice Roberts behaved like a politician, which is more corrosive to the rule of law and the Court’s legitimacy than any abuse it would have taken from a ruling that President Obama disliked. The irony is that the Chief Justice’s cheering section is praising his political skills, not his reasoning. Judges are not supposed to invent political compromises.

"It is not our job," the Chief Justice writes, "to protect the people from the consequences of their political choices." But the Court’s most important role is to protect liberty when the political branches exceed the Constitution’s bounds, not to bless their excesses in the interests of political or personal expediency or both. On one of the most consequential cases he will ever hear, Chief Justice Roberts failed this most basic responsibility.

Precisely.  And Roberts caved.  From the lecture the court got from Obama during a State of the Union address till now, he became a cautious old lady more concerned with his reputation in perpetuity than serving the people and the Constitution he swore to uphold. 

That, as the WSJ says, is “more corrosive to the rule of law and the Court’s legitimacy” than anything he could have done.  He didn’t have the spine to take the heat from a controversial but proper decision so he took the easy way out.  He threw away his integrity for popularity and peace.   A judicial Chamberlin if you will.

Jacob Sullum at Reason gives you the rest of the bad news:

The Journal notes that the tax power endorsed by Roberts is no less sweeping and dangerous to liberty than the Commerce Clause argument he rejected. "From now on," it says, "Congress can simply regulate interstate commerce by imposing ‘taxes’ whenever someone does or does not do something contrary to its desires." Worse, as I pointed out last week, the tax trick allows Congress to dispense with claims about interstate commerce altogether. As long as a mandate is disguised as a tax (and as long as it does not violate explicit limits on federal power such as those listed in the Bill of Rights), "because we said so" is reason enough.

Mandates “disguised as a tax” give Congress almost limitless power to control your life.  That is the power Roberts handed our elected officials. 

Oh, but the apologists say, that will never happen.  They’d never abuse that power.  Yeah, a little lesson in history.   When the Constitutional amendment for the income tax was being debated some wanted to put a 2% limit on it. “Don’t do that,” the others said, “it will encourage Congress to immediately go that high.”

And here we are.

The Congress no longer need wrestle with intrusion in your life via the Commerce clause.  Justice Roberts just gave them an infinitely easier route that doesn’t require a Constitutional check.  He effectively removed the Court from its role in protecting you from increasing government intrusion.

And clever politicians will find a way to use that power he handed them when necessary.  Don’t you ever doubt that.

As for Roberts.  I have little or no use for a man who sits on the bench of the Supreme Court and puts politics in front of the Constitution he’s sworn to uphold.


Twitter: @McQandO

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