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Free Markets, Free People

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?


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.


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Economic Statistics for 17 Oct 13

The Housing Starts and Industrial Production reports were delayed due to the government shutdown.

Initial jobless claims fell 16,000 to 358,000. The 4-week average 11,500 to 336,500. Continuing claims fell 43,000  to 2.859 million.

The Bloomberg Consumer Comfort Index fell to a nearly seven-month low of -34.1 last week.

The general business conditions index of the Philadelphia Fed’s Business Outlook Survey fell 2.5 points to 19.8 in October.

The Fed reports that M2 Money Supply increased by $25.7billion last week.

The Fed’s balance sheet rose $54.9 billion last week, with total assets of $3.814 trillion. Reserve Bank credit increased $51.1 billion.

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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?


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


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Economic Statistics for 16 Oct 13

The Consumer Price Index and Treasury International Capital reports were delayed by the government shutdown.

The MBA reports that mortgage applications rose 0.3% last week, with purchases down -5.0% and refinancings up 3.0%.

The Housing Market Index fell 3 points to 55 in October.

The Fed’s Beige Book is still pointing at a slow recovery with economic growth continuing at a "modest to moderate" pace.

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Blaming the victim

So, I got this email from the TEA Party Express people. It starts:

We are saddened to see today that the political establishment in Washington DC continues to do the only thing they seem to know – kick the proverbial can down the road. Instead of repealing, defunding or at least delaying the atrocious Obamacare, the political elites are content to let the "train wreck" happen at the expense of the American people.

Now, look, I’m really sympathetic to the goals of the TEA Party. If it was up to me, the executive departments of the Federal Government would consist of State, Defense, Treasury, Justice, and Interior. We’d have a balanced budget amendment. There would be no federal-level entitlements. Basically, the federal government’s primary responsibility would be sound money and talking to or killing foreigners as required.

But this is just a bit tendentious. It’s not “political elites” that gave us Obamacare, or who are preventing it from being overturned. It’s Democrats. The problem isn’t that Republicans have some secret admiration for Obamacare that prevents them from getting rid of it. The problem is that Republicans control 1/2 of 1/3 of the government. They have no political way to force the repeal of the ACA. They don’t control the senate—or even have a majority in it—and they don’t control the White House. Since we don’t have government by magical pixie dust, but by actual votes in actual legislative bodies and approval by the president, what possible path to ACA repeal was on the table?

The Tea Party and conservatives got short end of the stick on today’s announced budget "compromise."   Enough Republicans in the Senate and the House are ready to give the Democrats everything they wanted and rendered the principled stand led by Ted Cruz, Mike Lee, and others a futile effort.

No. It was a futile effort before it began. The principled stands of some Republicans were irrelevant, because they had no power whatsoever to translate their stands into concrete action. Nor, apparently, were the Democrats in the Senate or White House particularly worried enough about negative public opinion to yield. SO, where was this going to go? Partially shutting down the government forever? Stopping Social Security and Medicare payments? I mean, what, precisely, was the end game that got to Obamacre repeal with the current senate and president? Hey, while we’re on the subject, what was the plan that the Republicans had—or that Ted Cruz had—prior to shutting down the government? I mean, other than, you know, hope.

To put it plain and simple: we don’t have enough conservatives in Congress to stop the irresponsible spending in Washington.

Yes. Exactly. Which everyone else knew early in November of 2012, just as they knew the next chance to repeal the ACA, barring its spectacular failure, would be after 2014 at the earliest.

We have seen 5 years of the Obama Administration and no successful negotiations have taken place except the sequester, which was Obama’s idea because he never thought it would actually happen!

So, by what sophistry of reason did anyone assume Obama would negotiate over Obamacare?

This is simply unacceptable.  The Republicans have had 5 years to try and make some progress in remedying the financial ills that plague our nation’s future, and have made little to no progress.

I guess that makes you wish you’d had a massive GOTV effort in 2012, huh? But that didn’t happen, and millions of Republican voters stayed home. So we got a Democrat-controlled Senate, and Barack Obama went back to the White House.

The predictable result was that Obamacare was not—and with Democrats controlling the Senate and White House, will not—be repealed in the foreseeable future.

Are there some Republicans who could be described as insufficiently conservative? Yeah. Sure. So what? They aren’t the fundamental problem here. They aren’t the ones who voted for it in the first place, either.

If you want the ACA repealed there’s a simple way to do it: Win elections. Like Cory Booker just did in New Jersey, which sent another Democrat to the Senate.

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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 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.


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Closer to the edge

The grand compromise over the budget and debt ceiling was scuttled by the House. So, the expected Republican surrender didn’t emerge yesterday or today. And everyone was so hopeful, too. Anyway, we now move closer to at least a technical default on US Securities, and, as a result, Fitch announced today that the US rating was being put on watch for a possible downgrade.

Chicago-based Fitch, the third-largest of the major debt-rating companies behind Standard & Poor’s and Moody’s Investors Service, put U.S. Treasury bonds on Rating Watch Negative, which is sometimes but not always a first step before a downgrade. Fitch said in a statement that it still thinks the debt ceiling will be raised in time to prevent a default.

Fitch said the government would have only limited capacity to make payments on the $16.7 trillion national debt after Treasury Department’s emergency measures run out Thursday.

Speaker Boehner did come up with a plan for some sort of House bill, but he abandoned it at the end of today, apparently not having the votes to pass it.

Last-minute protests from conservatives in the House created a day of delay and confusion in Congress’s efforts to avoid a U.S. debt default, as Republican leaders failed to craft a GOP budget proposal that could muster enough votes to pass.

In an embarrassing retreat for House Speaker John Boehner (R., Ohio), House leaders had to cancel plans to bring a GOP bill to the floor for a vote Tuesday night.

At this point, under Congressional rules, I don’t see how a debt deal can be struck that can pass Congress and be signed by the president before the Treasuries emergency actions on the debt run out on the 17th.

The markets are starting to get cautious about all this. There were 3- and 6-month T-Bill auctions today. They didn’t go especially well. The rate for the 3 month jumped 10 basis points, while the 6-month yield rose 9 basis points from last week. Last month’s 4-week auction was weak, as well.

Doom approaches! Or not.

Meanwhile, the Chinese government is calling for a de-Americanized world.

“The world is still crawling its way out of an economic disaster thanks to the voracious Wall Street elites,” the commentary said. “Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated.”

“The congressmen are behaving irresponsibly not only for other countries but also for” the United States’ “own creditors,” said Mei Xinyu at the Chinese Academy of International Trade and Economic Cooperation, which has ties to the Commerce Ministry. “They are gambling the U.S. future on their political-struggle interests.”

I don’t know what they’re complaining about. After all, we’re funding a great portion of their defense budget with the interest payments on the US bonds they own, so I don’t see why….oh. Wait. If we default, those interest payments stop. OK. I think I’m beginning to see what they’re so upset about. I imagine our messy democratic maneuverings are also a bit foreign and frustrating to a one-party dictatorship, too.

If only we had a dictatorial, one-party, state here, we could do these things so much more efficiently. Just like Tom Friedman always says.

I like the phrase, “political-struggle interests.” You gotta hand it to those Commies, boy. You just can’t beat ‘em for catchy political sloganeering. “The running dogs of the capitalist-imperialist forces” has always been a favorite of mine.

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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.


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Well, that didn’t take long

Last night, on the podcast, I predicted the Republicans would fold on Obamacare, end the shutdown, and avoid a technical default on the debt. Less that 24 hours later, it appears that the Republicans have decided to celebrate the Columbus Day holiday by folding. The word is—as of 1:30pm Pacific Time—that the government will be funded through 15 Jan 2014, and the debt ceiling to around 15 Feb 2014. All is proceeding as I have foreseen.

My position, as a strategic matter, was that the Republicans have simply been galactically stupid. The reality is that Obamacare, with the current Senate and President, will not be repealed. If the republicans, therefore, were not prepared to shut the government down for as long as the sun burns hot in space, they shouldn’t have shut it down at all.  Moreover, even if we assume, arguendo, that the Republicans were prepared to shut down the government forever, they shouldn’t have done it this month.

Alternatively, they could’ve sent up a temporary debt limit increase first, and ensured that was in place, and then shut the government down. At least that way, they could have a long-term shutdown without the specter of default hanging over it.

Then, they should have delayed shutting down the government until after the Obamacare rollout, which everyone with an ounce of sense knew was going to be a failure. Assuming they could have gotten the senate to sign on to a clean budget deal that would’ve funded the government for some period of time, that would’ve made the Obamacare rollout failure the top story last week. Instead it got overshadowed by the budget fight and the shutdown. The Republicans effectively did the Obama administration a favor. Otherwise, they could’ve waited until the failure of the Obamacare rollout was clear, then could’ve offered to delay the personal mandate for a year, to match the business mandate delay, as a gesture of good will to give the Administration some time to "get the system fixed."

Sure, the Republicans—or at least a plurality of them—were elected to repeal Obamacare. Sadly, the electorate as a whole didn’t provide them with the political power to make that happen. Those Republicans, therefore, cannot simply wave a handful of magical fairy dust and make Obamacare disappear. Absent a new resident of 1600 Pennsylvania Avenue, or the program’s collapse under its own weight, Obamacare will be the law until 2017. That’s just an undeniable fact.

The shutdown was a big game of chicken. The problem is that I firmly believe that President Obama is fully willing to have the US technically default on its debt rather than agree to let Obamacare loose. He isn’t going to veer away at the last minute. He’ll go all the way to default, then blame Republicans for it, and his water carriers in the media will be glad to repeat that message. As Michael said last night on the podcast, at the end of the day, this isn’t about the debt, or default, or Obamacare. It’s about taking the chance to destroy the Republican Party’s opposition.

And again, I go back to my oft-stated position that I want Obamacare implemented. The electorate effectively voted for it, they rejected the chance to repeal it, so they should get it. good and hard.

All the government shutdown did—a shutdown that the republicans didn’t have any plan to implement, by the way—is expose the Republicans as ineffective and, ultimately, feckless. So, this appears to be ending exactly as I knew it would, with the Republicans having accomplished nothing but cause an unnecessary uproar for a couple of weeks, and obscure the Obamacare rollout’s failure.

It doesn’t do much real-world good to temporarily stand for your principles, without any thought-out plan or strategy, knowing you will eventually cave, with the inevitable result of making it measurably more difficult to stand for your principles in the future.

In basic weapons training, one of the first things you learn is that you never pull a gun on someone unless you’re fully ready to put two rounds into the body and one to the head. In this case, the Republicans pulled the gun, brandished it wildly for dramatic effect, and now appear to be ready to calmly snap it back into the holster.


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