The expected happened:
California voters soundly rejected a package of ballot measures Tuesday that would have reduced the state’s projected budget deficit of $21.3 billion to something slightly less overwhelming: $15.4 billion.
The defeat of the measures means that Gov. Arnold Schwarzenegger and the state Legislature will have to consider deeper cuts to education, public safety, and health and human services, officials have said.
Propositions 1A through 1E – which would have changed the state’s budgeting system, ensured money to schools in future years and generated billions of dollars of revenue for the state’s general fund – fell well behind in early returns and never recovered.
The only measure that voters approved was Proposition 1F, which will freeze salaries of top state officials, including lawmakers and the governor, during tough budget years.
Schwarzenegger, however, still doesn’t get it:
In a written statement Tuesday night, Schwarzenegger said that he believes Californians are simply frustrated with the state’s dysfunctional budget system.
“Now we must move forward from this point to begin to address our fiscal crisis with constructive solutions,” the governor said.
In reality it has nothing especially to do with the state’s “dysfunctional budget system”, but instead with the state’s profligate spending which has landed it in overwhelming debt. And the most “constructive solutions” would be to – wait for it – cut spending.
Why is it I have a feeling that such a solution will be mostly absent from whatever CA legislators come up with?
I love the way the Wall Street Journal starts this editorial about health care reform and rationing. It is something I’ve been wondering for some time here at QandO:
Try to follow this logic: Last week the Medicare trustees reported that the program has an “unfunded liability” of nearly $38 trillion — which is the amount of benefits promised but not covered by taxes over the next 75 years. So Democrats have decided that the way to close this gap is to create a new “universal” health insurance entitlement for the middle class.
In fact what they’re proposing defies logic. It is counter-intuitive (some wag said that “counter-intuitive” is the new “stupid”). I mean think about it – they’re essentially saying “we’ve run the 46% of the health care segment we have into $38 trillion of unfunded debt. The way to fix that is to give us the rest”.
But the bulk of the editorial is about who, under this new grand scheme the Democrats are proposing, will be making decision about how to treat you. And in this case one example serves to make the point:
At issue are “virtual colonoscopies,” or CT scans of the abdomen. Colon cancer is the second leading cause of U.S. cancer death but one of the most preventable. Found early, the cure rate is 93%, but only 8% at later stages. Virtual colonoscopies are likely to boost screenings because they are quicker, more comfortable and significantly cheaper than the standard “optical” procedure, which involves anesthesia and threading an endoscope through the lower intestine.
Virtual colonoscopies are endorsed by the American Cancer Society and covered by a growing number of private insurers including Cigna and UnitedHealthcare. The problem for Medicare is that if cancerous lesions are found using a scan, then patients must follow up with a traditional colonoscopy anyway. Costs would be lower if everyone simply took the invasive route, where doctors can remove polyps on the spot. As Medicare noted in its ruling, “If there is a relatively high referral rate [for traditional colonoscopy], the utility of an intermediate test such as CT colonography is limited.” In other words, duplication would be too pricey.
Consequently, because there might be a percentage of referrals (that Medicare assumes might be “relatively high”) which then require a traditional colonoscopy, no Medicare patients may have the virtual colonscopies even if they are quicker, more comfortable and, as with any invasive procedure, less dangerous.
Now I assume I don’t have to lay out all the implications of this to readers here – this is prefect example of precisely what opponents of government health care have been saying for years. And it certainly gives lie to the claims by some that all government wants to do is offer “insurance”.
Led by budget chief Peter Orszag, the White House believes that comparative effectiveness research, which examines clinical evidence to determine what “works best,” will let them cut wasteful or ineffective treatments and thus contain health spending.
The problem is that what “works best” isn’t the same for everyone. While not painless or risk free, virtual colonoscopy might be better for some patients — especially among seniors who are infirm or because the presence of other diseases puts them at risk for complications. Ideally doctors would decide with their patients. But Medicare instead made the hard-and-fast choice that it was cheaper to cut it off for all beneficiaries. If some patients are worse off, well, too bad.
One of the complaints about private health insurers is that patients resent someone group on high deciding what is best for them. That should be their doctor’s decision. Yet here is that complaint being sanctioned for the largest purchaser of health care in America – Medicare. And, as the WSJ points out, since private carriers usually adopt Medicare rates and policies, the virtual colonoscopy could be a technology which is “run out of the market place”.
Mr. Orszag says that a federal health board will make these Solomonic decisions, which is only true until the lobbies get to Congress and the White House. With virtual colonoscopy, radiologists and gastroenterologists are feuding over which group should get paid for colon cancer screening. Companies like General Electric and Seimens that make CT technology are pressuring Medicare administrators too. More than 50 Congressmen are demanding that the decision be overturned.
All this is merely a preview of the life-and-death decisions that will be determined by politics once government finances substantially more health care than the 46% it already does. Anyone who buys Democratic claims about “choice” and “affordability” will be in for a very rude awakening.
Is this how you want health care decisions affecting your life to be made? Political fights in Congress? Look at the financial health of the US government right now and consider the huge unfunded liabilities in front of it. What side do you really think such decisions will come down on – yours or the least costly alternative regardless of your individual need?
[HT: Anna B]
Because the fact you’ve been a responsible adult and paid your credit cards on time and have immaculate credit simply doesn’t matter once Congress gets involved in saving yet another victim class from itself:
Credit cards have long been a very good deal for people who pay their bills on time and in full. Even as card companies imposed punitive fees and penalties on those late with their payments, the best customers racked up cash-back rewards, frequent-flier miles and other perks in recent years.
Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit.
Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.
“It will be a different business,” said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks. “Those that manage their credit well will in some degree subsidize those that have credit problems.”
You begin to wonder, “why bother”? You pay your mortgage on time and end up subsidizing those who don’t. You manage your household finances well and end up paying to bail out institutions which didn’t. You stay on top of your credit cards and pay them off regularly and now you’ll be subsidizing those who don’t.
Responsible conduct is punished and irresponsible conduct is subsidized.
And, of course, when you create a new victim class, it is important to vilify the evil oppressor:
Austan Goolsbee, an economic adviser to President Obama, said that while the credit card industry had the right to make a reasonable profit as long as its contracts were in plain language and rule-breakers were held accountable, its current practices were akin to “a series of carjackings.”
“The card industry is giving the argument that if you didn’t want to be carjacked, why weren’t you locking your doors or taking a different road?” Mr. Goolsbee said.
Amazing. Just simply and utterly amazing.
Sy Hersh, not yet ready to leave the evil cabal of Bush/Cheney alone, has concocted a real beaut this time and is peddling it on Arab TV (what other media outlet would be open to this stuff?), just in time to inflame the unwashed masses in the Middle East:
Former prime minister of Pakistan Benazir Bhutto was assassinated on the orders of the special death squad formed by former US vice-president Dick Cheney, which had already killed the Lebanese Prime Minister Rafique Al Hariri and the army chief of that country.
The squad was headed by General Stanley McChrystal, the newly-appointed commander of US army in Afghanistan. It was disclosed by reputed US journalist Seymour Hersh while talking to an Arab TV in an interview.
Hersh said former US vice-president Cheney was the chief of the Joint Special Operation Command and he clear the way for the US by exterminating opponents through the unit and the CIA. General Stanley was the in-charge of the unit.
Seymour also said that Rafiq Al Hariri and the Lebanese army chief were murdered for not safeguarding the US interests and refusing US setting up military bases in Lebanon. Ariel Sharon, the then prime minister of Israel, was also a key man in the plot.
A number of websites around the world are suspecting the same unit for killing of Benazir Bhutto because in an interview with Al-Jazeera TV on November 2, 2007, she had mentioned the assassination of Usama Bin Laden, Seymour said. According to BB, Umar Saeed Sheikh murdered Usama, but her words were washed out from the David Frosts report, he said.
Got that? Bhutto was killed at Cheney’s behest (he apparently was the secret chief of the JSOC) by Gen. McChrystal and the boys (McChrystal soon to be the commander in Afghanistan headed the “squad”) because Bhutto blurted out that bin Laden was dead and that, unfortunately for her, undermined the given reason for the US being in A’stan.
Wow. How this guy gets even the coverage he does (The Nation and Arab TV) amazes me. At least The Nation jabbed Hersh with the “reputed journalist” tag. Arab TV, though, will eat it up with a spoon.
Matt Burden of Blackfive has announced the formation of something near and dear to my heart. A foundation to, well, let him explain:
So, a few of us decided to start our own foundation – non-partisan – to work with both sides of the aisle to solve veterans issues. We decided that we need to include every generation, every branch of service, in order to stand firm, back to back, and defend our family.
The Warrior Legacy Foundation is born.
The family he’s speaking about is the military family. And that family includes everyone, from service members and veterans, to those who have someone in the service to those who simply want to support the military and the veteran community.
This foundation’s membership is open to all – veteran or non-veteran – who are interested in supporting a group dedicated to ensuring the problems veterans face today have a powerful advocate willing to spend both the time and money necessary to see those problems solved.
The WLF becomes official on Memorial Day. But you can join now. Please do and support this new and worthy effort. This is the chance to make your unofficial support official.
Although Herbert Hoover is rarely cited when one thinks of “immortal words”, these few paragraphs from Hoover (from James T. Flynn’s “The Roosevelt Myth”, HT: the Heritage Foundation) should certainly give you pause:
In every single case before the rise of totalitarian governments there had been a period dominated by economic planners. Each of these nations had an era under starry-eyed men who believed that they could plan and force the economic life of the people. They believed that was the way to correct abuse or to meet emergencies in systems of free enterprise. They exalted the state as the solver of all economic problems.
These men thought they were liberals. But they also thought they could have economic dictatorship by bureaucracy and at the same time preserve free speech, orderly justice, and free government.
These men are not Communists or Fascists. But they mixed these ideas into free systems. It is true that Communists and Fascists were round about. They formed popular fronts and gave the applause. These men shifted the relation of government to free enterprise from that of umpire to controller.
Consider the “car czar”. Look at the Chrysler board. Imagine government run health care. Cap-and-trade. Etc.
After that bit of reality from today, read Hoover’s further observations:
Directly or indirectly they politically controlled credit, prices, production or industry, farmer and laborer. They devalued, pump-primed and deflated. They controlled private business by government competition, by regulation and by taxes. They met every failure with demands for more and more power and control … When it was too late they discovered that every time they stretched the arm of government into private enterprise, except to correct abuse, then somehow, somewhere, men’s minds became confused. At once men became fearful and hesitant. Initiative slackened, industry slowed down production.
Look around you and tell me what you see. The future? It’s to be found in Hoover’s words from 1940.
According to AP, there’s not much of an appetite among Democrats to raise taxes to support “health care reform”.
And, of course, given the estimates of the cost of “health care reform”, aimed at making health care “more affordable” (how do they get away with that, especially in light of our experience with Medicare and Medicaid), there’s no question that taxes must increase.
Right now the administration and Democrats are attempting to convince a skeptical public that most of that cost can be recovered in “efficiencies” government will introduce into the system. It is the oldest con game going. Anyone who has observed government operations of any scope or size knows quite well that government and its bureaucracies are not at all efficient in their operation. Medicare fraud, for instance, costs us about $60 billion a year. Somehow the same bureaucracy which has allowed this year after year will suddenly become “efficient” and stop it?
Even if that could happen, the huge expansion of the governmental piece of health care is going to require massive funding. That means raising taxes. But many Democrats are very wary of such a move, especially with the 2010 midterms looming:
Many of those newly elected Democrats are wary of voting to raise taxes, especially when they are unlikely to get any Republican support.
“If you are a first- or second-term Democrat, why on earth would you want to vote in July or August 2009 for a tax increase that the president doesn’t want to have take effect until 2011?” asked Clint Stretch, managing principal of tax policy at Deloitte Tax. “You’ve just handed your opponent an extra year to campaign that you’re a big-tax Democrat.”
There, indeed, is the nut of the opposition to such a move. That doesn’t mean that Democrats wouldn’t eventually vote to raise taxes, but they’d want to do it in 2011, not 2009. That, of course, puts them in direct opposition to Speaker Pelosi, from a safe California district, who has pledged to pass “health care reform” this year. As I’ve stated repeatedly, while Pelosi might not be the sharpest knife in the drawer (and her CIA/waterboarding debacle make the case) her political instincts are good. She realizes that there’s a very narrow window available to Democrats to pass their liberal agenda and it may close by 2010.
That shapes up into an interesting internal fight within the Democratic caucus. As I see it, “victory”, at least in the short-term, would be seeing health care put off until after the mid-terms. And, as history has told us, the longer it takes for the Congress to act on legislation like this, the less likely its passage becomes.
Many states have decided the financial relief they need to make up for their profligate spending sprees of the recent past and their present budget short-falls is to be found in raising the taxes of their “rich” citizens.
With states facing nearly $100 billion in combined budget deficits this year, we’re seeing more governors than ever proposing the Barack Obama solution to balancing the budget: Soak the rich. Lawmakers in California, Connecticut, Delaware, Illinois, Minnesota, New Jersey, New York and Oregon want to raise income tax rates on the top 1% or 2% or 5% of their citizens. New Illinois Gov. Patrick Quinn wants a 50% increase in the income tax rate on the wealthy because this is the “fair” way to close his state’s gaping deficit.
But there’s a problem with the plan. As the WSJ points out, these citizens and their money are mobile and while they may prefer to live in the states listed above, they simply don’t have too. And with the plan to significantly increase taxation for them, now there’s a good reason not too:
The tax differential between low-tax and high-tax states is widening, meaning that a relocation from high-tax California or Ohio, to no-income tax Texas or Tennessee, is all the more financially profitable both in terms of lower tax bills and more job opportunities.
Updating some research from Richard Vedder of Ohio University, we found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas. We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts.
Notice that the exodus from the high-tax states to low-tax states with more opportunity has been significant since 1998. But now with the plan to increase taxes again on the “richer”, high-tax states are providing even more of a financial incentive for those in higher income brackets to leave them and move to low or no-income tax states. While such a relocation might have had marginally positive financial results for those leaving in the past, high-tax states are about to make relocation for financial reasons a no-brainer. And states like California and New York can hardly afford to run off the class of tax payer that presently pays the largest percentage of state taxes. But, with alternatives available, that’s precisely what they’re getting ready to do.
And when that happens, who ends up making up for the state’s shortfall?
More recently, Barry W. Poulson of the University of Colorado last year examined many factors that explain why some states grew richer than others from 1964 to 2004 and found “a significant negative impact of higher marginal tax rates on state economic growth.” In other words, soaking the rich doesn’t work. To the contrary, middle-class workers end up taking the hit.
Heh … what a surprise.
In this podcast, Bruce and Dale discuss the Nancy Peolosi’s beclownment, and the state of the economy
The direct link to the podcast can be found at BlogTalkRadio, since I inadvertently failed to record a local copy of the podcast.
The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2007, they can be accessed through the RSS Archive Feed.