Business As Usual?

There I was, out of the stock market against advice, waiting for Tea Party House Republicans to pull the trigger on the debt ceiling and get serious about deficits and the debt.

What  happened? Capitulation; the worst bit of negotiating ever seen.

First they write a bill to restore the pay of federal workers after just two days of shutdown.

Then they change their demands multiple times; defund Obamacare, repeal medical device tax, make congress participate, etc.

Then they fail to highlight the President's unilateral changes to Obamacare as a legitimate reason to defund or delay or reopen the law; if the executive can do it, why can't they?

• Delayed employer mandate
• Delayed out-of-pocket caps
• Rescinded congressional participation mandate
• Rescinded requirement for congressional employees to pay for their own Obamacare premiums
• Income verification requirement dropped
• Income verification for Obamacare subsidies is a stumbling block for the insurance exchanges (top left below) since the Hub software is reportedly the part that has been failing and liberals want no barrier to giving away taxpayer earnings (is the Hub software failing on purpose?). At least this was brought back as part of the deal.

Finally and inexplicably, Boehner caves and allows a floor vote instead of calling the President's bluff.

The good news is that the software (maybe) has kept enrollment for the first two weeks to about 70,000 nationwide, well short of the 30,000,000 goal.

The other good news is that when the Hub software is made to work (by competent software engineers), it can serve as the vehicle for Welfare and Medicaid reform by automating the work of millions of bureaucrats and eliminating the horrendous 263% overhead.

I'm not opposed to Obamacare per se'. I'm opposed to the projected $150 billion annual cost (all borrowed) to taxpayers. I am equally opposed to the fact that it does nothing to control actual health care costs. I am also opposed to some of its provisions since they put taxpayer's wallets at risk.

Given the 270 million insured people and the $2.7 trillion yearly cost of health care, we're talking $10,000 each. This means taxpayers will pick up half the cost to insure all enrollees (30 million people times $5,000 average subsidy equals $150 billion).

I think this is why establishment Republicans were siding with Democrats; not because they want government expansion but because their big-business constituents want taxpayers to pay for employee health insurance instead of them; a $2,000 fine, er, tax is cheaper than a $10,000 premium. Smaller businesses will be screwed since they can't afford to bribe, er, lobby capitol hill; I suspect that's why they're not hiring.

The Tea Party Republicans should have fought the cost, not the law. If they ever get elected again, they can repeal the law the same way we got it; by party line vote.

They should have forced a choice in spending priorities by demanding $150 billion/year in spending cuts to offset the impact of the law (prior to repealing it). They also needed to address the rest of the $800 billion annual deficit not covered by the sequester (Part II coming up in January).

What is a Trillion?
My friend Jack asked me to include a thought experiment of what a trillion is.

A penny is 1.55 millimeters thick. A trillion of them would make a stack 1.55 billion meters tall. The stack would weigh 2,750 tons.

A distance of 1.55 billion meters is 962,000 miles; roughly to and from the moon 4 times.

A dollar bill is  2.61 inches wide by 6.14 inches long, and the thickness is 0.0043 inches

It would take nearly two Stockholm Globes to hold a trillion of them.

It's a pretty big number!

Our debt is 17 times bigger.

Liberals like to compare the debt to GDP because they view ALL of our money as theirs; why stop at a paltry 40%?

Campaign Finance Reform

This topic is a little off the beaten path for me since it isn't really about fiscal policy.

However, it is in the news since the Supreme Court is on the subject again. In addition, it's all about selecting who gets to make fiscal policy and that is in my wheelhouse.

As most of you have gathered, I don't hold politicians in high esteem. I respect the office but it seems most office holders are lying, cheating, obfuscating, thieving sons of bitches.

Even those who are good are forced to spend most of their time raising money to combat the bullshitters, pinheads and windbags running against them. I, for one, would prefer it if they'd just do their jobs and fix the country's problems without putting us all in the poorhouse.

The big issue, ironically, is freedom of speech! I suspect we'd all like a lot less talk and a good deal more action solving problems.

So here's my idea; rather than limit how much money can be raised by who, for who or for/against what, let's limit all political campaigns to the 30 calendar days immediately preceding election (or primary) day. Print, TV, yard signage, radio and internet. Two weeks to lay out the plan, one week for rebuttal/debate and the rest for whatever.

We can also force all primaries to be held on the same day to prevent state-to-state contamination; I, for one, couldn't care less about the races in Manhattan yet I'm forced to endure it for months on end.

In addition, we'll insist that all unspent funds be given to a pre-selected list of charities the day after the election and that those charities are a matter of public record.

This has a ton of beneficial rewards and I'll list a few:

• Only those with solid plans will make it; no time for nonsense.
• Well organized candidates will have an advantage and get to prove who they are.
• The public will be spared endless political ads.
• The public can be more focused and weed out the bullshit early.
• It might improve voter interest and turnout; as opposed to disgust and disinterest.
• There will be fewer attack ads; with less time, better to focus on plans, not attacks.
• Unions, rich guys and the rest of us will be on equal footing.
• Charity gets a big boost since most candidates are losers (Weiner, Spitzer, Palin, etc.).
• The court can focus on more important matters.
• Once elected, more time can be spent working on problems.

This will not stop the endless chatter on Fox and MSNBC or in the Editorial pages since that's free speech too. It also won't fix the fact that most voters don't really grasp what's going on.

However, it will prevent the financing of political hacks with taxpayer money; who wants to pay to elect liberals to steal their money?

Evident Truths

I've been studying the fiscal realities of our country since I retired. I've been writing about them for more than a year (letters to the editor before this blog). Here are the top 50 truths I've found along the way.

1. Social liberalism (http://en.wikipedia.org/wiki/Social_liberalism) is good except where it interferes with fiscal conservatism (http://en.wikipedia.org/wiki/Fiscal_conservatism). It has interfered too much in the last 20 years.
2. If you ignore the dumb statements made by some (as I do for many liberals), the Tea Party-ers are the first group in Congress to show any backbone in 30 years. They'll cave as they always do since they still want to rule the bloat.
3. We spend about $1.6 trillion (10% of GDP) on public education every year. Hong Kong, South Korea and Finland spend half as much and get twice the results. We can clearly spend much less and do much better.
4. Let's try one of Einstein's thought experiments;
   
   • Imagine the best and worst schools in the country. 
   • Imagine transplanting the students of both schools, one to the other.
   • What happens?
   To my knowledge this experiment has never been tried but the result should not surprise anybody except for the fools who proclaim money to be the answer; the students who excelled will continue to excel and those who failed will continue to fail.
5. Government should set high educational standards and get out of the way.
6. Healthcare is simply too expensive and having taxpayers foot the bill is not the solution. This only causes prices to rise like Medicare did in 1965.
7. Our governments (fed, state and local) spend too much and get too little in return. We need to get back to the limited government of Washington and Lincoln; Justice, State, Defense and Treasury.
8. Excepting the non-civilian military, government pensions (fed, state and local) and Social Security must be converted to private investment accounts beyond the reach of thieving politicos.
9. It is stupid to burn stuff for energy when sunlight is free and can meet our demands cleanly.
10. Financial meltdowns are getting closer together; 1929, 1973, 1987, 1989, 2001, 2008...this is not a good progression! Either our regulators are not as clever as the crooks or they are in cahoots. 
11. We are becoming a socialist nation but socialism is a well known failure of policy.
12. Socialists argue that the general welfare clause of the constitution puts them on firm ground; the referenced clause is about promoting the general welfare, not providing it. It is unconscionable to confiscate one person's earnings because other people felt they could rely on a peer-provided safety net instead of earning for themselves. What is one man's fair share of another man's earnings?
13. As Cicero said in 55 BC: "The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed, lest Rome become bankrupt. People must again learn to work instead of living on public assistance." This is not a new problem.
14. The Peter Principle holds that in a hierarchy, members are promoted so long as they work competently. Eventually they are promoted to a position at which they are no longer competent (their "level of incompetence"), and there they remain, being unable to earn further promotions. Having reviewed the budget proposals from the White House, the (republican) house and (democrat) senate, it occurred to me that this must be the principle at work in our nation's capital. Only an incompetent group could look at what's happening here and around the world and produce a set of budget documents so blind to reality.
15. The notion of a general government spending fund should be done away with to prevent our spendthrift state legislators from diverting resources to projects intended to boost reelection chances or fill campaign coffers. The same should go for local governments and the federal government.
16. The current cost of the federal government is about $3.8 trillion. It should cost less than $600 billion. 
    Want the economy to pick up? Imagine how much better off we'd all be with 30% more of our own earnings back in our own pockets.
17. Even at this ridiculous level of spending and debt, not even a dent has been made in poverty; I believe this categorically proves that government spending is not the answer.
18. Liberals always whine that reducing or leveling government spending puts a drag on GDP growth. Well, duh! Government spending is 40% of GDP!
19. It is quite feasible to balance government budgets, fulfill all existing promises and pay off the debt (excluding the $50 trillion theft from Social Security) within 40 years.
20. It is quite possible for liberals to pay the full cost of Welfare and Medicaid and still pay less than they currently pay for them.
21. Prisons are stupidly expensive. Maybe we should consider air-dropping all of our violent prisoners on Riyadh, Tehran and Pyongyang with explosive vests (with remote triggers).
22. Illegal immigrants cost us $155 billion/year. A mass deportation would finance Obamacare but no liberal would suggest that; they'd seemingly rather let them vote.
23. It appears as though the highest student loan default rates correlate to art schools, schools in tropical locales and community colleges suggesting that defaults correlate with a lack of seriousness regarding higher education.
24. The cost to deliver a quality college education should not be not much higher than the cost to deliver at the K-12 level. The cost should be driven by the instructor's salaries since the paid delivery of an education happens in the classroom, just like K-12.
25. The sum of government education subsidies should never exceed, say, half of the total amount to make sure the students have skin in the game. Loans should not be forgiven except for hardship; tack the balance onto tax bills; that said, subsidies cause prices to rise so pick your poison.
26. Entitlements and tax-funded charity must end; both are unconstitutional.
27. Stormy weather conditions seem to have been getting more extreme lately and global warming is the odds on favorite for the cause.
• It's hard to judge what's happening since we've only witnessed a tiny portion of Earth's history.
• Ice cores show that temperatures rise before carbon dioxide.
• We pump 5 ppm of Earth's atmosphere full of carbon dioxide every year but the actual concentration only increases by 2 ppm/year.
• Water vapor is a more potent greenhouse gas than carbon dioxide and there's a lot more of it.
• Carbon dioxide does not appear to be the main culprit to anybody but the liberals; they even tried to reinterpret the ice core data to fit their theory so they can tax carbon emissions too.
28. I remember hearing about the collapse of the Mianus River Bridge the day after I drove over it. I am convinced that it wouldn't have happened if the politicians had been budgeting to maintain the roads and bridges instead of doing the social engineering that gets them elected.
29. The whole Middle East has become a quagmire that makes Vietnam in the 60's look like a picnic. Our efforts are not making it any better; Arab Spring, Islamic Fundamentalists in charge of Egypt, Libya (Benghazi), the Syrian Civil War, Iraq, Iran's centrifuges, the Taliban in Pakistan, Afghanistan and Lebanon again (go Hillary, woo hoo!). This doesn't even cover the fact that al Qaeda sprang from Saudi Arabia, our supposed ally and long time trading partner. Why stay?
30. The 'War on Drugs' is another total policy failure. We spend $15 billion/year to stop a $400 billion/year business. This is like bringing a knife to a gunfight. This doesn't include the $14 billion cost of imprisonment of the 325,000 people convicted of drug crimes. Legalize and tax to let the worst welfare recipients fund themselves.
31. This is what the 2nd Amendment is all about; a well-armed citizenry as a bulwark against government tyranny. Bring on the Howitzers!
32. Blindly throwing money at a problem, as liberals would have it, fixes nothing. This simple fact is borne out by the steady poverty rate of 13% after more than 50 years of social engineering failure.
33. There are lots of folks with disabilities (10 to 13% in Connecticut). It's about the same everywhere.
34. There are 11 million on Social Security Disability Insurance; 20% of all retirees. How can that be?
35. In Connecticut, it costs $9.52 billion to deliver $6.24 billion of Welfare and Medicaid benefits, a 53% overhead but only 3.8% of state GDP as compared to 9% nationwide. The real cost without overhead is 2.48% of GDP. The bottom 40% earn 3.3% of all income and income is half of GDP. Think about it.
36. Taxpayer-funded insurance must end; it is also unconstitutional.
37. Government represents nearly 14% of the entire workforce. Government is essentially management so why is it 14% when, in the private sector, it's 4.28%? Think about it.
38. We need revenue-neutral tax reform to get us on the road to lower taxes for all.
39. Nobody in the US should be exempt from taxation unless they forfeit justice and defense; making them fair game for all gun-totin' taxpayers.
40. Federal tax breaks cost as much as all income tax and payroll tax (FICA) revenue. This is 83% of all federal revenue. End the breaks and reduce income taxes.
41. The Wealth Gap is sort of like the description of God; was, is and always shall be.
42. The Wealth Gap, ironically, reaches its peak under communism/socialism; Moscow, Beijing and Havana have everything while the rest get nothing.
43. Printing money inflates the Wealth Gap, it doesn't change it.
44. Raising the minimum wage is like printing money; no impact on the Wealth Gap.
45. Redistribution efforts tend to inflate the incomes of the well-off while simultaneously reducing those same incomes by taxation. The poor get no relief at all as illustrated by history.
46. Social Security maintains poverty by disallowing inheritance in favor of theft (by government).
47. Consumption, sin, fuel and property taxes exacerbate poverty since they comprise a larger percentage of the low earners wages.
48. We should tax income or outgo but not both.
49. There has been no argument to the contrary from Congress or the White House so it must be true that the federal government has stolen at least $50 trillion from the Social Security Trust Fund.
50. The real national debt is more than $66.7 trillion, not $16.7 trillion and the interest on it is nearly equal to all federal revenue.

More Liberal Arithmetic Shenanigans

Those liberals just can’t resist trying to make a bad situation (of their own making) look worse than it really is; I've heard it before but today it was in print. A New York Times article has Jacob Lew, the new Treasury Secretary, saying the US spends $60 billion/day.

Of course, it's an exaggeration made by the liberal rag itself. The article has a link to the actual letter from Lew that says that the $30 billion on hand on October 17th "would be far short of net expenditures on certain days, which can be as high as $60 billion".

The arithmetic; the 2013 budget was for $3.8 trillion. Divided by 365 days, I get $10.4 billion/day.

The article suggests federal spending exceeds GDP. I know this is the dream of liberals but, come on!

This is similar to the way the liberals under-report the national debt at 75% of GDP; if that were true there would be no debt ceiling battle over a $16.7 trillion limit, would there?

They stop White House tours, they close beaches, they bar national monuments, they suggest Social Security won't get paid and so on. What a load of crap.

There is no need for a default. We only paid $395 billion in debt service this year. We could pay that by reducing all manner of other spending before defaulting.

Don't buy this nonsense.

The Obamacare Arithmetic Revisited
The reality is that Obamacare will result in an additional $150 billion/year of deficit spending starting in 2017. According to the AMA, uninsured and uncompensated health care cost about $54 billion in 2008 (the year in which Obamacare began).

There are about 50 million uninsured (no idea how they can measure this) so the actual cost is only a bit over $1,080 each. To fix this, the CBO estimates that Obamacare will spend $150 billion/year starting in 2017; $3,000 each.

This is plainly a waste of taxpayer dollars; House Republicans are clearly crazy, right?.

If the current trend of half of the uninsured remaining so persists, does that put the cost at $6,000 each?

If young, healthy people don't buy in (and why would they wwith a $95/year tax penalty for not doing so), what will that do to costs?

Such a deal!

Even better, it will increase by $30 billion/year in just a few years;  see graph below.

Those liberals are economic masterminds! Of course, they're spending your earnings so who cares.

The liberals love to lambaste the (conservative) House of Representatives for trying and failing to repeal it dozens of times (so far). They also whine about the shutdown and looming debt ceiling battle. However, given these facts and the facts that half of the states have rejected it and that the roll-out of the pre-existing condition trial is already out of money lend credence to the House's efforts.

They also love to say it's a republican idea: modeled after Romneycare in Massachusetts. In 2012, the Blue Cross Foundation of Massachusetts funded and released in April research that showed that the 2006 law and its subsequent amendments – simply in terms of measuring the state-budget effect on the uncompensated care pool and funding subsidized insurance had cost approximately $2 billion in fiscal year 2011 versus approximately $1 billion in fiscal year 2006. Some of this doubling in cost was funded by temporary grants and waivers from the United States federal government (us again). The result doesn't include the $295 per employee cost to employers; nor does the CBO estimate of the cost of Obamacare include premiums; just subsidies.

The net result is that 4% more of the state population is insured. With a population of 6.6 million, this is 264,000 people. The cost per person is $3,787 + $295 = $4,082. Still way more than the original $1,080. The beneficiaries are the health care providers, not the uninsured people or the taxpayers.

I'll not argue that republicans are incapable of dumb ideas too, but that's no reason to duplicate them on a large scale.

This may be stating the obvious but wouldn't we be better off to repeal and offer the hospitals insurance against uninsured people rather than doing stupid stuff like this?

The real culprit is costs, not who pays.

Again, I urge you all to send this to your senators. It's worth 10 minutes of your time.

The law is a piece of crap, passed in an anti-Bush fervor with zero Republican support. America open for business is a wonderful thing.

*****************************************************
Senator,

I'm writing to ask you to vote for the house CR to fund government and defund the ACA.

The ACA is a $150 billion 'solution' to a $50 billion problem.

Poor people can't afford even cheap premiums but they can't be turned away from emergency care.

As more companies opt for a fine instead of providing employee's insurance, the whole wage basis of the middle class will come unhinged.

The MLR provision isn't working either; insurance companies still post 30% profits.

The only good thing is the pre-existing thing but that would be a good standalone law.

You rightly bucked the party on place something here, please do it again.

-Marty
******************************************************

The Goal
The ultimate liberal goal is a single-payer system.

Obamacare exists because that would never become law.

The liberals hope this train wreck will make that one look good by comparison.

Show me the arithmetic.

Shutdown is Sequester with Conservative Flavor

So, here we are in a federal government shutdown. I saw that coming but am surprised that the DJIA is up.

I think the liberals are hoist by their own petard; by refusing to negotiate, they have actually cut government spending by a lot more than a deal could have produced.

How much?

With 800,000 federal employees furloughed at an average pay of $66,000/year ($254/day), the shutdown saves $203 million/day. This assumes that congress won't vote to restore back pay like they did the last time; they should not.

If we assume that the shutdown will persist through the debt ceiling expiration on the 17th, we'll have saved nearly enough to fund Obamacare in 2013 by defunding everything else except the military and the two real entitlements; SS and Medicare; a conservative dream come true.

And the battle of the titans will continue.

When it continues, the ante goes up to $2.4 billion/day since the feds borrow $2.2 billion/day and that will have stopped. In addition, treasuries will become less valuable, thus making the national debt smaller.

Liberals have trouble with arithmetic outside of opinion polls.

Conservatives watch the dollars; they rightly believe that they belong to those who earned them whereas liberals believe that the dollars are all theirs. Liberals want their fair share; conservatives ask what is your fair share of someone else's earnings?

The President was wrong when he said that "one faction of one party in one house of Congress in one branch of government doesn’t get to shut down the entire government"; they just did. He was also wrong by signing off on Obamacare when he knew that all Republicans and many others were opposed to it; roughly half of the country. He manipulated the anti-Bush fervor and was foolish to believe that it would not hound him like it has.

And the President still has not answered my question (after three attempts) regarding the $50 trillion missing from the Social Security Trust Fund. This tells me that there isn't enough money to satisfy his desire for redistribution; fair share = ALL.