With Obamacare People will quit their Jobs leading to longer Wait Times and the Rationing of Health Care

Posted by PITHOCRATES - November 3rd, 2012

Week in Review

Britain’s National Health Service (NHS) is currently trying to cut about $32.2 billion from their approximate $162 billion budget by 2014.  A 20% cut.  Why?  Because of the cost pressures of an aging population.  More people are retiring from the workforce than entering it.  And these retirees are consuming the lion’s share of health care resources.  So they have fewer and fewer people paying for a growing aging population burdening the NHS.  They have no choice but to find ways to cut costs.  Because the money is just not there.  Not like it once was when they had a population getting younger.  With more people entering the workforce than leaving it.  When people were still having a lot of babies.  To keep that population growing.  Further expanding the tax base.  But those days are gone.  They don’t have the money like they once did.  So they have to cut costs.  Which increases wait times.  And rations health care.

The US is in the same boat.  They, too, have an aging population.  And unable to learn the lesson of the British (national health care doesn’t work when you have an aging population) they went ahead and passed Obamacare.  It’s not yet fully implemented.  But already the CBO is projected bad news (see CBO: Health law to shrink workforce by 800,000 by J. LESTER FEDER and KATE NOCERA posted 10/2/2012 on Politico).

CBO Director Douglas Elmendorf told the House Budget Committee on Thursday that the health care law will reduce employment by 0.5 percent by 2021 because some people will no longer have to work just to afford health insurance.

So on top of an aging population some people will quit their jobs.  Because health care will be free under Obamacare.  Which must mean Obamacare will mutate into a full-blown national health care system.  Even though what they’ve told us thus far is that the key to Obamacare was forcing people to buy health insurance.  That individual mandate.  But if people are going to start quitting their jobs it doesn’t sound like they’re going to buy health insurance.  Which will make things worse.  More people collecting government benefits.  Fewer people paying for those benefits.  This can only mean one thing.  Longer wait times.  And the rationing of health care.  Just like they have in the NHS.

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Rising Costs and Falling Revenue forces NHS to cut Hearing Services, Hip & Knee Operations and Eye Surgeries

Posted by PITHOCRATES - October 27th, 2012

Week in Review

The costs of an aging population (due to fewer people having babies these days than in our parent’s generation) are causing great cost pressures on Britain’s National Health Service.  The number of elderly patients is rising.  And they’re consuming more health care resources.  While the tax base is shrinking.  With fewer people paying taxes overall tax revenue falls.  You don’t have to be highly skilled in math to see the problem here.  They’re spending money faster than they can get it.  And when you have a problem like that your options are few.  You cut costs.  Increase wait times.  And ration services (see NHS hearing services ‘being cut’ by Nick Triggle posted 10/22/2012 on BBC News Health).

NHS hearing services are being scaled back in England, an investigation by campaigners suggests.

Data obtained by Action on Hearing Loss from 128 hospitals found more than 40% had seen cuts in the past 18 months.

In particular, the study found evidence of rises in waiting times and reductions in follow-up care.

The report is the latest in a growing number to have suggested front-line care is being rationed as the health service struggles with finances.

The NHS is in the middle of a £20bn five-year savings drive.

The government believes the savings can be made by increasing productivity.

But in the past year reports have suggested everything from hip and knee operations to eye surgery is being cut.

As American health care transitions into full scale Obamacare these are terms we’ll start to hear.  Cost cuts.  Wait times.  And rationing.  You know, before they cut our hearing services.  Then these things will happen.  We just won’t hear about them.

Incidentally, the NHS is trying to cut about $32.2 billion from their approximate $162 billion budget.  That’s a 20% cut.  According to Kaiser, the US spent about $2.3 trillion on health in 2010.  A similar 20% cut in our health care spending would total approximately $450 billion over five years.  Or about $900 billion over 10 years.  Which is close to what the first CBO score came in for Obamacare.  When they were counting revenue for some years but no costs.  So basically to do what the British are doing would require the repealing of Obamacare.  That’s how big these numbers are.  And why we should repeal Obamacare.  Before our excellent health care system suffers these cost cuts, wait times and rationing.

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The NHS may be letting Elderly Patients Die to Help Cut Costs

Posted by PITHOCRATES - October 21st, 2012

Week in Review

There are few things more difficult than watching a loved one die a slow death.  Nothing prepares you for this.  Even if you work in the health care industry (see My diary of mum’s awful death on the Liverpool Care Pathway: Nurse’s heart-rending account of how doctors decided  to put her mother on ‘pathway to death’ by Tom Rawstorne posted 10/19/2012 on the Daily Mail).

As a nurse and health visitor with 25 years’ experience, Carole Jones thought she knew the workings of the NHS inside out.

But when her 85-year-old mother Maureen was admitted to Addenbrooke’s Hospital in Cambridge last year having suffered a stroke, she was totally unprepared for what followed.

Her mother’s chances of recovery having been written off by medics, a decision was taken — without Carole’s knowledge — to place Maureen on the controversial Liverpool Care Pathway (LCP).

This is a plan ostensibly designed to ease the suffering of the dying, which can involve the heavy sedation of a patient and the removal of tubes providing food and fluid.

Over the past week, families have contacted the Daily Mail saying they believe their loved ones were wrongly put on the LCP by hospitals when they were not in fact close to death, fuelling the suspicion that it is used to hasten deaths to save the NHS money and free up beds.

In June this year, Professor Patrick Pullicino, a consultant neurologist for East Kent Hospitals, and Professor of Clinical Neurosciences at Kent University, told a conference the LCP had become an ‘assisted death pathway’.

‘Very likely, many elderly patients who could live substantially longer are being killed by the LCP,’ he said.

It is so difficult when the roles reverse between parent and child.  When a parent consults with a doctor about his or her child you usually don’t have to worry whether the doctor is doing what’s best for the child.  When it is a daughter or son of a parent discussing an elderly parent’s treatment with a doctor it’s a different story.  Especially if that parent is suffering from dementia.  And the National Health Service is dealing with cost pressures from an aging population.

More people are leaving the workforce than entering it in the UK (as well as the US).  Which means two things.  Tax revenue is falling because of fewer workers (which means fewer taxpayers).  While at the same time a larger number of retirees are consuming a large share of health care services.  So that’s less money coming into the health service.  While the health service is spending more money on providing health care services.  Which is a problem.  If you spend more than you receive you will run deficits.  And if you can’t increase tax rates anymore that leaves only one other option.  Cost cutting.

Is this the reason why they are placing elderly patients in the controversial Liverpool Care Pathway (LCP)?  To help cut costs by having them die more efficiently?  Whether they are or not it would help cut costs.  Probably the largest cost savings they can make.  By removing the largest consumers of health care resources from the health care system.  A death panel, if you will.  Where some government bureaucrat makes a cold and calculated decision to let a person die because it’s the cost efficient thing to do.

It’s something to think about as they fully implement Obamacare.  For if the NHS is doing this it would follow that Obamacare will, too.  For both nations have aging populations.  Only the US has about five times the population of the UK so the US will probably have five times the cost pressures.  And will likely place five times the patients into the US equivalency of the Liverpool Care Pathway (LCP).

This is the bleak future of Obamacare.  Real death panels.  Despite what the proponents of Obamacare say.

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NHS closes Emergency Departments to Save Costs while Angering Britons

Posted by PITHOCRATES - October 14th, 2012

Week in Review

Some of the most expensive services in health care are emergency departments.  Or A/E departments in Britain.  For accident and emergency departments.  Because you need a lot of staffing to handle everything from a heart attack to severe trauma from an accident to a difficult pregnancy.  Doctors, nurses, technicians, orderlies, pharmacists, administrative, cleaning, security, etc.  Not to mention the diagnostic equipment.  Medical devices.  Medicine.  Oxygen.  It adds up.  So it’s no surprise that the NHS is looking at A/E closures to cut costs (see 28,619 Mail on Sunday readers write to Government to stop A&E closures… and Ministers still do nothing by Nick Craven and David Rose posted 10/13/2012 on the Daily Mail).

Thousands of you sent in your protests against A&E closures – and this week we delivered two bulging mailbags full of your demands to David Cameron’s doorstep.

Nearly 30,000 Mail on Sunday readers have called for the Government to reverse the policy of downgrading and axeing local casualty departments across England and Wales.

A total of 28,619 protests were lodged – 17,170 coupons, 7,377 emails and 4,072 text messages – all prompted by fears that the policy for big, centralised A&E departments could risk lives as it leads to longer journey times to hospital…

Changes in London could result in a massive 47 per increase in the number of people served by each A&E department.

You ever waited for a long time to see a doctor in a crowded emergency waiting room?  Before Obamacare in America?  It was not uncommon on a busy night to wait for up to 3 hours if you had a non-life-threatening condition.  Now imagine being in that waiting room with 47% more people waiting with you.  Which could easily extend that wait time to 4-5 hours.  Or more.  Which is what will happen as Obamacare mutates into a national health service like they have in Britain.  Which is what the proponents of Obamacare want.  National health care.

At that time even the proponents of Obamacare won’t like Obamacare.  And they, too, will mail in enough complaints to fill two bulging mailbags.  (Based on the US having five times the population of the UK, that would probably be 10 bulging mail bags.)  Because these people will want everything for nothing.  But they won’t understand the cost of everything.  Or why the health service will have to cut costs, increase wait times and ration health care treatment.  And they will.  Because the NHS is.  And they can probably do national health care better than Obamacare ever will.

As as well as travelling longer distances after answering 999 calls, it will have to pick up seriously ill patients who turn up at the so-called ‘urgent  care centres’ which are set to replace A&Es but in reality cannot treat any life-threatening conditions.

At just one of the hospitals where A&E is due to close, Ealing, there is already an urgent care centre which transfers up to 50 patients a day to casualty.

Currently, this is a short journey down a corridor, but if casualty closes, as planned, all the patients will have to be transferred by blue-light ambulance to an A&E somewhere else, probably West Middlesex 20 minutes away, or Northwick Park, 45 minutes away.

To cut costs national health care services have really only one option.  As they cannot tell people to have 10% fewer accidents and health care emergencies.  Which leaves health care overhead.  If you close an emergency department (A/E department) you can save some money.  Close a few and you can save a lot of money.  So they do.  And make people travel further for their health care.  Up to 45 minutes by ambulance.  Perhaps an hour or more by car.  Even longer by train for those non-life-threatening emergencies.

This is the future of health care in America.  Under Obamacare.  And whatever that evolves into.  The NHS had some good years.  Before the British population began aging.  Now the British population is older.  More people are leaving the workforce while fewer are entering to replace them.  And as they leave the workforce they’re consuming more and more health care services.  Causing the cost strains in the NHS.  And the need for those cost savings.

This would be the starting point for the Americans.  They would not have the good years the NHS had.  Because right from the get-go they will be struggling with the costs of an aging population.  Which they will have to tackle right away by cutting costs, increasing wait times and the rationing of health care treatment.  Meaning that when trying to provide everything for everyone they will end up providing only for those some bureaucrat deems worthy of those limited health care resources.  They won’t be called death panels in the new health care law.  But they will be death panels.  Because someone will have to decide who gets those limited health care resources.  And who doesn’t.  Because they just won’t be able to give everything to everyone.  As the proponents of Obamacare think they will be able to.  And they will be none too happy when they learn this unpleasant little fact.

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The U.S. Postal Service is One of the Biggest and Least Successful Companies of All Time

Posted by PITHOCRATES - May 5th, 2012

Week in Review

The U.S. Postal Service (USPS) may not be part of the government.  But it sure acts like it is (see As a private firm the US Postal Service would rank 35th on the Fortune 500 list, but it would also be bankrupt posted 5/5/2012 on The Economist).

AT THE bottom of its press releases the US Postal Service brags that if it were a private company, it would rank 35th on the Fortune 500 list. Were it a private firm, it would also be bankrupt. The service loses $25m a day.

Hit hard by the recession and the march towards electronic mail, the Postal Service is in desperate need of reform…

A normal business could not operate like this. Over three-quarters of America’s post offices do not make a profit. Take, for example, the office in Alix, Arkansas, which last year cost $48,452 to run and brought in just $3,642 in revenue. Its earnings may be thinned by the presence of eight other post offices in an 11-mile radius. Under the Senate bill, the Alix office would remain open…

A more pressing concern for the service involves payments into a health-benefits fund for the future retired…

The focus will now shift to the House, which is considering a postal-reform bill of its own. Its author, Darrell Issa, a Republican from California, plans to end Saturday delivery and establish a financial-control board with a mandate to cut costs. His bill would take politics out of the process by creating an independent commission to oversee the closure of post offices. And it would aim to bring the pay of postal employees into line with the private sector.

The solution is easy to some.  Get rid of email.  Text messaging.  And paying your bills online.  That’s the solution they’ve used elsewhere in the economy to protect a dying industry from a higher quality, lower cost competitor.  They used tariffs to protect the U.S. automotive industry.  And as a result they have lost all but a fraction of the global market.  They’ve passed labor laws favoring higher cost union labor.  And chased manufacturers out of the country.  The Labor Department sued Boeing for building a new 787 Dreamliner plant in a nonunion state.  Because they wanted those planes to be built with costlier union labor.  Making them less competitive with Airbus.  Who continues to expand their market share.  So why not get rid of email?  It would be no more foolish than past solutions.

Of course, they can’t do that.  Too many young people enjoy emailing and texting.  And everything else in the digital world.  They can increase the price of a car or a plane ticket without it affecting your every waking moment.  You can’t do that with the Internet.  For the American youth have a fever.  And the only prescription is more Internet access.  Or more cowbell.  And if you take that away to save something they don’t use that will come back to bite them in the buttocks in the first election following that action.  And that’s a problem.  Because the youth don’t care about past institutions or economics.  Their world is centered on them.  And if you mess with their immediate pleasures in life they will punish you at the polls.

So the solution to the USPS may have to be a real solution.  To address the real problems.  Which are simple.  There isn’t enough paper mail to support the current size of the USPS.  Or the current budget.  So you’re going to have to close some offices.  Some sorting centers.  And other infrastructure.  Most important of all you’re going to have to cut the payroll.  Letting people go.  And reducing their pay and benefit packages for those who stay.  Including those for retirees.  Like they do in the real world.  It’s either that or figuring out a way to put a stamp on an email.  Which past postmasters have thought about.  And are no doubt thinking about again.  If they can just figure a way to blame George W. Bush.  Or the Republicans.  Because young people already hate them. 

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FT101: “Unlike government a business tries to fix bad policy before it bankrupts them.” -Old Pithy

Posted by PITHOCRATES - January 20th, 2012

Fundamental Truth

If Businesses give their Employees Overly Generous Pay and Benefits they will not be able to Stay in Business

A lot of people say businesses are greedy.  That they are always trying to go on the cheap when it comes to their employees.  The fatal flaw of capitalism some even say.  That need to make a profit.  And because of the profit-incentive businesses try to use as few employees as possible.  While paying them as little in pay and benefits as possible.  Which they, of course, do.  Because that’s the only way they can stay in business when their customers are doing the same.  When we go to the store looking for the maximum value at the lowest price.

You see, a business has to earn enough sales revenue to cover all their costs.  And their sales prices include these costs.  If these costs are too high people won’t buy from them.  So this is the reason why they pay their employees as little in pay and benefits as possible.  Because of us.  And our greed.  To keep as much of our money as possible when shopping.

So businesses can’t be overly generous to their employees.  For if they are they are then faced with two choices.  Raise prices to pay for this generosity.  Thus dissuading consumers from buying from them.  Which reduces their sales revenue.  Or they can choose not to raise their prices.  Which will increase their costs greater than their sales revenue.  Either way it’s bad for business.  For if they give their employees overly generous pay and benefits they will lose money.  And not be able to stay in business.

Businesses must make these Difficult Choices if they wish to Survive in the Real World

In free market capitalism businesses have real constraints.  They can’t be overly generous.  Because they won’t be able to earn enough revenue to cover their costs.  But neither can they be too miserly with their employees.  Because they have to be generous enough to entice them to work for them.  It’s this balancing act between generosity and being too cheap that causes a business problems.  Because in good economic times employees like to demand more.  And if they don’t get it where they currently work they will leave and work for someone else.  So employers are generous.  Sometimes too generous.  Which they usually learn when the good times end and they can no longer cover their costs at the new levels of revenue during those bad economic times.

A business cannot raise revenue by simply saying ‘raise revenue’.  For it is not up to them.  It’s up to the consumer.  And during bad economic times they’re just not buying like they once were.  Which leaves a business only one choice.  They must cut costs.  Either by cutting back on pay and benefits.  Or by really cutting back on pay and benefits.  By laying off employees.  It’s either that or they will bankrupt themselves out of business.

All businesses must make these difficult choices.  If they wish to survive.  Because they live in the real world.  Capitalism.  Where there are winners and losers.  And where businesses fail because they don’t make the difficult choices when they have to.  We’ve all seen a favorite store go out of business.  It may not always be because of the cost of their employees.  But it is always because they’re not earning enough revenue to cover their costs.

Difficult Choices are Rarely Politically Expedient and don’t bring in Many Votes

Health care costs and pensions have been the biggest costs businesses have struggled with.  That’s why defined benefit pension plans are a thing of the past.  Unless you’re in a union.  Or in government.  And employees are contributing more to the cost of their health care benefits.  Why?  Because of our aging population.  People are having fewer babies and are living longer.  And consuming more health care and pension benefits in their retirement than the actuaries ever dreamed possible when they created the health care benefit and defined benefit pension plans.

It’s no different in the public sector.  In fact, it’s worse.  Government grew.  And taxes grew to pay for that growing government.  It became more expensive to have babies.  So people had fewer.  Made possible by birth control and abortion.  Now there are fewer and fewer young people entering the work force to pay the taxes to pay for the ever growing number of seniors in their retirement.  Again, something the actuaries never calculated.  And there’s no way to fix it.  It’s a failed model.  But government won’t give up on this bad policy.  Unlike businesses have.  Because government doesn’t operate in the real world.  Like those businesses.

Government can do things businesses can’t.  They can tax.  They can run deficits.  Paid by massive borrowings.  And they can print money.  So they don’t have to make the difficult choices.  And chose not to.  Because those difficult choices are rarely politically expedient.  And don’t bring in many votes.

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Obama Delivers his $447 Billion Political Stimulus Plan to Congress

Posted by PITHOCRATES - September 12th, 2011

Had the $800 Billion Stimulus worked we wouldn’t need the $447 Billion Stimulus

We have a plan. Rather, Congress does. President Obama delivered it today. And he reiterated that they must pass it now. That there was no time for political games. Like he was doing. Saying basically that if the Republicans don’t pass it they don’t want to help the economy. And, by extension, they hate the American people. For only those who hate the American people could deny them jobs (see Obama urges no “political games” on jobs plan by Laura MacInnis and Matt Spetalnick posted 9/12/2011 on Reuters).

President Barack Obama called on Republicans not to play “political games” with his jobs plan as he pressed for swift passage of a $447 billion package he hopes will revive the U.S. economy and boost his re-election prospects…

He took aim at Republicans who have resisted many of his economic initiatives in the past.

“We can’t afford these same political games, not now,” Obama said.

Economic initiatives in the past? Like that $800 billion stimulus? You know, if that had worked we would not need another stimulus. But we apparently need another stimulus. So the previous stimulus must have failed. And, if so, why would this stimulus be any different?

It would appear that the only one playing a game now is the president.

Stimulus Sleight of Hand: Taking from the Private Sector to Stimulate the Private Sector

So let’s take a look at what the president calls stimulus. First of all, where is that $447 billion going to come from (see Obama proposes tax hikes on wealthy to pay for $447B jobs bill by Sam Youngman posted 9/12/2011 on The Hill)?

The White House said Monday that President Obama wants to pay for his $447 billion jobs bill by raising taxes on the wealthy and business.

Oh. He’s going to pay for his jobs bill by raising taxes on the job creators. I mean, let’s face it, poor people don’t create jobs. Rich people do. And businesses. And why aren’t they creating them now? They have no idea what cost this administration is going to levy on them next. Like a tax hike to pay for another stimulus bill.

The stimulus will be temporary. But you can bet those tax hikes won’t be. They’ll be permanent. And a disincentive for rich people and business owners alike to risk their money to create jobs.

The administration would tax the income investment fund managers make, known as “carried interest,” as regular income instead of as capital gains, which has a low 15 percent tax rate. This is another long-standing administration goal that has been resisted by Wall Street as well as some Democrats.

The administration estimates the capital gains change would provide $18 billion in revenue.

In other words, he wants to chase what investment capital we have out of the country.

A lot of people lose money in the stock market. Because it’s risky. It’s like gambling. Where there is no such thing as a sure thing. So those who take big risks often lose big. Even Donald Trump has filed for bankruptcy protection a couple of times. That’s why when they do win they need to win big. To cover all of those times they don’t win. But when you raise the tax rate on those winnings from 15% to 33% (the current top marginal income tax rate), it’s going to make investors think twice. That’s an increase of 120%. They may not just whistle a happy tune and pay it. You see, the funny thing about capital, it’s mobile. You can move it. And park it.

European investors are parking their money in U.S. banks at a negative interest rate while they wait out the European sovereign debt crisis. American investors can just as easily move their money out of the country. And wait for a more favorable investment climate before returning. Which won’t create jobs. Or provide tax revenue.

Another $3 billion would come from changing the way corporate jets depreciate. With a few other revenue raises, Lew indicated the total measures proposed by the administration would bring in $467 billion, $20 billion more than the cost of Obama’s jobs bill.

What is it with him and corporate jets? He sure hates those corporate jets.

So he will pull a half trillion dollars out of the private sector. So he can inject it back into the private sector. Less a small handling fee. And the usual gifts to his political cronies. Resulting in more debt. And very little stimulus. If any.

This is less stimulus. And more political sleight of hand. Taking from the private sector to stimulate the private sector.

The White House dug in on its refusal to say how many jobs the package would create, pointing instead to an estimate from Moody’s that said the bill would create about 1.9 million jobs.

Lew noted that he was not a part of Obama’s economic team when NEC director Christina Roemer and Vice President Biden’s former chief economist Jared Bernstein said that the original stimulus package would reduce unemployment to below 8 percent.

After months of being reminded by Republicans that the recovery act did not cut unemployment, which is now at about 9 percent, Lew said he thinks it is “dangerous to ever predict unemployment rates.”

If Moody’s prediction is accurate, that’s $ 235,263.16 per job. It would be cheaper just to give $30,000 to 1.9 million people. That would only cost $57 billion. And it would probably stimulate more. Of course, they won’t do that. Because that wouldn’t reward any political cronies.

And there’s a good reason why they’re not making any predictions. Because they know this stuff doesn’t work. They only made the unemployment rate prediction because they thought the economy would have fixed itself in short time. It usually does. That’s why they were in such a rush to pass it. They had to pass it before the economy recovered. They had no idea how bad things were. Or how their policies would make things worse. Because they have no idea of how the economy works.

And isn’t the refusal to make unemployment predictions an admission that they have no faith in what they’re doing? Vis-à-vis the economy, that is. For they have full faith and confidence in the political effects. They can predict the campaign donations this will generate. And the likely votes. But they won’t make these predictions public. For it will be admitting the truth of this political stimulus.

Stimulus that Works: Cutting Costs for Business

But someone knows how to create jobs. Not by putting more money into workers’ pockets. But buy cutting a business’ costs (see Detroit Sets Its Future on a Foundation of Two-Tier Wages by Bill Vlasic posted 9/12/2011 on The New York Times).

The newest Chrysler workers earn about $14 an hour, compared with double that amount for longtime employees on the same shift. With the economy slumping and job creation once again a pressing issue in the White House and Congress, the advent of a two-tier wage system in Detroit is spiking employment for one of the country’s most important manufacturing industries…

What was once seen as a desperate move to prop up the struggling auto industry is now considered an integral part of its future. The demand for $14-an-hour manufacturing jobs is providing Detroit’s Big Three automakers with a ready pool of eager new employees. Last year, Chrysler was flooded with inquiries about the jobs here, and it froze the list after receiving 10,000 applications.

So someone understands. American cars weren’t selling because they couldn’t compete in the market place. They couldn’t sell the cars they had. And they certainly weren’t going to expand production. But cut labor costs and look what happens. They can compete in the market place again. And create jobs.

So far, about 12 percent of Chrysler’s 23,000 union workers earn the lower wage, and over all, 4,000 or so of the 112,000 U.A.W. members are second-tier hires. Those numbers are expected to grow — and in fact can increase significantly even under the current contract. The jobs are central to the contract talks now because they are viewed as a critical element of the industry’s continued recovery.

The benefits for the lower-tier workers are scaled back as well. They get a maximum of four weeks paid time off a year, versus five for the longtime workers. And instead of the guaranteed $3,100-a-month pension a full-paid worker receives after age 60, the new hires have to build their own “personal retirement plan” based on contributions from the company of less than $2,000 a year.

This is stimulus that works. Cut costs for business. And business creates jobs. Which is the goal of stimulus.

Raising taxes on business won’t cut costs for business. So it won’t stimulate. Raising taxes on business to pay for a stimulus bill will tap the brakes on the very economy they’re trying to stimulate. And what is government spending that doesn’t stimulate? Pork. Earmarks. Rewarding political cronies.

Keynesian Stimulus Spending stimulates Politics, not Economic Activity

Let the political games begin. And the lying. The latest stimulus is no different from the first stimulus. It will fail. Only it will be less of a failure. The only good thing we can say about it.

Detroit has shown the way. If you want to create jobs. If you want to stimulate the local economy. You cut costs. You don’t raise them. And you do it in a way where there is little uncertainty. The two-tier wage system is here to stay. The automotive companies can plan on this cost certainty.

You know another name for this? Supply-side economics. That’s right. They fixed the car companies on the supply side. Not the demand side. That’s why they won’t take this model and apply it to the rest of the economy. That would go against every Keynesian fiber in their body. But they did in Detroit. Because they had to save the UAW. And things were so bad in the U.S. automotive industry that they had to drop politics this one time. But they will be damned if they’ll concede defeat and stop their Keynesian ways everywhere else. I mean, if they did, how, pray tell, would they reward their political cronies?

Keynesian stimulus spending stimulates politics. Not economic activity. Whereas supply-side economics stimulates economic activity. Not politics. So you can see why those in government are Keynesians. Because spending our money before we can is more important than our economic wellbeing.

 

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Obama Says Judge him on his Dismal Keynesian Economic Record

Posted by PITHOCRATES - August 21st, 2011

Are you Better Off than you were 4 Years Ago?

People who live in economic houses made of cards shouldn’t blow too hard.  Or boast about future successes (see Obama: Judge me on economic progress by Richard Wolf posted 8/21/2011 on USA TODAY).

“Things would have been much worse has we not made those decisions, (but) that’s not that satisfying if you don’t have a job right now. And I understand that, and I expect to be judged a year from now on whether or not things have continued to get better.”

You shouldn’t boast about a successful track record before you have one.  That could come back to haunt you at the next election.  I mean, when your last three years or so in office haven’t been successful economically, why would you think year 4 would be any better?  In fact, the odds are good that someone will Ronald Reagan you if current trends continue.  When that candidate will ask the people, “Are you better off than you were 4 years ago?”

Businesses never, ever hire New Employees while the Economic Outlook is so Dismal

If the judges are American businesses their verdict is already in (see Moody’s chief economist: Lawmakers need to ‘get it together’ to save economy by Meghashyam Mali posted 8/21/2011 on The Hill).

Zandi pointed to positive signs for American businesses. They are “getting their cost structures down, getting their profitability up, getting their balance sheets in order,” he said.

While businesses are still reluctant to start hiring new workers, they had little reason to layoff employees, a sign we would avoid a second recession according to Zandi.

They’re doing things now that a business does during bad economic times.  Cut costs.  Increase productivity.  Avoid new debt.  Stockpile cash.  And never, ever hire new employees while the economic outlook is so dismal.

The Nice Thing about Bonuses is that you can pay your People Less 

And the bad jobs outlook isn’t just on Main Street America.  It goes all the way up to the fat cats on Wall Street (see Layoffs sweep Wall Street, along with low morale by Lauren Tara LaCapra posted 8/21/2011 on Reuters).

The planned cuts at Bank of America have pushed the number of financial sector layoffs this year to 18,252 — 6 percent higher than in the comparable period in 2010, according to Challenger, Gray & Christmas, an outplacement firm that keeps a daily tab on layoff announcements.

Some companies began the culling earlier this year — HSBC has already axed about 5,000 employees, with 25,000 more set to get pink slips by the end of 2012 — and others, such as Goldman Sachs, said that cuts will come by year’s end.

Even the Wall Street bailouts couldn’t save Wall Street.  Or all that quantitative easing.  The economy is tanking some three years later despite all of Obama‘s best efforts to stimulate a recovery.  In fact, it turns out that their best efforts are complicit in these Wall Street purges.

Changes in pay structures mandated in part by the Dodd-Frank financial reform laws have exacerbated the problem.

Banks that used to pay modest base salaries supplemented by opulent stock-and-option packages that encouraged meeting short-term performance goals now are weighting compensation toward base salary…

The shift erodes Wall Street’s former flexibility to lower end-of-year bonuses in bad times and forces a heavier reliance on layoffs.

The nice thing about bonuses is that you can pay your people less.  If you have a bad year, you don’t have to lay off your employees.  You just cut year-end bonuses.  Their base salaries are more than enough to live on.  And they are tickled pink to still have a job after a bad year.  Of course, when you remove bonuses from the picture that only leaves one way to cut costs to reflect declining business.  You have to cut people.  Which is never a good thing in a ‘relationship’ business.

It’s hard to build a level of trust and confidence in a relationship.  And the higher the dollar amounts the harder it is to build that trust and confidence.  It’s scary letting other people into your balance sheet.  Once you do you don’t want to see that person leave.  Because you don’t deal with a bank.  You deal with a person.  That person.  And when they leave there’s nothing but more uncertainty in an already uncertain economic climate.

Keynesian Economics was always about the Growth of Government

So it looks like the chances are good President Obama may get that question next year.  Because indications are that it won’t be better than when he took office in 2009 (see Mises on the Business Cycle by Dennis Sperduto posted 8/21/2011 on Ludwig von Mises Institute).

The economic and financial events of the last few weeks indicate that the economies of the United States and most of Europe remain quite weak, if not in outright recession. This situation comes after unprecedented fiscal and monetary “stimuli” by many governments that were strongly supported and recommended by the large majority of the economics profession, media commentators, and politicians. And of course, with economic conditions showing renewed weakness, the mainstream calls for additional stimuli of even larger magnitudes. The mainstream is unable or unwilling to abandon its Keynesian foundation, a system of thought that has been shown by many individuals associated with the Austrian School to be one of the great retrogressions in scientific economic thought in modern times.

Obama is a Keynesian.  His administration has adopted Keynesian policies.  And all of their Keynesian policies have failed thus far.  No matter how they try, try and try again, they will always fail, fail and fail again.  For Keynesian economics was never about economics.  Not to those in government.  For them it was always about the growth of government. 

Recessions never End because of Keynesian Stimulus, they End Despite Keynesian Stimulus

But the one flaw in their grand design is that the private sector funds everything.  Economic activity.  And government.  So the more government grows, the more wealth is transferred from the private sector to fund it.  Meaning that if the government grows the private sector must shrink.  For here it is simple zero-sum.  Which is why recessions never end because of Keynesian stimulus.  They end despite Keynesian stimulus.

So if the Obama administration moves forward with more of the same it should make the 2012 election come down to a simple question.  Are you better off than you were 4 years ago?  Even Obama is admitting that if things don’t improve over the next year he will be a one-term president.  And right now there’s nothing in the economic forecast that bodes well for a second term.  If he’s judged for his economic performance.  Which he is telling the voters to do in 2012.  As I’m sure they will be more than happy to oblige.

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Death Panels in/out of Medicare, Obamacare still Betting on Death to Cut Costs

Posted by PITHOCRATES - January 5th, 2011

Death is more Cost Efficient than Life

First they denied it.  Then they backtracked when everyone could see they were included.  Then they pulled them.  Then they tried to sneak them back (see Administration reverses on end-of-life counseling by Ricardo Alonso-Zaldivar, The Associated Press, posted 1/5/2011 on The Washington Post).

Medicare coverage for voluntary end-of-life planning was part of the original House version of the overhaul legislation in 2009, but it was dropped after Sarah Palin and other Republicans raised the specter of “death panels” deciding the fate of vulnerable seniors. Those charges were later debunked by several non-partisan fact-checking groups.

I keep hearing this.  That they’re not death panels.  They’re actually good things that people want.  But I have to ask this.  Why are they constantly trying to sneak this legislation in?  I mean, Obamacare itself is controversial and unpopular.  The people already hate it.  So why are they hiding these so called death panels that aren’t death panels?

I can think of only one reason.  Cost control.  With Social Security, Medicare and Medicaid all projected to go bankrupt in the not so distant future, there’s no way that Obamacare can escape that same fate.  Unless sick people die quicker.  Before the government spends a fortune trying to extend their lives. 

Yes, it’s a grim prospect.  But that’s the only way you can save cash-strapped programs that incur costs from sick and dying people.  You stop spending money on sick and dying people.  That way you can take in more money than you pay out.  Do that and these programs (Obamacare, Social Security, Medicare and Medicaid) can stay solvent.  And there is only one way to do this.  You have to ‘let’ people die.  You get them to choose death.  By persuading them that it’s for the best.  For them.  Their family.  And for the country.  In other words, death panels.  Because death is more cost efficient than life.

Obamacare Welfare:  Wealth Transfer from the Responsible to the Irresponsible

This is what they want to hide from the people.  Because it’s just too ghoulish.  It’s something the Nazis did.  Getting rid of undesirables.  Or the stuff of science fiction like Soylent Green.  Only without the cannibalism.  So far, that is. 

I joke, of course.  Then again, no one knows what’s in the Obamacare legislation.  No one read it.  At least, no one that voted for it.  After all, it was the now deposed Speaker of the House, Nancy Pelosi, who said we’d have to pass Obamacare to learn what was in it.  So anything can be in it.  We just don’t know.  But we’re learning.

The new regulations have already exploded private health care costs.  Even though they said it wouldn’t.  In fact, everything was supposed to get cheaper.  But when you force private insurers to cover preexisting conditions, they have to act accordingly. 

With preexisting coverage, no one will buy insurance.  They’ll save their money for car payments.  New entertainment centers.  Jet skis.  You know, fun stuff.  Then, if a kid gets leukemia or some other catastrophic diagnosis, then they’ll buy insurance.  Get the picture?  The only people buying insurance will be those with catastrophic medical expenses.  People who will be consuming millions in benefits but only pay a pittance in premiums.  And that ain’t insurance.  That’s pure welfare wealth transfer.  From the responsible.  To the irresponsible.

The House Rules Enabled Corruption and Backroom Deals

And this is just asinine.  So how did they pass something this stupid into law?  Well, have you seen the House rules (see New rules in the House of Representatives by Felicia Sonmez posted 1/5/2011 on The Washington Post)?  Here’re some of the rules back then.  When Congress slipped Obamacare into law.

  1. 1.  No “Constitutional Authority Statement” was required.  A similar statement was required only for bills reported out of committee and was included in the committee report.
  2. 2.  Only bills reported out of committee were required to be “made available” three days before a vote, and they were not required to be posted online.
  3. 3.  Spending increases could be paid for by spending cuts or tax increases.
  4. 4.  Committee chairmen did not have term limits.
  5. 5.  Legislation was not required to be posted online before it was marked up.
  6. 6.  The “Gephardt Rule” allowed the House to automatically raise the debt limit when a joint budget resolution was adopted.
  7. 7.  The Constitution has never been read in full on the House floor.

This is not what the framers of the Constitution had in mind.  Not even Alexander Hamilton (the biggest of the ‘big government’ Founding Fathers).  In fact, he would be as shocked as his arch nemesis, Thomas Jefferson (who thought any central government was too much central government).  (Just to prevent any confusion, Jefferson was in France during the Constitutional Convention and did not participate.  His assault against the Constitution escalated after ratification.)

The Constitution means something.  It’s the Rule of Law for the central government.  The Constitution has to authorize everything the central government does.  Why?  Because that’s the law.  And we’re a nation of laws.  At least, we used to be.

The fact that Congress has never read the Constitution in full on the House floor is worrisome.  Why haven’t they?  Are they trying to bury the restrictions it places on Congress?  It would appear so.  And that lawmakers look at it as more of a nuisance than as the foundation of our nation.  Something that checks their power and spending sprees.  Which tax and spend Big Government types just don’t like.

The other rules just invite corruption and backroom deals.  The very thing Jefferson warned about.  And he was right.  Because that’s what it took to pass Obamacare.  They bribed Congress people to vote for it.  The Cornhusker Kickback bribed Nebraska Senator Ben Nelson.  The Louisiana Purchase bribed Louisiana Senator Mary Landrieu.  And a laundry list of bribes to other people and organizations.  Hidden in the bowels of the health care reform bill.  Which was fast-tracked into law before anyone read it.  Thanks to the rules of the House.

The New 112th Congress to Revise House Rules to Stop the Corruption and Backroom Deals

But all is not lost.  The new 112th Congress is proposing to change the rules.  They even plan to read the Constitution in full on the House floor.  It may be the first time some will learn what’s in it.  And that’s good.  Here are some of the other changes (these numbers correlate to the numbers above):

  1. 1.  All proposed bills must be accompanied by a “Constitutional Authority Statement” that notes the specific section of the Constitution that empowers Congress to enact the legislation.
  2. 2.  All bills must be posted online for three days before they are put up for a vote.
  3. 3.  Spending increases have to be offset by cuts of an equal or greater amount elsewhere and cannot be paid for by tax increases.
  4. 4.  Committee chairmen have a six-year term limit.
  5. 5.  The text of legislation must be posted online 24 hours before it is due to be marked up in committee; the House Rules Committee is exempt from this rule.
  6. 6.  A new rule eliminates automatic debt-limit increase upon passage of joint budget resolutions.
  7. 7.  A full reading of the Constitution will take place on Thursday, the second day of the 112th Congress.

It’s a start.  It might stop some of the Founding Fathers from spinning in their graves.  Probably not Jefferson, though.  It’s going to take a whole lot more to soothe his distraught spirit.

Revised House Rules a Good First Step.  Repealing Obamacare a Good Second Step.

So maybe with the new Congress and the new House rules (if adopted) will prevent another corrupt bill like Obamacare from sneaking through backrooms and into law.  Good.  But that’s just a start.  Now we have to address Obamacare itself.  We need to repeal it.  For a plethora of reasons (see New Congress Begins Fight to Repeal Obamacare and Get Health Care Reform Right by Kathryn Nix posted 1/4/2011 on Heritage’s The Foundry).  Many already know some of these reasons.  But it’s good to keep talking about them.

The negative effects of Obamacare will be felt by all Americans. The new law includes several new taxes and penalties for businesses that threaten to kill job growth and further damage the economy. Budget gimmicks and double counting of savings mean Obamacare will increase federal deficit spending significantly.

Obamacare does nothing to reform the systemic problems and unfunded liabilities represented by Medicare and Medicaid. Instead, the new law uses savings in Medicare to fund a new entitlement that experts expect to greatly exceed its projected cost. Obamacare does not fix Medicaid, which already performs poorly, but adds more to its ranks as a means to reduce the uninsured.

Obamacare increases premiums and overall health spending in the U.S. Instead of allowing insured Americans to keep their current coverage, the new law will cause millions to change or lose their health plans. Last but not least, Obamacare will increase federal control of every aspect of the health sector, increasing the role of bureaucracy in the practice of medicine and interfering in the doctor–patient relationship.

If you want more detail, you can find them in Impact of ObamaCare at The Heritage Foundation.   

If we repeal Obamacare, the death panels become a moot point.  And our deficit and debt crises become that much easier to manage.  As will the Social Security, Medicare and Medicaid crises.  So let’s do it.  Repeal Obamacare.

Give Grandma a Chance

Obamacare is bad.  We should repeal it.  Death panels and all.  Instead of putting all our eggs into the ‘death’ basket, we should give living a chance.  But we need to get away from welfare.  And move into insurance.  Pay our own way for expected, routine costs.  And buy insurance to protect our finances from unexpected, extraordinary costs.  And allow insurers to compete across state lines, tort reform, etc.  You know, the usual, sensible stuff.

Come on.  Give Grandma a chance.  Repeal Obamacare.

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FUNDAMENTAL TRUTH #21: “The reason why health insurance is so expensive is because it is not insurance.” -Old Pithy

Posted by PITHOCRATES - July 6th, 2010

YOU CAME IN with a grand ‘to lose’ but have been riding a hot streak.  You’re up 5 grand.  And feeling luckier still.  You came in with a grand, you think, so you can just as well leave with a grand.  So you bet 5 grand.  Cause those cards have been so good to you tonight.  And there it is.  Blackjack!  And just as you’re about to shout to the heavens you see the dealer throw an ace on his down card.  The dealer asks, “Insurance?”   

You don’t want to but you just KNOW what’s under that ace.  All of a sudden you’re not so cavalier about losing 5 grand.  Too many friends have told you the same story.  “I was up 5 grand until that last hand.”   You could cry.  You don’t buy insurance.  Only suckers buy insurance.  That’s what you’ve always said.  But when you’ve got 5 grand on the table, the dealer can’t have anything but blackjack.  You know it.  He knows it.  And your wife knows it even though she’s off playing the slots somewhere.  You pull out $2,500 from your ‘do not touch’ money and buy the insurance.  (Let’s end this on a happy note.  The down card was a queen.  You walk away as if that last hand never happened, $5,000 richer.  Less taxes, of course.)

LIFE’S BEEN GOOD.  You’re making good money.  You have a beautiful wife and 3 great kids.  You just sold that small house and moved into that big house you always wanted for the holidays.  Cost a pretty penny.  But you had $75,000 in equity in the old home.  And cashed in a CD to furnish the new one with some nice new toys.  After all, life has been good.

The mortgage stings a little, but not too much.  You’ll get by.  You got all the big things you’ve wanted.  Now you can settle in and live modestly in your new home.  And you bought insurance up the wazoo.  If there is fire, flood, theft or death, no worries.  Well, there’ll be some worry, but you won’t financially ruin your family.  They’ll keep the house.  And there will be college for the kids.  Because you were responsible.  You protected the greatest investment of your life.  Yes, things have been good.  But not good enough to pay for everything twice.

TRADE EXPLODED IN the 17th century as little wooden ships crossed the oceans.  Storms and rough seas, though, toss around little wooden ships.  A lot of them sank.  With their cargoes.  But they didn’t all sink.  So owners insured their ships and cargoes.  For a nominal fee, they protected their investment.  For those that didn’t sink, the insurance wasn’t much of an added expense.  For those that did sink, it paid to replace the lost ship and cargo. 

YOU’VE ALWAYS WANTED to open a restaurant.  And your dream finally came true.  You saved for years.  You scrimped on vacations.  Didn’t by a new car.  Expensive toys.  No.  Your years of denying yourself the little pleasures in life saved up enough money to buy that restaurant.  To put enough money down to borrow to fit out the kitchen and dining area.  To stock your fridge, freezer and pantry.  You maxed out your credit and sunk your life savings into your dream.  And you’re loving it.  But you don’t want to lose it.  So you have all the insurances.  Fire.  Property.  Workers’ comp.  Liability.  So in case of fire, celebrating students (who trash the town after winning the championship), a strained employee back or an E. coli outbreak (because an employee didn’t wash his hands after using the toilet), you’re protected.  Your business may suffer, as they are wont to do after an E. coli outbreak, but the lawsuits won’t leave you destitute.

BEING IN THE NFL is a dream come true to many athletes.  But it can be a brutal occupation.  Compared to other professional sports, it has a short season.  Why?  Attrition.  Concussions, broken bones, torn ligaments and contusions take their toll.  The short season allows a longer healing period.  And time for surgeries.

Players can make obscene amounts of money.  But they can also suffer a career-ending injury in the first year of a multi-year contract. Great playing potential means great earning potential.  If you stay healthy and play.  Of course, if injured, all gone.  Some players insure against a career-ending injury.  Lloyd’s of London will insure an athlete.  For a price.  It ain’t cheap.  But if it keeps you from losing, say, 20 million in earnings, it could turn out to be quite the bargain.  If you’ve got huge potential.

THE MOST PRECIOUS gift we all have is our life.  So we take care of it.  We watch what we eat, don’t drink, don’t smoke, don’t take drugs, don’t speed in our cars or while on our motorcycles, don’t drink and drive, don’t drive around flashing railroad crossing barriers, don’t binge drink, don’t have unprotected sex, don’t play with matches or run with scissors and don’t do that thing where you jump up on a railing with a skateboard and fall, crushing your testicles on the railing and hitting your head on the concrete step.  No, we exercise, go to bed early and eat a lot of bran. 

All right, we probably don’t eat as much bran as we should.  And maybe we do a risky thing or two.  But we understand that those risky things we DO do can cost us.  Could wipe us out financially.  So we buy insurance to protect our life savings in the event of a catastrophic event that could be medically very expensive.

Or do we?

EVERYONE THAT HAS ever bought blackjack insurance didn’t get a winning blackjack hand.  Everyone that has ever bought homeowner’s insurance didn’t get a new home with their policy.  Everyone that has ever bought mariner’s insurance didn’t get a ship and a cargo of goodies with their premium payment.  Everyone that has ever bought business insurance didn’t get a business with their payment.  And an NFL player doesn’t get a dime from Lloyd’s of London until something pretty horrible happens first.  No.  These purchases were ‘just in case’.  Most people will never get anything for their payments (other than peace of mind).  Only those who suffer a loss will.  And those that do will have mitigated their financial losses with the insurance they so wisely purchased.  And they will get on with their lives.

This is insurance.   We use it to protect our wealth.  It takes a lot of time to accrue it.  So when we have it, we tend to protect it.  We do risky things.  And insurance manages that risk.  So we don’t lose everything we have because of a catastrophic event. 

We don’t think like this when it comes to health insurance, though.  We don’t think of health insurance as a way to manage our risk.  We look at it as a free ride.  If we have it, we expect free health care.  We want everything.  But we don’t want to pay for anything.  Free mammograms.  Those blue pills for the old johnson.  Heart valves.  Prenatal care.  Child vaccination.  Etc.

The problem is, these things cost.  A lot.  And if anybody can have them, those who actually pay for insurance have to pay for them.  And they’ll be paying for things they aren’t using.  All those things listed above mean nothing to a young single male.  But he’s helping to pay for that stuff.  Either by his premium contribution.  Or in lost wages.  Because an employer can’t afford such quality health insurance AND high wages.

Health insurance has become nothing more than a wealth transfer.  It’s like a Ponzi scheme.  A large and ‘growing’ group of healthy young people pay into the system and collect few benefits.  The ‘fewer’, older, sicker people pay little into the system but consume the lion’s share of the benefits.  At least in theory.  But like social security, and all Ponzi schemes, the theory doesn’t work in practice.

AMERICA HAS THE best health care in the world.  If you judge by where the affluent go for their health care.  They go to America.  And the best is never cheap.  You get what you pay for.  And if you want the best, expect to pay.  A lot.

All right, we have the best and some of the most expensive health care in the world.  Add to that an aging population.  What do you get?  A shrinking group of people (the young and healthy) paying for a growing group of people (the old and sick).  That means the burden on those paying into the system has to what?  It has to keep getting bigger.

But it can’t.  The young and healthy will just opt out.  Eventually.  When it gets to the point that it’s a car payment or a health insurance payment, what do you think they’ll choose?  Their annual health care expenses for an entire year may not equal one premium payment.  So they’ll say screw that.  And do.  A lot of young do not have health insurance because they choose not.  It’s just too fricking expensive.  And this just shrinks the shrinking group more.  Which increases the amount those with insurance pay.  And so it goes.

AND YOU DON’T fix this problem by nationalizing health care.  That doesn’t address the problem.  You have to tie the cost to the benefit.  People only chose to pay for things they get.  Those receiving the benefit, then, need to pay its cost.  Like we do with every other thing in our lives.  You want a TV you pay for a TV.  You don’t pay for one so your neighbor can have one.  TV prices are very reasonable, too.  They keep coming down.  The quality is fantastic.  And so it would be in health care.

Single payer health care insurance ain’t the answer either.  Because it’s not insurance.  It’s a wealth transfer.  That means it’s political.  It will serve political ends.  Not make good health care.  First of all, they’ll force the young and healthy to pay for insurance under penalty of law.  Or they’ll raise taxes until it hurts.  Then they’ll cut costs.  First by limiting what doctors can earn.  Then they’ll limit the profits the pharmaceuticals can make.  Then the medical device makers will have their turn.  Soon, people won’t want to be doctors any more.  Or make new and life saving drugs.  Or make medical devices.  So when the supply of these things falls, rationing must follow.  And if you really want to cut costs, there’s really only one place to do it.  The really sick and the really old.  These people, after all, consume the lion’s share of health care services. 

We don’t have a health care problem.  People are living longer than ever.  We have a dependency problem.  The current system has made us dependent on others for our health care.  And dependency kills.  It cowers a people.  Takes away their dignity.  Makes them subservient.  People live in fear.  Of what they may lose.  Nationalizing health care will only make us more dependent.  It’s not the answer.  Unless you want to conquer and subjugate a people.  I mean, how many of you have stayed at job you absolutely hated because of the health insurance?  If that ain’t subjugated, I don’t know what is.  As bad as that was, at least you got something for it.  Good health care.  If you think you’re going to get that under a national system, think again.  Or ask those people with a national system that come to this country for better care.

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