The Petulant President scolds Republicans, Conservatives and Anyone Else who dares to Oppose Obamaism

Posted by PITHOCRATES - October 17th, 2013

Politics 101

The government shutdown is over. And we avoided defaulting on the national debt  Or so they say.  So who won and who lost?  Well, at this point in time it looks like the Democrats lost less than the Republicans.  But it is the American people who lost.  For they are stuck with Obamacare for the time being.  And President Obama can raise the national debt to a new record high.  But it gets worse.  This morning the president gave a petulant, God-awful speech scolding the Republicans, the Tea Party, talk radio, the blogosphere and pretty much anyone else who dares to oppose Obamaism (see Transcript of Obama Remarks on End of Standoff posted 10/17/2013 on The Wall Street Journal).

Good morning, everybody.  Please have a seat.

Well, last night, I signed legislation to reopen our government and pay America’s bills.  Because Democrats and responsible Republicans came together, the first government shutdown in 17 years is now over.  The first default in more than 200 years will not happen.  These twin threats to our economy have now been lifted.  And I want to thank those Democrats and Republicans for getting together and ultimately getting this job done.

There was never a risk of default.  With $2.45 trillion in annual revenue coming into the treasury from the taxpayers there was never a risk of the $415.7 billion annual interest payment on the debt going unpaid.  Lying about it just helped a petulant child get his way.  Waaa.

Now, there’s been a lot of discussion lately of the politics of this shutdown.  But let’s be clear:  There are no winners here.  These last few weeks have inflicted completely unnecessary damage on our economy.  We don’t know yet the full scope of the damage, but every analyst out there believes it slowed our growth.

What growth?  Since coming to office the president’s policies have lost approximately 9,966,000 jobs through the September jobs report.  That’s just shy of 10 million jobs he’s lost.  So what recovery?  Or is he just setting the stage to blame the worst economic recovery since that following the Great Depression on this 16 day shutdown?  And not the lost economic activity from those 10 million or so lost jobs?  Of course he is.  Because what are 10 million jobs when he can stick it to the Republicans?

We know that families have gone without paychecks or services they depend on.  We know that potential homebuyers have gotten fewer mortgages, and small business loans have been put on hold.  We know that consumers have cut back on spending, and that half of all CEOs say that the shutdown and the threat of shutdown set back their plans to hire over the next six months.  We know that just the threat of default — of America not paying all the bills that we owe on time — increased our borrowing costs, which adds to our deficit.

Yes, pity the government bureaucrats who had to go 16 days without reporting to work.  Even though they will be paid for those 16 days they missed.  Yes, pity the government bureaucrats.  And not the 10 million who have disappeared from the labor force since President Obama assumed office.  I mean, what are 5 years without a paycheck compared to missing 16 days of work?  Which the taxpayers will still pay them for?

Businesses cut back on spending and hiring because of the great uncertainty of a 16-day shutdown?  Are you sure it wasn’t the regulatory requirements of Obamacare that is forcing employers with close to 30 ‘full time’ employees (30 hours or more per week) to not hire any more workers?  Even pushing full-time workers to part time?  Are you sure this isn’t the reason why they’re not hiring?  Especially with the cost of health insurance going through the roof now that it must cover everything under the sun (such as pediatric care for a couple whose children are now grown adults) as well as pre-existing conditions?  Where someone can walk in off the street who was just diagnosed with cancer and buy an insurance policy for the first time in their life?  Are you absolutely sure it’s the 16-day shutdown and not Obamacare?   If so someone needs to attend a high school economics class to learn the first thing about economics.

And, of course, we know that the American people’s frustration with what goes on in this town has never been higher. That’s not a surprise that the American people are completely fed up with Washington.  At a moment when our economic recovery demands more jobs, more momentum, we’ve got yet another self-inflicted crisis that set our economy back.  And for what?

Again, are you sure it was the 16-day shutdown and not the 4 years or so of Obamacare?

There was no economic rationale for all of this.  Over the past four years, our economy has been growing, our businesses have been creating jobs, and our deficits have been cut in half. We hear some members who pushed for the shutdown say they were doing it to save the American economy — but nothing has done more to undermine our economy these past three years than the kind of tactics that create these manufactured crises.

The last fiscal year ending deficit while George W. Bush was president was $498.37 billion (adjusted for inflation).  At the end of the first fiscal year with President Obama in office the deficit soared to $1.539.22 trillion.  An increase of 208.9%.  It is this deficit number that he cut in half.  The one he exploded with his near trillion dollar stimulus that did not stimulate anything but unions and the president’s cronies on Wall Street and in Big Business.  Especially Big Green Business.

And the president had something else preventing him from spending as much as he did during his first term.  Sequestration.  Which the Democrats hate with a passion and want to get rid of.  So they can turn on the spending spigot once again.  Like they did during his first term.

And you don’t have to take my word for it.  The agency that put America’s credit rating on watch the other day explicitly cited all of this, saying that our economy “remains more dynamic and resilient” than other advanced economies, and that the only thing putting us at risk is — and I’m quoting here — “repeated brinksmanship.”  That’s what the credit rating agency said.  That wasn’t a political statement; that was an analysis of what’s hurting our economy by people whose job it is to analyze these things.

Really?  Brinkmanship?  You don’t think adding $6.2 trillion to the national debt during your presidency had anything to do with the credit rating agency’s concern about our debt paying ability?  A high school economics student can understand that the greater your debt is the greater your debt-paying problem.  Funny how you don’t, Mr. President.

That also happens to be the view of our diplomats who’ve been hearing from their counterparts internationally.  Some of the same folks who pushed for the shutdown and threatened default claim their actions were needed to get America back on the right track, to make sure we’re strong.  But probably nothing has done more damage to America’s credibility in the world, our standing with other countries, than the spectacle that we’ve seen these past several weeks.  It’s encouraged our enemies.  It’s emboldened our competitors.  And it’s depressed our friends who look to us for steady leadership.

I thought it would have been your bad foreign policy that did all those things.  Starting with the Green Revolution in Iran.  An uprising of the people against the Islamist and oppressive government of Iran.  The precursor to the Arab Spring.  Where you did nothing.  Leaving the good Iranian people with that oppressive Islamist government.  Which is currently working to produce a nuclear bomb.  Then there was the Arab Spring and you telling our friend and ally and anchor to peace and stability in the Middle East, Hosni Mubarak, that he had to go.  Turning Egypt over to the anti-Western Muslim Brotherhood.  And then there was Libya.  Another ally in the War on Terror, Muammar Gaddafi (who joined the fight against terrorism after our invasion of Iraq), that he had to go.  Turning Libya over to radical Islamists.  Who killed four Americans in Benghazi.  Then there was the red line fiasco with Syria.  If you cross that red line I will hem and haw and stammer.  Then I might say something else.  Then Vladimir Putin steps in and saves the day for their Syrian ally.  Russia.  Who suspended all adoptions to Americans to spite America.  Who are also helping the Iranians with their nuclear program.  All the while laughing at President Obama who they see as weak.  Who couldn’t get one nation to join him for military strikes against Syria.  If you want to talk about our prestige on the world stage you gave that up long ago.  For today no one fears the wrath of the United States these days.  With some nations seeing the United States becoming irrelevant in the world.  Especially Russia and China.  As well as radical Islam.

Now, the good news is we’ll bounce back from this.  We always do.  America is the bedrock of the global economy for a reason.  We are the indispensable nation that the rest of the world looks to as the safest and most reliable place to invest — something that’s made it easier for generations of Americans to invest in their own futures.  We have earned that responsibility over more than two centuries because of the dynamism of our economy and our entrepreneurs, the productivity of our workers, but also because we keep our word and we meet our obligations.  That’s what full faith and credit means — you can count on us.

And today, I want our people and our businesses and the rest of the world to know that the full faith and credit of the United States remains unquestioned.

There is a difference between economic investment and buying our bonds.  Any money that buys government bonds is money pulled out of the economy.  Investing in government bonds doesn’t create economic activity.  It actually destroys economic activity.  And the only worry the rest of the world had was what you were going to do, Mr. President.  Would you not pay the interest on the national debt out of spite to attack the Republicans?  That’s what they were worried about.  For even they knew we had the money to pay our debt without new borrowing.  They just don’t trust you.

But to all my friends in Congress, understand that how business is done in this town has to change.  Because we’ve all got a lot of work to do on behalf of the American people — and that includes the hard work of regaining their trust.  Our system of self-government doesn’t function without it.  And now that the government is reopened, and this threat to our economy is removed, all of us need to stop focusing on the lobbyists and the bloggers and the talking heads on radio and the professional activists who profit from conflict, and focus on what the majority of Americans sent us here to do, and that’s grow this economy; create good jobs; strengthen the middle class; educate our kids; lay the foundation for broad-based prosperity and get our fiscal house in order for the long haul.  That’s why we’re here.  That should be our focus.

Strong words coming from a professional activist.  For he was a community organizer.  And taught activism.  Funny how there are two types of activism.  The good kind in his world.  When it advances a liberal agenda.  And the bad kind in his world.  The kind based in conservatism.  The president hates conservative activism, otherwise known as a government of the people, by the people and for the people, and believes it should be silenced and replaced with one-party rule.

Now, that won’t be easy.  We all know that we have divided government right now.  There’s a lot of noise out there, and the pressure from the extremes affect how a lot of members of Congress see the day-to-day work that’s supposed to be done here. And let’s face it, the American people don’t see every issue the same way.  But that doesn’t mean we can’t make progress.  And when we disagree, we don’t have to suggest that the other side doesn’t love this country or believe in free enterprise, or all the other rhetoric that seems to get worse every single year.  If we disagree on something, we can move on and focus on the things we agree on, and get some stuff done.

And the Democrats calling the political opposition terrorists, arsonists, hostage takers, the Taliban, etc., how is that coming together to focus on the things we agree on?  To get some stuff done?  Well, Mr. President, it is obvious you believe compromise is the Republicans caving and becoming your bitch.  This is not a government of the people, by the people and for the people.  This is a government of, by and for you.

Let me be specific about three places where I believe we can make progress right now.  First, in the coming days and weeks, we should sit down and pursue a balanced approach to a responsible budget, a budget that grows our economy faster and shrinks our long-term deficits further.

At the beginning of this year, that’s what both Democrats and Republicans committed to doing.  The Senate passed a budget; House passed a budget; they were supposed to come together and negotiate.  And had one side not decided to pursue a strategy of brinksmanship, each side could have gotten together and figured out, how do we shape a budget that provides certainty to businesses and people who rely on government, provides certainty to investors in our economy, and we’d be growing faster right now.

The last time we did this little dance it was the same.  You want to raise taxes and cut no spending.  That’s your idea of a balanced approach.  Oh, you’ll promise spending cuts after we raise some taxes.  But those spending cuts will never come.  Democrats just don’t cut spending.  Unless they get themselves stuck in a sequester.  And that’s not even real spending cuts.  It’s only smaller increases in future spending.

Now, the good news is the legislation I signed yesterday now requires Congress to do exactly that — what it could have been doing all along.

And we shouldn’t approach this process of creating a budget as an ideological exercise — just cutting for the sake of cutting.  The issue is not growth versus fiscal responsibility — we need both.  We need a budget that deals with the issues that most Americans are focused on:  creating more good jobs that pay better wages.

Can the nation afford anymore of your job creation?  After losing some 10 million jobs we should just cut our losses.  And refuse anymore of your ‘help’ with the economy.

Cutting for the sake of cutting?  What, we don’t have a debt crisis that requires our debt ceiling to be raised again and again?  We’re spending too much.  Hence the need to keep raising our debt ceiling.  And Obamacare only makes this worse.  A lot worse.  Hence that 16-day government shutdown.  Or did he miss that?

And remember, the deficit is getting smaller, not bigger.  It’s going down faster than it has in the last 50 years. The challenges we have right now are not short-term deficits; it’s the long-term obligations that we have around things like Medicare and Social Security.  We want to make sure those are there for future generations.

Oh, you are devious, Mr. President.  The deficit is going down faster than in the last 50 years only because you raised it to record highs in your first year in office.  Your smallest deficit is still larger than George W. Bush’s last deficit.

Medicare?  You cut Medicare spending so you can spend that money on Obamacare.  And Social Security?  The Social Security Trust Fund has no cash in it.  It’s stuffed with government IOUs.  Because the government is spending so much money that they have to raid the Social Security Trust Fund to pay for it.  And even that’s not enough to prevent deficit spending.  So they’re robbing Peter to pay Paul.  This out of control spending is why Medicare and Social Security may not be there for future generations.

So the key now is a budget that cuts out the things that we don’t need, closes corporate tax loopholes that don’t help create jobs, and frees up resources for the things that do help us grow — like education and infrastructure and research.  And these things historically have not been partisan.  And this shouldn’t be as difficult as it’s been in past years because we already spend less than we did a few years ago.  Our deficits are half of what they were a few years ago.  The debt problems we have now are long term, and we can address them without shortchanging our kids, or shortchanging our grandkids, or weakening the security that current generations have earned from their hard work.

More on education?  That’s to shore up the teachers’ underfunded pensions.  Infrastructure?  That’s just pork-barrel spending.  Building airports where no one wants to fly.  Or high-speed rail that requires constant government subsidies.  Money that buys votes in Congress to pass huge spending bills.  Like Obamacare.  Which passed only by buying off Democrats with the Cornhusker Kickback, the Louisiana Purchase, the Florida Flim Flam, etc.

So that’s number one.  Number two, we should finish fixing the job of — let me say that again.  Number two, we should finish the job of fixing our broken immigration system.

There’s already a broad coalition across America that’s behind this effort of comprehensive immigration reform — from business leaders to faith leaders to law enforcement.  In fact, the Senate has already passed a bill with strong bipartisan support that would make the biggest commitment to border security in our history; would modernize our legal immigration system; make sure everyone plays by the same rules, makes sure that folks who came here illegally have to pay a fine, pay back taxes, meet their responsibilities.  That bill has already passed the Senate. And economists estimate that if that bill becomes law, our economy would be 5 percent larger two decades from now.  That’s $1.4 trillion in new economic growth.

There’s a reason why people hire illegal aliens.  So they can pay them less than legal citizens.  So once these illegals become legal they’re not going to work for illegal wages anymore.  So it will raise labor costs.  Forcing businesses to lay off some workers.  Creating no net economic benefit.  But the Democrats don’t care.  Because it’s not about the economy.  It’s about all those new Democrat voters.  To turn the nation, like they turned California, Democrat.

The majority of Americans think this is the right thing to do.  And it’s sitting there waiting for the House to pass it.  Now, if the House has ideas on how to improve the Senate bill, let’s hear them.  Let’s start the negotiations.  But let’s not leave this problem to keep festering for another year, or two years, or three years.  This can and should get done by the end of this year.

Really?  A majority of people want immigration reform?  And because of that we should pass it?  Well, the majority of people want to repeal Obamacare.  So perhaps this is a negotiation the Republicans and Democrats can agree on.  To please the majority of people.  Exchange immigration reform for the repealing of Obamacare.

Number three, we should pass a farm bill, one that American farmers and ranchers can depend on; one that protects vulnerable children and adults in times of need; one that gives rural communities opportunities to grow and the long-term certainty that they deserve.

You know, it was a farm bill that helped precipitate the Great Depression.  Price parity.  Increasing the price of farm goods so they were closer to the price of nonfarm goods.  In response to their increased productivity due to the mechanization of the farm that produced bumper crops.  Increasing supply beyond demand.  Causing the price of farm goods to fall.  So Hoover passed legislation raising the price of food.  Making it harder to put food on the table for the average American.  An example of the unintended consequences of government intervention.  Such as requiring gasoline to include a portion of the corn crop.  Thus raising the price of corn.  And everything in the food chain downstream from corn.  Like beef, chicken, milk, eggs, etc.  No, the last thing consumers need who are trying to put food on the table is another farm bill.

Again, the Senate has already passed a solid bipartisan bill.  It’s got support from Democrats and Republicans.  It’s sitting in the House waiting for passage.  If House Republicans have ideas that they think would improve the farm bill, let’s see them.  Let’s negotiate.  What are we waiting for?  Let’s get this done.

So, passing a budget; immigration reform; farm bill.  Those are three specific things that would make a huge difference in our economy right now.  And we could get them done by the end of the year if our focus is on what’s good for the American people. And that’s just the big stuff.  There are all kinds of other things that we could be doing that don’t get as much attention.

I understand we will not suddenly agree on everything now that the cloud of crisis has passed.  Democrats and Republicans are far apart on a lot of issues.  And I recognize there are folks on the other side who think that my policies are misguided — that’s putting it mildly.  That’s okay.  That’s democracy.  That’s how it works.  We can debate those differences vigorously, passionately, in good faith, through the normal democratic process.

And sometimes, we’ll be just too far apart to forge an agreement.  But that should not hold back our efforts in areas where we do agree.  We shouldn’t fail to act on areas that we do agree or could agree just because we don’t think it’s good politics; just because the extremes in our party don’t like the word “compromise.”

When the Republicans wanted to add tax breaks for small business in the stimulus bill President Obama refused to listen.  Because he won the election.  And elections have consequences, he said.  And to the winner goes the spoils.  When the Democrats had the House, Senate and the White House they had no interest in compromise.  And didn’t.  But when they don’t have all the power they expect the other side to compromise.  And give them what they want.  That’s their idea of compromise.  Unconditional surrender.

I will look for willing partners wherever I can to get important work done.  And there’s no good reason why we can’t govern responsibly, despite our differences, without lurching from manufactured crisis to manufactured crisis.  In fact, one of the things that I hope all of us have learned these past few weeks is that it turns out smart, effective government is important.  It matters.  I think the American people during this shutdown had a chance to get some idea of all the things, large and small, that government does that make a difference in people’s lives.

We hear all the time about how government is the problem.  Well, it turns out we rely on it in a whole lot of ways.  Not only does it keep us strong through our military and our law enforcement, it plays a vital role in caring for our seniors and our veterans, educating our kids, making sure our workers are trained for the jobs that are being created, arming our businesses with the best science and technology so they can compete with companies from other countries.  It plays a key role in keeping our food and our toys and our workplaces safe.  It helps folks rebuild after a storm.  It conserves our natural resources.  It finances startups.  It helps to sell our products overseas.  It provides security to our diplomats abroad.

Really?  You want to go there?  Security of our diplomats?  The administration that let 4 Americans die in Benghazi on its watch?  Despite ample warnings?  Warnings so serious that the British pulled out of Benghazi?  Before our four diplomats were killed?  But there was an election, wasn’t there?  And we just couldn’t have trouble with terrorists during an election, could we?  Not for the president that won the War on Terror with the killing of Osama bin Laden.

So let’s work together to make government work better, instead of treating it like an enemy or purposely making it work worse.  That’s not what the founders of this nation envisioned when they gave us the gift of self-government.  You don’t like a particular policy or a particular president, then argue for your position.  Go out there and win an election.  Push to change it. But don’t break it.  Don’t break what our predecessors spent over two centuries building.  That’s not being faithful to what this country is about.

The Founding Fathers created LIMITED government.  What we have today is far from limited.  The progressives/liberals have destroyed what the Founding Fathers gave us.  Today we have a big, fat, bloated bureaucracy.  And the Republicans would like to change it by winning elections.  Which isn’t that easy when the Obama administration suppresses the vote by turning the IRS loose on the Tea Party.  Limiting their fundraising ability.  Causing their turnout to be less than it was in the 2010 midterm election.  When the Tea Party stirred the people to vote the House of Representatives back to the Republicans.  Which they weren’t going to let happen in 2012.  Hence using the IRS to suppress the Republican vote.

And that brings me to one last point.  I’ve got a simple message for all the dedicated and patriotic federal workers who’ve either worked without pay or been forced off the job without pay these past few weeks, including most of my own staff: Thank you.  Thanks for your service.  Welcome back.  What you do is important.  It matters.

You defend our country overseas.  You deliver benefits to our troops who’ve earned them when they come home.  You guard our borders.  You protect our civil rights.  You help businesses grow and gain footholds in overseas markets.  You protect the air we breathe and the water our children drink.  And you push the boundaries of science and space, and you guide hundreds of thousands of people each day through the glories of this country. Thank you.  What you do is important.  And don’t let anybody else tell you different.  Especially the young people who come to this city to serve — believe that it matters.  Well, you know what, you’re right.  It does.

And those of us who have the privilege to serve this country have an obligation to do our job as best we can.  We come from different parties, but we are Americans first.  And that’s why disagreement cannot mean dysfunction.  It can’t degenerate into hatred.  The American people’s hopes and dreams are what matters, not ours.  Our obligations are to them.  Our regard for them compels us all, Democrats and Republicans, to cooperate, and compromise, and act in the best interests of our nation –- one nation, under God, indivisible with liberty and justice for all.

Thanks very much.

The majority of people want to repeal Obamacare.  But the president doesn’t care about these American people.  Because they don’t share his vision of expanding government power in our lives.  People who would prefer to keep the health insurance they have.  And the doctors they have.  As well as not paying more for their health insurance.  But what they want isn’t as important to President Obama as what he wants.  So there is no compromise.  No cooperation.  Or acting in the best interest of the United States.  For this may be one nation, under God, indivisible with liberty and justice for all.  Where all Americans are equal.  Only some are more equal than others.  Like those who share President Obama’s vision.

www.PITHOCRATES.com

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Medicare Receipts, Medicare Outlays and the Medicare Deficit

Posted by PITHOCRATES - March 5th, 2013

History 101

The Seller is the Medical Provider and the Customer is the Insurer—not the Patient

Health care prices are out of control because there are no market forces in health care.  Buyers and sellers never meet.  As the consumer of health care services doesn’t pay for them.  And the provider of services neither bills nor collects from the recipient of those services.  Instead billings and payments go through a third party.  The insurer.  Or government.

The buyer is the insurer.  Not the patient.  Who is the recipient of what the buyer pays for.  Because the recipient is not paying the recipient does not care about prices.  Or the number of tests and procedures a doctor orders.  Because if you’re not paying what do you care how much anything costs or how many costly tests or procedures you have?  You don’t.

The seller is the medical provider.  The doctor, hospital, laboratory, nursing home, etc.  Their customer is the insurer.  Who pays their bills.  Not the recipient of their services.  The patient.  Because the patient is not paying medical providers can charge high prices without hurting their patient.  And they can order excessive tests and procedures without hurting their patient.  Financially, at least.  Which they often do because medical providers don’t get paid for all the services they provide.  Some people without insurance can’t pay their bills.  And insurers often refuse to pay or discount some of the bills they receive.  Also, the government is always reducing Medicare reimbursements.  Forcing medical providers to be more creative in getting paid for services rendered.

As Medicare Outlays and Receipts grew Further Apart the Medicare Deficit Soared

Medicare began in 1965.  Medical care for people 65 and older.  And like the private health care market there are no market forces in Medicare.  Worse, government bureaucrats run it.  Which throws open the doors to waste and inefficiencies.  And cost overruns.  Because private insurers have bottom lines to meet.  Government bureaucrats don’t.  All they have to do when they do a poor job managing something is to raise taxes.  Which they had to as Medicare ran a deficit in all but one year of its existence (see Table 2.4—COMPOSITION OF SOCIAL INSURANCE AND RETIREMENT RECEIPTS AND OF EXCISE TAXES: 1940–2017 and Table 3.1—OUTLAYS BY SUPERFUNCTION AND FUNCTION: 1940–2017 at FISCAL YEAR 2013 HISTORICAL TABLES BUDGET OF THE U.S. GOVERNMENT).

Medicare Receipts Outlays Deficit 1970-2011

Medicare ran a $912 million surplus in 1974.  We made it zero to keep the Y-axis positive.  The difference in graphs is negligible and unnoticeable at the scale shown.  The right axis shows the Medicare payroll tax rate.  Medicare outlays and receipts are pulled from the above referenced source.  The Medicare deficit is calculated by subtracting Medicare Receipts from Medicare Outlays.  However, for simplicity we show that negative number as a positive value on the graph (the graph shows the magnitude only of the deficit).  The graphs are pretty flat during the Seventies so we drop them off in the following chart.

Medicare Receipts Outlays Deficit 1980-2011

The Medicare tax rate has been holding steady at 2.8% since 1986.  This tax rate has provided a growing rate of Medicare receipts.  But Medicare outlays have grown at a greater rate.  Outlays remained flat for a few years in the Nineties thanks to the Medicare Sustainable Growth Rate (SGR) included in the Balanced Budget Act of 1997.  Which basically discounted doctors’ Medicare billings.  Doctors provide the same services.  Only the government paid them less.  After some fierce opposition this provision (the doc fix) went away.  For it was either that or doctors would leave the Medicare program en masse instead of operating at a loss.  Leaving the government with a lot of seniors without any doctors.  So Medicare outlays resumed their upward growth.  With receipts growing at a lesser rate.  As outlays and receipts grew further apart the Medicare deficit soared.

Obamacare Spending will be out of Control because Medicare Spending is out of Control

The Medicare tax is a flat tax.  Which means the more you earn the more you pay.  Unlike Social Security that has a maximum taxable earnings amount.  The Social Security tax rate is 12.4% of the first $113,700 you earn.  Bringing the FICA tax (Social Security and Medicare) total to 15.3%.  When they passed the Social Security into law they promised that the Social Security tax would never exceed 3% of the first $3,000 you earn.  Just to give you an idea of how horrible the government’s projections were.  They have raised taxes far beyond what they promised and it still isn’t enough.  Medicare is running greater and greater deficits.  So Medicare is in trouble.  And with Obamacare pulling some $700 billion from Medicare things aren’t going to get any better any time soon.

Medicare is national health care.  And the government is running it very poorly.  The Medicare outlays in 2011 were $485.6 billion (or about 13.5% of all 2011 federal outlays).  And that was generated from treating only 12.8% of the population.  How bad will these numbers be if Obamacare evolves into a full-fledged national health care service?  If you divide the 2011 Medicare outlays by 12.8% you get $3.79 trillion.  This amount would be for 100% of the population receiving medical care as if they are 65 or older.  Currently those 65 and older consume about 35% of all health care spending.  So if we multiply $3.79 trillion by 65% (1-35%) we get $2.47 trillion (or about 68.4% of all 2011 federal outlays).  Which adjusts this amount as if everyone receiving health care is under 65.  As the amount of those 65 and over receiving health care will fall under Obamacare thanks to those unofficial death panels.  And they’re going to need those death panels.  Because with the government running Obamacare it will be an abject failure.

A crude guesstimate.  But it’s probably not that far off.  For national health care is very, very expensive.  And as we’ve learned from Medicare, it’s also very, very inefficient.  Because there are no market forces in health care.  Which is why Medicare spending is out of control.  And why Obamacare spending will be out of control.  Requiring massive new taxation.  Rationing.  And cost cutting.  As in death panels.  For letting people die instead of treating them will be the only way to bring down costs.  Unless they force health care providers to work without pay.  Another way to cut costs.  Compel health care providers to work against their will.  For why should anyone profit off the suffering of others?  Which may be the next dictate handed down in Obamacare.

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The Price for China’s Booming Export Market is some of the worst Air Pollution

Posted by PITHOCRATES - January 13th, 2013

Week in Review

The Chinese economy has boomed in the last decade or so.  Liberals in America think it’s because of the Chinese Communists managing the economy.  For they believe brilliant government bureaucrats are smarter in things economic than free market capitalists.  But there’s more to the Chinese economy than those government bureaucrats.  Such as low-paid labor.  And no environmental laws (see Air pollution in Beijing goes off the index by LOUISE WATT, Associated Press, posted 1/13/2012 on Yahoo! News).

People refused to venture outdoors and buildings disappeared into Beijing’s murky skyline on Sunday as the air quality in China’s notoriously polluted capital went off the index…

Air pollution is a major problem in China due to the country’s rapid pace of industrialization, reliance on coal power, explosive growth in car ownership and disregard to environmental laws. It typically gets worse in the winter because of heating needs.

This is how you get a booming economy.  You exploit workers.  And pollute the air.  This is the Chinese secret.

The Chinese can export goods at prices below our costs.  Because they pay next to nothing for labor.  And give them no benefits.  They also don’t burden businesses with costly regulations.  Like environmental regulations.  The Left’s relationship with Big Labor keeps labor costs high.  And excessive regulatory costs make the cost of business high.  China has neither.  Which is why they have a booming export economy.  And why the Americans cannot compete with them.

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The American Left loves the Chinese Economic System despite its Inefficiencies, Income Gap and Crimes Against Humanity

Posted by PITHOCRATES - January 6th, 2013

Week in Review

The American Left looks at China with awe and reverence.  They see that huge export economy and they know how they did that.  Massive government control over the economy.  And Keynesian economics on such a grand scale that it would  even impress Paul Krugman.  Nobel-winning Keynesian economist who’s constant refrain is that the government just never spends enough.  Something no one can say about the Chinese Communists.  And that’s why the American Left loves China.  For when it comes to the economy they wield dictatorial power.  If the American Left had those powers they could accomplish so much.  Beginning with the arrest of the Republican opposition and deportation to reeducation camps.  Then they could make our economy hum.  Just like in China.  Where brilliant government bureaucrats educated in the finest Ivy League universities called all the shots.  For only those who despise free market capitalism would know how to truly optimize economic output (see Game Over for China’s Photovoltaic Manufacturers by Gao Zitan & Frank Fang posted 1/6/2013 on TheEpochTimes).

It was in October of 2011 when the U.S. and European PV companies decided that enough is enough. Over the last years they had to compete against Chinese companies selling their products below cost. As a result many European and U.S. companies had to close down. The remaining ones chose to appeal to regulators to stop the unfair practices.

Note once again who is complaining about companies selling things too cheaply.  It is not the consumer.  For the consumer never complains that they aren’t being charged enough.  It is always another business requesting antitrust protection against a company they cannot compete against.

The Chinese regime viewed solar photovoltaic production as a promising industry with rapid scalability and production, and high profits. It could add to GDP growth and employment. This is why the regime greatly promoted the growth in the domestic PV market through business-oriented regulations and incentives. Banks, local governments and other financial agencies were ordered to heavily subsidize the solar industry with cheap loans.

Starting in 2009, the regime sponsored some large-scale national PV projects. The Solar PV building program comprised 111 projects and the Golden Sun program included 275 projects. Provincial or municipal funded programs provided the framework for many other PV related projects.

This is exactly what the Left wants to do.  What the Obama administration did.  They want smart government bureaucrats to tweak market forces to make things better.  At least this is what these government people think.  Because they are so smart.  Even though they have no business experience.  So the American Left wants to do exactly what China did.  What the Americans did but on a much grander scale.  Because their communist government had the power to do it on a grander scale.  Something the American Left laments that the American government doesn’t have that kind of power.  Yet the Americans want to penalize the Chinese for unfair practices.  Despite constantly championing the Chinese way.

In 2008, there were less than 100 PV enterprises. But by the end of 2011 there were more than 500 PV companies, a five-fold increase, according to Guangzhou-based business newspaper 21st Century Business Herald…

On the surface, Chinese companies were doing well. Revenue of the PV industry was more than 300 billion yuan ($48 billion) and Chinese companies occupied five spots in the top 10 of global solar cell manufacturers, according to the report. However, the fast expansion of PV production capacity did not match domestic demand.

According to statistics of EU ProSun, in 2011, China reached a total PV production capacity of 45 GW but domestic consumption was only 2 GW. The production capacity spurred by massive subsidies and state incentives was over 20 times higher than actual demand for solar powered electricity. The only way out was exporting the surplus production…

As a result of lower subsidies in Europe and tariffs in the United States, the overproduction stimulated by state subsidies can no longer be exported. One indication is a rapid growth in inventories. Sixty-six listed Chinese PV companies of the Shanghai A-Share Stock Market showed a 20 percent increase in inventories compared with the same period of the previous year…

President of EU ProSun Milan Nitzschke said, “Chinese subsidies shield manufacturers from insolvency, and are pumped into solar companies even if they are unprofitable. Most Chinese solar companies would have gone bankrupt a long time ago if not for endless government subsidies.”

This is what happens when you have ‘smart’ government people take over the free market economy.  You build a lot of stuff no one will buy.  Just like the Soviets built a lot of tractor parts that sat on store shelves unsold while people stood in line to buy soap and toilet paper.  This is why the command economies of communism failed.  And while the command economy of the Chinese Communists will fail, too.  What Friedrich Hayek of the Austrian school of economics called malinvestments.  Which directs resources from making things people want to making things people don’t want.  Creating shortages of the things people want (like soap and toilet paper in the Soviet Union).  And overflows inventories with things people don’t want (like solar panels in China).  All because a government bureaucrat decided to make more tractor parts and solar panels instead of soap and toilet paper.

And if that wasn’t bad enough there are other costs for the Chinese way (see Never Mind the Fiscal Cliff, China is Headed For a ‘Real’ Cliff by Michelle Yu posted 1/6/2013 on TheEpochTimes).

China is dangerously close to a catastrophic political, economic, and social meltdown, according to a Chinese business scholar, who cites China’s growing income gap as one of its serious crisis indicators…

Rural versus urban inequality has long been recognized as a key factor in China’s income gap. Not only does the rural income level fall far below the urban level, but the income inequality is also more obvious within rural regions…

Another notable factor is high unemployment rate. The SUFE study suggests that China’s national unemployment rate was 8 percent in July 2011, suggesting an unemployed population of 27.7 million, which is almost twice as high as what authorities have admitted to. The unemployment rate doubles for 51-55-year-olds, reaching 16.4 percent, and is attributed to mergers and standardized bankruptcy of state-owned enterprises in the early 2000’s. (An explanation of mergers and standardized bankruptcy are available here  and here.)

Surprisingly, the unemployment rate for 21-25-year-olds who hold college or above degrees is also 16.4 percent—the same as for the 51-55-year age group. By contrast, the rate for 21-25-year-old poorly educated migrant laborers from rural areas is only 3.4 percent. A shortage of cheap labor has affected some of China’s key export industries such as apparel and electronics, especially on the east coast.

But the root cause of the income inequality and a battery of other economic problems in China can be found in the communist regime’s overexploitation of social wealth, according to Winifred Tung, an attorney and commentator from Taiwan.

The exploitation has been realized largely through preferential policies in favor of state-owned enterprises and suppression of the private sector, Tung told NTD Television, citing recent data, which says that the GDP of large-scale state-owned enterprises (SOEs) accounts for 60 percent of China’s overall GDP. However, among the different culprits of tax evasion in China, SOEs came in first place with 26-28 percent.

So this is why they can make so many solar panels (and other export goods) so cheaply.  By exploiting poor rural laborers in their big city factories.  Resulting in something the American Left say wouldn’t exist if they had control over the economy like the Chinese do.  An income gap.  Income inequality.  Something that is apparently worse in the country where the government has the power to make life fair.  But it’s more than just an income gap.

The Chinese factory workers aren’t like UAW workers.  They have low pay, no benefits and often live in dormitories in the factory compound.  And these have it good (see The Difficulty of Smuggling a Slip of Paper From a Chinese Labor Camp by Guo Jufeng posted 1/6/2013 on TheEpochTimes).

Like the person whose plea made headlines around the world, I was also in Liaoning Province, China. Twelve years ago, I was imprisoned in Huludao City Forced Labor Camp, Liaoning, for 2.5 years for practicing the meditation discipline of Falun Gong. My companion Cao Yuqiang, who was eventually tortured to death, and I were watched 24 hours a day by two criminals, so that we could not exchange information regarding the persecution of Falun Gong.

One day, I came up with the bold idea to find a way to communicate information about the persecution to the outside world.

The first obstacle we faced was that we didn’t have pen or paper. So, as more and more information was passed on to me, it became quite a challenge to memorize everything! To improve my memory, I repeated the information to myself every day, since I couldn’t communicate regularly with Cao Yuqiang.

One day, out of the blue, Cao told me he had found a refill for a ball-point pen. I suspected he must have gone through a great deal of trouble to procure it, but I did not have the opportunity to ask him for any details at that time.

Now I had a pen, but there was still the question of what to write on. I finally realized that the only possibility was toilet paper, and to avoid being caught, I would have to write the message after midnight.

I had to keep strengthening my mind to overcome fear and anxiety as any negative thoughts could lead me to give up. Questions and doubts plagued my mind: “Would this work? How could we get the information out? Would I be able to withstand the torture if it was discovered? Had other prisoners found out about my plan? Were they waiting to catch me in the act?” I was certain that if my plan were discovered, I would be tortured mercilessly with electric batons.

This is part of that Chinese economic system the American Left so admires.  An economy that is based on cheap labor.  In some cases even slave labor.  And it’s no secret.  Which is odd for the American Left who are champions of the labor movement.  Who bankrupted countless businesses (GM, Chrysler, Hostess, etc.) by demanding ever higher pay and benefits packages.  Yet here they are.  Admiring an economic system that just exploits labor in the worst ways.  Even using torture.  And it bothers some.  Maybe not the American Left.  But the Chinese themsleves (see A Young Chinese Man’s New Year Wish for His Father by Gao Zitan posted 1/1/2013 on TheEpochTimes).

As 2013 begins with an atmosphere of joy welcoming in the new year, a young man from Hubei, China, is worried about his father who is a member of the Communist Party.

The term “San Tui” in Chinese refers to the three distinct renouncements. It means to quit the Chinese Communist Party (CCP) and its two affiliated organizations: the Communist Youth League, and the Young Pioneers, which people are made to join in their youth.

In recent years, “the three renouncements ensure safety” has become a well-known saying in China, and many consider it a rational choice for mainland Chinese to guarantee themselves immunity from all the crimes perpetrated by the Communist Party when the day of reckoning comes. So family members of those who refuse to consider the wisdom of this option are very worried for their loved ones…

“The three renouncements ensure safety” has been widely recognized by the Chinese public since 2004, when The Epoch Times published the truth about the CCP in “Nine Commentaries on the Communist Party” in 2004, and began registering those wishing to make the three withdrawals.

As of Dec. 30, 2012, more than 130 million people had registered with The Epoch Times to quit the CCP and its affiliated organizations.

The American Left may be enthralled with the Chinese communist way just as they were enthralled with the Soviet communist way but those living under those oppressive regimes weren’t.  And aren’t.  China is not the China it was under Mao.  But the hard-line communists are.  But even some of these committed their crimes against humanity for a higher purpose.  To prevent the anarchy that followed in parts of the former Soviet Union when the Soviet Union collapsed.  So some may commit their crimes for good.  While a lot no doubt just enjoy the privilege that comes with being in the party leadership.  And the very comfortable lifestyle.  Much like liberals in this country.  But not the average Chinese.  At least 130 million of them.

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Thieves are Stealing Medical Equipment and Personal Information from the NHS

Posted by PITHOCRATES - September 29th, 2012

Week in Review

Thomas Jefferson did not like having money and government get too close.  Because history is strewn with examples of corruption whenever money and government come together.  From padding the federal payroll to spending money to buying votes to outright graft.  Which is why Thomas Jefferson would have opposed Obamacare.  For he would have thought it was not the federal government’s business to provide health care.  And he definitely would not have wanted the federal government spending that kind of tax money.

We spend a lot on health care.  About $2.6 trillion today.  And another bad thing about spending that kind of money?  Government bureaucrats just aren’t that good at it.  So you know Obamacare won’t be as good as the health care provided by the private sector.  Just look at what’s happening in the UK to see the future of Obamacare when the government takes responsibility for $2.6 trillion in health care spending (see The great hospital robbery: Defibrillators, baby heart monitors, even beds – thieves are walking out of NHS wards with vital equipment by John Naish posted 9/24/2012 on Mail Online).

The great hospital robbery: Defibrillators, baby heart monitors, even beds – thieves are walking out of NHS wards with vital equipment…

Experts suggest they are spiriting it abroad, to Eastern Europe or even as far afield as Iraq and Afghanistan.

And, shockingly, NHS staff are sometimes involved, acting as an ‘inside man’.

But if such thefts are not scandalous enough in themselves, NHS chiefs appear to be so blasé about the losses they don’t even have a national picture of how much equipment is being stolen, let alone a comprehensive anti-theft strategy…

To make matters worse, NHS trusts can’t claim for the stolen property, says Sarah Bailey of the Association of British Insurers.

‘The NHS does not tend to take out commercial insurance policies. Instead, it “self-insures”, which means it absorbs the cost of its losses, rather than taking out policies that could be expensive.’

As she points out: ‘Ultimately, it could be the taxpayer who funds those losses.’

Of course government bureaucrats aren’t going to get excited about theft.  Why should they care?  It’s not their money.  And it’s not their job.  Besides the losses won’t come out of anyone’s pay.  They’ll just pass the losses on to the taxpayers.  Something they can’t do in the private sector.  Which is why they take loss prevention a bit more seriously in the private sector.  Because there is accountability in the private sector.  And profits.  So they put people in places to minimize anything that will reduce those profits.  Like theft.  Something the NHS appears to be not overly concerned about.  Pity.  For they are stealing more than just medical equipment.

Laptops used by hospital staff are the most frequent target of hospital thieves, which could mean millions of people’s personal details and medical records have fallen into the hands of criminals.

In June last year, for example, NHS North Central London admitted that an apparently unencrypted laptop, containing details of more than eight million patients, was one of 20 machines reported stolen from a storeroom.

When computer thefts result in the loss of sensitive information on patients, this has to be reported to the Information Commissioner’s Office (ICO), the independent public authority set up to uphold information rights.

Figures from the ICO show that the NHS is the top sector for such losses, with significantly more incidents than the whole of the private sector put together…

And this is the future under Obamacare.  Greater inefficiencies because of theft.  And greater theft of personal information.  Which there will be a lot of available to steal as Obamacare digitizes all our medical records.  So as we move to national health care it will cost more and we will get less.  As they spend a lot of our tax dollars to replace stolen equipment thanks to the lackadaisical attitude of the government bureaucrats in charge of Obamacare.  While we spend more to replace what others steal from us thanks to their lackadaisical attitude about securing our personal information.

Sure, some say Obamacare will do better than the NHS.  But to them I say the NHS probably does national health care better than most.  And after doing it since 1948 they’ll be able to do it better than the Americans will be able to do it just starting out.  Only it will be a lot harder than it was in 1948.  Thanks to an aging population raising the cost of health care.  And the sophistication of the bad guys in stealing from the system.  No.  Obamacare will be a far cry from the NHS.  So as bad as anything is in the NHS just remember that Obamacare will probably never be that good.

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Floridians in General and Seniors in Particular want to Repeal Obamacare

Posted by PITHOCRATES - July 15th, 2012

Week in Review

The fact that the Supreme Court upheld Obamacare doesn’t change some facts.  People don’t like it.  They don’t want it.  And they want to repeal it.  Especially the seniors (see Poll: Most Floridians disapprove of federal healthcare law, half want it repealed by Alex Leary, Tampa Bay Times, posted 7/12/2012 on The Miami Herald).

A majority of Florida voters oppose the national healthcare law and half want it repealed, a new Miami Herald/Tampa Bay Times/Bay News 9 poll shows two weeks after President Barack Obama’s signature achievement was largely upheld by the U.S. Supreme Court.

Only 43 percent of voters statewide support the Affordable Care Act and 52 percent oppose it, with 5 percent undecided. With the exception of southeast Florida, more voters think the law will make the healthcare system worse.

More voters also favor the state opting out of provisions of the law, something Gov. Rick Scott has already said it would do…

In perhaps the most worrisome sign for Obama and Democrats, only 39 percent of voters 65 years or older support the law. Seniors make up about 30 percent of the overall state’s electorate…

The results mirror surveys in other states and show the same entrenched partisan feelings.

What is even more significant is that seniors are the largest consumers of health care services.  These aren’t ill-informed young adults who want free birth control and abortion on demand.  These are people whose very lives depend on quality health care.  And that’s the problem.  These informed consumers of health care services see Obamacare reducing the quality of their health care.  For they listen to the details.  Unlike healthy people in their twenties who have other pressing issues on their minds.  I refer you back to the part of Obamacare that interests them.  The free birth control and abortion on demand.

When Coke came out with New Coke the consumers of the original Coke did not like the change.  So they brought out Classic Coke.  And eventually dropped New Coke.  Because New Coke was a disaster with the people who consumed the vast majority of Coke.  The Coca Cola Company understood they had to please the people who consumed the vast majority of their product.  So they took actions to please the consumers of Coke.

The reaction of seniors to Obamacare is similar.  For the new health care system doesn’t benefit the largest consumer of health care services.  These seniors.  No.  These seniors will lose the most.  Obamacare will make huge cuts in Medicare spending which will hurt seniors.  Obamacare will reduce doctors’ Medicare reimbursements and cause many of them to drop Medicare patients.  Again, this will hurt seniors.  And Obamacare will prioritize the use of their limited health care resources.  Those who are younger and have more to live for (i.e., who can work longer and pay more taxes) will receive priority over a senior who no longer contributes to tax revenue while consuming enormous amounts of health care resources.  The phrase ‘death panels’ does not appear in the health care law but there will be government bureaucrats determining who will receive health care and who will not.  Which is a terrifying prospect to all seniors and the terminally ill.  As well as the chronically ill.

Coke listened to their consumers because they cherished them as customers.  The problem with Obamacare is that the government looks at the largest consumers of health care as a burden.  And they don’t like them.  As shown by the passage of a health care bill that is so hostile to them.  Seniors often voted Democrat because they benefited from growing government spending.  That spending will continue to grow under Obamacare.  Only they will pay for a lot of it with spending cuts on programs that serve seniors.  So it’s not likely that the seniors will vote Democrat in the 2012 election.  Especially when only 39 percent of voters 65 years or older support Obamacare.  Meaning 61% don’t.  In Florida as well as other states wherever seniors can be found.  No.  They will vote for those who will listen to them as the largest consumers of health care services.  And who don’t plan on fixing whatever problems we have in the health care system by trying to get seniors to die sooner.

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Tobacco, Smoking, Cigarettes, Sin Taxes, Obesity, Health Care Costs, Lost Tax Revenue, Abortion, Deficit and Debt

Posted by PITHOCRATES - June 5th, 2012

History 101

The Government saves Money in the Long Run when People Smoke because they Die Earlier than Nonsmokers 

A lot of people like to smoke.  Before we knew any of the adverse health effects of smoking it was as wholesome as apple pie in America.  American tobacco was one of the first cash crops of the United States.  Because it was in such high demand throughout the world.  During the American Civil War many officers chain-smoked cigars.  We put cigarettes in our soldiers’ C-rations in World War II.  Some of the most iconic photographs of battle-weary soldiers, seamen and airmen have a cigarette dangling from their mouths.  Our favorite parents from the Fifties’ sitcoms smoked cigarettes in their homes with their children playing on the floor at their feet.  If you watch AMC’s Mad Men everyone smoked cigarettes.  All of the time.  At work and at home.  In restaurants and in hospitals.  Even while pregnant.  Then the attacks against Big Tobacco began.

First they started with the sin taxes.  Greatly increasing the cost of cigarettes.  Which increased their opportunity costs.  People had to give up other things to continue to enjoy their cigarettes.  Especially the poor.  The rich still could enjoy their cigarettes without making sacrifices in their life.  And kept on smoking.  Movie stars and rock stars always have a cigarette hanging out of their mouths.  To look cool.  Which is why teenagers started to smoke.  Not because of Joe Camel.  But to look cool like their favorite movie stars and rock stars.  So people kept smoking their cigarettes.  While the government bureaucrats started tallying the health care cost of smokers.  To recover the health care cost of smoking government bureaucrats sued Big Tobacco.

According to ‘health care experts’ in the government smoking costs the health care industry some $100 billion annually.  Which is why they’re constantly raising taxes on cigarettes.  Why they sued Big Tobacco.  And why they’re ostracizing smokers everywhere by making almost every area a nonsmoking area.  But they still haven’t made smoking illegal.  Why?  High sin taxes and lawsuits.  Smoking is a cash cow for government.  And the dirty little secret about smoking is that the government saves money in the long run when people smoke.  Because of those sin taxes.  And because smokers die earlier than nonsmokers.  Up to a decade or more.  And it is in that last decade of life that seniors cost government the most.  Another decade of Social Security benefits.  And Medicare and Medicaid benefits.  Those benefits smokers paid into all of their lives.  Who forfeit them when they die early (and they don’t get passed on to their heirs).  Unlike the nonsmokers who don’t have the decency to die before collecting all of their Social Security and Medicare benefits.  Adding another decade or so for a whole sort of health ailments to inflict their fragile bodies.  Requiring more hospitalization.  Medication.  And nursing home care.  Expenses smokers help cut short by dying earlier.  Such as from an early heart attack before they even get a chance to have a lengthy and expensive hospital stay.

The Loss Tax Revenue from Abortions in the Eighties over Three Decades is Approximately $4.98 Trillion 

So government is increasing the opportunity costs of something people enjoy.  Smoking.  When in the long run smokers’ early deaths save the government money.   Not to mention those sin taxes fattening the tax pot when they’re alive.  So it’s a specious argument that the government is spending more on them in health care costs than nonsmokers who live another 10-20 years.  So why do they do it?  To boost tax revenues.  And smokers are just a convenient scapegoat.  Like the obese.  Where those on the Left make the same arguments.  Where according to ‘health care experts’ in the government obesity costs the health care industry some $150 billion annually.  Even though these people like smokers live shorter lives.  So while they’re consuming that $150 million the government is keeping about 10-20 years of their contributions to Social Security and Medicare.  So it is again a specious argument that the government is spending more on obese people than thinner, healthier people who live 10-20 years longer.  Who could, say, fall and break their pelvis requiring an extensive and expensive hospital stay.  As well as rehabilitation and possibly nursing home care.  And yet those on the left have campaigned to remove toys from Happy Meals.  And made it illegal in New York to buy a big cup of soda pop.  Why?  Again, to boost tax revenue.

All right, let’s go to the source of that tax revenue problem.  Let’s look at a decade of lost tax revenue.  From 1980 to 1983 there were about 1,300,000 abortions each year.  In 1984 there were 1,333,521 abortions.  In 1985 there were 1,328,570 abortions.  In 1986 there were 1,328,112 abortions.  In 1987 there were 1,353,671 abortions.  In 1988 there were 1,371,285 abortions.  In 1989 there were 1,396,658 abortions.  In 1990 there were 1,429,577 abortions. 

Had these abortions not happen in 2006 there would have been an additional 1,300,000 taxpayers aged 26.  In 2007 there would have been an additional 1,300,000 taxpayers aged 27 and an additional 1,300,000 taxpayers aged 26.  And so on.  If you crunch the numbers over a 30-year period by decades you get an additional 72,006,665 people paying taxes at all levels of government in the first decade (2006-2015).  An additional 146,913, 940 tax-paying people in the second decade (2016-2025).  And an additional 88,169,092 tax-paying people in the third decade (2026-2035).  The average age in the first decade is 29.  It’s 32 in the second decade.  And 42 in the third decade.  Assuming those age 29 earn on average $30,000 annually, those age 32 earn on average $40,000 annually and those age 42 earn on average $50,000 we get the following incomes per decade: $2.16 trillion, $5.88 trillion and $4.41 trillion, respectively.  Assuming that we pay approximately 40% of all our earnings in taxes at the city, state and federal level the lost tax revenue (at all levels of government) for those same decades equals $864.1 billion, $2.35 trillion and $1.76 trillion, respectively.  For a grand total of loss tax revenue for those three decades of approximately $4.98 trillion.  Or on average $165.9 billion per year.  These numbers are conservative.  Yes, some of these people may not survive to become taxpayers.  But some of these could become millionaires and billionaires, paying more in taxes.  There could have been another Lady Gaga, Madonna, Oprah Winfrey, Warren Buffet, Bill Gates, Barbara Streisand, George Clooney, Steve Jobs, etc.  A few of these added to the calculations would make the lost tax revenue numbers larger.

From the Government’s Perspective Abortion has a Far Greater Opportunity Cost than Smoking and Obesity 

This is the opportunity cost of the abortions in the Eighties.  So much loss tax revenue that the government has attacked smokers and the obese.  Whose health care costs are not adding much if anything to the federal budget.  Thanks to their early deaths compared to nonsmokers and thin people.  (If the government starts refunding remaining Social Security and Medicare benefits to the surviving family that may change.)  Yes they are costing the health care system.  But their costs are just brought up earlier in their lives as opposed to someone living 10-20 years longer making the nursing home to hospital to nursing home roundtrip a few times in the last 10 years or so of their life.  Because they have lived so long.  And had a chance to suffer every disease and trauma those smokers and obese can’t due to their early deaths.

It is interesting to note that the federal deficit in 2006 was $282.14 billion.  The lost tax revenue from the Eighties’ abortions was on average $165.9 billion per year in those three decades.  Granted not all of that money would have been federal taxes.  But with the conservative estimate of that loss tax revenue it is safe to say it would have come close to balancing the federal budget.  And if you factor in the abortions of the Seventies (there were fewer than in the Eighties but they would have been higher earners in the 2000s) the federal deficit may have become a surplus.  At least holding the federal debt to the $9.34 trillion it was in 2006.  Perhaps even reducing it.

Smoking and eating an unhealthy diet may be bad for you.  But it probably doesn’t cost the government anymore in tax dollars.  But they increase the opportunity costs of these things we enjoy to dissuade us from enjoying them.  So those who enjoy smoking and eating and drinking ‘bad’ things enjoy life less.  By not choosing what they want to choose.  Why? To pay for the lost revenue from another choice that government doesn’t try to dissuade people from.  Abortion.  Which from the government’s perspective has a far greater opportunity cost than smoking and obesity.  And yet government paints a bulls-eye on the back of smokers and the obese.  Why?  Because they’ve so demonized and oppressed them they can.  While the abortion issue too much of a sacred cow to those on the Left.

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Poor Quality Standards uncovered in the NHS a Glimpse into Obamacare?

Posted by PITHOCRATES - April 1st, 2012

Week in Review

Do you want to know what Obamacare will be like when they fully implement it?  Yes?  Well, then, I give you the UK’s National Health Service (NHS).  Only it won’t be as good as the NHS.  For the United States has far more patients than the UK does.  But even with fewer patients than the US the NHS bureaucracy is still cold, detached and, at times, deadly (see Health regulator ‘gagged own staff against speaking of failures’ by Rebecca Smith posted 3/30/2012 on The Telegraph).

The Care Quality Commission has been criticised for failing to act on concerns of residents being abused by care home staff and reducing the number of inspections to focus on registering organisations instead, a report said.

One of the key ways that poor standards of care in residential homes and hospitals come to light is through staff blowing the whistle yet the CQC shut down a dedicated hotline, the Public Accounts Committee said.

At the same time the CQC gagged its own staff when they tried to raise concerns about the Commission’s work, it said.

One board member told MPs she had tired [sic]to speak publicly about her concerns over the way the CQC was run but had been “ostracised and vilified”.

The report did not name the board member but it is understood to be Kay Sheldon, a psychiatrist, who gave private evidence to the Mid-Staffordshire Inquiry, into dozens of deaths of patients amid appalling standards of care.

Whistleblower hotline?  Gag orders?  Ostracized?  Vilified?  Patient deaths?  Appalling standards?  These are not the things they led us to believe would happen under Obamacare.  But they have them in the NHS.  Which is full of excellent doctors, nurses and caregivers.  So we can expect them in Obamacare.  And far more of them.  Because Obamacare will have far more patients than the NHS.  And it’s not because ‘bad’ people are sneaking into a national health care system.  It’s just the nature of a great bureaucratic beast.  That must spread diminishing limited resources to an expanding and aging patient base.  That turns health care into a game of numbers.  Accounting entries.  Even in the area of quality control.

The CQC has been ‘struggling for some time’, the report said, and the Department of Health is ‘only now’ starting to take action…

The CQC was formed in 2009 under a Labour government led by Gordon Brown, taking over regulation of healthcare, social care and mental health services.

Reports from the Health Select Committee, the Department of Health and the National Audit Office have all been critical of the Commission.

The PAC report said it has been ‘poorly governed and led’ and ‘we have serious concerns about the leadership, governance and culture of the Commission’.

Cynthia Bower, chief executive of the Care Quality Commission, resigned last month from the £195,000 a year post as a review by the Department of Health found widespread failures including a lack of evidence it protected patients, it was too reactive and inspectors missed neglect of care home residents.

Lady Barbara Young who was chairman when the organisation was set up in 2009, left after the Basildon hospital scandal in which dozens of patients were thought to have died despite the hospital receiving a ‘good’ rating from the Commission.

Government does not make things better.  No matter how ‘smarter’ government bureaucrats are than everyone else.  For that’s the belief of politicians and government bureaucrats.  That the world would be a better place if these ‘smart’ people took control.  And that includes health care.  So they can give large salaries (based on the current exchange rate that £195,000 comes to $312,195 US) to their likeminded friends.  Who can put all of their enlightened ideas into practice.  And what happens after they start running things?  Continued patient neglect.  And more patient deaths.  Despite all of their good intentions.

Mrs Hodge said: “The CQC completed less than half its target number of inspections. That is a serious failure that lets down patients and users of care services who rely on the CQC to protect them from poor or unsafe care.”

The Commission now has to register all 10,000 GP practices in England by April next year and the process has been simplified to an online application form in which partners will declare if they meet 16 pre-set standards including cleanliness, medicines management, patient consent, complaints and record keeping.

In pilots a quarter of GPs said they did not meet all the standards.

The report said: “We are concerned, however, that the Commission will simply be a ‘postbox’ for self-certified applications and that the process will not be sufficiently robust to give the public meaningful assurance that registered GP practices are meeting the essential standards.”

Bureaucrats love paperwork.  The more the merrier.  Put it online and they’re in paperwork nirvana.  Because they never have to leave their offices.  They never have to work late.  They never have to travel to these disgusting health care facilities (where they neglect patients and cause many to die).   Out of sight out of mind.  Ergo their system works.  Thanks to the honor system.  And as long as bad care providers identify themselves to the regulators so the regulators can quickly and efficiently complete paperwork addressing the situation.  And then file it electronically.  Confidant that they did everything they could to increase the quality of patient care.  And then they go home.  Trusting that the other bureaucrats in the system will take the appropriate action.  Thus improving the quality of health care.  Efficiently.  And cost effectively.  Leaving more money available for those large salaries they so enjoy.

“But it is also important to keep this in perspective. The main responsibility for ensuring care standards are met lies with front line staff and hospital boards. We must be realistic about what the regulator can do – its role is to act as a backstop when they fail in this task.

“The Commission had a troubled beginning, exacerbated by a lack of clarity about its role and a failure to provide the resources needed for it to meet the enormous and complex task it was given. Politicians must bear some of the responsibility for this – it is no good preaching the virtues of light touch regulation, and then blaming the regulator for not taking a more interventionist approach when problems emerge.

But there is a problem relying on the frontline staff when they follow orders from on high.  Their health-care-providing hands are tied.  They can only do what some bureaucrat in a far distant office allows them to do.  They’re doing the best they can in a broken system.  But when care or treatment is denied based on cost accounting performed in some office that never sees a patient their patients will suffer neglect.  And some will die.  In part from the refusal to give them life-saving treatment.  And in part due to the apathy people will feel when the quality of their care doesn’t matter as much as their meeting cost-reduction targets.  When they see patients suffer and die because they can’t do anything for them.  Because their requested treatment was denied.  It’ll harden the best of people.  Making their patients just numbers.  And not people.

And this will be the world of Obamacare.  For the NHS is full of great people.  Yet even they can’t prevent the ill effects of a bad system.

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Japan’s Population is Aging just like in Europe and the U.S., Deficits and Debt may soon be Unsustainable

Posted by PITHOCRATES - February 19th, 2012

Week in Review

Liberal Democrats have never worried about the long-term consequences of high government spending.  High deficits.  And growing debt.  And their ‘go to’ example they like to go to is Japan.  During the Eighties government partnered with business.  Their economy boomed.  And they started buying up U.S. landmark assets.  People began to worry that Japan would one day own the United States.  National Lampoon magazine had a cover showing a Japanese executive as the president of the United States, a wholly owned subsidiary of some Japanese corporation.  Liberals looked at all of this and said that’s how you run an economy.  And the Americans were fools for not doing the same thing.

Then the Nineties came.  And a deflationary spiral that continues to this day.  All of that government interference with the market created bubbles.  And they eventually burst.  But as their economy contracted they did not cut back on their government spending.  Which brings us back to Japan being the poster-child for liberal Democrats.  “See?” they say.  “Japan has some of the highest government spending in the world and they’re doing just fine.  Japanese debt is some of the safest debt out there.  So we don’t need to worry about high deficits or high debt.  Because it’s not harming the Japanese any.”  But that may be changing soon (see Japan slowly wakes up to doomsday debt risk by Reuters posted 2/19/2012 on the Vancouver Sun).

Capital flight, soaring borrowing costs, tanking currency and stocks and a central bank forced to pump vast amounts of cash into local banks — that is what Japan may have to contend with if it fails to tackle its snowballing debt…

The government borrows more than it raises in taxes, and its debt pile amounts to two years’ worth of Japan’s economic output, the highest debt-to-GDP ratio in the world.

It costs Japan half of the country’s tax income just to service its debt. Each year, Japan’s debt level increases by more than the combined gross domestic product of Greece and Portugal…

Conventional wisdom is that Japan is safe as long as it keeps covering about 95 per cent of its borrowing needs at home…

What sets Japan apart from Europe’s crisis-hit nations is that it borrows almost exclusively at home and with domestic savings of some 1,500 trillion yen ($19 trillion) it can do it paying less than one per cent for 10-year bonds…

Budget arithmetic and demographics suggest that it will take another decade before Japan’s swelling ranks of retirees will begin to run down their vast savings to the point where Tokyo will need to start borrowing more from overseas lenders…

… Over decades of virtually single-party rule, Japan developed a system where expertise and formulation of policies would be the domain of elite bureaucrats rather than elected politicians…

Sakuma estimates the sales tax would need to go to 25 per cent or more to close the financing gap built up over the past 20 years when Japan failed to respond to rising costs associated with rapid aging by adjusting taxes and social security premiums.

Even tax hikes on such a scale will fail to reduce the debt burden if Japan remains stuck in deflation and anemic growth, he warns. “If we stay in this situation, this amount is never repayable. It’s just impossible…”

The problem Japan is having is the same problem Europe is having.  And the United States.  We all have aging populations.  Because we all also have a declining birth rate.  We have fewer people entering the workforce than we have leaving the workforce.  And that’s a problem when you provide a lot of government benefits.  Especially in retirement.  Such as pensions.  And health care.  Because you pay for benefits with taxes.  And you collect taxes from working people.  And when fewer people work guess what?  Tax revenue falls.

These government benefits were set up in a time when there were low tax rates.  And when people were having a lot of babies.  But as government gave out more benefits taxes went up.  It became more expensive to live.  And to raise a family.  So people had fewer babies.  And long story short we are where we are today.

Japan had some of the highest saving rates in the world.  Which has allowed them to build up the highest debt-to-GDP ratio in the world.  Well that.  And elite government bureaucrats.  Who were so smart that they knew what they were doing.  Just like liberal Democrats in the U.S.  And their counterparts in the social democracies of Europe.  They are so smart that they, too, want to run their economies.  And here we all are.  Countries with elite bureaucrats running their economies.  All facing some level of economic and financial collapse.

Perhaps it’s time to go back to first principles.  To Adam Smith.  And John Locke.  Put the people back in control of the government.  Get the government out of the economy.  And let the invisible hand do its magic.  Like it did before elite government bureaucrats mucked everything up.

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FUNDAMENTAL TRUTH #66: “In socialism you don’t get what you want. You settle for what you get.” -Old Pithy

Posted by PITHOCRATES - May 17th, 2011

Beggars can’t be Choosy

Imagine if you will some outdoor summer event.  By the lake.  Or the beach.  Someplace nice.  But a long way from any restaurants or stores.  It’s a day of fun and games enjoyed by all.  A rather long day at that.  And the people get hungry.  Lucky for them there’s food.  Over at the concession area there are two lines.  One long.  One short.  At the long line it says free food.  The short line says $250 per plate. 

There are also menus.  For $250 per plate you can get almost anything you want.  New York strip steak.  Crab legs.  Lobster tails.  BBQ ribs.  Corn on the cob.  Baked potatoes.  You name it and it’s there.  The free line is serving watery, lukewarm macaroni and cheese.  And they make it with an artificial cheese product.  One cup per person.  It tastes horrible.  But, hey, it’s free.  And you know what they say?  Beggars can’t be choosy.  Oh, and they run out before everyone is served.

Now everyone would rather have the steak, ribs, crab, lobster, etc.  But not everyone can afford $250 per plate.  Or wants to pay.  Some say it’s not fair.  But the people enjoying their steak aren’t complaining.  The line’s short.  And there’s plenty of food for them.  It’s just those who can’t or don’t want to pay the $250 per plate that complain.  Because they not only want something for free, they want something good as well.  But life doesn’t work that way.  Because everything costs.  And it’s just too expensive to give away steak, ribs, crab, lobster, etc.  But by selling these at a high price allows them to give away the macaroni and cheese to everyone else.  Which allows everyone to eat.  Until they run out.

As an interesting exercise, substitute ‘health care’ for ‘food’ in the above exercise.

The Free Market is most Efficient 

We can get a broad understanding of economics from this example.  In free market capitalism you can pretty much buy whatever you can afford.  Innovation and the profit incentive provide a lot of competition for your money.  Giving you a lot of choices.  There’s always a new company out there saying, “Hey, look at me!  Look at the new thing I have to sell!”  And if we like what we see we just may buy it.  Perhaps making another millionaire entrepreneur in the process.  While making our life better to boot.  Not too shabby.  This would be the ‘short’ line in our example.

Socialism is a command economy.  ‘Smart’ government bureaucrats direct the economy to maximize market efficiency.  And its objective is egalitarianism, not profits.  Because people should come before profits.  So the socialists decide who gets what resources and what prices should be.  Of course, when you do this, ultimately someone has to decide for the masses.  Because you can’t put 60 million people into a room and ask them what they want.  Sports cars or fuel efficient hybrids?  More tractor parts or more toilet paper and soap?  Grain crops used for food or fuel?  So not only do they decide how to do things more efficiently, they decide our choices for us as well.  This would be the ‘long’ line in our example.

In our example, the free market capitalists are happy.  And sleepy after eating a huge and delicious meal.  The socialists on the other hand are not so happy.  The food wasn’t that good.  And they had to ration it at the end of the day to feed everyone.  And yet they still ran out before everyone ate.  And this happened why?  Because it is the free market that is most efficient.  Not the command economy.  The free market is what fills up store shelves with things we want to buy at affordable prices.  Not the command market of socialism.  If you don’t believe me, talk to someone who lived in the Soviet Union.  Ask them what was on their store shelves.  They probably saw more tractor parts (which they didn’t want to buy) than toilet paper or soap (which they did want to buy).

Egalitarianism leads to Low Quality and Rationing

In theory, socialism sounds wonderful.  Egalitarianism.  Income redistribution.  From those according to ability to those according to need.  Sticking it to the rich.  What’s not to like about that?  I mean, if you’re not rich.  And that’s the catch.  Rich can be a relative term.  If someone has more money than you they’re rich and should pay more in taxes.  And those who make less than you will feel the same way about you.  Which, of course, you’ll probably reply by saying something like, “Hey, wait a minute.  I’m not rich.”  But anyone poorer than you would disagree.

So the middle class will only want to tax the ‘rich’ rich.  And the poor will all be for taxing the middle class and the rich.  Ultimately, though, because there are so many ‘poor’, you have to tax the middle class in any income redistribution scheme.  Because even though the middle class is far from being rich, they are far more numerous.  And the numbers add up. 

Besides being taxpayers, the middle class and rich also have something else in common.  Jobs.  The rich provide startup capital for new businesses.  That creates jobs.  And the middle class start up most small business.  And they, too, create jobs.  In fact, small business creates the majority of the jobs.  So high taxes on these people provide a disincentive to do what they do best.  Create.  Jobs.  And things people want to buy.  So higher taxes reduce incentive.  And this reduces economic output.  Less stuff on the market means higher prices.  Lower quality.  Or simply less stuff.

Some People are more Equal than Others

And this is why beggars can’t be choosy.  Egalitarianism sounds nice but there is only one way to achieve it.  You can’t give everyone steak.  It’s just too costly.  So you give everyone watery, lukewarm macaroni and cheese.  Everyone is equally miserable.  And hungry.  But you don’t complain.  Because it is either that.  Or nothing.  Unless you’re part of the inner circle.  The ruling elite.  For them there is always steak and lobster.  For it’s a small price to pay for all the selfless service they do giving us our egalitarian society.  They have a lot of stress in their life optimizing market efficiency.  So they need a little pick me up.  I mean, who could begrudge them fine steak and caviar after all they’ve done for us?

Socialism is not about market efficiency.  It’s about lowering quality (to make things cheaper).  And rationing.  So you can try to spread less stuff around to more people.  But taxing the creators raises costs.  And reduces economic output.  Which means there is less stuff to distribute to the people.  Which means they have to raise taxes to keep giving the people the same stuff.  Or reduce the quality further.  Or ration more.  It’s an endless downward spiral. 

And once you’re in the system, you are dependent on the system.  You beg and plead for less rationing and cuts but to no avail.  Sure, there’s enough steak for the ruling elite, but not for everyone else.  So there has to be fair-shared sacrifice.  By everyone.  Everyone that’s not in government, that is.  For in an egalitarian society, all people are equal.  Only some are more equal than others.  (A little George Orwell there.)

As an interesting exercise, substitute ‘health care’ for ‘food’ in the above exercise.

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