As we have noted, Obamacare violates medical ethics by first doing harm. In the early going, in violation of repeated presidential promises, Obamacare stripped many embattled Americans of the health plans they had selected. This pushed them toward the dysfunctional and insecure Obamacare website, where they would get the news about higher premiums and bigger deductibles. Even on December 1 key parts of the website were not even built, so those who “enrolled” might find on January 1 that they don’t have insurance after all. The doctors people were told they could keep are fleeing the system. That is quite a record of damage, but one Obamacare enthusiast wants the system to be even more punitive.
Akhilesh Pathipati is a Stanford medical student who has “worked on health initiatives in Massachusetts and California,” according to his author line in this Sacramento Bee piece. Obamacare “has had its share of well-publicized struggles,” he writes, “but it’s only a matter of time before the website glitches are gone.” Further, “the flaw in an otherwise straightforward design is a weak individual mandate.”
“Young people like me are the linchpin to making health care reform successful,” he says. But without their participation, “more gets paid out than gets paid in so premiums rise, and the system falls apart.” If the young and healthy “invincibles” determine that the costs are too high and decline to participate, Obamacare punishes them with a fine. As Pathipati has it, if a young man earning $40,000 a year declines even the cheapest plan, “opting out would only cost him a $300 tax penalty.” The Stanford medical student has the answer.
“The only way to ensure the participation of the young invincibles is to strengthen the mandate by making the opt-out tax as costly as buying insurance.” Got that, healthy young people? If you think Obamacare is not for you, Akhilesh Pathipati wants to jack up your fine, big time.
Pathipati acknowledges that young people are not signing up in sufficient numbers, and the prospect of stiffer fines is unlikely to make them do so. But young and old alike can learn a lesson here. When people become apologists for a fatally flawed system, they tend to put defense of that system above the welfare of its victims. Medical student Akhilesh Pathipati has yet to learn that if a treatment harms the patient one should stop the treatment.
As we expected, the chairs of the House and Senate budget committees, Paul Ryan and Patty Murray, reached a deal in setting the amount of federal government spending for the next two years. The Washington Post reports on the particulars:
Under the terms of the deal, spending for the Pentagon and other federal agencies would be set at $1.012 trillion for fiscal 2014, midway between the $1.058 trillion sought by Democrats and the $967 billion championed by Republicans. The Pentagon would get a $2 billion increase over last year, while domestic agencies would get a $22 billion bump, clearing space for administration priorities such as fresh investments in education and infrastructure.
For fiscal 2015, spending would increase only slightly, to $1.014 trillion, for a total of $63 billion in sequester replacement.
That cost would be covered through a mix of policies to be implemented over the next decade. They include $12.6 billion in higher security fees for airline passengers, $8 billion in higher premiums for federal insurance for private pensions, $6 billion in reduced payments to student-loan debt collectors and $3 billion saved by not completely refilling the nation’s strategic petroleum reserves.
Another large chunk of savings — $12 billion over the next decade — would come from reduced contributions to federal pensions, split evenly between military retirees and new civilian workers who start after Dec. 31.
For those in the military, the reduction would take the form of lower cost-of-living increases for retirees between the ages of 40 and 62, many of whom take other jobs while collecting their military pensions. New civilian workers, meanwhile, would be required to contribute an additional 1.3 percent to their retirements.
What’s important to recognize in this spending deal is that it applies to only the discretionary portion of the U.S. federal government’s budget. Given how previous Congresses have set it up, the funding and spending for so-called “mandatory” programs as Medicaid, Medicare, Social Security, and the Affordable Care Act (aka “Obamacare”) are all effectively on auto-pilot and would not be affected by whether or not a deal for the budget was ever reached. The deal would make it possible for U.S. politicians to instead focus on reforming these mandatory spending programs, particularly the troubled Affordable Care Act, which is presently failing by nearly every measure at every level.
Looking at the numbers, it appears that Ryan and Murray simply split the difference between the House and Senate budget proposals in setting the total level of discretionary spending that will take place during the 2014 fiscal year, which runs through September 30, 2014. It’s really more remarkable that the amount of spending provided through Fiscal Year 2015 is just $2 billion higher, which would be an increase of 0.2% from Fiscal Year 2014′s total of $1,012 billion (or $1.012 trillion, if you prefer).
A lot of the other changes in the proposed deal can be described as nibbling around the edges of the federal government’s real problems in spending — particularly the requirement of the federal government’s new employees to contribute a portion of their income toward funding their pensions. Given what we’ve seen with the role of government employee pensions in driving state and local governments into bankruptcy proceedings, it would be tremendously beneficial for both American citizens and the government’s employees if ALL government employees paid a much more fair share of their incomes toward the costs of their extremely generous retirement benefits.
On December 9, the federal government dumped the rest of its 30 million shares in General Motors, which had become known as Government Motors, for good reason. In 2009, the federal government bailed out the bankrupt automaker to the tune of $49.5 billion and once held 60.8 percent ownership in the company. The loss comes in at $10.5 billion, confirming what Special Inspector General Christy Romero told reporters in August: “There’s no question that Treasury, the taxpayers, are going to lose money on the GM investment.” It’s a very strange investment that loses more than $10 billion. For taxpayers to break even, according to a recent government report, GM stock would have to sell for $95.51 per share, three times the price at the time.
Jack Lew, President Obama’s Treasury Secretary, told reporters that the sale of GM stock was “one of the final chapters in the administration’s efforts to protect the broader economy by providing support to the automobile industry.” The Treasury boss can boast some bailout experience. Lew, a former chief operating officer at Citi Alternative Investments, a division of Citigroup, bagged a cash bonus of nearly $1 million just before a $301 billion federal government bailout of Citigroup. That bailout came during a time of job losses and economic hardship for millions of Americans.
The Washington Post touted Lew as one who “aggressively advocates on behalf of programs that protect the poor,” but holds “a belief that the nation must have its financial books in order.” Those books aren’t exactly in order with a loss of $10.5 billion on GM, and Government Motors is hardly the only loser. Don’t forget the $1.3 billion loss on the federal government’s $12.5 billion bailout of Chrysler. And the federal stimulus losses on Solyndra, Fisker and many others.
Happy holidays, taxpayers.
According to a recent report, a judge has ordered California’s High-Speed Rail Authority to “rescind its original funding plan, a decision that figures to halt state bond funding for the $68 billion project until a new plan is put in place.” That might slow down the project but taxpayers should recall the reasons it never should have started in the first place.
The state’s major north-south highways render good service and air travel is cheap and readily available. So high-speed rail is not needed. Rail is 19th century technology, an odd choice for a supposedly progressive state. It is as though in 1880 politicians had promoted a swifter brand of covered wagon. Californians will not be eager for a train that is slower and more expensive than air travel, and which doesn’t exactly take them where they want to go.
The so-called “bullet train” will supposedly link Los Angeles and the San Francisco Bay Area, but it is slated to start in a remote area of the San Joaquin Valley. That is because a key purpose of the train is to shore up the fortunes of valley politicians by showing that they can “create jobs” and bring home the bacon for their district.
The train is also prohibitively expensive. As Lawrence McQuillan noted, when voters approved bonds in 2008 they were told it would cost $43 billion. Now voters are told it will cost nearly $100 billion if completed by 2033, but they don’t get to vote on the higher price tag. It’s a classic bait-and-switch deal, like other boondoggles.
And as in Blazing Saddles, one thing stands between the state rail bosses and the property they need: the rightful owners. They are not eager for a train to displace productive farmland. The project would also be environmentally destructive but supporters such as California governor Jerry Brown want to suspend environmental regulations for high-speed rail.
State bond issues may be in doubt but according to another court ruling California’s High-Speed Rail Authority can still spend the $3.4 billion in federal money on the first segment near Fresno. So even if the bullet train is not needed, wasteful, destructive of the environment, and a threat to property rights, it will still succeed at wasting money. And as governor William LePetomaine put it in Blazing Saddles, the project will protect “phony-baloney jobs.” That’s why politicians and bureaucrats are still yelling “all aboard!”
If Obamacare (aka the “Patient Protection and Affordable Care Act”) has had any success, it has been in signing up more Americans for Medicaid – the federal government’s program for providing free health care to people with poverty-level incomes.
Or, thanks to changes mandated by the Affordable Care Act law, a large number of people whose household income is within 133% of the federal poverty limit, depending upon whether or not the state in which they live has agreed to expand their eligibility standards for Medicaid.
But that success comes with a budget-busting price. Writing in the New York Post, Michael Tanner describes the Medicaid Time Bomb:
The good news, if you want to call it that, is that roughly 1.6 million Americans have enrolled in ObamaCare so far.
The not-so-good news is that 1.46 million of them actually signed up for Medicaid. If that trend continues, it could bankrupt both federal and state governments....
The Congressional Budget Office projects that, in part because of ObamaCare, Medicaid spending will more than double over the next 10 years, topping $554 billion by 2023.
And that is just federal spending.
State governments pay another $160 billion for Medicaid today. For most states, Medicaid is the single-largest cost of government, crowding out education, transportation and everything else.
To understand just what that means for spending at the federal government level, the following chart from the Mercatus Center’s May 2013 study of Obamacare’s Medicaid expansion visualizes how much the Congressional Budget Office believes the cost of the program will grow as a percent share of the nation’s entire Gross Domestic Product from 2012 through 2037:
And the following map indicates the amount of Medicaid spending per capita for each of the United States and the District of Columbia in 2012 (an interactive version is available here):
So, imagine what having those spending levels grow by over 150% in just the next three years will do to your state government’s budget after it starts having to pay its portion of that increased spending. And remember that every state’s Medicaid program needed to be bailed out by the federal government back in 2009 when the economy was in deep recession.
During the recent 16-day partial shutdown of the federal government, the U.S. economy continued to grow, according to this report on a recent survey by the Federal Reserve. In seven of the Fed’s 12 banking districts, growth was moderate and in regions such as Boston the economy continued to expand. Manufacturing was on the upswing, hiring increased in five districts, and in most regions consumer spending increased. This represents only modest economic growth but any growth is welcome in these hard times. It happened during a partial government shutdown, and therein lies a lesson.
Economic growth does not come from government and government is not necessary for growth to occur. Economic growth happens when independent individuals invest and practice entrepreneurial activity, producing goods and services that consumers choose to buy. This creates jobs and generates wealth from the ground up. Despite what left-wing economists and the Pope say, this is not a process of “trickle-down.”
That happens when government confiscates wealth at punitive levels. Those funds must then trickle down through layers of bureaucratic sediment before reaching their politically correct beneficiaries. In other words, a tax dollar cannot go out on the town in Washington and return to some district fully intact. As it happens, the partial-shutdown was also educational as to where the money goes.
A high percentage of federal employees turn out to be “non-essential.” The Federal Department of Education proclaimed 95 percent of its employees non-essential but as George Will said that was 5 percent off. Education is the responsibility of the states, not the federal government. The federal Department of Education has only existed since 1980 and was a payoff to the National Education Association, the teacher cartel that endorsed Jimmy Carter for president. The department is now a flywheel of waste, fraud and abuse, including armed squads fond of bashing down doors.
During the partial shutdown, 90 percent of EPA employees proved non-essential, same for the FCC, SEC and HUD. At NASA it was 97 percent non-essential. At the same time, the entire federal government is non-essential for economic growth.
So far Obamacare has been shuffling a deck full of jokers. It’s a bad idea in the first place, based on lies, paternalism and trickery, and enshrined in an elephantine bill few bothered to read but passed anyway. Even supporters such as Montana Democrat Max Baucus described it as a train wreck. The government paid hundreds of millions of dollars to crony incompetent contractors who spent the money but could not explain why the website did not work. HEW boss Kathleen Sebelius conceded the website was insecure and that “navigators” could be convicted felons. Despite all that and more, things will really get dicey when Obamacare plays the IRS card.
According to a report in the Washington Post, which has been handing out “Pinnochios” for the president’s lies, everything hinges on the IRS, whose tasks include “helping to distribute trillions of dollars in insurance subsidies and penalizing people who do not comply.” Those are part of “nearly four dozen new tasks” that represent the biggest increase in IRS responsibilities in decades. IRS bosses say they are ready to roll but others remain skeptical. MIT economist Jon Gruber, a designer of Obamacare mandates, told the Post “We should be absolutely clear we don’t know how this will work.” Robert Laszewski of Health Policy and Strategy Associates sees “little hope we are going to get enough younger healthy people to sign up, and that means that this law is in grave danger of financial collapse.”
To make Obamacare palatable legislators barred the IRS from using liens or levies to punish non-participants. But they can deduct the fine from tax refunds. Brian Haile, health policy analyst with a tax firm, told the Post “I wouldn’t be very confident they’ll do much better here than on their other tasks.” And how are they doing with those.
As we recently noted, the IRS has been giving away billions to identity thieves. Some IRS bosses have been taking the Fifth Amendment before government committees and others own up to “horrible customer service.” Get ready for more abuse, incompetence and waste with Obamacare. And remember to eat your vegetables.
As one headline put it, “Health Care Site is Doing Better,” something one would say of a child still in bed with a fever. But even before December 1, when everything was supposed to be fixed, the federal health care website remained troubled. This news came from the New York Times, which was willing to cut the President Obama some slack on his “incorrect promise.” As the federal debacle rolled out, some were countering that state health exchanges and their websites, particularly California’s, were “a bright spot in Obamacare signups.” That is something of a stretch.
According to this report, the California exchange and site are about more than getting the uninsured to sign up. It’s all about “health equity,” that is “reducing the increased burdens of illness experienced by select populations relative to others.” California exchange bosses “want to make sure that one racial group doesn’t have a higher rate of infant mortality than another, for example, or that women don’t die disproportionately of certain illnesses.” How they would do this remains to be seen, and disparities between groups are the rule rather than the exception. And another problem is looming.
In the pursuit of health equity, exchange bosses want “to collect and use data on a raft of sensitive customer information, from race and ethnicity to sexual orientation and gender identity.” This may run afoul of privacy laws, and the actual policy on collecting the data “has yet to be developed.”
In late November Covered California threw a sign-up party at the Sacramento Convention Center. Some 1,500 people showed up, with 300 “assisters” ready to lend a hand. Only ten people signed up and it remained unclear if any had actually paid and been issued a policy. The upbeat report on Covered California estimated that fewer than 80,000 had signed up statewide. A journalist’s trial telephone sign-up raised questions about security and tactics.
Also in November Covered California bosses voted to continue canceling more than 1 million plans that individuals had selected as best meeting their needs, but which the Affordable Care Act nixes. Covered California also opposed President Obama’s plan to extend existing health plans. So Covered California, like its federal counterpart, first does harm. That’s not much of a bright spot.
The Washington Post is carrying a story today about the rising economic misery facing the U.S. territory of Puerto Rico, home to 3.67 million Americans, the government of which has racked up $70 billion worth of debt. That places the territory third after California’s $96.4 billion and New York’s $63.3 billion in terms of its total amount of debt.
We thought it might be interesting to take data that was presented in the article and translate it into how much the individual public debt burden is for each of these governments, and compare them to the individual debt burdens of U.S. cities and counties that have declared bankruptcy in recent years. The chart below presents what we found:
If we were to adjust Orange County, California’s public debt per person to account for the effect of inflation since 1994, it would be $876.40 in terms of current U.S. dollars.
Considering Puerto Rico’s situation, in the absence of a much larger federal government bailout that doesn’t appear likely at present, the territorial government could soon be forced to default on its public debt, since filing for bankruptcy is not an option available to it.
Puerto Rico is well down the debt death spiral path, as it has significantly hiked tax rates in attempting to increase its revenue to service its debt payments, which have negatively impacted the territory’s economy. The economic situation of the territory is such that more Puerto Ricans now live elsewhere in the United States than are currently living in Puerto Rico, as its residents have increasingly fled the deteriorating economic conditions within the territory.
The impact of a default will be felt in the U.S., because a large number of investment funds own debt issued by Puerto Rico’s government among their municipal debt holdings, which would negatively affect Americans who rely on income from these kinds of funds for their retirement income.
In 2013, the American Farm Bureau Federation reports that a traditional Thanksgiving dinner for 10 people will cost $49.04 on average. But did you know that the U.S. federal government is subsidizing a portion of that meal?
It’s true! In 2012, the most recent year for which we have data, the U.S. federal government provided U.S. wheat producers with over $1.1 billion, U.S. dairy producers with over $447 million, and U.S. corn producers with more than $2.7 billion.
And that shows up in your Thanksgiving dinner! The wheat can be found in the rolls, pie crust and stuffing and the dairy products go into pumpkin pie and whipped topping on your dining table. But it’s a lot harder to find the corn in a traditional Thanksgiving feast.
As it happens, the corn is there, but you probably don’t notice it because it’s actually in the turkey! The way that works is because corn is a primary ingredient in the feed stock for turkeys, and today’s average 30-pound farm-raised turkey eats a lot of corn to reach that weight.
Now, onto the subsidies. We plowed through the Department of Agriculture’s data on the amount of corn, wheat and dairy products that were produced in 2012 and estimated out how many bushels, pounds or cups of each would go into each item on the Farm Bureau’s Thanksgiving menu.
Altogether, we estimate that in giving the U.S.’ multi-billion earning corn, wheat and dairy producers so many billions of dollars, the U.S. government reduces the direct cost to consumers of a traditional Thanksgiving dinner by about 27.4 cents, with about twenty-six and a half cents of that to produce the corn that was used to feed the turkey.
National Geographic estimates that 46 million American households will have turkey as part of their Thanksgiving meal. Collectively then, the U.S. government is paying over $12.6 million in subsidies to the corn, wheat and dairy industries just for this one meal.
Since the U.S. federal government is running a very large deficit however, that really means that it is actually borrowing over $12.6 million so that each of these 46 million U.S. households can each save 27.4 cents on their Thanksgiving dinner this year.
Now, if the federal government were really serious about making food more affordable for the people who live in U.S. households, they should perhaps look at eliminating the mandates that require ethanol produced from corn be included in ever increasing quantities in the nation’s fuel supplies. That one change in the U.S. government’s policies has the potential to reduce the cost of a traditional Thanksgiving dinner by as much as $15 because it would dramatically reduce the cost of producing turkeys in the U.S.
Because if the federal government’s elected officials and bureaucrats really cared about people, not to mention the environment, they wouldn’t be out to pay farmers so much money to grow food that is never intended to be eaten, but is instead intended to be burned as fuel in cars.
Have a happy Thanksgiving!