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Wednesday May 24th, 2017   •   Posted by K. Lloyd Billingsley at 9:36am PDT   •  

As we noted, failed presidential candidate Bernie Sanders has been pushing California to establish what he calls “single payer” health care. This is a misnomer for several reasons, particularly on the issue of cost. As legislators recently learned, the price tag is $400 billion a year to cover all health and administrative costs, twice as much as California’s entire state budget.

“Where do you get the extra money?” governor Jerry Brown wonders. No “single payer,” not even Bill Gates, has that kind of dough. Since politicians must tap taxpayers, “single payer” is really “multiple payer.” Taxpayers are looking at an additional $200 billion in taxes, as Dan Walters of the Sacramento Bee notes, “the equivalent of a 15 percent tax on all of Californians’ earned income layered on top of existing income taxes” and “nearly as much as the state will collect this year in income and sales taxes with the nation’s highest tax rates.” So the slogan should be “let’s have the wallet, Jack.”

In reality, “single payer,” is government monopoly health care. In this plan, the multiple payers get only the health care government wants them to have. Contrary to politicians’ claims there is no “right” to health care, even in Canada’s government monopoly system. Backers of government monopoly health care for California include Lt. Gov. Gavin Newsom, insurance commissioner Dave Jones, and the prime mover is Sen. Ricardo Lara, Bell Gardens Democrat. The loudest voices come from government employee union bosses.

RoseAnn DeMoro of the national nurses’ union appeared with Bernie Sanders, when he made his pitch. Government monopoly health care would empower the union to negotiate with the single payer of government, in the style of the California Teachers Association with the K-12 government education monopoly. True to form, the California Nurses Association threatens to take out Democrats who refuse to play along. Taxpayers would do better to heed governor Jerry Brown’s take on “single payer.”

“This is called ‘the unknown by means of the more unknown,’” he told reporters. “In other words, you take a problem, and say ‘I am going to solve it by something that’s ... a bigger problem,’ which makes no sense.”

President Trump’s “Fat” Budget Proposal Arrives


Tuesday May 23rd, 2017   •   Posted by Craig Eyermann at 5:43am PDT   •  

It’s here! After months of anticipation following March release of President Trump’s “skinny” budget proposal (cover pictured on the right), the president’s “fat” budget proposal is being released today.

Bloomberg summarizes the main features that define President Trump’s first full budget proposal.

President Donald Trump would dramatically reduce the U.S. government’s role in society with $3.6 trillion in spending cuts over the next 10 years in a budget plan that shrinks the safety net for the poor, recent college graduates and farmers.

Trump’s proposal, to be released Tuesday, claims to balance the budget within a decade. But it relies on a tax plan for which the administration has provided precious little detail, the elimination of programs backed by many Republican lawmakers, and heavy use of accounting gimmicks.

Trump’s fiscal 2018 budget proposal has already been declared dead on arrival by many of his Republican allies in Congress. The plan would slash Medicaid payments, increase monthly student loan payments and cut food stamps and agricultural subsidies, each backed by powerful constituencies. The administration is unbowed.

“We’re no longer going to measure compassion by the number of programs or the number of people on those programs,” White House budget director Mick Mulvaney said. “We’re going to measure compassion and success by the number of people we help get off those programs and back in charge of their own lives.”

In the days ahead, we’ll be digging deeper into the main elements of President Trump’s budget proposal for the U.S. government’s 2018 fiscal year, particularly in spending its proposal for Medicaid, which in recent years has been the fastest growing portion of mandatory entitlement spending while also being perhaps the “civilized world’s worst health insurance program.”

By focusing on restraining only the growth of the Medicaid welfare spending program, President Trump is missing an opportunity to put Medicare and Social Security, the U.S. government’s other two big mandatory spending programs—not to mention the entire U.S. government—on a more stable fiscal footing. Leaving those two entitlement programs untouched does, however, satisfy the president’s campaign pledges, so this neglect is not surprising.

Pentagon Slush Funds Waste Billions


Monday May 22nd, 2017   •   Posted by K. Lloyd Billingsley at 9:04am PDT   •  

President Donald Trump has decried the “tremendous waste, fraud and abuse” in the federal government, and proclaimed “we’re going to get it.” When it comes to the Pentagon, that is going to be a tough task.

As we noted late last year, the Pentagon buried an internal study exposing $125 billion in administrative waste. The Pentagon’s purchasing bureaucracy counted 207,000 full-time workers, with 192,000 in property management and 84,000 in human-resource jobs. The Army alone employed 199,661 full-time contractors—more than the combined workforce of the Departments of State, Agriculture, Commerce, Education, Energy and Housing and Urban Development. This bulk is hardly the only example of military waste.

According to Craig Whitlock and Bob Woodward of the Washington Post, “The Pentagon has generated almost $6 billion over the past seven years by charging the armed forces excessive prices for fuel and has used the money—called the ‘bishop’s fund’ by some critics—to bolster mismanaged or underfunded military programs.” The Pentagon raked in the cash “by billing the armed forces for fuel at rates often much higher—sometimes $1 per gallon or more—than what commercial airlines paid for jet fuel on the open market.” This takes place “under a bureaucracy that dates to World War II,” but it’s not an isolated example of unaccountability.

As Paul Shinkman notes in U.S. News, the Overseas Contingency Operations Budget, once considered supplemental, “is now considered a de-facto slush fund.” Launched for operations in Iraq and Afghanistan “it accounts for the unregulated spending of $60 billion or more in taxpayer dollars per year, with no end in sight.”

As the president says, there’s tremendous waste, fraud and abuse in the federal government in general and the Pentagon in particular. He should tell those responsible, “You’re fired,” and then get to work trimming government.

Feds Take Defaulting Student Loan Borrowers to Court


Monday May 22nd, 2017   •   Posted by Craig Eyermann at 6:22am PDT   •  

6527083 - angry male judge in a courtroom striking the gavel and pronounces sentence What happens to Americans who have taken out student loans from the U.S. government, but aren’t able to pay them back?

Increasingly, the U.S. government is taking them to court to get its money back. National Public Radio’s Bobby Allyn reports on a relatively new policy that the U.S. Department of Education put into place during the last two years of President Obama’s tenure in office:

On Adriene McNally’s 49th birthday in January, she heard a knock on the door of her modest row-home in Northeast Philadelphia.

She was being served.

“They actually paid someone to come out and serve me papers on a Saturday afternoon,” she says.

The papers were from a government lawsuit that represents something more than just an unwelcome birthday gift—it’s an example of a program the federal government has brought to 19 cities around the country including Brooklyn, Detroit, Miami and Philadelphia: suing to recover unpaid student loans, like the ones McNally owes.

Every day, 3,000 people default on their federal student loans—and those lack of payments amount to an unpaid bill of $137 billion for the federal government. For decades, the government has tried to get borrowers to pay up by hiring debt collection agencies to call and send letters. But now the government is trying this new lawsuit strategy.

McNally filed for personal bankruptcy back in 2006, which eliminated all of her debts except for her student loans, which by federal law cannot be discharged in bankruptcy proceedings. Assuming that she now loses her lawsuit for having defaulted on her student loan payments—which is the outcome of nearly every such case brought to court—McNally can expect to have either her wages be garnished, her Social Security or disability payments be docked, or her house or other valuable personal assets have a lien placed on them until the debt has been cleared.

Quite possibly, all three actions may be taken against her. While the first two options would involve seizing a portion of any income she earns or Social Security benefits she receives, the third option of imposing a lien on any property she owns is an indirect form of leverage. NPR’s Allyn describes how imposing a lien on a student loan defaulter can provide a means for the government to recover the money the borrower owes should its more direct seizures be insufficient to fully pay off the government-issued loan.

Jennifer Schultz, an attorney with Community Legal Services of Philadelphia, says that a lien traps a person, like house-handcuffs.

“I describe a lien as a kind of marker on the house,” Schultz says. “Any time a person tries to do a transaction involving their house—a new mortgage, a refinance, or if they try to sell it—they’re going to be expected to clear up any debt that’s attached to that house.”...

Once a lien is in place, the government can force the sale of a former student’s home. That’s “exceedingly rare,” officials say, but it does sometimes happen.

The federal lawsuit program is expected to keep expanding, and with more than 8 million people currently behind on their federal student loans, it doesn’t look like the private firms will run out of work any time soon.

The private firms to which Allyn is referring are the debt collection firms that the U.S. government hires to shake down defaulting and delinquent student loan borrowers prior to taking them to court. According to Bloomberg‘s Shahien Nasiripour, the U.S. government is paying its debt collection contractors $38 for every $1 of debt they succeed in collecting.

When you consider that the U.S. government has so stacked the deck in its favor against Federal Direct Student Loan borrowers, you have to wonder why it costs so much to produce so little benefit for U.S. taxpayers. The U.S. government badly needs to get out of its failing student loan business.

UC Regents Reinforce the Rot


Friday May 19th, 2017   •   Posted by K. Lloyd Billingsley at 3:27pm PDT   •  

As we noted, University of California president Janet Napolitano has been beating the drum for tuition hikes while maintaining a secret slush fund of $175 million, California’s state auditor recently revealed. As Republican assemblyman Dante Acosta pointed out, Napolitano’s office spent the hidden money “on things such as administrator bonuses and renovating the homes of campus chancellors,” but criticism of Napolitano, a Democrat and former governor of Arizona, was bipartisan. “President Napolitano is not worthy of the public’s trust,” explained Democratic assemblywoman Sharon Quirk-Silva. “It’s time she resigned.”

The case is strong, but the UC Regents aren’t having it.

“I was delighted when I found out we had a chance to have Janet Napolitano as our president. I’m still delighted,” Regent Norm Pattiz explained. For Regent Bonnie Reiss, “Seeing how some in the press have characterized it as a slush fund or a secret fund hurt my heart.” Actually, the press was right. It was a slush fund and it was secret. Regent Sherry Lansing targeted media “distortions” that claimed Napolitano had done anything wrong and proclaimed, “Her leadership of UC has been incredible.” Taxpayers, legislators and students alike might wonder what leadership Lansing is talking about.

From 2009 to 2013, Janet Napolitano headed the federal Department of Homeland Security, but she fails to maintain order and civil discourse on campuses such as UCLA where free-speech advocates are under fire. UC Berkeley explodes into violence over any speaker less than worshipful of political correctness, but president Napolitano looks the other way. She has made no cuts in the UC’s vast bureaucracy and beats the drum for tuition hikes while secretly hoarding $175 million. As assemblywoman Quirk-Silva contends, Janet Napolitano is not worthy of the public trust and it’s time she resigned. By hiring and retaining this corrupt non-leader, the Regents have made the UC presidency a sinecure for a political hack who got her start smearing the African American Supreme Court nominee Clarence Thomas.

Connecticut’s Collapsing Credit Rating


Thursday May 18th, 2017   •   Posted by Craig Eyermann at 6:09am PDT   •  

23097403 - hand putting check mark with red marker on poor credit score evaluation form. The state of Connecticut’s fiscal outlook took a sharp turn for the worse this week. Following the state’s sharp plunge in income tax revenues earlier this month, which prompted the state to completely drain its rainy day fund and to modestly cut the state government’s budget, the state’s growing debt burden and pension liabilities have combined with poor economic growth prospects to prompt all three major U.S. credit rating agencies to downgrade the Nutmeg State’s credit rating.

S&P Global Ratings downgraded the state of Connecticut on Wednesday, becoming the final of the big three Wall Street credit rating agencies to drop the state into single-A territory because of a huge revenue slump and mounting economic weakness.

Moody’s Investors Service cut the state’s credit rating on Monday, and Fitch Ratings downgraded it on Friday.

That makes Connecticut one of the lowest-rated states in the country, with Fitch and Moody’s ranking only Illinois and New Jersey worse. For S&P, Connecticut is now rated A+ with a stable outlook, fourth worst behind Kentucky.

Connecticut Governor Daniel Malloy on Monday proposed slashing more expenses to help close a $390 million budget shortfall. He previously said the state would also need to drain its reserve fund and sweep in one-time revenues from other funds.

The downgrade to Connecticut’s credit rating means that it will cost the state more to borrow money because it will have to pay higher interest rates, which in turn means that it will have less money available to spend because it will have to dedicate a larger amount of its tax revenues to pay the interest it owes to the institutions that might loan the state money.

Connecticut offers an interesting case study because the state has sought to deal with its deteriorating fiscal condition by imposing increasingly higher and more progressive income taxes upon the state’s highest income earners without restraining the growth of its spending. In doing so, the state has become more and more dependent upon how well its top income earning residents do each year to fund the state government’s programs, which given how volatile the incomes are for top income earners, puts them at an increased risk of fiscal crises whenever they might have a bad year. Or if they or their employers move away for better economic prospects.

The question remains: After the U.S. territory of Puerto Rico’s precedent-setting bankruptcy filing, will it be Illinois or will it be Connecticut that becomes the next state-level government to follow suit?

Government Bullies Get Bookish


Tuesday May 16th, 2017   •   Posted by K. Lloyd Billingsley at 4:02am PDT   •  

Last December, California governor Jerry Brown signed AB 1570, authored by former Republican assemblywoman Ling Ling Chang. Chang’s measure alters the state’s “autograph law,” formerly limited to sports memorabilia, to include any signed item worth more than $5, including books.

As Anastasia Bolden of the Pacific Legal Foundation notes, this makes it “extremely risky, if not impossible,” for Book Passage, a Bay Area bookstore, “to continue selling autographed books or hosting author events.” Book Passage has hosted signing events for Bernie Sanders, Ralph Nader, Caitlyn Jenner, Charles Krauthammer and other high-profile authors, along with local writers, poets and cookbook authors. The shop must now provide a “certificate of authenticity” and keep it for seven years. Even an inadvertent omission can subject a seller to “outrageous penalties” including: actual damages, plus a civil penalty of up to 10 times the damages, plus court costs, plus reasonable attorney’s fees, plus expert witness fees, plus interest.

The National Law Review, in an article headlined “California’s New Autograph Law: Not What I Signed Up For,” warns of similar perils for art dealers, who “should not wait to learn the law applies to them until it is too late.” PLF is challenging the “poorly written” and “overbroad” measure in court, but Anastasia Bolden is too kind.

Government has no role in the bedrooms of the nation or the bookstores of the nation. Legislators should “make no law” like AB 1570 but Ling Ling Chang did and Jerry Brown duly signed it. Chang lost her state senate race and her bill is a loser for authors, readers, booksellers, and freedom of expression in general. Bolden knows who the winners are, as she explains: “professional plaintiff’s lawyers must be chomping at the bit.”

Government Takeover Will Not Solve California’s Housing Crisis


Monday May 15th, 2017   •   Posted by K. Lloyd Billingsley at 9:45am PDT   •  

As anybody looking for a house or apartment can easily verify, California is in the throes of a housing crisis. In Oroville, for example, many low-income residents live in 1960s-vintage housing built for dam construction workers. Across the state, home ownership rates are the lowest since the 1940s and according to California’s Housing Future: Challenges and Opportunities, from the California Department of Housing and Community Development, the annual 80,000 new homes over the past ten years falls far short of the 180,000 needed. Politicians have started to take notice.

More than 100 housing bills now jostle in the legislature, and according to Sara Libby of Voice of San Diego, “California Democrats are uniting against a common enemy who they believe is making residents miserable and imperiling the state’s future. The target: NIMBYs across the state who continually shoot down new housing projects, and the localities that bend to their will.”

For Joe Mathews of Zócalo Public Square, “The state of California has begun a takeover of local housing policy,” and the more than 100 bills “clearly signal the state’s intention to take a leading role in how California houses itself.” Such intervention is usually worrisome, he explains, but this one should be welcome because it forms “the last, best hope for pressuring the biggest obstacles to new housing – local governments – to get out of the way.”

In reality, government at all levels is the biggest obstacle to housing, and with state government taking “a leading role,” the crisis will only get worse, as Mathews appears to understand. “Some of the more than 100 housing bills could make the shortage worse,” he warns, “by adding to the costs of housing or creating disincentives for local governments to approve housing.”

Sara Libby recalls that during the recession, “government was the only entity doing any building,” and market-rate projects were abandoned. Government should get out of the way and let the housing market function. That will provide the housing Californians need and help fuel an economic recovery.

A good place to start would be to eliminate the California Coastal Commission, an unelected body that runs roughshod over property rights and overrides the voters on land-use issues. CEQA, the state’s onerous environmental law, also blocks housing development and adds delays and costs. Legislators have failed to reform this institutionalized regulatory zealotry, a major cause of the housing crisis.

Who Owns the U.S. National Debt?


Monday May 15th, 2017   •   Posted by Craig Eyermann at 6:32am PDT   •  

As of May 11, 2017, the total public debt outstanding of the U.S. government exceeds $19.8 trillion.

Political Calculations provides a summary of the major interests to whom the U.S. owes all that money, as of the end of the U.S. government’s 2016 fiscal year on September 30, 2016, when the national debt total stood at just shy of $19.6 trillion:

One of the crazier things about the U.S. national debt is that it often takes a lot of months after the end of a given fiscal year for the U.S. Treasury to sort out who the U.S. federal government owes money, particularly when when that money is owed to foreign entities.

So here we are, just over halfway through the federal government’s 2017 fiscal year, before we have a good idea of how much U.S. government-issued debt was held by its major foreign creditors at the end of the U.S. government’s 2016 fiscal year, which ended on 30 September 2016! The following chart reveals who the biggest holders of the U.S. national debt were as of that time:


FY 2016: To Whom Does the U.S. Government Owe Money?

Officially, the U.S. government’s total public debt outstanding is divided up into two parts: the “Public” portion of the national debt....

And the so-called “Intragovernmental” portion of the national debt, where the latter category represents money owed to various trust funds established and operated by the U.S. government.

Right now, we can see that Social Security’s Old Age and Survivors’ Insurance Trust Fund accounts for a little over half of the Intragovernmental portion of the U.S. national debt, which works out to be nearly $2.8 trillion, or about one-seventh of the U.S. government’s total public debt outstanding.

If Social Security’s Trustees are right, that number will steadily shrink to zero over the next 17 years, as that debt is cashed in to pay retirement benefits to Social Security recipients. When that number does reach zero, Social Security’s Trustees have indicated that the program will be forced to revert to the program’s original Pay-As-You-Go basis, where benefits can only be paid out of the payroll taxes that fund Social Security. When that happens, they predict that all Social Security benefits will need to be cut by 21%, unless Social Security’s payroll taxes are increased from 12.4% of earned income (which is currently equally split between employers and employees) up to 15.78% of earned income.

If you would like to see more detail on who the U.S. government owes money to, and also what countries owe the U.S. government money, Jeff Desjardins of Visual Capitalist has an interesting infographic that explores that data.

The Firing Next Time?


Friday May 12th, 2017   •   Posted by K. Lloyd Billingsley at 3:30pm PDT   •  

Everybody’s talking about President Trump’s firing of FBI director James Comey, and some consider the dismissal improper. On the other hand, as Michael Corleone might say, “Where does it say you can’t fire the head of the FBI? I am talking about an FBI boss who overstepped his authority, who got mixed up in a candidate’s email scandal, and who got what was coming to him. Now that’s a terrific story.” That is true, and there’s a lot more to the story. As it happens, Comey has a long history of carrying water for the Clintons. Trump was right to fire him, but one has to wonder why the president has not fired many others, particularly in the Internal Revenue Service.

As Kimberly Strassel of the Wall Street Journal notes, after the Citizens United ruling, “the IRS deliberately put some 400 conservative organizations, representing tens of thousands of Americans, on political ice for the 2010 and 2012 elections.” Louis Lerner took the fifth and no surprise that the previous administration failed to fire anybody. John Koskinen became IRS boss in 2013 and handed out bonuses while obstructing investigators at every turn. Calls have been ringing out for the president to fire Koskinen, but he has not done so. Perhaps that is because back in 1975, when Koskinen was vice president of the Palmieri Company, he handled the sale of the Commodore Hotel for rising star developer Donald Trump.

The National Security Agency could also use some cleanup. As Mary Theroux noted, the NSA has been grabbing every domestic communication. Those who conducted the warrantless searches should be shown the door, but no such reports have surfaced.

Meanwhile, James Comey is a good start but the federal government, with its massive waste, fraud and abuse, remains a target-rich environment. To paraphrase the late Don Rickles, the president should make himself at home and start firing more high-profile people, starting with John Koskinen. Few if any taxpayers will object.

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