Miscellany: 2/28/10

Happy Birthday, Diane!


Congratulations to Team Canada in Winning the Winter Olympics Men's Hockey Gold


I'm not a big hockey fan, but I was pulling for Team USA to win as they did in Lake Placid 30 years ago. Tournament rules had changed since the Miracle on Ice in 1980, when the underdog US beat the Soviet Union in a come-from-behind victory. (Technically the US then had to beat Finland to win the gold.) To a certain extent, I thought that the same might happen again, especially since the US beat Canada in an earlier tournament game. But Team Canada sped to an early 2-0 lead, only to see the US score the tying goal with less than 30 seconds in the game, forcing sudden death overtime. I felt the momentum was with the Americans heading into overtime, but Canada scored the winning goal roughly 7 minutes into the overtime. Ironically the US finished second to Canada in both men's and women's hockey.

Smoke and Mirrors on Health Care:
A Generalized Discussion of Ryan's Critique



Rep. Paul Ryan (WI-R) delivered salient critique of the Democrats' "smoke and mirrors" CBO scoring of their health care reform package (a sample transcript of the clip is here). Paul Ryan appeared on Fox News Sunday today to further discuss the discussion, which really got to be arcane at times; one could see Chris Wallace struggling to find some way to get Ryan to explain in plain English what Ryan means by the Democrats double-counting of money, issues with CBO scoring and the like.

I started a relevant discussion in last Monday's post, where I discussed the myth of the Clinton surplus; Clinton took credit for the fact that the Republican House turned down a large percentage of his domestic expenditures, and there was a significant booking of unsustainable capital gains taxes fueled by the NASDAQ stock bubble and other bullish stock market returns. A lot of the bubble in the tech sector reflected illusory demand for information technology reflecting duplicate and accelerated purchases (from Bush's first term) to guarantee delivery, and of course the Federal Reserve had flooded money into the economy in advance of what would prove to be overblown Y2K fears. Progressives attribute the surpluses to Clinton's class-based tax hikes, in what I refer to as the "leaky bucket" strategy, an artifact of lowering the net marginal benefit of income: tax revenues did rise, but less than expected. In fact, conservative economists would argue that there is an opportunity cost to such tax increase mischief, i.e., higher economic growth at the current tax rate could result in higher tax revenue than the higher tax rate with slower economic growth. ( For example, WalMart fueled its internal growth on higher inventory turnover with low prices/smaller item profits.) Other factors also entered the picture: productivity increases resulting from favorable business-friendly policies stemming from the Reagan and Bush administrations.

But let me build on the actual smoke and mirrors discussion in the post: many people think that the budget deficit refers to federal operations, but the budget also includes dedicated cash flows relevant to major entitlements which should be stand alone. The increases in entitlement reserves constitute a captive source of funding for federal operations, masking the true operational deficit.

I discussed the budget (versus operations) deficit/surplus as being  federal inflows - federal outflows.

budget inflows = (money raised from public debt)+(federal revenues)+(trust fund contributions/premiums)
budget outflows = (money used to retire public debt)+(federal expenses)+(trust fund disbursements)

Now for the trust funds, e.g., payroll taxes (which are really trust fund contributions), we would ideally see a lockbox where contributions add to a critical mass of diversified investments which yield sufficient income to handle ongoing fund disbursements on an ongoing basis. That has never really happened. What has happened is something like this (assuming an adequate reserve):

trust fund contributions/Medicare premiums = (trust fund disbursements)+(loan to the federal government)

where the loan is from the change in fund reserves.

The reason we conservatives have been pushing for social security and Medicare reform is that the day is rapidly approaching where the dedicated payroll contributions won't match the distributions, e.g., social security checks and payments to doctors and hospitals. Once that happens, we have to realize that federal expenditures can no longer depend on trust fund contributions partially covering federal expenses. 100% of the fund contributions will go to disbursements--and if there aren't enough contributions, fund administrators will have to sell off their Treasury IOU's, which the government must reimburse out of federal operations (I'm not holding my breath) or public debt; this is over and beyond any public debt needed to cover an operations deficit. If and when the reserves are exhausted, it now becomes more serious--it goes beyond paying interest on the debt to borrowing principal as the disbursements become a de facto federal expense and contributions become a federal revenue.

There are a variety of ways to deal with the entitlement reform problem which go beyond the scope of this post. But it is likely on the disbursement side, we would move to postpone eligibility and/or restrict eligibility to meet actuarial factors (like increased lifespan), to limit payment increases, and on the contribution side, we would look at things like raising payroll taxes or income eligibility ceilings or expanding the population paying into the system.

Now let's discuss some of the arcane details of financing the new federal health care entitlement:

First of all, we need to realize that Medicare disbursements for patient goods and services to doctors and hospitals do not cover the market rate; the government dictates how much it will pay and does not negotiate with providers. In many cases, this can be 20% or more below the going rate; in essence, doctors and their private-sector patients (and/or their insurance companies) are subsidizing the true costs of Medicare, and already we see some signs of doctors and clinics refusing to accept Medicare patients. It's not only that, but the public sector is already paying for nearly a half of the health care sector expenses; a shrinking private sector means that hospitals and doctors will find fewer opportunities to pass along Medicare payment  shortfalls.

Some of the Republican objections with the Democratic Party Health Care Bill deals with how the Democrats have been using CBO scoring, which I analogize to shaking a kaleidoscope until you get a result you like. Keep in mind CBO scoring is made based on model projections, including assumptions regarding the economy and federal revenues. There are some things (e.g., defensive medicine opportunity savings) which the CBO models don't assess. [The Democrats also misdirect people on the nature of tort reform: we are not discussing economic damage resulting from doctors' mistakes, covering related medical expenses, loss of livelihood, etc., but punitive damages. Capping punitive damages also caps legal fees.]

Anyone who has listened to the debate knows that Obama and his Congressional allies repeatedly state that CBO estimates a savings from tort reform at virtually insignificant levels; the fact that trial lawyers are the second highest source of Democratic Party contributions may have something to do with their resistance to change. In part, the CBO is looking at the damages awarded against medical costs, but it doesn't  account for related defensive medical costs--which HHS estimates as costing up to $50B a year: more than many of the other projected savings categories. Governor Rick Perry (TX-R) notes since tort reform passed in Texas in 2003, 10 new insurance carriers are operating in the state, and the number of practicing doctors has increased by nearly 15,000, including increased coverage in underserved rural areas.

Another Republican objection is double-counting. e.g., Medicare cuts, which do not reduce the national debt but essentially constitute a loan from the Medicare reserve to fund federal expenses, including the new health insurance entitlement.

There are hidden costs or obligations which are difficult to score. Richard Foster, Chief Actuary of the HHS Centers for Medicare and Medicaid Services, has separately challenged the House and  the Senate bills by questioning the viability of proposed Medicare cuts, that there is not enough short-term slack in provider resources to accommodate a large influx of newly insured, which will result in higher overall sector costs, and doctors may respond by dropping low- or negative-margin patients. Congress may need to increase payments to providers to ensure Medicare fulfillment.

There is also cost-shifting;  Ryan ,  notes that a proposed 21% cut in doctor fees for Medicare services is being fixed in separate legislation, which understates the actual health care legislation by the amount of the fix. There is some gimmick costing: for instance, you get the initial 10 years of tax hikes but only 6 years of benefits. Paul Ryan puts the legitimate number of the Democratic Party Health Care Bill at a $460B deficit the first 10 years, $1.4T the second..


Quote of the Day



Pay no attention to what the critics say... Remember, a statue has never been set up in honor of a critic! - Jean Sibelius


Political Cartoon


Lisa Benson no doubt that the Congress, under progressive Democratic leadership, has strayed off course with its fiscally irresponsible agenda and is headed for a crash landing with reality:

Musical Interlude: Sunshine Songs

John Denver, "Sunshine on my Shoulders"



Stevie Wonder, "You Are the Sunshine of my Life"



Katrina and the Waves, "Walking on Sunshine"

Miscellany: 2/27/10

Massive 8.8 Magnitude Quake Hits Chile

Courtesy of the Associated Press

The earthquake, caused by the Pacific Ocean floor shifting below the South America landmass, and multiple magnitude-6 aftershocks have reportedly affected over 2 million people, including hundreds of casualties, and significant property damage. Tsunami warnings had been issued across Pacific, including Hawaii and US territories in the Pacific region, as well as lower-range advisories along the American West Coast and Alaska.

Courtesy of the AP

Chile is one of the most developed nations in South America, and there is a qualitative difference between its ability (versus that of the desperately poor nation of Haiti) to cope with such an emergency. The Obama Administration has expressed its condolences to the people of Chile and has offered whatever help is requested, including military assistance through Southcom; I offer my own prayers and good wishes to surviving family members and the Chilean people and my unconditional support of Obama Administration efforts in this regard.

Political Potpourri

NY Governor David Paterson, a Democrat whom succeeded Eliot Spitzer in the wake of the call girl scandal, announced his decision not to seek reelection as a scandal emerged involving state troopers, allegedly involving pressure to dismiss a domestic violence allegation against one of Paterson's aides. The fact of the matter is that the current attorney general, Andrew Cuomo, son of a  former multi-term governor Mario Cuomo, has been eying the governor's mansion, and the Obama Administration has been pressuring the increasingly unpopular Paterson to step aside for some time, with polls showing Cuomo trouncing Paterson by double-digits before this latest controversy cropped up, it was only a matter of time anyway. In an election year with an anti-incumbent smell hanging over it and a lousy economy, Paterson never had a chance. So far it looks like the only name Republican who is interested in running for the governor's mansion is Rick Lazio, whom ran an embarrassingly bad Senate campaign against Hillary Clinton a decade ago, and he doesn't seem to match up well against Cuomo in the polls I've seen to date.

Probably the weirdest thing is that Kirsten Gillibrand, Hillary Clinton's replacement whom must stand for election this fall for the remaining 2 years of the Clinton seat, a Blue Dog Democrat in the House (representing a Republican-leaning district) but a reliably progressive Democrat in the Senate, seems to be getting a free ride, with two high-profile Republicans whom could beat her, former Governor Pataki and America's Mayor Giuliani, seeming to pass. Harold Ford, who unsuccessfully ran for the Senate against Bob Corker for Majority Leader Bill Frist's seat, has floated the idea of challenging Gillibrand, but polls have shown him trailing Gillibrand badly. (What might have been interesting is seeing Caroline Kennedy challenge her, even though I disagree with Caroline's conventional progressive politics.) However, Mort Zuckerman, real estate and publishing mogul, is looking as though he might emulate Bloomberg's example of switching parties to run in the less crowded GOP primary; whereas liberals point to the fact that the New York Daily News is not conservative and in fact endorsed Obama in 2008, Mort Zuckerman is a centrist whom has an active interest in foreign policy and has been a critic of the Democrats' exploding federal deficit.

Rick Perry, the incumbent Texas GOP Governor, looks on his way to winning renomination, although he may be forced into a runoff with Senator Hutchison. His likely Democratic challenger is former Houston Mayor Bill White, so far trailing in polls by high single-digits. In other state contests, Maryland former GOP Governor Ehrlich is slightly behind his successor, unpopular Maryland Governor and former Baltimore Mayor Martin O'Malley; similarly, unpopular Massachusetts Democrat Governor Deval Patrick leads a split opposition between GOP and independent candidates.

Pollingnumbers.com has a number of interesting observations; Obama's ratings are highly polarized based on party, nearly mirror images of the other, with 4 out of 5 Democrats approving but only 1 of 5 Republicans (and roughly 40% approval among independents). However, Rasmussen reports that the intensity ratings against Obama are nearly twice as high; one recent poll shows that over half of the respondents believe that Obama doesn't deserve reelection. In addition, Obama's approval numbers are falling below 50% in traditional battleground states he carried. The 2012 race is still a good 30 months away, which is a lifetime in politics. There is little doubt that Obama's fortunes will improve if and when we emerge from the current employment slump, but I suspect that he won't be able to explain away his huge deficits and priorities, not to mention treating terrorists like criminals and the near tragedy last Christmas thanks to the underwear bomber. Several weeks back, he cockily predicted that the Democrats would not suffer the same fate as in 1994, because he, not Clinton, is in charge. Obama is extremely stubborn. After giving dozens of speeches on health care, and watching the support sink, he thinks it's due to "distortions" by conservative talk shows. He hasn't quite grasped the fact that while he bashes health insurance companies, most Americans like their health care options and  suspect that the Obama changes may impact their own health care insurance. Many Americans have the position, if it ain't broke, don't fix it.  (The Democrats will argue the system is broken. But the Republicans can make a strong case that dysfunctional government policies have contributed to the problem and  are not its salvation.)

Quote of the Day



Be more concerned about making others feel good about themselves than you are making them feel good about you. - 

Dan Reiland  

Musical Interlude: Sun Songs


Beatles, "Here Comes the Sun"



Animals, "House of the Rising Sun"



John Stewart, "Lost Her in the Sun" (I prefer the arrangement of the original studio track on "Bombs Away Dream Babies", but I haven't found an A/V link to that)

Miscellany: 2/26/10

Commentary on the Blair House Health Care Summit


One moment immediately stuck out at me, which had more to do with style than substance. The legislators stuck with normal deference to each other and the President, but Obama kept referring to the legislators by their first name and frequently came across to me as condescending, dismissive and judgmental.

Obama picked a fight with Senator Alexander (TN-R) over a claim Alexander made about the CBO numbers being higher on individual coverage plans under the Democratic plan than under current law; Alexander was technically correct (although Obama doesn't consider the market price relevant since government subsidies mitigate the increase). Obama also accused Representative Cantor (VA-R) of pulling an unproductive stunt by bringing a copy of the Democrats' 2000-page plus bill with him; this was "the pot calling the kettle black" because the very concept of the health summit was a political gimmick from the get-go. And when Senator McCain reminded him of Obama's vows of transparency over the course of the 2008 general election campaign, Obama scolded McCain to get over the campaign, that the election was old nows.

In a certain manner, we knew this was a staged event; if the Democrats were seriously interested in negotiating with the Republicans, they would have done so in Senate offices or conference rooms. I mean, if Senate Majority Reid was making deals behind closed doors for Gator-Aid, the Louisiana Purchase, and the Cornhusker Kickback over a number of weeks with his fellow Democrats, does anyone seriously believe that the GOP legislators were going to throw support the same old same old measure in exchange for some changes enabling interstate marketing of health insurance, medical malpractice tort reform, and certain small business group cooperatives with self-insurance and a minimal list of required mandates.

However, Obama and his fellow Democrats weren't interested in letting the market (versus the government) decide what constitutes basic health insurance. Obama repeated the same nonsense over CBO estimates marginalizing the effect of medical malpractice tort reform, and you had the typical knee-jerk response to interstate marketing of insurance as a so-called "race to the bottom". (In other words, the way you get to cheaper health insurance coverage is to minimize the number of market mandates.) To me, the so-called "race to the bottom" is an inherent check on state-based regulatory corruption, where special interest groups get certain mandates implemented. I might be willing to pay my fair share of someone's appendectomy but not for their in vitro fertilization treatment.

The Democrats responded that they have already responded to some of the GOP's ideas, saying their proposal expands state high risk pools, creates high-deductible policies for young people (i.e., lower cost in response to mandates), and addresses fraud. [The fact that they say these things, of course, contradict their partisan claims of the Republicans as the "party of no" and "no new ideas", something, of course, the liberal mass media fails to acknowledge.] Obama was quickly dismissive of the idea of catastrophic insurance and health savings accounts with Sen. Barrasso (WY-R), saying they weren't answers for the average American.

The bottom line is that however these concepts are getting implemented, Obama and the other Democrats are insisting only the federal government and its contrived market exchange--not the state governments, which have traditionally regulated health insurance, or the private sector--can resolve the matter. I am getting so tired of their frivolous arguments. Take, for instance, the issue of bankruptcy. Medical debts dismissed in court through bankruptcy proceedings mean that those charges ultimately get charged back through charges for ongoing health care services. I would prefer to open the transparency of the system, with explicit catastrophic insurance, reserves, etc. rather through hidden charges wrapped up in premium payments.or service reimbursements.  The same thing holds true of Medicare and/or insurance fraud.

It is a matter of principle, and I do wish both sides would stop this nonsense about these cutting costs. Even if we get some initial boosts in terms of digitizing health care records or improving fraud detection, we are facing some intrinsic trends strongly correlated with higher health care costs, i.e., an aging population. What we do have, though, is a system where many policyholders regard health care insurance as a "free good"; they can ask for dubious name-brand prescriptions and various medical tests, they can and do unnecessarily  make use of doctors and more expensive health care facilities. Obama and the Democrats want to minimize any out-of-pocket policyholder costs associated with health care, but without a vested consumer interest in lower costs, these consumers will, if anything, use MORE medical services under the Democratic approach.

I think the Republicans could have a better job articulating a more cohesive  (versus piecemeal) vision, building on and reforming traditional state regulation (including the strengthening of high risk groups) and traditional economic liberty (e.g., choosing how to transact with doctors or to organize benefit groups across states). They could have been focused on the fact that insurers seem to be caught in a vicious cycle of cherrypicking the best risks; one of the ways that the federal government can facilitate this is to become the reinsurer of last resort and to spread the costs of catastrophic costs across the US population. I also expected that SOMEBODY would have dared the Democrats to push up benefits to when new taxes/cuts take effect, which would further expose Democratic voodoo economics on health care reform.

The summit was fairly predictable, although I think it somewhat backfired on Obama. The way I read this game of chess, Obama had already made the decision to go forward with health reform. I think what he wanted to do was to provide a high-profile event with the Republicans, hoping to show they weren't constructive partners, unwilling to negotiate in good faith. Or perhaps he kept a couple of cards hidden in this hand (say, for instance, tort reform) so he could come out of the summit, put those cards on the table, and then dare the Republicans to oppose their own cherrypicked proposals.

The way it backfired on Obama is the fact that the Republicans came to the summit and showed they were highly articulate and respectful, while politely disagreeing, on health care reform. It was the Democrats whom revealed to the national audience the exact manner in which Republicans have not been included in the process, one of the worst offenders being the President himself, whom dismissed ideas like catastrophic insurance with prejudice and made it clear he would decide whether or not and what Republican ideas would be included in the final package. That's not negotiation, only Obama's arbitrary judgment.

Already we are hearing of a new Presidential proposal coming next week, and Obama hints at forcing the bill through reconciliation, and the Democrats are implying new votes around Easter. It's possible that Obama is trying to use the threat of reconciliation to force more concessions and votes from the GOP.

We cannot have another year-long debate about this. So the question that I'm going to ask myself and I ask of all of you is, is there enough serious effort that in a month's time or a few weeks' time or six weeks' time we could actually resolve something? And if we can't, then I think we've got to go ahead and make some decisions, and then that's what elections are for.

As for Obama and the Democrats arguing that a year is long enough, no, it's not, when we're talking about radical changes to 17% of the economy. And it's still clear that there is no consensus among the Democrats themselves (i.e., the House versus the Senate Democrats). And even if you argue the Democrats have spent a year trying to come  up with their own bill, it wasn't with Republican inputs on critical decisions, and if all you have is a bill which barely passed the Senate even with corrupt deals, there is no reason to throw good money after bad when polls after polls show the bill is unpopular. The Democrats try to counter that if you raise the IDEALS (e.g., disallowing filtering on preexisting conditions), these sound good on paper. When you explain to people, however, that means their own rates go up as others try to game the system by avoiding applying for a policy until they actually get sick, that's a problem. [I realize that the Democrats will argue that mandates and/or fines deal with that issue, but there is a serious constitutional issue here. The fundamental problem is finding a fair way to distribute the costs of high risks across all insurers and to limit catastrophic expenses which could bankrupt an insurer.] The proof is in the pudding, and the Democrats have cooked a rancid pudding.

I would like to see McCain or some other bipartisan senators (including Lieberman, Landrieu, Lincoln, Byrd, Nelson, and others), band together to block the use of reconciliation for major policy issues.

The Republicans seem to be somewhat amused and baffled that the Democrats, even after Scott Brown's victory last month, seemed determined to vote through a highly unpopular bill--give the Democrats all the rope they need to hang themselves this fall.

Hillary Clinton Slams Former Fed Chairman Greenspan: Right Guy, Wrong Reasons

Well, it shouldn't surprise us that Hillary Clinton is holding Greenspan responsible for irresponsible budget deficits and trade deficits with large Treasury positions held by China, oil exporters, and Russia, noting that Bush cut taxes in 2001 and 2003 and Greenspan was supportive of Bush's tax cuts and calls for American spending.

OK, as Dr. Phil McGraw would say, let's get real. In the aftermath of 9/11, with the economy already suffering from the Nasdaq bubble/stock market crash, people were almost paranoid to leave their homes and to spend. Keep in mind some 70% of our economy is based on consumer spending. There was talk back then of a possible global depression. We were also running a budgetary surplus during that period; Bush pushed for tax cuts, designed to stimulate consumer demand and business growth.

The real story was Democratic policies that directly facilitated the subsequent real estate bubble, not to mention the Democrats' chief argument at the time was not that the Republicans were spending too much, but that they were spending too little. And what party has been responsible for restrictive policies against domestic oil and gas exploration?


Political Cartoon


Dick Locher implies that Barack Obama is gambling the nation's future on the taxpayer being able to make it around the track with all the extra weight of Democratic Party hyper-deficit spending on his back. (I personally think the only jockey whom will ride this horse is the headless horseman; he must be brainless to believe disingenuous Democratic spin that adding more patients to a full-capacity medical care system will actually shrink the federal deficit.)

Musical Interlude: Eye Songs


Art Garfunkel, "Bright Eyes"



Frankie Valli, "My Eyes Adored You"



Elton John, "Blue Eyes"



Peter Gabriel, "In Your Eyes"



Frankie Valli and the Four Seasons, "Can't Take My Eyes Off of You"

Miscellany: 2/25/10

The Blair House Project


This production by the White House Propaganda New Media office focuses on the legend of the elusive Bipartisan Health Care Compromise, where conservative ideas have been found dead on arrival although there is documentary evidence that relevant Congressional bills have been filed... This film has been rated 'R' (parents don't want their children to know that the costs of the Democratic Party Health Care Bill are going to have to be paid off by the new generations).


Beck's GOP and McCain Bashing


The popular conservative/libertarian TV/radio host Glenn Beck last weekend was the keynote speaker at CPAC.  To those whom are familiar with Beck's FNC commentary show, he did his usual critical review of the history of American progressivism. But then he worked some bizarre elements into his speech, including the topic of Tiger Woods, writing on a blackboard,  his own past alcoholism--and then launches in a full blown attack on the GOP:

I have not heard people in the Republican Party yet admit that they have a problem. And when they do say they have a problem I don’t know if I believe them. I haven’t seen the come-to-Jesus moment of the Republican Party yet... I don’t know what they even stand for any more. And they’ve got to recognize that they have a problem. Hello! My name is the Republican Party and I’ve got a problem. I’m addicted to spending and big government.

I disagree with the way, especially between 2002-2006, that the GOP Congress seemed to lose its way, including its massive reorganization and expansion of homeland security, sharply higher domestic social spending, the nature of budgeting for the Afghanistan/Iraq war/occupation, its not properly funding the new Medicare prescription drug entitlement, and President Bush's reluctance to use his veto authority.  But Beck's attempt to brush the GOP and the Democrats as equivalent in fault when it comes to fiscal conservativism is misleading and wrong:

In 1993, the Congressional Budget Office projected the federal budget deficit would hit $361 billion in 1998; however, Gingrich and the Republicans succeeded in forcing Clinton to balance the budget that year due to their change in fiscal policy.

Clinton and the Democrats had to be dragged along to balance the budget because they fought against it every step of the way, former Gingrich press secretary Tony Blankley said.

This was exemplified by Bill Clinton’s decision to shutdown the federal government in 1995 in response to Republican plans to cut $57 billion from the federal budget compared with the prior year.

• Under the [most recent] budget proposal put forward by House Republicans, spending as a percent of GDP is 20.7% of GDP in 2015, and in 10 years is at 20.7% of GDP [the historical mean is 20%]
• The House Republican budget called for $36.913 trillion in spending over 10 years, whereas CBO estimated in March that the President’s budget would spend $41.726 trillion over 10 years. This is a difference of $4.813 trillion over a 10 year period.
• Debt held by the public is set to rise from $5.803 trillion in FY2008 to $16.027 trillion in FY2019, which is 2.76 times larger.

In fact, let's review deficit numbers by party in control, from the GOP win in 1994 for its first fiscal year start in control (FY1996) through its last fiscal year start in control (FY2007) (based on a  White House OMB spreadsheet ):

Finally, I'm getting tired of  Beck's constant bashing of John McCain and the fact that McCain mentions Teddy Roosevelt as ONE of his heroes (let's pretend that Beck doesn't realize that much of McCain's admiration stems from Roosevelt's Rough Rider background and the his tilt towards progressivism emerged near the end of his Presidency and that McCain also admires Lincoln and Reagan).

Beck also classifies McCain as a "progressive Republican". This is patently absurd; Beck confuses a populist streak with progressivism. Let's note, for instance, that liberal Republicans Specter, Collins, and Snowe voted for last year's $787B Democratic Party Stimulus Bill and yesterday's $15B Democratic Party Jobs Bill, and John McCain did not. [Specter changed parties after the stimulus vote.] They also have ACU lifetime ratings in the mid-40's while McCain is in the lower 80's, even with his bipartisan efforts. Even influential media conservative Mark Levin, not a McCain, took offense at Beck's suggestion in a Couric interview that McCain would have been a worse President than Obama and that Beck might have voted for Hillary Clinton over McCain. (Let's give Beck the benefit of a doubt that Beck never checked Clinton's voting record, which is overwhelmingly progressive--with maybe one vote out of 10 in favor of a conservative position, according to the ACU.)


Quote of the Day

The most important thing a father can do for his children is to love their mother. - Theodore Hesburgh

Political Cartoon


IBD cartoonist Michael Ramirez doesn't say this, but if you look at the odometer on this Government Motors car, you'll see a national debt odometer, which doesn't stop even when the job engine stalls out.... And of course when they try to start the car back up, they'll flood the engine, and it still won't turn over.

Musical Interlude: Flower Songs


Scott McKenzie, "San Francisco (Be Sure To Wear Flowers in Your Hair)"







Roxette, "Fading Like a Flower"



Carly Simon, "Jesse" ("I won't cut fresh flowers for you")



Neil Diamond and Barbra Streisand, "You Don't Bring Me Flowers"

Miscellany: 2/24/10

Senate Jobs Bill Passes 70-28


One of my research interests is readability, and I get annoyed at the needlessly obscure way votes are described. For instance, on the Senate website, the Reid jobs bill is described as  the "Motion to Concur in the House Amdt. to the Senate Amdt. to H.R. 2847 With an Amendment (No. 3310)" where HR 2847 is described as "a bill making appropriations for the Departments of Commerce and Justice, and Science, and Related Agencies for the fiscal year ending September 30, 2010, and for other purposes." Of course, legislators often use grandiose political spin in naming bills, e.g., last year's Democratic Party Stimulus Bill was called the "American Recovery and Reinvestment Act".

Just a word of caution here: the $15B measure needs to be reconciled with a House version which is 10 times bigger. It's quite possible that, at minimum, an upsized compromise measure may lose GOP and centrist Democrat support.

What was particularly interesting is noting the Republicans whom going with the 5 earlier ones, whom had voted for closure: Hatch (UT), Murkowski (AK), Burr (NC), Alexander (TN), Inhofe (OK) and LeMieux (FL). (At least a couple of these senators are facing reelection battles this fall; I strongly suspect they don't want to give Democratic opponents ammunition for voting "against jobs". Never mind the fact that this bill just won't do that...)

The Wellpoint/Anthem Blue Cross California Rate Increase Kerfuffle


The last thing conservatives needed as the health care "summit" approaches as the recent revelation that Anthem Blue Cross is going to hike INDIVIDUAL COVERAGE (vs. group coverage) plans an average of 25%, with some experiencing an increase of up to 39%, along with hints that policies are going to be subject to price adjustments on a more frequent basis; this follows on top of a similar increase the prior year. [The individual coverage market is roughly a tenth of the size.]

Duke Helfand of the LA Times gives an example of Dr. and Mrs. Martin Weiss, whom found their coverage going from $20K to $27K; ABC News gives examples of a family of 4 which has seen its monthly insurance go up by $300/month to almost $1200 and a single female lawyer whom now faces a premium of $9000, a 28% increase.

The Obama Administration, of course, is up in arms: if the general inflation rate is 3% or so, how can it possibly justify these kinds of numbers? It must be price gauging, right? It just proves we need a second level of regulation at the national level, right? Wrong.

The story isn't well-described in the news stories, so I'll need to reorganize some facts across sources. First of all, the level of health care inflation is significantly higher than general inflation--Anthem claims in California it runs between 10 to 15%. Second, California has state insurance regulators; although it does not specifically approve rate hikes in the individual cover market, California requires at least 70% of each premium dollar to be spent on health care expenditures (i.e., medical loss ratio). Anthem says that in the individual market claims experience does not affect premium and the cost differences in the individual coverage market in part reflects the fact healthier-risk individuals (e.g., younger people), given a tough economic environment, budget constraints and higher insurance costs, are opting out of the market, leaving major costs to be spread among a smaller number of  (lower- or negative-margin) policyholders. Anthem's response to HHS Secretary Sebelius is that its individual coverage program ran at a loss last year, and it must price its products to cover its costs in an actuarially sound manner to remain a going concern. (Unlike the federal government, it can't continue to operate a business on massive deficits.) Anthem says that its proposed rate hikes have been independently verified by external auditors to ensure the announced rate increases do not result in a medical loss ratio below the 2006 statutory minimum 70%. (NOTE: California is investigating Anthem claims on the medical loss ratio mandate using its own independent auditors)

I am not in a position to verify Anthem's claims. I do know that Anthem is well-aware there is a supply/demand curve, and in a market without insurance mandates and increasing costs, you can expect attrition, particularly among healthier policyholders. I suspect that we're probably seeing some signs of a health care bubble: health care costs cannot continue to outpace income gains in the long run. What we do know is these costs are far higher than in other, less regulated states, and I suspect we need to look at some of the systemic issues discussed in prior posts, e.g., customers without a vested interest in managing costs, superfluous diagnostic tests associated with defensive medicine (e.g., need for medical malpractice tort reform), dysfunctional governmental policies (such zero or low wait periods, gold-plated benefit mandates, etc.), cost recovery from uninsured people, etc.

But one thing for sure: Obama and Sebelius have no power over cost components, and  artificially capping rates so insurers cannot meet costs simply means that companies will exit the market--resulting in a less competitive market. Price controls don't work.

The paradigm must shift. I suggest that the federal government consider reinsuring catastrophic costs and benefit limits, spreading the cost across the US economy. There are ways to do that, including an idea I posed in an earlier post, advocating a two-tier tax structure, including a small consumption tax across goods and services.

Tomorrow's "Health Care Summit" is a PR Stunt: GOP Must Watch Its Step


I have not read the administration's composite plan released Monday; what I've heard second-hand from news reports is that it does not include the much discussed public option (positive) and that the administration had responded to some of the more controversial deals in the Senate plan (e.g., the Cornhusker Kickback, Louisiana Purchase, and Gator-Aid, not to mention special treatment for unions facing so-called Cadillac taxes) by throwing money at the problems (negative) to make the deals universally applicable or define the problem away (e.g., raising the tax threshold for Cadillac plans).

Let us understand why Obama never really fleshed out his own health care plan, simply promoting general objectives; Obama no doubt drew a lesson from happened to Bush when he started off his second term pushing one of 3 panel recommendations to fix social security: a partial privatization of employee contributions. (The others were to patch the existing framework and to means-test benefit payments.) Bush, not unlike Clinton's unsuccessful attempt to reform health care, had a high-profile failure early in his term and never really recovered. So the Congressional Democratic leadership has manned the front lines of the debate, which has mostly kept Obama out of the line of fire, but then intra-party differences, especially between the House and the Senate, have put Obama in a difficult position, needing the ongoing support of both sides on other issues.

Democrats have been negotiating among themselves behind the scenes for months: are we supposed to treat a one day "summit" as anything more a PR stunt, designed to pretend that even more serious differences in approach can be bridged in a mere 6-hour gotcha moment in front of a nationally telecast audience?

Word has it that the Republicans have posted something like 17 different plans online to combat the lie that conservatives don't have ideas relevant on health care.

Here's a sample approach of what I might do if I was managing the Republican side of the summit tomorrow:

• Lower expectations from the summit. If the Democrats cannot reach a cohesive agreement over 8 months, what can we expect from a 6 hour session?
• Address Democratic threats of the Senate "nuclear option" (an unprecedented abuse of the budget reconciliation process to pass major policy) from the get-go to bypass bipartisan negotiations.
• Show good faith. Do NOT say "let's start at the very beginning".  Explicitly acknowledge "good ideas" from the Democratic side, just as Obama has signaled some good GOP ideas, like health insurers operate across state lines and malpractice tort reform, including guaranteed issue and catastrophic health coverage. However, note that Obama's lip service to these good ideas has not resulted in their inclusion in a single piece of Democratic-sponsored legislation.
• Build on the Bipartisan Patient Protection Act, i.e., a Patient Bill of Rights.
• Offer catastrophic insurance/reinsurance on benefit caps. This explicitly addresses the bankruptcy issue. Costs beyond a certain level of out-of-pocket expenses (not to mention costs of "free" medical care from doctors and hospitals) could be funded by a low consumer tax on goods and services. NOTE: This is a workaround on the mandate issue.
• Explicate a fundamental set of principles. For instance: equal protection for health care tax benefits.
• Fix Medicare and Medicaid first. 
• Advocate a staged approach to health care reform. Argue we cannot pass a comprehensive reform plan given a weak economy. Insist that we set priorities. Recommend a staged approach where we focus first on guaranteed issue mechanism and catastrophic costs.
• Suggest a bipartisan health insurance reform panel. If Obama believes that he can deal with the national debt with a bipartisan panel, why not on a consensus plan for health care reform?
• Consider an arms-length national high risk plan with decentralized management (e.g., a GSE with premiums an offset over state/regional averages, with means-tested premium credits.)

Quote of the Day

He who builds to every man's advice will have a crooked house. - Danish Proverb

Political Cartoon


IBD cartoonist Michael Ramirez implies that the real estate bubble is being followed by the Obama  Big Government bubble.

Musical Interval: Fire Songs

Bangles, "Eternal Flame"



John Parr, "St. Elmo's Fire (Man in Motion)"



Cheap Trick, "The Flame"



Johnny Cash, "Ring of Fire"

MIscellany: 2/23/10

Quote of the Day 

Whatever enables us to go to war, secures our peace.

Thomas Jefferson

Reid Jobs Bill Survives Cloture 62-30

The three New England liberal GOP senators (Snowe (ME), Collins (ME), and Brown (MA)) joined with two retiring senators (Bond (MO) and Voinovich (OH)) to help pass Reid's stripped-down jobs bill, which basically tries to bribe employers to hire workers unemployed for at least 2 months with a limited-term employer payroll tax holiday plus a bonus tax credit if the employee stays at least a year. Moreover, additional funds are dedicated to a subsidized Build America Bonds program (introduced during last year's stimulus bill which Obama wants to expand to non-profit hospitals and other ideologically/politically favored groups). 


[It should be noted that the House passed a supersized "jobs" bill ("Stimulus III") which has multiple times the funding of this bill, so the question is what the reconciled bill after Thursday's scheduled vote looks like, but given my objections to both versions, the real question is whether the 5 senators will also vote for an upsized ineffectual bill adding even more to the national debt.]

I already announced in a prior post that I opposed this version of the Senate bill. First of all, the job market is always changing; I have dealt with a number of recruiters during my work history, and I can't think of a single opportunity where being long-term unemployed would have been considered a positive thing. Companies are constantly hiring, during good times and bad; for example, a spouse gets transferred to another location and his or her spouse, also holding a job, moves. Why are you giving a tax credit to a business already hiring for their replacements (or whatever vacancy emerges)? It's pushing on a string.

I can honestly say, at least within the field of information technology, a gimmick tax cut wouldn't make a difference. However, I have been in situations where a government vendor had a rate range. A broad-based payroll tax cut would enable the vendor to raise the W-2 rate cap for a given position.

The problem with Reid's progressive bill is the same old same old I've discussed before--these nuanced, thread-the-needle qualifications are being designed by people whom don't have a clue of how employment works in the real world--never mind a basic foundation in the rule of law: simplicity and economy of the law. If you are a job creator, you don't have time to try to parse needlessly obscure legalese in making a hiring decision. OCKHAM'S RAZOR, people! I bet they never teach Ockham's razor in law school; Obama has probably never heard of it. Most graduate students (if not undergraduates) are probably familiar with Thomas Kuhn's The Structure of Scientific Revolutions and the salient concept of a paradigm shift. At the risk of oversimplification, an existing paradigm (e.g., "the world is flat") becomes progressively more difficult to reconcile with cumulative scientific observations to the point a new paradigm emerges, which more intuitively and simply fits the evidence in question. In a similar way, the Democrats keep adding levels of complexity to this already convoluted "house of cards" tax system. (It may be the only true jobs the Democrats create are openings for tax attorneys, CPA tax practices, and, of course, within the IRS itself!)

James Carville, during the initial Clinton campaign was well-known for promoting the slogan "It's the Economy, Stupid". It's too bad he never taught Democratic lawmakers a well-known design principle as well: KISS ("Keep it Simple [and] Stupid!")

I understand but disagree with Senator Scott Brown and the other Republicans whom decided that the nuanced employer tax breaks constitute a glass half-filled (versus half-empty). Beyond the obvious deficiencies of the bill from a conservative standpoint (it's not just giving away tax breaks for hiring decisions motivated by other consideration, but the questionable outcome and scalability), I'm not sure, from a standpoint of political tactics, that it was a good idea to set a precedent that Senator Reid can take a bipartisan bill, strip Democratic concessions to Republicans, and get rewarded with Republican support. I would have sustained a filibuster to require Reid to reinstate the original compromise.

Schwarzenegger and the Dems A
ccuse GOP of Spending Hypocrisy

If there's one thing you can count on, it's the fact that Democrats will attempt to blame accuse the Republicans as "hypocrites" on spending, in particular, last year's $787B stimulus if and when Republicans who voted against the stimulus seem to promote a project which is funded in part or whole by stimulus bill money.

I was very disappointed in Governor Schwarzenegger's repeating Democratic partisan talking points in reference to the stimulus on ABC's This Week. In fact, I strongly supported his earlier reform measures, which, unfortunately, went down to defeat, especially due to opposition from unions, and, unlike media conservatives, I have been strongly supportive of a big tent philosophy, including the Maine senators, Brown, Crist, Ridge, Giuliani, Powell and himself (among others). 

To a certain extent, I did expect Schwarzenegger to be defensive since he supported the stimulus and accepted state money for it. I have no doubt that negotiating spending cuts with the Democratic-majority legislature (which had a vested interest in the supersized budget) is difficult. However, Schwarzenegger's simplistic "all-or-nothing" approach regarding the stimulus bill is unreasonable and intellectually dishonest. You could support part of the bill, say, infrastructure, while opposing, say, giving morally hazardous handouts to cover to bail out fiscally irresponsible state legislatures which didn't establish rainy day funds.

A prominent example of alleged hypocrisy is one of the key young GOP leaders in the House, Eric Cantor (VA), whom is promoting the application of stimulus money for an infrastructure project of a high-speed rail between DC and Richmond, VA. Now let me say, first of all, just as I panned the idea of a high-speed rail project between Orlando and Tampa several posts ago, I similarly question whether this project is another potentially money-losing operation like most Amtrak routes. I haven't studied the status quo of traffic between DC and Richmond.

But let me take on whether the "hypocrisy" charge is relevant. First of all, Eric Cantor has been pursuing this project for years, and money is fungible. Whether or not it's part of the stimulus or other dedicated federal project expenditures really isn't a case of consistency or hypocrisy.

Second, excluding regions of the country from eligibility for federal stimulus proceeds simply because their Congressman or Senator voted against the stimulus bill is unconscionable; after all, these are taxpayers, and they should not be forced to subsidize projects in other areas at their own expense. A stimulus bill, by definition, is supposed to support the broad extent of the American economy, not just constituents of free-spending progressives. In fact, you wonder about the cynical nature of progressives raising the issue, given the fact they supported the Orlando-Tampa project.

Third, most of us conservatives were willing to support a stimulus bill--but one that was significantly smaller, did not consist of bumped-up funding for repackaged Democratic operational spending priorities, which are not inherently "stimulative" in effect (any more than, say, a comparable job in the private sector), and which included tax incentives for job creators and the business side of the economy. We pro-business conservatives especially are committed to infrastructure spending--but the right type of infrastructure spending (not political white elephants, like the Bridge to Nowhere).

Fourth, I am not surprised that politicians would want to take credit for federal funds being spent in their district or state, and I don't think I've ever heard a politician promote a government project without mentioning it will bring more jobs to the area. No doubt Rep. Cantor would be promoting, e.g., tourist dollars from DC area visitors in shops, restaurants, taxis or rental cars, hotels, etc., meaning more business and jobs going along with it.

Yes, of course, I don't think it's politically wise for a Republican conservative to be attacking Democratic hyper-spending, question an ineffectual spending bill resulting in few real jobs and then apply for stimulus funding for a local project, noting the jobs that will result. I would focus more on the business case for the infrastructure; for example, significant numbers of metro DC area workers commute from Richmond area and interim points or can help alleviate some congested DC area traffic, existing railways are running at or over capacity and/or have increasingly high operational and maintenance costs. When we have a $12T debt, we need to have better reasons than it's faster than driving from Richmond to DC.

As for Governor Schwarzenegger: after having to deal with the fact you have to live within your state's budget, how can you allow yourself to be used by the current Obama Administration as their token Republican shill, mere window-dressing of "bipartisan" support for a supersized boondoggle that your future grandchildren will have to pay off one day? Why haven't you pulled a Chris Christie budget freeze as governor instead of begging for scraps from Santa Obama's table in a shameless quid pro quo? When Eric Cantor criticizes the Democrats in Washington for the same sort of things you've been criticizing in the context of California, why are you picking fights with fellow conservatives trying to put speed bumps on Democratic overspending?

Now as to the hypocritical progressive Democrats, pointing at the Bush deficits:  name one thing (beyond cutting and running from Iraq--and even then, the Democrats controlled spending during 2007-2008) where Democrats were more fiscally conservative than Bush? The Democrats constantly screamed that the Republicans weren't spending enough--not enough dollars in education (despite a healthy budgetary upgrade), SCHIP, etc. In particular, when Bush argued for the Medicare prescription drug benefit, the Democrats largely opposed him--not because they disagreed with the program in concept, but because Bush wasn't spending enough. Does anyone really believe that a GOP Congress and President in 2009 would have run up a $1.42T deficit? Whereas I agree with the criticism that Bush wasn't a fiscal conservative and proposed record fiscal budgets, criticisms from the left (implying that that the spending/deficit numbers are comparable) have no basis, even when we are using White House estimates:

Courtesy of Heritage.org, 3/24/09

Political Cartoon

Gary Varvel shows that the progressive Congress and President are driving a Government Motors program vehicle (financed by foreign investors and fueled by imported energy supplies (i.e., higher trade deficit))... The Big Government bubble is heading for a crash....

Musical Interlude: Christian Artist Pop Singles


Bob Carlisle, "Butterfly Kisses"

Michael W. Smith, "Place in This World"

Sixpence None the Richer, "Kiss Me"

Miscellany: 2/22/10

Addressing the Clinton Surplus Myth and Bad Progressive Math


If you go to the Treasury debt-to-the-penny link and plug in the inauguration dates, here's what we see:

Now, in reviewing the Clinton numbers, one has to keep in mind that the key number is NOT public debt, but total debt outstanding (which is what I show above).  Total debt outstanding is public debt plus intragovernmental holdings; intragovernmental holdings include social security, civil service retirement, federal supplementary medical insurance trust, federal hospital insurance trust, unemployment trust, military retirement funds and other miscellaneous accounts. These intragovernmental holdings are required to purchase Treasury notes with their surpluses. This presents a captive source of funding used to finance government operations or service the public debt.  [Personally, I would prefer that trust fund holdings be invested in a diverse set of assets; the captive investment in Treasury notes creates a moral hazard, because lawmakers don't feel as much a need to cut expenditures when they can use trust fund money to make up the difference.] The budget surplus is when federal inflows exceed federal outflows. Now we can broadly classify inflows as federal revenues (income taxes, tariffs, etc.) and trust fund contributions (e.g., payroll taxes). Similarly, we can classify outflows as federal expenditures and trust fund redemptions. Most taxpayers intuitively think of the surplus/deficit in narrower terms, i.e., federal operating revenues minus expenditures. That, in fact, never happened during the Clinton administration. Steiner notes the closest we came to an operational surplus was an $18B deficit in FY2000.

So what do you do when your mandated trust fund debt service exceeds any operational surplus or deficit? You pay down the public debt. I remember during those days some people even wondered what we would do if we managed to pay off the public debt.... [Here's a quick thought: how about letting the trust funds divest of their Treasury notes and build a lockbox of real assets?] The Treasury reports only yearly intragovernmental holdings during the later Clinton years, but we see approximately $200B annually being loaned to the government during this period.) So what does the much vaunted "surplus" really mean?  The federal government was robbing Peter to pay Paul, i.e., shifting Treasury notes from the public account and putting them in the trust accounts. Simply put: an accounting gimmick.

Now here's the problem (and that's why we conservatives are so anal-retentive about entitlement solvency): as trust funds continue to pay out more money as baby boomer retirements accelerate, the government will no longer be able to depend on this captive surplus to finance the debt. (This has become more apparent during periods of unemployment above the historical mean, as we have today, because unemployed people do not pay payroll taxes.) In fact, the time is fast approaching when we will have to finance net outlays to trust beneficiaries in order to redeem Treasury notes owned by the trust funds. Assuming that we are not operating an operational surplus, this means doing the reverse of what we saw during the latter Clinton years: we need to sell public debt to meet our obligatory outlays to beneficiaries. The long-term picture is even worse because the trust funds may run out of Treasury notes but we STILL are obligated to pay out benefits to beneficiaries; that's what we refer to as an unfunded mandate. Where do we get that money? In essence, even when the reserves are exhausted, we'll still have trust fund contributions--but we will have to pay out the difference as a federal expenditure. We either have to make painful cuts in other federal expenditures or try to increase the public debt. In essence, we will have converted a trust fund to an operating budget program.

But among other things, the Clinton myth conveniently ignores the elephants in the room, namely the House Republicans whom took control over the last 6 years of the Clinton Presidency. Clinton piled up a $600B deficit during the first two years with a Democratic-controlled Congress--and that was WITHOUT passing his version of health care reform. The GOP also balked at planned Clinton budget increases for domestic spending, and Clinton received the benefit of productivity increases associated with the information technology advances and increased tax revenue of  unsustainable investment gains during the stock market bubble in the last few years of his Presidency.

Obama Wants to Regulate Health Insurance Rates? HELL, NO!

I'll address some of the other expects for the Obama health care framework released today for a future post, but one of the ideas is flatly a non-starter: the idea of centralizing the regulation of insurance rate increases, which I consider flagrantly unconstitutional (tenth amendment). The fact is, states already regulate health care insurance rates. Now, of course, this is consistent with Obama Administration rhetoric, pointing out that certain carriers dominate in some markets. The theory is that the market makers will exploit the lack of competition to arbitrarily mark up premiums, translating to windfall profits. There are several things wrong with that, including the fact that windfall profits, if they are perceived to be sustainable, will draw competition. The insurance business model does not require intrinsic high barriers to entry, e.g., computer chip foundries. It bundles medical services with a markup to cover its costs, including provider reimbursements and administrative services (including qualifying and negotiating with providers and validating charges), and a reasonable profit (when applicable, because some vendors (e.g., Blue Cross) are non-profit).

Why are there high costs for health care insurance? Some of the cost trends are intrinsic, based on demographics, i.e., an aging, longer-living population, or lifestyle trends (e.g., obesity, alcohol and drug abuse, etc.) Other factors include including increased utilization of medical testing and services, advances in medicine and expensive new health care technology, broader-access plans and government cost-shifting to providers in the private sector (e.g., servicing Medicare/Medicaid patients or unrecovered costs of uninsured patients). Others reflect expensive supplemental health care benefit mandates (e.g., in vitro fertilization) or dysfunctional policies perverting the concept of insurance, e.g., no-wait-period acceptance, which essentially allows people to defer buying insurance until they have a serious medical problem and then attempt to socialize their medical expenses. In addition, escalating medical insurance costs affect the number of available providers, with relevant supply/demand implications.

In fact, it's hard to make a case of excessive profits for the health care insurers:

Overall, the profit margin for health insurance companies was a modest 3.4 percent over the past year [2008], according to data provided by Morningstar. That ranks 87th out of 215 industries and slightly above the median of 2.2 percent. With profits in many other industries depressed, health insurance profit margins probably rank higher than they normally would, compared with other industries. Pharmaceutical companies have a profit margin of 16.4 percent—seventh highest of the 215 industries that Morningstar tracks. Others segments of healthcare with margins well above the median include healthcare information (9.4 percent), home healthcare firms (8.5 percent), medical labs (8.2 percent), and generic drugmakers (6.5 percent). [You can also add medical device makers behind pharmaceuticals.]

A Weiss Report, looking at 2003 data, found 69% of insurers either lost money or made under a 5% profit margin, and heath care insurers lagged behind property & casualty insurers and life insurers (just over 8% margins) by at least 270 base points.


Obama can't change the inherent cost drivers (in fact, he's selling the use of preventive diagnostic tests, some of which have been questioned from a cost-benefit approach); he also makes a disingenuous comparison of administrative costs between the government and the private sector, since (among other things) the government establishes its entitlement program reimbursements by fiat, not negotiation, does not have comparable marketing expenses, and  in the past has not included standard anti-fraud measures like the private sector. 


Political Cartoon


Bob Gorrell points out some executives exercise leadership and take responsibility. The Obama Administration could, at any time, exercise restraint and responsibility by slashing programs and personnel, eliminating redundancy and middle management, merging operations, freezing hires, salaries and benefits. etc. All Obama is trying to do is to create yet another panel, commission, etc.--a favorite stalling tactic of many managers unwilling to take decisive unpopular action in the short term. When we are facing solvency issues with entitlements, aggravated by falling payroll tax collections due to unemployment issues, what did Obama do? Push on strings, i.e., tackle climate change and health care reform (given a large percentage of Americans happy with their private-sector insurance).

Quote of the Day


A person who can't lead and won't follow makes a dandy roadblock. - Author unknown


Musical Interlude: Simon & Garfunkel (solo)


"My Little Town" (my favorite S & G song; this is a great solo performance by Simon)





Paul Simon, "Mother and Child Reunion"



Art Garfunkel, "All I Know"