Miscellany: 1/21/13

Quote of the Day
He who smiles rather than rages 
is always the stronger.
Japanese proverb

Sometimes Words Are Just That: Words



New JOTY Nominee

The First Lady is caught rolling her eyes on tape clip (9 s) as Speaker Boehner engages in small talk with the President.



Obama Scorecard: First Term: 
An Abridged Summary

Courtesy of Gallup

The only 2 Presidents with lower mean ratings, both one-term'ers:: Ford and Carter. The Bushes finished just over 60%, most likely a rally-behind-the-Chief, the first Gulf War and 9/11 respectively. What about Obama's bounce last year? In my opinion, a few things. First, the rising stock market, improving housing and auto sectors, and declining official unemployment rate provided the facade of a more robust economy. Second, a lot of that was late in the year as a couple of widely publicized tragedies, Hurricane Sandy and the Newtown Massacre provided Obama to showcase a key strength as Consoler-in-Chief. Third, I think Obama has considerable political skills: he was able to exploit differences between GOP factions, attribute the economic malaise to his predecessor's policies and fear-monger over the GOP (GWB v. 2, "extremist"  candidates, intolerant policies, and politicians of and from the wealthy elite); the President also tried to co-opt a couple of traditional GOP strengths, tax cuts and small businesses.

Other accomplishments (via CBS, others or me*):

Sasha Obama yawning at yet another of her Dad's speeches:
His second Inaugural Address

• highest average unemployment since the 1930's * (recent improvements in unemployment have more to do with people dropping out of the official labor force than new jobs: recent gains have barely kept up with new labor market entrants/population growth)
• highest long-term unemployment * (one source I recently saw cited a Fed Reserve study that claims employers have been routinely trashing resumes with a current 6 month or longer gap)
• lowest labor rate participation rate in decades *
• declines in household income and net worth (2010 Fed 3-year study, did not improve in 2011, 2012 data not yet available, but unlikely much better in an employer's market)
• largest accumulated national debt ($5.8T--Obama disingenuously argues that Bush owns the FY2009 deficit, which covers the first 8 months of his Presidency: this ignores the fact a Democratic-controlled Congress did not pass Bush's budget and instead passed continuing resolutions to bridge Bush's final months in office)
• most overexposed President in history: number of speeches, remarks and comments: 1,852  (with teleprompter: 699, bashing Slurpee-drinking (do-nothing) Republicans: 35), days with no public or press appearances: 93, media interviews: 591 (major TV networks, 104 )
• number of blue or purple states not visited: 0, red states 6, foreign nations visited at least once: 35
• vacations: 13 (spanning all or part of 83 days); golf outings: 113; evening outings (dinner, theater, shows): 57

Number of Americans whom wished they could forget the last 4 years? 310 million
Number of people whom will end up paying Obama's overdue bills, may never see the money they put into senior entitlements or US Treasury obligations  paid off? Too many.

Housing Recovery? A Note of Caution

There are a flurry of news reports showing housing starts improving, prices up all over the country year over year, ETFs in home builders or builders and construction registering strong gains for 2012 and continuing into this year , at record-low mortgage rates, low vacancy-rates/increasing rental costs, what could go wrong with this picture? I will say that the contrarian in me gets restless when I read the perpetually perky Carpe Diem blog, with a few threads on low inflation, improving manufacturing base, the shale gas revolution and related hiring boom and lower utility rates, and housing. Perry thinks the upbeat tone and stories draw viewers to his blog; he reasons if you want doom and gloom, there are a lot of sources on the Internet.

To be sure, even the housing bulls pay lip service to caution, and we haven't seen yet the return of the condo-flipping infomercials. I stumbled across a webpage which, among other things noted that nearly a third  of the sales are in cash and/or by investors. I know at least two companies have been investing in single-family homes, hoping to convert them into rentals. The point is, these are speculative plays, and some of the demand is also coming from foreign investors, no doubt also driven by a declining dollar. Even a casual Google search showed about a third of homeowners underwater on their mortgage (and almost half of younger homeowners). This limits, for example, families which can migrate to larger homes. Furthermore in this jobless employers' market, we might see more foreclosures bringing inventory onto the market, dampening prices. In fact, you have to wonder, with many mortgages dependent on two incomes and less than a robust labor market, just how sustainable this recovery and how vulnerable it might be to another economic shock (say, the bursting of the bond bubble) or a second recession (some people are already speculating Obama could face his version of the 1937 recession)

Did Wily SCOTUS Chief Justice Roberts  Insert a Trojan Horse in ObamaCare?

George Will's most recent column focuses on a recent Cato Institute journal paper, dealing with the tax/penalty constraints. Basically the point is this: regulated insurance cannot recover the costs of older/sicker policyholder (community rating) or expensive/preexisting condition (guaranteed issue) policyholders from premiums. They have to make the difference from other (younger/healthier) policyholders. This means the latter are paying more than they should and  elect to self-insure as premiums become unsustainable (supply/demand).

Clearly this is not insurance from the get go if you can defer medical treatment and socialize the balance of your preexisting condition care except a modest capped premium. And chronically ill people may not be able to hold onto a job. You might think, why doesn't the government simply subsidize, on a means-tested basis, the excess costs their policies, including regulated premiums,  do not allow insurers to recapture?

In effect, if you mandate insurance to healthier risks, they end up subsidizing care without formally touching the government's hands. It's a de facto tax.

But how do you enforce it? What's to stop someone, say, a self-employed person, from simply not paying premiums? That's where the tax/penalty come into play.But what Roberts said is the government cannot simply collect on behalf of the insurance company. The tax/penalty must be sufficiently smaller than the premium.

So, just for the sake of argument, insurance costs $9000/year, the penalty is $2000/year, and you need a $5000 operation. Why should you pay $9000/year versus $2000? After all, your $5000 operation is covered either way. Perhaps if the government kicked in a $7000/year voucher to buy insurance... Now the point, where is that $7000/year subsidy coming from? Or how is your operation going to be paid from beyond your tax/penalty?

This is Will's point: the system sounds innocent enough: government protects you from high insurance premiums and guarantees insurance. But, unlike the government, an insurance company must balance its budget. This means the hidden costs of ObamaCare, while ObamaCare supporters still hold will "reduce the deficit" (by accounting gimmicks, like 10 years of taxes for 6 years of benefits), will come to the surface, and how do you think the GOP is going to react when the "deficit-reducing" ObamaCare starts running up huge unplanned bills? I told you so; wouldn't be prudent, not going to do it....

Musical Interlude: My Favorite Groups

The Cars, "Let's Go"