Thursday, April 8, 2010
Barker's Newsbites: Thursday, April 8, 2010
Let's get this show on the road, folks...
Update: While my hope is that each day's newsbites will impart useful information and provide compelling analysis (yeah... with a bit of my trademark wiseass humor thrown in), today's newsbites are more than usually chock full of "good stuff."
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http://apnews.myway.com/article/20100408/D9EUR2280.html
Qatar's U.S. ambassador rushed to the defense of his envoy [identified as Mohammed Al-Madadi] whom authorities say grabbed a surreptitious smoke in a jetliner's bathroom...
* JUST CURIOUS: DID THE SMOKE ALARM GO OFF...???
...sparking a bomb scare and widespread alert that sent jet fighters scrambling to intercept the Denver-bound flight.
* HMM... I WONDER WHAT THE FINANCIAL COST FOR THAT WAS...
Two law enforcement officials said investigators were told the man was asked about the smell of smoke in the bathroom and he made a joke that he had been trying to light his shoes - an apparent reference to the 2001 so-called "shoe bomber" Richard Reid.
President Barack Obama was briefed about the incident aboard Air Force One by National Security Adviser Gen. Jim Jones and National Security Chief of Staff Denis McDonough shortly before 9 p.m. EDT, said a White House official, who spoke on the condition of anonymity to discuss an ongoing investigation.
* WAS THE GUY SMOKING IN THE BATHROOM OR NOT; THAT'S ALL I FRIGG'N WANNA KNOW.
Passengers say they were kept on the plane for nearly an hour after it landed and then were questioned by officials. Many were still trickling into the baggage area five hours after the plane landed.
* NICE... REAL NICE. HOW'D YA LIKE TO HAVE BEEN A PASSENGER ON THAT FLIGHT, FOLKS...
[A]uthorities speaking on condition of anonymity said they don't think [Al-Madadi] was trying to hurt anyone during Wednesday's scare and he will not be criminally charged.
* NOW ISN'T THAT JUST SPECIAL... (*SMIRK*)
* IMAGINE WHAT HAPPENS TO YOU... TO YOUR SPOUSE... TO YOUR PARENT... TO ANYONE YOU KNOW WHO CAUSES SUCH HAVOC.
http://www.realclearmarkets.com/articles/2010/04/08/decrying_the_union_pension_bailout_bill_98411.html
Some members of Congress seem to like putting taxpayers on the hook for practically unlimited liabilities. The latest Congressional Budget Office forecasts 2020 public debt climbing to 90% of GDP under President Obama's 2011 Budget. This is not enough for Senator Robert Casey, a Pennsylvania Democrat and habitual ally of labor, who now wants Americans to bail out union pension plans underfunded by hundreds of billions of dollars.
Following on the healthcare model, it's all part of a political calculus in which Washington politicians try to buy votes today for the next election with money that Uncle Sam won't have to spend until afterwards.
Mr. Casey's bill, the Create Jobs and Save Benefits Act of 2010, is similar to that of Representatives Earl Pomeroy, a North Dakota Democrat, and Patrick Tiberi, an Ohio Republican [in name only], who seek to bail out pension plans with their proposed Preserve Benefits and Jobs Act of 2009, introduced last fall.
Under these bills, the Pension Benefit Guaranty Corporation would, at the request of the plans, have the authority to take over the pension obligations of employers who have withdrawn from the plans, and pay the benefits out of taxpayer dollars.
Once the PBGC shoulders that obligation, it would keep making payments until the last retiree or designated survivor dies.
(*FEELING SICK TO MY STOMACH*)
Under the Casey and Pomeroy-Tiberi bills, some underfunded plans would be shifted to taxpayers. But it's a vicious circle: once PBGC took over some plans, other employers would want to declare bankruptcy, unload plans on the PBGC, and reorganize under another name. The incentives to do this would be enormous, because companies bailed out by the PBGC would be free of onerous pension obligations and hence would acquire a competitive advantage.
Both House and Senate bills would allow failing multiemployer pension funds to form alliances and merge where such mergers would reduce PBGC's losses. Plans that have been financially prudent could lose, because they could be merged by PBGC with failing plans, with PBGC funding failed plans.
(*RUSHIJNG TO THE BATHROOM TO THROW UP MY BREAKFAST*)
By bailing out the plans, Congress would be compromising the remedial provisions of the Pension Protection Act of 2006. The Act requires underfunded pension plans to put their houses in order by raising retirement ages; increasing contributions by employers, workers, or both; and lowering benefits. A bailout would remove any incentive for multiemployer pension plans to reorganize their plans responsibly.
(*CONSIDERING SUICIDE*)
* UPON FURTHER THOUGHT... MAKE THAT (*CONSIDERING HOMICIDE*)
http://www.investors.com/NewsAndAnalysis/Article.aspx?id=529593
There are ironies, and then there are ironies. Former Fed Chairman Paul Volcker, who 30 years ago wreaked havoc slaying inflation, now advocates the most inflationary tax ever devised.
Conquering the seemingly intractable double-digit inflation of three decades ago was a national objective of such import to Volcker that as chairman of the Federal Reserve Board he was to tighten monetary policy to an unprecedented level of pain - raising the federal funds rate to 20%.
Yet on Tuesday, the chairman of the president's new Economic Recovery Advisory Board proposed an idea just as unpopular as his Fed policy of the days of yore - except that this policy would explode inflation.
Speaking at the New York Historical Society, Volcker claimed that Europe's infamous value-added tax was "not as toxic an idea as it has been in the past." Volcker reportedly added that "if at the end of the day we need to raise taxes, we should raise taxes."
* AND TO AN EXTENT I AGREE; THE EXTENT BEING THAT NO ONE SHOULD BE TOTALLY EXEMPT FROM FEDERAL TAXES - CERTAINLY NEARLY 50% OF AMERICANS SHOULDN'T BE PAYING NO FEDERAL INCOME TAXES!
* THAT SAID, IT'S THE SPENDING THAT'S THE PROBLEM; THE SPENDING MUST BE CUT!
Last fall, another former central bank chief, Alan Greenspan, also talked up tax hikes and called a VAT "the least-worst way."
* UNDERSTAND, FOLKS... THE TRULY RICH AND POWER - MEN LIKE VOLCKER AND GREENSPAN - THEY'LL ALWAYS HAVE OPPORTUNITIES NOT AVAILABLE TO YOU AND I TO "BEAT" INFLATION VIA "SPECIAL" (INSIDER) INVESTMENT OPPORTUNITIES WHICH WILL OUTPACE INFLATION WHATEVER IT IS. YOU AND I... THE MIDDLE CLASS... THE POOR... THOSE ON FIXED INCOMES... INFLATION MARKS THE DEATH KNELL TO OUR STANDARDS OF LIVING...
Even a supply-sider such as former Treasury economist Bruce Bartlett has cozied to the VAT...
* BARTLETT "TURNED" YEARS AGO. (HE'S A BUD OF DAVID FRUM; THAT SHOULD TELL YOU ALL YOU NEED TO KNOW.)
In "Impostor," his 2006 critique of George W. Bush's economic policies, Bartlett wrote: "In my view, the VAT lends itself to dealing with our long-term budget problem because it can be raised a little bit at a time without causing serious economic repercussions."
* OH... GREAT... "A LITTLE AT A TIME," HUH... (*ROLLING MY EYES*)
Lovers of big government have long yearned for a VAT, and statements made by House Speaker Nancy Pelosi make it clear that she is salivating for its enactment to pay for some of the Democrats' endless spending spree.
First cooked up by France, the VAT's hidden nature is what gets ordinary Americans justifiably furious when they hear talk of it. Steve Forbes and Elizabeth Ames, in their new book "How Capitalism Will Save Us," call the VAT "insidious because it imposes an invisible layer of taxation that inflates the cost of living...
* YEP!
"Not only are prices marked up by the amount of the VAT as soon as the tax goes into place," the economists add, "but there are second and third rounds of inflation as wages respond to higher prices through cost-of-living escalation. In 1979, when Britain raised its VAT rate while cutting income tax rates, a burst of inflation crippled the economy for several years."
http://www.nypost.com/p/news/opinion/opedcolumnists/vat_attack_RUxBOS7fspwKRdjNiWpXyO
[It has been] suggested...that it's time for America to adopt a VAT, or value-added tax.
The White House yesterday downplayed the idea, but it's sure to resurface: It's an inevitable consequence of a government that's too big now and likely to grow even bigger thanks to Washington's reckless spending spree.
The VAT - on top of all the other taxes Washington imposes - is a terrible idea. Imposing it would pretty well finish the transformation of our country into a European-style slow-growth nation. The right way to close Uncle Sam's gaping deficits is to reverse the continued explosion of federal spending.
* HEAR! HEAR!
The VAT is a type of national sales tax, levied on the value-added at each stage of production.
Consider a piece of furniture: The VAT would be imposed when the raw timber is sold, when the sawmill produces lumber, when the manufacturer builds a chair, a tax at the wholesaler level and then when a retailer sells the chair to a consumer. To avoid double taxation, each seller along the way gets a credit for taxes paid at earlier stages of the production process. So the final tax to the consumer, at least in theory, is the same as a retail sales tax of the same amount.
* TO TRANSLATE... (*SMIRK*)... WHEN ALL IS SAID AND DONE THE CONSUMER - MEANING YOU AND ME - PAYS 100% OF THE TAX.
The politicians want a VAT, and they want to keep the income tax. (To be more accurate, they want a VAT and to raise other taxes as well.) They want the cash, of course, so they can continue buying votes by spending other people's money.
This decade already has seen a huge expansion of government. In the Bush years, federal spending rose from $1.8 trillion in 2001 to $3.5 trillion in the last Bush budget. Now President Obama is well on the way to doubling outlays yet again.
He has already saddled the economy with $800 billion of "stimulus" and a giant new health-care entitlement, and his proposals for next year will push the federal budget even higher.
Meanwhile, our aging population and the built-in growth in federal programs like Medicare, Medicaid and Social Security has a dramatic expansion in the size of government set to occur automatically in coming decades.
Simply stated, there's no way to finance all this new spending without an added broad-based tax.
But this is exactly why we should vigorously resist a VAT.
* HEAR! HEAR!
Blocking a VAT may not be sufficient to control the size of government, but it's necessary. Handing Washington a whole new source of revenue would be akin to giving keys to a liquor store to a bunch of alcoholics.
* YOU FOLKS SHOULD READ MITCHELL'S (THE AUTHOR'S) FULL PIECE. HE PROVIDES ADDITION BACKGROUND AND "BEFORE AND AFTER" COMPARISONS BUTTRESSING HIS CASE.
http://www.bloomberg.com/apps/news?pid=20601039&sid=a2xng6J3TAdU
With more than $1 trillion of assets and about $973 billion of liabilities, the FHLB system is among the largest U.S. borrowers after the federal government, bigger even than Fannie Mae or Freddie Mac.
The Federal Home Loan Banks are a frequently overlooked band of government-chartered cooperatives whose name screams systemic risk with every word. Federal means Uncle Sam. Homes are a declining asset. A loan is money out the door. And banks are the things that get taxpayer bailouts when they’re too big to fail and enough of their loans go bad.
So perhaps it shouldn’t come as a surprise that these 12 regional lenders collectively suffered massive losses last year. What’s astonishing is that you wouldn’t know it by looking at their bottom-line earnings or from the strange way their regulator measures their capital cushions.
Last week, the FHLBs, which is pronounced “flubs,” published their combined audited financial statements for 2009. And at first glance, it might seem like they had a profitable year. Net income was about $1.9 billion, the banks said, up 54% from the year before.
The most striking part about that dollar figure was what it didn’t include: About $8.8 billion of paper losses from their portfolios of mortgage-backed securities. By the banks’ own description, these losses were “other than temporary,” meaning the values of the investments aren’t expected to recover soon.
The reason those losses weren’t included in earnings? The Financial Accounting Standards Board rewrote its rules a year ago so they wouldn’t have to count...
* HMM... "A YEAR AGO," HUH... NOW WHO WAS PRESIDENT A YEAR AGO... WHO WAS SPEAKER OF THE HOUSE A YEAR AGO... WHO WAS MAJORITY LEADER OF THE SENATE A YEAR AGO...?
The FASB rule change was one of the reasons cited by former U.S. Comptroller General Charles Bowsher when he resigned as chairman of the FHLBs’ Office of Finance in March 2009, saying he was uncomfortable vouching for the banks’ numbers.
Thanks to the FASB rule change, the banks got a new way to report phony profits, too. Before 2009, whenever companies wrote down debt securities that they labeled as held-to-maturity or available-for-sale, their earnings had to include any losses they deemed other than temporary.
Now they get to separate the writedowns into two parts: estimated future credit losses and everything else. The first kind reduces earnings and regulatory capital. The other doesn’t...
(*SMIRK*)
* LONG, COMPLICATED STORY SHORT... THE DEMS AND THE BANKING SPECULATORS ARE (AGAIN) WORKING HAND IN HAND.
http://finance.yahoo.com/news/Initial-jobless-claims-apf-355511092.html?x=0&.v=7
The number of newly laid-off workers seeking unemployment benefits rose last week... The Labor Department said Thursday that first-time claims increased by 18,000 in the week ending April 3, to a seasonally adjusted 460,000.
[T]he tally of people continuing to claim benefits for more than a week [is] 4.55 million... Slightly more than 5.8 million people were receiving extended benefits in the week ended March 20, the latest data available...
http://www.realclearmarkets.com/blog/Omnivest%204%206%202010.pdf
The gentle tiptoeing around the decision to publicly label China a “currency manipulator” relates directly to its ownership of $755.8 billon of US government debt. China is the next to largest owner of US debt, second only to Japan with a record $768.8 billion. It is no wonder that Treasury Secretary Geithner has delayed the timing of this important decision.
Heavy reliance on external funding for public finances is a very dangerous proposition.
The US did not become the largest debtor nation merely to provide investment instruments to global investors. We became the world’s largest debtor because Congress could not make difficult decisions about cutting wasteful spending.
Greece relies on external financing to fund its deficit, which is currently estimated to be 175% of GDP.
By way of comparison, Japan’s public debt is 192% of GDP, of which only 6% is financed with external funds. With so little debt financed externally, the Japanese government has nearly complete control over its interest rates. Conversely, Greece has to rely on external investors trusting their credit quality and financial resolve. As a result Japanese 10-year yields are only 1.38% while Greece must pay 7% for ten-year financing.
In the US, our external debt as a percent of GDP is a striking 96% and will likely continue to grow as US investors look for higher returns outside of the US or simply move away from low yielding Treasury debt.
It is important that US investors and government officials listen to what the markets are saying about Greece and develop a bit of humility about our own weakening financial condition. Two-year yields at 1.14% are not indicative of a country with a deficit at 10% of GDP and external debt at 96% of GDP. Any other country with these financial characteristics would suffer from credit rating downgrades. Investors would demand significantly higher risk premiums to continue to supply funds to such a larger debtor nation. The argument that it could never happen here because the US has the world’s largest and most liquid bond market is nearly laughable.
It is also very risky for US investors to look at “how strong the US dollar is against the euro” without looking at how weak the dollar is against most other currencies. A broadbased weakening of the dollar away from the euro should serve as a warning regarding our dependence on foreign capital inflows. Moreover, yields are rising for the US relative to Canada, Brazil, Mexico, France, Germany and the UK with little impact on supporting the US dollar. Perceptions about the stability of
US credit quality maybe shifting as US yields rise relative to our trading partners.
http://www.observer.com/2010/wall-street/wall-street-2-return-corzine
After a legendary 1998 Christmastime palace coup, Jon S. Corzine was ousted from Goldman’s helm.
The trader pivoted to a career in New Jersey politics, which ended this January after the senator-turned-governor lost reelection by more than 80,000 votes.
On Saturday, March 20, Goldman’s former chief executive was in a New York office building, touring the ninth-floor headquarters of an unremarkable futures brokerage named MF Global. Three days after the tour, he was named chairman and chief executive of the little-known company, which does not look or sound or make money like a serious full-service financial institution.
In fact, it’s lost money for four straight quarters.
Mr. Corzine thinks it can become something very different. It’s already applied, for example, to be one of the few firms that are allowed to deal directly with the Federal Reserve Bank of New York.
* HMM... WHAT DO YOU THINK THE ODDS ARE THAT THE VOTER OUSTED FORMER DEMOCRAT GOVERNOR (AND BTW, FORMER DEMOCRAT SENATOR BEFORE THAT) WILL HAVE HIS APPLICATION... umm... GRANTED...??? (*SNORT*) (*SMIRK*)
After Mr. Corzine was announced as the firm’s new leader, its stock price went up to nearly $9, well over its previous 52-week high.
* YEP. SEEMS THAT I'M NOT THE ONLY ONE CONFIDENT THAT CORZINE'S... er... SKILLS... WILL LEAD TO MF GLOBAL DOING... umm... WELL IN THE CURRENT... er... ENVIRONMENT. (*SNICKER*)
Mr. Corzine wants to grow the futures brokerage into a mini-Goldman...
* YEAH... (*SMIRK*)... I BET HE DOES...
http://www.forbes.com/forbes/2010/0426/investing-obama-tax-hikes-capital-gains-duck-obamatax.html?boxes=financechannellatest
With the enactment of an enhanced federal role in medical care comes the need for revenue enhancement. The age of the Obama tax hikes has officially begun.
The big news for high-income folks is a new 3.8% "Medicare" tax on investment income and an additional 0.9% Medicare tax on wages, both of which are to take effect in 2013. This tax is paid solely by the employee - on top of the current 2.9% Medicare payroll tax split evenly between employer and employee.
The 3.8% investment tax, combined with the expected (and Obama- favored) Jan. 1, 2011 expiration of the Bush tax cuts for high-income taxpayers, would produce a 2013 top federal income tax rate of 23.8% on long-term capital gains from the sale of securities, up from 15% now.
The top rate on interest, rents, royalties and certain "passive income" would rise to 43.4% from 35%. (Neither 2013 rate includes the return next year of the phaseout of itemized deductions for the better off, which can add one percentage point to both rates.)
Beginning next year money stashed in pretax FSAs, health savings accounts and health reimbursement accounts may no longer be used for over-the-counter medications other than insulin, unless prescribed by a doctor. [B]eginning in 2013, the amount you can shelter pretax in an FSA will be restricted to $2,500 a year, an amount that will then be indexed for inflation. (Currently there is no legal limit, and 78% of large employers set it at $5,000 or higher, according to Hewitt Associates.) (That means you should plan to put aside pretax money in 2011 or 2012 for such big-ticket items as orthodontia and Lasik surgery. You must have the procedure done that same year, since any pretax money not used each year is forfeited.)
* I GUESS IN OBAMA'S WORLD ONLY CHILDREN OF "THE RICH" GET BRACES.
* OH... SO NOW ACCORDING TO THE FEDS MY CONTACT LENS CLEANING SUPPLIES AND DAILY ASPIRIN FOR HEART HEALTH ARE NOT CONSIDERED LEGITIMATE "MEDICAL EXPENSES." MARY'S DOCTOR RECOMMENDED IRON PILLS ARE A NO-NO TOO. (*SMIRK*)
If you're well paid, don't marry another high earner. The marriage penalty was already pretty severe for upper-middle-incomers (with typical deductions, two $200,000 earners would see the second income kicked up from 28% and lower brackets to 33%). The penalty will get a lot worse, with a greater gulf between rates in the two highest brackets and rates in the brackets below.
* WHILE THE ARTICLE FOCUSES ON "THE RICH" ($200,000-PLUS EARNERS; $250,000/YR. COUPLES) IT'S STILL WORTH READING TO GET A GLIMPSE OF THE SMOKE AND MIRRORS OF THE TAX CODE AND HOW IT'S CONSTRUCTED TO FAVOR THOSE WITH THE BEST ACCOUNTANTS REGARDLESS OF INCOME.
* TWO-PARTER... (Part 1 of 2)
http://www.washingtontimes.com/news/2010/apr/08/voters-challenge-feds-on-rights-act/
Kinston [NC] voters decided overwhelmingly in a 2008 referendum to eliminate partisan elections, but the Justice Department stopped the change because the city is among 12,000 almost exclusively Southern voting districts that require department approval before making any changes to voting procedures.
In the November 2008 elections, the city had uncommonly high voter turnout, with more than 11,000 of the 15,000 registered voters casting ballots. In that election, residents voted by a margin of 2-to-1 to eliminate partisan elections in the city.
The measure appeared to have broad support among both white and black voters, as it won a majority in seven of the city's nine black-majority voting precincts and both of its white-majority precincts. About two-thirds of Kinston's 23,000 residents are black.
But before nonpartisan elections could be implemented, the city had to get approval from the Justice Department. In an Aug. 17 letter by [Loretta King, who at the time was the acting head of the Justice Department's civil rights division], the city received the department's answer: Elections must remain partisan because the change's "effect will be strictly racial."
Ms. King said that white voters in Kinston will vote for blacks only if they are Democrats and the city cannot get rid of party affiliations for local elections because that would violate black voters' right to elect the candidates they want. The department's decision in Kinston, which affects races for city council and mayor, went so far as to say partisan elections are needed so black voters can elect their "candidates of choice" - identified by the department as those who are Democrats and almost exclusively black.
"Removing the partisan cue in municipal elections will, in all likelihood, eliminate the single factor that allows black candidates to be elected to office," King wrote in a letter to the city.
Ms. King said that white voters in Kinston will vote for blacks only if they are Democrats and the city cannot get rid of party affiliations for local elections because that would violate black voters' right to elect the candidates they want.
* To be continued...
* BTW... FRIGG'N UNBELIEVABLE, HUH!
* CONTINUING... (Part 2 of 2)
[In response...] Several residents of Kinston, N.C., filed a lawsuit Wednesday challenging an Obama administration decision that the town must keep political parties in local elections because (*SNORT*) equal rights for black voters cannot be achieved without the Democratic Party.
* OH... BTW -- Ms. King is the same official who put a stop to the New Black Panther Party case, in which the department filed a civil complaint in Philadelphia after two members of the black revolutionary group dressed in quasi-military garb stood outside a polling place on Election Day 2008 and purportedly intimidated voters with racial insults, slurs and a nightstick. After a judge ordered default judgments against the Panthers, who refused to answer the charges or appear in court, the Justice Department dropped the charges against all but one of the defendants, saying, "The facts and the law did not support pursuing" them.
(*SMIRK*) NIGHTSTICKS, FOLKS... QUASI-MILITARY GARB AND NIGHTSTICKS.. (THE AGE OF OBAMA, BABY...!!!)
The lawsuit argues that Section 5 of the Voting Rights Act, which gives the federal government this power, is unconstitutional.
The Kinston lawsuit was filed in the wake of a key Voting Rights Act case that the Supreme Court heard last year. In that case, a small voting district in Texas challenged the constitutionality of Section 5, but the Supreme Court avoided ruling on the constitutional issue and opted instead to allow the Texas district an exemption from the law's requirements.
The court, in its 8-1 decision, did express concerns about the law. Justice Clarence Thomas issued a dissenting opinion saying Section 5 was unconstitutional.
"The historic accomplishments of the Voting Rights Act are undeniable, but the act now raises serious constitutional concerns," Chief Justice John G. Roberts Jr. wrote in the majority opinion. But he also said that the "importance of the question does not justify our rushing to decide it. Quite the contrary: Our usual practice is to avoid the unnecessary resolution of constitutional questions."
http://taxvox.taxpolicycenter.org/blog/_archives/2010/4/6/4498744.html
It appears that ["Obamacare"] will make it beneficial for many employers to drop their insurance coverage.
In 2014 and beyond - once federal money is available through the insurance exchanges - switching from employer coverage to the exchanges may benefit both employers and workers in a wide range of income levels.
The employer-provided system subsidizes health insurance mainly by exempting from tax the health benefits offered by employers. Before reform, unless you were elderly, disabled, or poor, this exclusion was probably the only health care subsidy available. But under the new law, the subsidy tied to the insurance exchanges will significantly exceed the tax benefit that low and middle income households get now. (Our analysis does not consider the implications for Medicaid, which creates a third subsidy system at the low-income end of the exchange.)
A worker whose household cash income is $60,000 in 2016 and who gets no health benefits from her employer would receive a subsidy equal to approximately $9,000.
Because the firm provides no health insurance, it must pay a $2,200 penalty, leaving a net gain of about $6,800. By contrast, a worker earning equal compensation who receives employer-provided insurance would receive a subsidy around $3,500 from the exclusion of health benefits from his taxable wages, leaving him more than $3,000 worse off than his counterpart whose employer offers no insurance.
* ARE YOU FOLLOWING THIS, FOLKS...??? RE-READ IF NECESSARY. LINK TO THE ORIGINAL "FORMATTING" OF THE ESSAY IF NECESSARY.
This pattern holds until compensation reaches about $84,000, at which point the two subsidies are about the same.
Workers earning more than $84,000 do better under the current employer-provided system than they will under the new system.
* THAT'S BECAUSE THEY'RE SUBSIDIZED UNDER THE CURRENT SYSTEM! FOLKS... UNDERSTAND... THE CURRENT "SYSTEM" IS TERRIBLY FLAWED - IT'S JUST THAT OBAMACARE MAKES THINGS WORSE... ADDS TO THE PRESENT DYSFUNCTION RATHER THAN SUBTRACTS FROM IT!
Except for the employer penalty for larger firms mentioned above, there are only limited mechanisms to stop employers from dropping coverage and allowing their employees to enter the exchange.
http://www.realclearpolitics.com/articles/2010/04/08/intersection_for_a_disaster_105096.html
This is justice under today's state capitalism: Ford took on $23.6 billion in debt to avoid becoming dependent on Washington, whereas GM shed much of its debt by becoming dependent. Washington...turned most of its $50 billion loan to GM into 60.8% ownership, the United Auto Workers got 17.5% for forgoing a $20 billion health care claim against the company, and Canada's government got an 11.7% stake for $9 billion.
* READ THE FULL ESSAY. IT'S PART HISTORY AND PART INDICTMENT. (YOU'VE ALREADY READ THE ENDING -- AMERICAN TAXPAYERS GET SCREWED.)
http://www.washingtontimes.com/news/2010/apr/08/epas-ginormous-power-grab/
Unless Congress acts quickly to curb the EPA's power, it will become a huge drag on the economy.
Few bodies are more deserving of cutbacks now. This year, EPA's budget (which had hovered at $7 billion to $8 billion since 1997) increased by 34% to more than $10 billion for the first time ever. The budget increase does not translate into an upsurge in staffing level...but instead represents much more patronage in the form of grants to states. This increased patronage comes at a time when the EPA is accruing much more power.
[Exhibit A: EPA's recent] finding under the Clean Air Act that greenhouse gases endanger public health and welfare goes way beyond the powers of the act.
[T]he EPA is ignoring the plain language of the statute and, in some cases, the constitutional requirements of the Supremacy Clause and separation of powers.
Congress may soon get its first real opportunity to rein in this rogue agency. Sometime between now and May 25, the Senate is expected to vote on [Republican] Sen. [of Alaska] Lisa Murkowski's Congressional Review Act (CRA) resolution of disapproval. This measure would veto the legal force and effect of EPA's endangerment finding.
A rogue regulatory agency is like an oil tanker with sails. Once in motion, it takes a lot to stop it. Congress can take the wind out of the EPA's sails through the Murkowski resolution of disapproval and a significant reduction in the agency's budget.
On the other hand, if the EPA gets away with this power grab, we can expect further abuses of its authority in relation to the Clean Water Act and the National Environmental Protection Act.
* TWO-PARTER... (Part 1 of 2)
http://reason.com/archives/2010/04/07/health-cares-history-of-fiscal
The Affordable Care Act - otherwise known as ObamaCare - isn't the first attempt to expand health insurance coverage in America. Before Washington passed its law, a number of states took smaller-scale cracks at the job - each of which proved far more expensive than planned.
As spectacular failures go, it's hard to do worse than Tennessee. In 1994, the first year of its operation, the system added half a million new individuals to its rolls. Premiums were cheap - just $2.74 per month for people right above the poverty line - and liberal policy wonks loved it. The Urban Institute, for example, gave it good marks for "improving coverage of the uninsurable or high-risk individuals with very limited access to private coverage."
At its peak, the program covered 1.4 million individuals - nearly a quarter of the state's population and more than any other state's Medicaid program - leaving just 6% of the state's population uninsured.
But those benefits came at a high price.
By 2001, the system's costs were growing faster than the state budget. The drive to increase coverage had not been matched by the drive to control costs. ... Spending on drug coverage, in particular, had gone out of control: The state topped the nation in prescription drug use, and the program put no cap on how many prescription drugs a patient could receive.
The result was that, by 2004, TennCare's drug benefits cost the state more than its entire higher education program.
Meanwhile, in 1998, the program was opened to individuals at twice the poverty level, even if they had access to employer-provided insurance.
In other words, the program's costs were uncontrolled and unsustainable.
By 2004, the budget had jumped from $2.6 billion to $6.9 billion, and it accounted for a quarter of the state's appropriations.
A McKinsey report projected that the program's costs could hit $12.8 billion by 2008, consuming 36% of state appropriations and 91% of new state tax revenues.
On the question of the system's fiscal sustainability, the report concluded that, even if a number of planned reforms were implemented, the program would simply "not be financially viable."
Democratic Gov. Phil Bredesen declared the report "sobering," and, rather than allow the state to face bankruptcy, quickly scaled the state back to a traditional Medicaid model, dropping about 200,000 from the program in a period of about four months.
Though the state still calls its Medicaid program TennCare, Bredesen's decision to scale back effectively shut the program down. In 2007, he told the journal Health Affairs, "The idea of TennCare, as it was implemented, failed."
* To be continued...
* CONTINUING... (Part 2 of 2)
Maine took a different route to expanding coverage, but it also resulted in failure. In 2003, the state started Dirigo Care, which, it was promised, would cover each and every one of the state's 128,000 uninsured by 2009. The program was given a one-time $53 million grant to get things started, but was intended to be eventually self-sustaining.
It wasn't.
Indeed, the program managed the neat trick of drastically overshooting cost projections while drastically undershooting coverage estimates.
In 2009, the year in which the program was to have successfully covered all of the uninsured, the uninsured rate still hovered around 10% - effectively unchanged from when the program began. Taxpayers and insurers, however, had picked up an additional $155 million in unexpected costs - all while the state was wading deeper into massive budget shortfalls and increased debt.
The program has not been shut down, but because expected cost-savings did not materialize, it's been all but abandoned. As of September 2009, only 9,600 individuals remained covered through the plan.
And then there is the Massachusetts plan...
The state's health care program has successfully expanded coverage to about 97% of the state's population, but the price tag may be more than the state can bear.
When the program was signed into law, estimates indicated that the cost of its health insurance subsidies would be about $725 million per year. But by 2008, those projections had been revised.
New estimates indicated that the plan was to cost $869 million in 2009 and $880 million in 2010, an upwards increase of nearly 20%.
More recently, the governor's office announced a $294 million shortfall on health care funds, and state health insurance commissioners have warned that, on its current course, the program may be headed for bankruptcy.
According to an analysis by the Rand Corporation, "in the absence of policy change, health care spending in Massachusetts is projected to nearly double to $123 billion in 2020, increasing 8% faster than the state’s gross domestic product."
The state's treasurer, a former Democrat who recently split with his party, says that the program has survived only because of federal assistance.
The history of health coverage expansion should make us worry. If ObamaCare's actual fiscal effects look anything like previous efforts to expand health coverage, the federal budget is in for a world of hurt.
http://www.politico.com/news/stories/0410/35515.html
Behind the scenes, [Former Treasury Secretary Robert ] Rubin still wields enormous influence in Barack Obama’s Washington, chatting regularly with a legion of former employees who dominate the ranks of the young administration’s policy team.
He speaks regularly to Treasury Secretary Timothy Geithner, who once worked for Rubin at Treasury.
[Rubin] is still dealing with the fallout from his post-[Clinton] White House career.
He took a job at Citigroup, where the bank’s collapse was averted only by the injection of $45 billion in taxpayer bailout cash.
[O]n Thursday, he had to answer for his actions at Citigroup before the congressionally created Financial Crisis Inquiry Commission, which is exploring the roots of the 2008 global meltdown. Rubin said he “deeply regrets” that he didn’t see the financial crisis coming in his role as a $15 million per year senior financial statesman at Citigroup.
* WELL, THEN... AS LONG AS HE "DEEPLY REGRETS" HIS PART IN DESTROYING THE AMERICAN ECONOMY BY ALL MEANS LET'S MAKE HIM A SENIOR "BEHIND THE SCENES" ADVISOR TO GEITHNER AND THUS OBAMA! (*SNICKER*)
“Almost all of us involved in the financial system, including financial firms, regulators, ratings agencies, analysts and commentators missed the powerful combination of forces at work and the serious possibility of a massive crisis,” Rubin said.
* SO WHY WOULD THE POTUS WANT AN ADMITTED INCOMPETENT ADVISING HIM...??? (*SIGH*) (*HEADING TO THE LIQUOR CABINET*)
“We all bear responsibility for not recognizing this, and I deeply regret that.”
* OH... IF ONLY RUBIN WAS JAPANESE... (*SMIRK*) HEY... BOB... EVER HEAR OF SEPPUKO...?!?!
The long list of Rubin acolytes working for Obama includes National Economic Council Director Larry Summers, Geithner counselor Gene Sperling, Budget Director Peter Orszag, Deputy Assistant to the President Michael Froman (who worked with Rubin at Treasury and at Citigroup), National Economic Council official Jason Furman, Deputy National Security Adviser Tom Donilon and Gary Gensler, the head of the Commodity Futures Trading Commission. Summers and many of the other officials also get regular phone calls from Rubin.
(*HEADING BACK TO MY LIQUOR CABINET FOR A REFILL*)
Rubin’s critics say they see his fingerprints on proposals in Obama’s regulatory reform agenda. Obama would force derivatives trades onto a public exchange — but still leave Wall Street free to keep “nonstandard” trades hidden from public view. And critics complain that the administration’s resistance to calls to break up the too-big-to-fail banks is classic Rubin.
(Rubin declined to comment.)
“This is the guy whose policies basically allowed Wall Street to play Russian roulette with our future, and now millions of Americans are out of work as a result,” said Daniel Pedrotty, director of the AFL-CIO’s office of investment. “He took his money and fled the scene of the crime.”
* ISN'T IT AMAZING HOW MANY TOTAL INCOMPETENTS FROM THE CLINTON ADMINISTRATION ARE TODAY MULTI-MULTI MILLIONAIRES...??? JUST SAY'N...
Executive pay is one area in which Rubin is very likely to come under fire from the commission. New York Times columnist Andrew Ross Sorkin excoriated Rubin on Tuesday for giving outgoing Citi CEO Chuck Prince a $12.5 million bonus even though the company was nearly destroyed under Prince’s leadership.
In his book “The Sellout,” Charles Gasparino argues that Rubin was largely responsible for driving Citigroup’s appetite for risky trades into dangerous territory.
Today, Rubin spends the bulk of his time in an office he pays for himself at the Council on Foreign Relations headquarters in New York’s Upper East Side. As co-chairman of the board, he spends his time talking about China and Russia with Henry Kissinger and African development ideas with Kofi Annan.
* KOFI ANNAN OF "OIL FOR FOOD SCANDAL" FAME... (I WONDER IF KOFI'S SON OFTEN SITS IN ON THESE... er... MEETINGS?)
http://blog.heritage.org/2010/04/07/morning-bell-how-the-left-really-plans-to-pay-for-obamacare/?utm_source=Newsletter&utm_medium=Email&utm_campaign=Morning%2BBell
According to the Congressional Budget Office (CBO), over half of President Barack Obama’s new $940 billion health care entitlement is paid for by price-fixing Medicare cuts.
(Never mind that the President’s own Centers for Medicare and Medicaid Services says that these cuts would cause “roughly 20 percent” of Medicare providers to go bankrupt in Obamacare’s first ten years.)
The CBO has to believe these cuts will happen because they are required, by law, to believe everything Congress tells them.
The American people are not.
So the American people ought to know that instead of cutting doctors’ Medicare reimbursement rates by 21% as required by law on April 1, the Centers for Medicare and Medicaid Services froze payments at current levels until Congress could come back after Easter recess and rescind those cuts.
Again.
As they have done every year but one since the cuts were first enacted in 1997.
This doc fix is big enough that, if it had been included as a cost of Obamacare, it would have sent the President’s bill into the red all by itself. But the half trillion dollars in Medicare cuts used to fund the rest of Obamacare are a much bigger problem.
Even if we assume they all go as planned, President Obama’s budget would borrow 42 cents for each dollar spent in 2010; would run a $1.6 trillion deficit in 2010; and would leave permanent deficits that top $1 trillion as late as 2020.
Add on the half trillion dollars in Medicare cuts that, given Congress’ track record, the American people would be naive to think will ever happen, and the federal government is looking at a pile of new debt.
Real federal spending remained steady at $21,000 per household throughout the 1980s and 1990s, before President Bush hiked it to $25,000 per household.
Now, President Obama has a proposed a budget that would permanently spend a staggering $32,000 per household annually – and that’s before all the baby boomers retire and add another $10,000 per household in Social Security, Medicare, and Medicare costs to the bottom line. [T]he problem is not declining revenues, but rather a spending spree unlike any in American history. If Washington insists on spending $32,000 per household, it will have to tax $32,000 per household – an unaffordable and unfair tax burden regardless what kind of tax collects it.
Simply bringing real federal spending back to the $21,000 per household average that prevailed in the 1980s and 1990s would balance the budget by 2012 without raising a single tax on anyone. Even returning spending to the pre-recession level of 20% of GDP would eliminate two-thirds of the projected 2019 budget deficit without raising taxes.
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