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August 31, 2009

Thought for the Day

"Health care and insurance are service-oriented, retail businesses. There is only one way to reduce costs in such a business: intense competition for every customer. The idea that the federal government can reduce costs by negotiating harder or telling businesses what to do is a triumph of hope over centuries of experience."

    ~ John H. Cochrane, Professor of Finance, University of Chicago

HT Wall Street Journal column

August 30, 2009

Is He Wrong Again?

Yesterday we growled, and compared the defense of the “public option” health care alternative by Arlington County’s Congressional representative, Rep. Jim Moran (D) with the Indian Health Service, which the federal government has been running for decades.

Today, let’s look at Rep. Moran’s defense of preventive care in the House version of health care reform legislation, i.e., H.R. 3200 (requires Adobe). During Thursday’s Washington Post online forum with Rep. Moran, a Falls Church resident asked, “Are there any provisions that focus on preventative care over medical treatment after the fact?” Rep. Moran 's answer, “Preventive care will be fully reimbursed and emphasized under the reform bills.”

But in today’s Washington Examiner, Sally Pipes, president and CEO of the Pacific Research Institute and author of “The Top Ten Myths of American Health Care,” writes, “An ounce of prevention is no cost-saving cure.” More specifically, she writes:

“Yet there are some inconvenient truths facing would-be reformers who tout prevention as if it were a bottle of "Dr. Feel-Good's Incredible Health-Promoting, Cost-Saving Elixir." The facts suggest that Americans have plenty of reason to be reluctant to swallow what politicians are trying to sell.

“The most recent warning came from the Congressional Budget Office. The nonpartisan agency has issued a study that debunks the claim that preventive care for all Americans would translate into substantial savings for the federal government.

“To the contrary, the CBO noted, ‘Researchers who have examined the effects of preventive care generally find that the added costs of widespread use of preventive services tend to exceed the savings from averted illness.’”

Let’s look at just one of the examples Pipes provides:

“The CBO isn't alone in its assessment. According to Alan Garber, the director of the Center for Health Policy at Stanford University, "the few studies that have compared preventive care to treatment have shown that either form of care can be cost-effective -- or not -- depending on how it's used. There's no magic to the idea of prevention, except that it sounds good."

“In a report published last year in the New England Journal of Medicine, researchers analyzed some 600 studies done since 2000 assessing the value of preventive care. They concluded that although about 20 percent of preventive measures -- including flu shots and colorectal cancer screenings -- did save money, "the vast majority reviewed in the health economics literature do not."

“One reason why? Prevention programs spend a lot of money targeting people who are perfectly healthy. Say, for example, that in screening 500,000 people, health workers find one person whose ailment can be pre-empted before it develops into a costly, life-threatening condition.

“They might save, say, $50,000 on late-stage treatment for that patient. But they will have spent much more than that to test the other 499,999 people who were just fine.”

You're 0-2, Rep. Moran. Batter up!

August 29, 2009

"Public Option" Health Care and False Promises

U.S. Rep. Jim Moran (D) was online with the Washington Post on Thursday “to discuss health-care reform and his support of the public option.” A search of the Post’s reporting of the questions and answers included 14 instances of “public option.” One of many particularly interesting exchanges with Rep. Moran was the following:

“Fairfax, Va.: Why isn't the case being made more forcefully that our current system of "unsocialized" medicine is more expensive than any country on earth? We spend more on health care as a percentage of GDP than anybody, including countries with so-called government-run medicine, yet all we hear from conservatives and moderates is that we can't afford reform. Who is making the case that we can't afford NOT to reform the system?

“Rep. Jim Moran: You make a good point. In fact, while the U.S. spends by far the most, we are not getting the best health care by a long shot, ranking 24th out of the 30 industrial countries in life expectancy and 28th in infant mortality.

“Incidentally, the insurance companies this year stated that they intend to increase their insurance premiums by an average of 10.5%. This at a time when there is virtually no inflation in the rest of the economy.”

Those who think the ‘public option’ alternative is so great may want to look at just how government-run health care facilities actually work. Not in Canada or England, but right here in America. This weekend’s Wall Street Journal does just that in a piece written by Terry Anderson, and he describes the Indian Health System this way:

“Native Americans have received federally funded health care for decades. A series of treaties, court cases and acts passed by Congress requires that the government provide low-cost and, in many cases, free care to American Indians. The Indian Health Service (IHS) is charged with delivering that care.

“The IHS attempts to provide health care to American Indians and Alaska Natives in one of two ways. It runs 48 hospitals and 230 clinics for which it hires doctors, nurses, and staff and decides what services will be provided. Or it contracts with tribes under the Indian Self-Determination and Education Assistance Act passed in 1975. In this case, the IHS provides funding for the tribe, which delivers health care to tribal members and makes its own decisions about what services to provide.”

And here is how Anderson describes the results:

“The IHS spends about $2,100 per Native American each year, which is considerably below the $6,000 spent per capita on health care across the U.S. But IHS spending per capita is about on par with Finland, Japan, Spain and other top 20 industrialized countries—countries that the Obama administration has said demonstrate that we can spend far less on health care and get better outcomes. In addition, IHS spending will go up by about $1 billion over the next year to reach a total of $4.5 billion by 2010. That includes a $454 million increase in its budget and another $500 million earmarked for the agency in the stimulus package.

“Unfortunately, Indians are not getting healthier under the federal system. In 2007, rates of infant mortality among Native Americans across the country were 1.4 times higher than non-Hispanic whites and rates of heart disease were 1.2 times higher. HIV/AIDS rates were 30% higher, and rates of liver cancer and inflammatory bowel disease were two times higher. Diabetes-related death rates were four times higher. On average, life expectancy is four years shorter for Native Americans than the population as a whole.

“Rural Indians fare even worse . . . According to IHS statistics, in Montana and Wyoming, Indians suffer diabetes at rates 20% higher, heart disease 12% higher, and lung cancer rates 67% higher than the average across all IHS regions in the country. A recent Harvard University study found that life expectancy on a reservation in neighboring South Dakota was 58 years. The national average is 77.”

So much for politicians' promises and solutions! Or perhaps the caller from Arlington was correct in saying to Rep. Moran, "I think some people just want to be able to walk into any clinic or hospital without ever having to personally pay anything out of their wallet."

August 28, 2009

What About Their Environmentalist Brownie Points?

Since 2000, spending on lobbying has more than doubled, and from 1998 to 2009, lobbying by General Electric has been the third most prolific spender, having spent almost $184 million, according to Mark Perry’s Carpe Diem blogsite.

In his column today at the Washington Examiner, Tim Carney explains “how GE green lobbying is killing U.S. factory jobs." Carney focuses on a GE incandescent light bulb plant in Winchester, Virginia, which will close next July since GE is replacing incandescents with compact fluorescent bulbs manufactured in China.

According to Carney:

“GE blamed environmental regulations for the closing. The first paragraph of the company’s July 23 press release explained:

“A variety of energy regulations that establish lighting efficiency standards are being implemented in the U.S. and other countries, in some cases this year, and will soon make the familiar lighting products produced at the Winchester Plant obsolete.”

“The U.S. legislation in question was a provision in the 2007 energy bill that required all bulbs sold in the U.S.—beginning in 2012 for some wattages—to meet high efficiency standards.”

[ . . . ]

“So, GE gets environmentalist brownie points for selling “clean” light bulbs, and they also get to charge more for their bulbs. But there’s another advantage—they save on labor with fluorescents, because they make the fluorescents in China.

“Not only are wages lower there, but so are the regulatory burdens, both environmental and labor. The Times of London recently reported, “Large numbers of Chinese workers have been poisoned by mercury, which forms part of the compact fluorescent lightbulbs.”

But what about all that spending on lobbying? That’s explained in Carney’s column in the Examiner on Wednesday. He cites a leaked e-mail written by GE’s vice-chairman:

"On climate change," Rice wrote, "we were able to work closely with key authors of the Waxman-Markey climate and energy bill, recently passed by the House of Representatives. If this bill is enacted into law it would benefit many GE businesses."

“Most of all, Waxman-Markey would profit a GE joint venture called Greenhouse Gas Services, which deals in greenhouse gas credits, products that have value only if a cap-and-trade bill like Waxman-Markey passes.
The leaked e-mail shows how tightly GE connects PAC contributions and lobbying efforts. "Our Company is heavily impacted by a number of issues pending in Washington this fall," Rice wrote.

Rent seeking? As economist David Henderson writes at the Concise Encyclopedia of Economics:

“People are said to seek rents when they try to obtain benefits for themselves through the political arena. They typically do so by getting a subsidy for a good they produce or for being in a particular class of people, by getting a tariff on a good they produce, or by getting a special regulation that hampers their competitors.”

August 27, 2009

A Trillion Here, A Trillion There . . .

This week’s spending and debt news brought to mind the following quotation by the late U.S. Senator Everett Dirksen (R-Illinois), i.e., “A billion here and a billion there, and soon you’re talking about real money.”

The Wall Street Journal sub-titled an editorial this week this way:

“Even $9 trillion might be too optimistic on current spending trends.”

The newspaper described their concern this way:

“Mr. Obama's White House and the Congressional Budget Office told us that current U.S. fiscal policy is "borrow and spend" on a hyperlink. The good news is the deficit for 2009 will be "only" $1.58 trillion, about $250 billion lower than expected thanks to less need for TARP funds. But the Obama fiscal plan envisions $9 trillion in new borrowing over the next decade, which is $2 trillion more debt than the White House predicted earlier this year. The 2010 deficit also rises by about as much as the 2009 deficit falls from January, so even the TARP windfall gets spent.

“We've never fretted over budget deficits, at least if they finance tax cuts to promote growth or spending to win a war. But these deficit estimates are driven entirely by more domestic spending and already assume huge new tax increases. CBO predicts that debt held by the public as a share of GDP, which was 40.8% in 2008, will rise to 67.8% in 2019—and then keep climbing after that. CBO says this is "unsustainable," but even this forecast may be optimistic.

“Here's why. Many of the current budget assumptions are laughably implausible. Both the White House and CBO predict that Congress will hold federal spending at the rate of inflation over the next decade. This is the same Democratic Congress that awarded a 47% increase in domestic discretionary spending in 2009 when counting stimulus funds. And the appropriations bills now speeding through Congress for 2010 serve up an 8% increase in domestic spending after inflation.”

Earlier this month, Investor’s Business Daily saw some of the problem when they wrote:

“Federal tax revenues have shrunk by the largest amount since the Great Depression, according to new data. This should come as no surprise, since we've been running a Depression-era economic policy.”

Brian Riedl closes a Heritage Foundation “web memo” this week saying, “It’s time to stop digging.” His conclusion:

“The new budget spending estimates are alarming and absolutely unsustainable--and are the true cause of these appalling levels of deficit and debt. President Obama has proposed massive tax increases that still cannot keep up with the historic spending increases he has proposed. The result will be highest level of spending--and debt--in American history. Within a decade, Washington would have to spend nearly $800 billion annually just to pay the interest on the national debt.

“In this budget context, the President's and Congress's brazen proposals to create a $1 trillion health care entitlement are reckless and unaffordable. Lawmakers should focus on capping federal spending, restraining entitlements, and eliminating wasteful and lower-priority programs.”

Here’s a chart from the Wall Street Journal story that shows how debt as a percentage of GDP is expected to grow through 2019. In addition, here are links to the Congressional Budget Office Director’s blog “comparing CBO and OMB’s projections of the budget deficit” and “the budget and economic outlook.” Victor Davis Hanson seemingly hits the nail on the head on the cause of all this spending with this essay in yesterday's National Review Online. Even the Washington Post reported that the new higher estimates are likely to fuel the president's critics.

HT Mark Levin Show 

August 26, 2009

Hey, It's Only Our Money

Citizens Against Government Waste (CAGW) named Rep. Neil Abercrombie (D-Hawaii) its Porker of the Month for August 2009, according to this CAGW press release. CAGW points out that Abercrombie is a “multiple threat to taxpayers,” specifically:

“He ranked first in earmarks in the House in fiscal year (FY) 2009 with 44 projects worth $256.8 million and fifth in the House in FY 2008 with 29 projects worth $153.6 million.”

CAGW explains in greater detail their decision to designate Abercrombie as their August Porker of the Month:

“Rep. Abercrombie’s latest outrage is to slip a provision (Sec. 2833) into the House version of the 2010 Defense Authorization Act that would double the construction costs of relocating 11,600 U.S. troops from Japan to Guam. The original cost estimate was $15 billion, $10 billion of which is associated with construction of living quarters for military personnel and their families. However, Sec. 2833 requires that the wages paid to construction workers match the “prevailing” wages in Hawaii, which are 250 percent higher than those on Guam. The Congressional Budget Office estimates this would increase need for discretionary appropriations by about $10 billion over the 2010-2014 period.”

“OpenSecrets.org lists the Hunt Building Company, which is headquartered in Texas and would be one of the prime builders of the facilities on Guam, as among Abercrombie’s top five campaign contributors in the 2007-2008 election cycle. The Hawaii Free Press reported on August 4 that Hunt has contributed at least $32,500 to Abercrombie’s re-election since 2002.”

I don’t know the ethics rules of the House, but Abercrombie’s little quid pro quo with the Hunt Building Company sure seems like a possible ethics violation that should be investigated. But, hey, it’s only taxpayer money that is being squandered.

If you're outraged at how Rep. Abercrombie spends your taxers, call his office on Capitol Hill at (202) 225-2726.

August 25, 2009

And We Would Let Them Manage Healthcare?

During his talk show this evening, Mark Levin read a Fox News article, a portion of which follows:

“The federal government mistakenly sent out stimulus checks to 1,700 inmates, the Social Security Administration said Tuesday -- a $425,000 error.

“Social Security spokesman Dan Moraski told FOXNews.com in a written statement that the money went out because official records "did not accurately reflect that they were in prison."

“The inspector general's office for the Social Security Administration is now looking into the problem as part of its broader audit on stimulus spending. The Social Security Administration acknowledged the glitch following a report that nearly two-dozen inmates in Massachusetts had wrongly received the $250 stimulus checks.

“Even before the agency disclosed that the problem was more widespread, the discovery prompted complaints from Republicans critical of the $787 billion stimulus and the way it has been managed.”

Other than the U.S. military, is there an agency of the federal government that you would buy a used car from? Oh no, the U.S. Department of Transportation can’t even run "cash for clunkers.”

HT Mark Levin Show

August 24, 2009

Thought for the Day

"Health care and insurance are service-oriented, retail businesses. There is only one way to reduce costs in such a business: intense competition for every customer. The idea that the federal government can reduce costs by negotiating harder or telling businesses what to do is a triumph of hope over centuries of experience."

    ~ John H. Cochrane

HT Op-ed, Wall Street Journal 

August 23, 2009

Something to Think About

“Always love your country — but never trust your government!

"That should not be misunderstood. I certainly am not advocating civil disobedience, (much) less insurrection or rebellion. What I am advocating is to not expect too much from government and be wary of its power, even the power of a democratic government in a free country.

"Ours is one of the mildest, most benevolent governments in the world. But it too has the power to take your wealth and forfeit your life. ... A government that can give you everything can take everything away.”

    ~ Robert Novak

HT Chicago Sun-Times Editorial Board

August 22, 2009

Kudos to an Augusta County Conservative

Last Sunday, Ed Morrissey wrote at Hot Air “that New Hampshire’s media had taken notice that their Congressional delegation had gone missing during the August recess, rather than hold town-hall meetings to face their constituents about the health-care reform package.  I joked that they had put Paul Hodes, Carol Shea-Porter, and Jean Shaheen on milk cartons, a reference to the admirable effort of milk producers to help find missing children.”

Today’s Waynesboro New Virginian suggests that Virginians need to consider putting the pictures of Senators Jim Webb (D) and Mark Warner (D) on milk bottles sold in Virginia.In their story, the paper told of the efforts of an Augusta County conservative who had unsuccessfully tried to obtain answers to questions in the heath care legislation currently in Congress. As a result, he decided to put his money where his mouth is. According to the News Virginia:

“Karaffa has decided to pay $275 and reserve the Riverheads auditorium for Sept. 6 and invite the two senators to speak to Shenandoah Valley residents.

“I decided to do everything short of picking them up and give them the opportunity to speak to constituents in the Valley. They are not speaking anywhere in the state and it’s their responsibility to speak,’’ Karaffa said.”

Congratulations to Mr. Karaffa for his efforts to engage Virginia’s two senators on this important topic.

By the way, Rep. Jim Moran (D), joined by former presidential candidate Dr. Howard Dean, has schedule a health care town hall event on Tuesday, August 25, 2009 for residents of Virginia’s 8th district. Here’s the “when” and “where;” the “what and why are at Moran’s website.

  • When: Tuesday, August 25, 2009, 7:00PM - 9:00PM
     -- Doors open at 6:00PM
  • Where: South Lakes High School, Auditorium
     -- 11400 South Lakes Drive, Reston, Virginia

Encourage Senators Webb and Warner to hold town hall meeting on health care by writing or calling their offices, and write or call Rep. Moran, too, and encourage him to hold additional town hall meetings on health care.

  • Senator Mark Warner (D) -- write to him or call (202) 224-2023
  • Representative Jim Moran (D) -- write to him or call (202) 225-4376

August 21, 2009

Yes Virginia, Global Warming will not be Catastrophic!

Earlier this week, the Science and Public Policy Institute (SPPI) announced “the publication of a major peer-reviewed paper by Professor Richard Lindzen of MIT, demonstrating by direct measurement that outgoing long-wave radiation is escaping to space far faster than the UN predicts, and proving that the UN has exaggerated global warming 6-fold.”

The SPPI press release described the paper this way:

“Lindzen’s paper on outgoing long-wave radiation shows that the “global warming” scare is over. Thanks to recent peer-reviewed papers that have not been mentioned in themainstream news media, we now know that the effect of CO2 on temperature is small, we now why it is small, and we know that it is having very little effect on the climate.”

Among the findings in the July 2009 issue of SPPI’s “Monthly CO2 Reports” were the following:

  • “The IPCC assumes CO2 concentration will reach 836 ppmv by 2100, but, for almost eight years, CO2 concentration has headed straight for only 570 ppmv by 2100. This alone halves all of the IPCC’s temperature projections.
  • Since 1980 temperature has risen at only 2.5 °F (1.5 °C)/century, not the 7 F° (3.9 C°) the IPCC imagines.
    “Sea level rose just 8 inches in the 20th century and has been rising at just 1 ft/century since 1993. Sea level has scarcely risen since 2006. Also, Pacific atolls are not being drowned by the sea, as some have suggested.
  • “Arctic sea-ice extent is about the same as it has been at this time of year in the past decade. In the Antarctic, sea ice extent – on a 30-year rising trend – reached a record high in 2007.
  • “Global sea ice extent shows little trend for 30 years.
  • “Hurricane and tropical-cyclone activity is at its lowest since satellitemeasurement began.
  • “Solar activity has declined again, after a large sunspot earlier in themonth. The Sun is still very quiet.
  • “The (very few) benefits and the (very large) costs of theWaxman/Markey Bill are illustrated. The Bill would cost trillions and achieve nothing.
  • “Science Focus this month studies the effect of the Sun on the formation of clouds. IT’S THE SUN, STUPID!

The full report is accessible with the link at the bottom of the press release. 

Will Congress and the media stop pandering to the global warming alarmists, and junk the Waxman-Markey job-killing, economy-arresting so-called energy legislation now in the U.S. Senate? If you agree, call or write Virginia’s two senators: Jim Webb and Mark Warner.

  • Senator Mark Warner (D) -- write to him or call (202) 224-2023

August 20, 2009

Can Congress Continue Ignoring Entitlements?

We growled on July 16 that the federal budget is on an unsustainable path, citing the Congressional Budget Office director’s testimony to the Senate Budget Committee.

On July 29, the Heritage Foundation published a “web memo” by Nicola Moore that focused on the role of entitlements - with the three major ones being Social Security, Medicare and Medicaid, and emphasized:

“Solving America's deficit problem is an impossible task unless entitlement programs are reformed. The current recession, which has put a finer point on the problem of trillion-dollar deficits, should elevate the need for reform to a level not even Congress can continue to ignore.”

Ms. Moore concludes the essay saying:

“Congress ought to take the warnings issued in the CBO's "Long-Term Budget Outlook" seriously. Adding new entitlements, such as national health care, or ignoring the need to reform existing ones while claiming to care about fiscal responsibility will be disingenuous at best and economically debilitating at worst.”

With so much written recently about members of Congress unwilling to read 1,000+ pages of legislation, citizens must wander if their Congressional representatives have even bothered reading the CBO director’s budget outlook. Or worse still, do they even understand the meaning of this Heritage Foundation chart below.


August 19, 2009

State Mandates and the Cost of Healthcare

Steve Malanga, a senior fellow at the Manhattan Institute, discusses “one of the problems with the health insurance reform debate” in his column today at RealClearMarkets, and explains:

“State government mandates and favorable tax treatment in Washington have so distorted the market for health insurance that a generation of Americans now look on medical coverage as something very different from other kinds of insurance that we buy.”

In just one of several explanatory paragraphs of how health insurance differs from other types of insurance purchased by most Americans, Malanga writes:

“Consider auto insurance, which is typically required of us by states, and home insurance, which mortgage lenders demand. Both give us protection from financial ruin at more reasonable prices than health insurance because our options are greater and the scope of the coverage narrower. When we buy home insurance we are essentially purchasing security against a catastrophic event that could cost us our investment in our home and possibly ruin us financially. We don't expect this insurance to cover everything that goes wrong on the property. Instead, we accept that we will pay out of our own pockets the tradesmen who come and install our new water heater, fix our electrical short-circuits and repave our driveway. Many of us haven't gotten a health care bill in years equal to what we paid the plumber for his last visit because the cost of a home insurance policy that covered every leak and crumbling piece of pavement would be prohibitive.”

We’ve growled before that there are things Congress can do to increase access to, as well as reduce the cost of, health care, e.g., here. Malanga reinforces the fact that before Congress legislates the takeover of one-sixth of the U.S. economy, they should look at the "small" things that can be done to reduce the cost, and increase access to, America’s incomparable healthcare system.

August 18, 2009

Why Big Government Hurts Economic Growth

The Center for Freedom and Prosperity released a video yesterday that talks about the eight reasons “why excessive government spending undermines economic performance.”

Narrated by Dan Mitchell of the Cato Institute, “the video uses macroeconomic and microeconomic analysis to explain why the Bush-Obama policies of bigger government hinder the economy's long-run vitality.” Here’s the ‘executive summary' of the video, titled, “Eight Reasons Why Big Government Hurts Economic Growth”:

“This Center for Freedom and Prosperity Foundation video analyzes how excessive government spending undermines economic performance. While acknowledging that a very modest level of government spending on things such as "public goods" can facilitate growth, the video outlines eight different ways that that big government hinders prosperity. This video focuses on theory and will be augmented by a second video looking at the empirical evidence favoring smaller government.”

It’s 8 minutes, 39 seconds, and provides a succinct explanation for opposing big government, whether that big government involves socialized medicine or cap-and-trade's job-suppressing, global warming, energy legislation.

August 17, 2009

Something to Think About

“Only the mob and the elite can be attracted by the momentum of totalitarianism itself. The masses have to be won by propaganda.”

    ~ Hannah Arendt, Philosopher and Author

HT OnPower.org

August 16, 2009

Nationalizing Your Body

Last Thursday, we growled about the Left, healthcare, and freedom, and cited a few paragraphs from a column by the inimitable Mark Steyn. In this weekend’s column at National Review Online, he returns to the subject of healthcare, saying, “Ultimately, government health represents the nationalization of your body.” As only Steyn can, he zeros in on the real point at issue:

“The problem with government health systems is not that they pull the plug on Grandma. It’s that Grandma has a hell of a time getting plugged in in the first place. The only way to “control costs” is to restrict access to treatment, and the easiest people to deny treatment to are the oldsters. Don’t worry, it’s all very scientific. In Britain, they use a “Quality-Adjusted Life Year” formula to decide that you don’t really need that new knee because you’re gonna die in a year or two, maybe a decade-and-a-half tops. So it’s in the national interest for you to go around hobbling in pain rather than divert “finite resources” away from productive members of society to a useless old geezer like you. And you’d be surprised how quickly geezerdom kicks in: A couple of years back, some Quebec facilities were attributing death from hospital-contracted infection of anyone over 55 to “old age.” Well, he had a good innings. He was 57.”

Even more directly, Steyn concludes the column saying:

“President Obama has wondered whether (the current system) is a “sustainable model.” But from your point of view, what counts is not whether the model’s sustainable but whether you are. I am certainly in favor of reform. I would support a Singapore-style system of personal health accounts — and Singapore, for Mayor Bloomberg’s benefit, has the third-highest life expectancy in the world. But, under any government system that interjects a bureaucracy between you and your health, the elderly and not-so-elderly get denied treatment. And there’s nothing you can do about it because, ultimately, government health represents the nationalization of your body. You’re 84, 72, 63, 58, you’ve had a good innings. It’s easy for him to say. And even easier for his army of bureaucrats.”

August 15, 2009

The Economic Cost of Congressional Gobbledegook

Yesterday, we growled about a few of the tax provisions in the House of Representatives healthcare reform proposal (H.R. 3200), focusing on lines 13-18 of page 203, which reads:

“NOT TREATED AS TAX IMPOSED BY THIS CHAPTER FOR CERTAIN PURPOSES. — The tax imposed under this section shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit under this chapter or for purposes of section 55.”

Things get worse, however. A study released yesterday by the Tax Foundation calculates the economic cost of higher tax rates and the health care surtax, and concludes, according to the press release:

“The actual economic costs of the proposed health care surtax and the expiration of the 2001 and 2003 tax cuts will be twice the amount of revenue the government intends to collect. According to a new analysis from the Tax Foundation, the higher tax rates are estimated to raise $88 billion in 2011, but the economy will incur an additional burden of $76 billion—or "deadweight loss"—as a result, which raises the total cost of the tax increases to $164 billion, roughly double what lawmakers intend to raise.”

According to Tax Foundation Senior Fellow Robert Carroll, who authored the study:

"Lawmakers should be wary of policies that are purported to make higher-income taxpayers 'pay their fair share' but that impose very substantial burdens on all taxpayers—nearly twice the revenue that is raised—and waste substantial economic resources."

For all the sordid details, read the full study of the excess burden of taxes and the economic cost of high tax rates (Special Report No. 170) and the related study on understanding the full burden of high tax rates (Fiscal Fact No. 186).

August 14, 2009

Healthcare and Congressional Gobbledegook

An editorial yesterday in the Washington Times took a look at a few tax aspects in the House version (H.R. 3200) of the healthcare reform bill, and concluded, “Orwellian doublespeak hides nature of health care bill.” Specifically, the editorial invited readers to:

“Please check out page 203 of the main House version of health care reform. It contains all the evidence you need that the entire bill is a nasty bait-and-switch.”

As Fox News likes to say, “we report, you decide,” here’s the exact language that appears on lines 13-18 of page 203 of the House version (H.R. 3200) of the healthcare reform bill (requires Adobe):

“NOT TREATED AS TAX IMPOSED BY THIS CHAPTER FOR CERTAIN PURPOSES. — The tax imposed under this section shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit under this chapter or for purposes of section 55.”

The editorial explains it this way:

“Gee, that really clears things up. It is especially helpful to know that the bill itself does not even contain a Section 55; the bill begins with a section numbered 101. (Section 55 apparently refers to the Internal Revenue Code, which it wouldn't do if the health care bill were not a tax bill, too.)”

The Times editorial staff was having way too much fun with the tax aspects of this healthcare reform bill -- especially since a search of the bill found 100 instances of “tax” -- but concludes:

“Is it any wonder that ever-larger majorities of polled Americans are quite literally afraid -- not just worried, but actually frightened -- by the prospect of a central bureaucracy, mired in the red tape of inscrutable governmental lingo, deciding what treatments can and can't be provided, by which doctors, at what costs, and at what time in the far-distant future after the waiting lists have been exhausted?

“If it wants, Congress can try to impose a tax but not "treat" it as a tax. But the American people know when they are getting taxed -- and when they are getting mistreated. And the American people still can, and will, vote out of office the congressmen responsible for the mistreatment.”

HT Mark Levin Show. Amendments to H.R. 3200 can be accessed here.

August 13, 2009

The Left, Healthcare, and Freedom

In his July 31, 2009 Orange County Register column, Mark Steyn argues that even a “water-down version” of any healthcare plan “would shift the country permanently to the left.” Specifically, Steyn asks:

“How did the health-care debate decay to the point where we think it entirely natural for the central government to fix a collective figure for what 300 million freeborn citizens ought to be spending on something as basic to individual liberty as their own bodies?”

Steyn answers that question making the following argument:

“That's the argument that needs to be won. And, if you think I'm being frivolous in positing bureaucratic regulation of doughnuts and vacations, consider that under the all-purpose umbrellas of "health" and "the environment," governments of supposedly free nations are increasingly comfortable straying into areas of diet and leisure. Last year, a British bill attempted to ban Tony the Tiger, longtime pitchman for Frosties, from children's TV because of his malign influence on young persons. Why not just ban Frosties? Or permit it by prescription only? Or make kids stand outside on the sidewalk to eat it? It was also proposed – by the Conservative Party, alas – that, in the interests of saving the planet, each citizen should be permitted to fly a certain number of miles a year, after which he would be subject to punitive eco-surtaxes. Isn't restricting freedom of movement kind of, you know … totalitarian?

“Freedom is messy. In free societies, people will fall through the cracks – drink too much, eat too much, buy unaffordable homes, fail to make prudent provision for health care and much else. But the price of being relieved of all those tiresome choices by a benign paternal government is far too high.

“Government health care would be wrong even if it "controlled costs." It's a liberty issue. I'd rather be free to choose, even if I make the wrong choices.”

There are things that Congress can do to reform the delivery of healthcare such as changes to the tax code and eliminating much of the unneeded regulatory burden, but at the end of the day, we need to look at the Declaration of Independence and tell ourselves that we have done no harm to those “unalienable Rights” of “Life, Liberty and the pursuit of Happiness.”

August 12, 2009

The Remainder of 2009 Belongs to You

Mark your calendars. As Grover Norquist and Sandra Fabry of Americans for Tax Reform write in their introductory message to the Cost of Government Day 2009 Report:

“This year, Cost of Government Day (COGD) - the day of the calendar year on which the average American worker has earned enough gross income to pay off his or her share of the spending and regulatory burdens imposed by government on the federal, state, and local levels - falls on August 12, which is almost a full month later than in 2008.

“In last year’s report, we cautioned that the looming entitlement crisis and efforts to drastically increase regulations were threatening to move Cost of Government Day later into the year. However, no one could have foreseen the magnitude of the federal spending spree which was to begin in the second half of 2008, and has not abated since.”

Here’s more bad news from the report’s overview:

“Cost of Government falls 26 days – almost a full month – later in 2009 than last year’s revised date of July 16. In 2009, the average American will have to work an additional 43 days out of the year to pay off his or her share of the cost of government compared to 2000, when COGD was June 29.

“In fact, between 1977 and 2008, COGD has never fallen later than July 20th. This year even marks a sharp leap of 23 days from the previous record date, in 1982, when it fell on July 20th.

“The driving factor for this development is that all components of the cost of government – federal spending, state and local spending, and regulations – are now increasing faster than national income, which shrunk as a result of the financial crisis in 2008. The Emergency Economic Stabilization Act (EESA) that created the Troubled Asset Relief Program (TARP) and the American Recovery and Reinvestment Act of 2009 (ARRA), passed under the guise of economic “stimulus,” have enormously expanded federal spending. In conjunction with the FY 2010 Budget proposed by President Obama and passed by Congress, these spending bills set taxpayers up for a year when federal spending has reached a record 28.5 percent of GDP.”

Here’s a chart of Cost of Government Days from 1977 to 2009:

Take a little time to browse through the report. There is much interesting information about state tax increases, regulatory burden, and case studies of TARP, cap and trade, and the value added tax. There is also a highly useful chart room.

August 11, 2009

About Those Enviro-Statists

"Recently I was foolish enough to try to reason with an environmentalist. But it became obvious that he had his mind made up and didn't want to hear any evidence to the contrary. The Pope is more likely to have read Karl Marx than an environmentalist is to have read even a single book that criticized environmentalism."

   ~ Thomas Sowell

HT National Review Online

August 10, 2009

Something to Think About

“I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue.”

    ~Barry Goldwater (1909-1998), U.S. Senator

HT OnPower.org

August 09, 2009

A Thought On The Radical Sustainability Movement

When we growled on February 9, 2009 that Arlington County debt has been growing faster than inflation, we noted that “sustainable” and “sustainability” are two of the County Board’s favorite words, based upon a search of the county’s website. Again on March 14, we growled about the County Board kow-towing to the enviro-statists when they approved a “green building” by offering “greater bonus density for higher levels of environmental sustainability.”

I was reminded of the above growls as I was reading a recent article, “UNESCO-topia: Sustainability’s Big Brother.” Written by Peter Wood, President, National Association of Scholars, the following paragraph seems pertinent, especially to the so-called “cap and tax” legislation that passed the House of Representatives and is expected to be debated in the Senate later this year:

"It is strange how little the radicalism of the sustainability movement registers with the general public—or even with politicians and denizens of think tanks who are normally alert to the machinations of the ideological left. It is as though Americans have acquired a selective deafness. The sustainatopians announce at the top of their lungs, “We want to reduce greenhouse gases, eliminate capitalism, and revolutionize the social order!” And all that a good portion of the public hears is, “Oh, they favor burning less fossil fuels. That’s nice!”"

Ah yes, those wonderful enviro-statists and their marvelous utopian dreams.

August 08, 2009

U.S. Has Second Highest Corporate Income Tax

On August 5, based upon a study by the Tax Foundation, we growled that state corporate income taxes hurt workers wages.

The Tax Foundation followed up that study with one showing “that the U.S. corporate tax rate has fallen even further out of step with the rest of the industrialized world as countries such as Canada, the Czech Republic, Korea, and Sweden have cut their corporate rates in 2009, lowering the average statutory corporate tax rate of all OECD nations to 26.5 percent.” More specifically, the Tax Foundation said:

“With a combined federal and state corporate tax rate of 39.1 percent, the U.S. continues to impose the second-highest overall corporate rate among industrialized countries. Only Japan's 39.5 percent combined rate is higher . . . .

[ . . .]

“America's high corporate tax rate should be a red flag to U.S. lawmakers worried about the country's flagging economic growth, slow wage growth, and overall global competitiveness. An important study released last year by economists at the OECD found that of the various taxes a country can impose, "corporate taxes are the most harmful tax for economic growth." High personal income taxes were found to be the second most harmful, followed by consumption taxes, with property taxes being the least harmful.”

Instead of gimmicks such as so-called "green jobs" and “cash for clunkers, Congress and the President should pass sweeping tax cuts in order to get the economy growing and really helping the jobless. The chart below is from the Tax Foundation study:

August 07, 2009

Nothing Is Too Good For Congressional Grandees

Today’s Wall Street Journal reports that Congress plans to spend $550 million to buy “eight more planes as lawmakers’ travel soars,” which they report is “a substantial upgrade to the fleet used by federal officials at a time when lawmakers have criticized the use of corporate jets by companies receiving taxpayer funds.” The Journal goes on to say:

“The congressional shopping list goes beyond what the Air Force had initially requested as part of its annual appropriations. The Pentagon sought to buy one Gulfstream V and one business-class equivalent of a Boeing 737 to replace aging planes. The Defense Department also asked to buy two additional 737s that were being leased.

[ . . . ]

“Congress turned harshly critical of companies that fly executives on private jets in the weeks following the government bailout of banks and auto makers last year. General Motors, Chrysler LLC and Citigroup Inc. were among those caught in the cross hairs of angry lawmakers.”

A Journal analysis of Congressional travel showed that overseas travel has significantly increased from 550 days in 1995 to 3,000 days last year. As the chart below, which accompanied the story, shows, spending over that timeframe has increased tenfold.

A “pullout” quote that accompanied the story included this comment: “Congress treats the American taxpayer like an all-you-can-eat buffet ... Pelosi and Reid, you need to put yourself on a diet, or we'll do it for you in 2010.” Yep! Throw the bums out! As the National Taxpayers Union "Congressional scorecare" we featured yesterday shows, there are a few "taxpayer friends" in Congress, but the vast majority need to be thrown out.

UPDATE (8/9/09): A follow-up article in the weekend Wall Street Journal featured an 11-day trip by 10 members of Congress that included travel to an Australian rain forest and the South Pole. "Penguins, a rocket-propelled airplane (and tax dollars) involved." Oh, the cost of the trip? $103,000, which "doesn't include the actual flying, because the trip used the Air Force planes."

August 06, 2009

Arlington County’s Big Spenders in Congress

The National Taxpayers Union (NTU) has completed its annual rating of Congress for the 2nd session of the 110th Congress (i.e. for 2008). Here’s a brief description:

“Every year National Taxpayers Union (NTU) rates U.S. Representatives and Senators on their actual votes— every vote that significantly affects taxes, spending, debt, and regulatory burdens on consumers and taxpayers. Unlike most organizations that publish ratings, we refuse to play the “rating game” of focusing on only a handful of Congressional votes on selected issues. The NTU voting study is the fairest and most accurate guide available on Congressional fiscal policies. It is a completely unbiased accounting of votes.”

According to NTU, an “A” “indicates the Member is one of the strongest supporters of responsible tax and spending policies. A score of “D” indicates “a ‘poor’ voting record on controlling taxes and spending” while scores “significantly below average” get an “F” and get Members tagged as “Big Spenders.”

That said, following are the ratings for Arlington’s representatives in Congress:

  • Senator John Warner (now retired)  --  34% (D)
  • Senator Jim Webb  --  3% (F)
  • Representative Jim Moran  --  7% (F)

Let them know how you feel about their fiscal responsibility. The switchboard number on Capitol Hill is (202) 224-3121.

Incidentally, when we last growled on NTU's ratings on April 9, 2008, Warner's score was 55%, Webb's was 13%, and Moran's 5%)

August 05, 2009

State Corporate Income Taxes Hurt Workers’ Wages

A special report from the Tax Foundation found “roughly a $2.50 loss in wages for each one-dollar rise in corporate tax collections.” The study on corporate income taxes and workers’ wages reports:

“While state-local corporate tax revenue has remained relatively constant for several decades, bringing in roughly five percent of revenue, some states have significantly increased their reliance on corporate taxes while others have relied less on that revenue source. The average state corporate tax rate—defined as collections divided by state income—has risen from 2.6 percent several decades ago to 4.4 percent today.

“This study examines this correlation between corporate tax rates and wages, and it finds a causal relationship. States with comparatively low corporate taxes have seen wages rise beyond what they would have otherwise . . . .

Four key findings emerged from the report, specifically:

  • States with high corporate income taxes have depressed their workers' wages over the long term, while states with low corporate taxes have boosted worker productivity and real wages.
  • This finding is consistent with other research focusing on the international trend towards lower tax rates: high corporate taxes tend to depress real wages.
  • According to this study, on average, between 1970 and 2007, a one-dollar increase in the average state-local corporate tax rate caused a $2.50 dip in wages five years later, compared with lower-taxed states.
  • A growing body of literature is showing that the burden of corporate income taxes falls predominantly on labor.

The complete report requires Adobe.

August 04, 2009

Recessions Are Bad For Government, Too

Today’s Washington Times published an Associated Press story that reported the outlook for federal tax revenue is the “worst since 1932.”  The story says:

“The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.

“Other figures in an Associated Press analysis underscore the recession's impact: Individual income-tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.

“The last time the government's revenues were this bleak, the year was 1932 in the midst of the Depression.”

The Tax Foundation’s Tax Policy Blog adds, “States are getting less revenue too.  So far, combined state shortfalls are over $160 billion.” The chart below is from the AP story  posted by Yahoo News. While recessions may be "bad" for government revenue, that's no justification for raising tax rates. Indeed, politicians should be cutting rates since that would enable the economy to grow and simultneously produce more revenue for government.

August 03, 2009

Homeowner Rights in Arlington County

On July 19, 2008, the Arlington County Board approved (agenda item 47) a zoning ordinance amendment  that allows “accessory dwellings in single-family homes and non-relatives to live in family/caregiver suites in single-family homes.” In addition, the Board limited the number of such dwellings to 28 per year. More information about such dwelling units is available at the county’s Planning Division website.

This week’s edition of the Arlington Sun Gazette will includes a letter to the editor in which the writer says that “(a)pparently, the accessory-dwelling-unit fiasco now infringes upon all single-family owners by restricting their, heretofore, right to these three basic features offered in Arlington homes since 1950.” The three components are “a full bath (tub or shower), an outside entrance, and a bar sink” and possibly microwaves. The letter-writer also points out:

“Sadly, common sense has given way to draconian political manipulation. When you politicize such basic features with poorly conceived accessory-dwelling guidelines, you will find the Arlington County government judging both the design and features you can have in your basement. In blunt term, don’t design and plan your house without involving Arlington County employees.

“The political assumption that everyone who has a particular basement design is guilty of something illegal is insulting. Unbelievably, the county government has begun moving against existing homeowners, demanding that their basements be modified to their imposed but unadvertised and unknown guidelines. In other words, your own existing home may not be grandfathered and guaranteed, even if constructed 20 years ago.

“These heavy-handed tactics taken against Arlington County homeowners are an insult against all of us and a blatant intrusion into the life of every residents. It shows our elected officials have lost touch with the people, and a “yes-man” county manager too eager to please the board.”

Don’t you just like how Arlington County taxpayers are treated? Stay tuned; we’re sure next week’s Sun Gazette will include a rebuttal by the Manager or County Board.

August 02, 2009

Another Month, Another Washington Porker

Citizens Against Government Waste (CAGW) named their July Porker of the Month, and he is Rep. Russ Carnahan (D-Missouri), according to the CAGW press release. CAGW awarded its dubious honor for Carnahan’s “blatant disregard for the interests of taxpayers," saying Rep. Carnahan:

“was caught on videotape by a vigilant citizen blogger at a town hall meeting held at St. Louis Community College at Forest Park, who posted the remarks on his website and on You Tube grossly misrepresented the costs associated with the controversial healthcare reforms bills currently under consideration in Congress.  His statements were so patently false that when members of the audience reacted with disbelief and loud guffaws, he instantly became the public face of those in Washington, D.C. who are willing to blurt out anything they think will mask the reality of this heinous reform plan to try to slip it by taxpayers.”

Carnahan should have remembered the advice of Mark Twain, who said, according to Brainy Quote, “It is better to keep your mouth closed and let people think you are a fool than to open it and remove all doubt." Read the entire press release for CAGW's complete justification for naming Carnahan its July Porker.

August 01, 2009

Is Massachusetts A Healthcare Reform Model?

Massachusetts passed a health care reform law in 2006, defined in chapter 58 of their laws, according to Wikipedia. “It requires nearly every resident of Massachusetts to obtain health coverage. Through the law, Massachusetts provides subsidized health care for residents earning up to 100% of the Federal Pover Level (FPL), and partially subsidized health care for those earning up to 300% of the FPL, depending on an income-based sliding scale.”

Michael Tanner, a senior fellow at the Cato Institute, authored a Briefing Paper in June that asked: “Massachusetts Miracle or Massachusetts Miserable: What the Failure of the "Massachusetts Model" Tells Us about Health Care Reform?” Following is the paper’s executive summary:

“When Massachusetts passed its pioneering health care reforms in 2006, critics warned that they would result in a slow but steady spiral downward toward a government-run health care system. Three years later, those predictions appear to be coming true:

  • “Although the state has reduced the number of residents without health insurance, 200,000 people remain uninsured. Moreover, the increase in the number of insured is primarily due to the state's generous subsidies, not the celebrated individual mandate.
  • “Health care costs continue to rise much faster than the national average. Since 2006, total state health care spending has increased by 28 percent. Insurance premiums have increased by 8–10 percent per year, nearly double the national average.
  • “New regulations and bureaucracy are limiting consumer choice and adding to health care costs.
  • “Program costs have skyrocketed. Despite tax increases, the program faces huge deficits. The state is considering caps on insurance premiums, cuts in reimbursements to providers, and even the possibility of a "global budget" on health care spending—with its attendant rationing.
  • “A shortage of providers, combined with increased demand, is increasing waiting times to see a physician.
“With the "Massachusetts model" frequently cited as a blueprint for health care reform, it is important to recognize that giving the government greater control over our health care system will have grave consequences for taxpayers, providers, and health care consumers. That is the lesson of the Massachusetts model.”

The complete Briefing Paper requires an Adobe Reader, and is well worth a read to get a handle on what one state is experiencing when it reformed it’s healthcare system just three years ago.