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Tragedy of the Healthcare Commons: The Affordable Care Act contributes to an already unsustainable situation by D.W. MacKenzie

Recent difficulties with implementing the Affordable Care Act have increased opposition to the program. A majority of Americans now oppose it. Problems with the healthcare.gov website are in all likelihood temporary. However, there are serious long-term problems, particularly considering long-term finance and labor-supply issues. Give the mounting difficulties with and growing concerns about the ACA, it is worthwhile to reconsider the main issues regarding this program.

The Congressional Budget Office (CBO) recently published a report examining some of these problems. It contains nothing new. Many commentators have discussed the projection of lower labor-force participation. Obamacare subsidies will allow lower-income Americans to work less. People do in fact work less if their costs are shared. The tendency of people to withhold work from collective undertakings is known among economists as a tragedy of the commons.

Reduced labor-force participation means both lower total tax revenue and higher spending on government benefits. The CBO’s long-term forecasts report serious imbalances between tax revenues and federal spending. Federal deficits are projected to remain high, but “manageable,” for about a decade.

The costs of entitlements, along with regular budget items (defense and non-defense), are relevant to any discussion of the ACA’s affordability. The retirement of the baby boomers, though, will result in steadily rising costs for older entitlement programs. Taxpayers are already legally responsible for a national debt of $17 trillion (which  will hit $20 trillion by the time Obama leaves office). Interest payments on the national debt are low for the time being, but they won’t stay that way forever. The Medicare trustees have admitted to a long-term deficit of $34 trillion, but independent estimates run much higher. Social Security has an unfunded liability of more than $12 trillion. These costs pile on top of the current regular budget of $3.5 trillion, not to mention projected growth in this budget. Taxpayers are also responsible for the ACA’s cost overruns. Section 1342 of the ACA makes taxpayers responsible for bailing out insurance companies if the need arises.

Taxpayers are legally obligated to finance all of the above-mentioned expenditures, debts, and unfunded liabilities. People who believe in individual liberty reject the idea that people are morally obliged to fund ever-rising Federal expenditures. But the dispute over whether American taxpayers should fund projected federal spending is rendered academic by the fact that younger Americans will not be able to afford to pay for all of it. The commons created out of the New Deal and the Great Society is collapsing.

Economist Larry Kotlikoff estimates that average rates of taxation would have to rise 56 percent to cover projected increases in federal expenditures. Kotlikoff’s estimate may be high, but even a lower figure would leave Americans in dire financial straits. Taxpayers simply will not be able to fund all projected increases in all current federal programs. Bond investors will not finance our rising national debt in unlimited amounts. The ACA’s increased spending and lower labor-force participation, on top of these increases, makes national bankruptcy that much more likely.

National bankruptcy is not inevitable. The U.S. government is heading toward bankruptcy superficially because politicians have failed to set rational budget priorities, and fundamentally because citizens expect far too much of the public sector. The ACA was created out of concern that financial considerations bar access to healthcare to many people. And Americans do spend a large percentage of national income on healthcare.

The good news is that “we” have a substantial amount of leeway to save money on healthcare. Data on the overall effectiveness of public healthcare spending is clear, but not nearly as well known among voters. For example, The RAND Corporation conducted a health insurance experiment from 1974 to 1982, which showed that making healthcare “free,” or available at no personal marginal cost, does lead people to buy more. Much of this extra healthcare is inappropriate or largely unneeded, however. When people pay for more of their healthcare out of pocket, they tend to waste less money. The RAND study concluded, “In general, the reduction in services induced by cost sharing had no adverse effect on participants’ health.” Many other studies cast doubt on the effectiveness of providing healthcare at no private cost. According to another study, “Medicare enrollees in higher-spending regions receive more care than those in lower-spending regions but do not have better health outcomes or satisfaction with care.” Studies of people with health savings accounts (HSAs), as compared with people with plans like PPOs, show HSA holders control premium inflation better than their PPO counterparts.

Having people pay deductibles or bear other out-of-pocket costs causes us to economize on healthcare. Health insurance pools risks and creates a type of commons, whether done privately or publicly. The private commons of insurance companies does, however, have limits. Private insurance companies deny some types of coverage, depending on how much insurance people contract for in the first place. In other words, private insurance is not an open commons—it specifies the extent to which each policy holder can draw out of the insurance pool.

Public insurance programs lure people in by promising more benefits than private insurance plans offer. Yet public programs ultimately run into the basic problem of scarcity. The ACA pushes people out of very basic insurance plans into plans with higher levels of coverage, but excessive coverage is a major source of high healthcare costs. Americans spend a sizable portion of GDP on health expenses (17.9 percent in 2011). The overconsumption of healthcare by overinsured Americans is both a major source of excessive costs and a cost that can be cut with little adverse effect.

The tendency of people to waste money in open-access healthcare financing is simply going to produce another tragedy of the commons. Too few young people have been signing up at Healthcare.gov because younger Americans are mostly smart enough to avoid paying into a commons. Americans are signing up mainly because they expect to draw subsidies out of this commons.

Problems with managing a commons in healthcare financing are serious. Once someone enters into a life-threatening medical condition, they and their family will want every possible available step taken to save this person—provided that “someone else” pays. Passing costs onto someone else is, aside from being morally dubious, unworkable in the aggregate because we are each “someone else” to everyone else.

There are many costs associated with government intervention into the healthcare industry: administrative and regulatory compliance costs, elevated costs of litigation and court rulings, lobbying costs, costs of perverse incentives. The perversities associated with treating health as an open-access and politicized commons have, along with other, government spending programs, created an unsustainable fiscal situation. The unaffordability of the Affordable Care Act leaves us with two main options: Congress can repeal the ACA immediately through the legislative process, or we can all wait for the repeal process of national bankruptcy.

ABOUT D.W. MACKENZIE

D. W. MacKenzie is an assistant professor of economics at Carroll College in Helena, Montana.

When Zero’s Too High: Time preference versus central bankers by Douglas French

Central banking has taken interest rate reduction to its absurd conclusion. If observers thought the European Central Bank (ECB) had run out of room by holding its deposit rate at zero, Mario Draghi proved he is creative, cutting the ECB’s deposit rate to minus 0.10 percent, making it the first major central bank to institute a negative rate.

Can a central-bank edict force present goods to no longer have a premium over future goods?

Armed with high-powered math and models dancing in their heads, modern central bankers believe they are only limited by their imaginations. In a 2009 article for The New York Times, Harvard economist and former adviser to President George W. Bush N. Gregory Mankiw wrote, “Early mathematicians thought that the idea of negative numbers was absurd. Today, these numbers are commonplace.”

While this sounds clever, Ludwig von Mises undid Mankiw’s analogy long ago. “If he were not to prefer satisfaction in a nearer period of the future to that in a remote period,” Mises wrote of the individual, “he would never consume and enjoy.”

Carl Menger explained that it is “deeply imbedded in human nature” to have present desires satisfied over future desires. And long before Menger, A. R. J. Turgot wrote of the premium of present money over future money, “Is not this difference well known, and is not the commonplace proverb, ‘a bird in the hand is better than two in the bush,’ a simple expression of this notoriety?”

Central bankers can set a certain interest rate, but human nature cannot be eased away, quantitatively or otherwise. But the godfather of all central bankers, John Maynard Keynes, ignored time preference and focused on liquidity preference. He believed it was investments that yielded returns, and wrote, “Why should anyone outside a lunatic asylum wish to use money as a store of wealth?”

If liquidity preference determined the rate of interest, rates would be lowest during a recovery, and at the peak of booms, with confidence high, everyone would be seeking to trade their liquidity for investments in things. “But it is precisely in a recovery and at the peak of a boom that short-term interest rates are highest,” Henry Hazlitt explained.

Keynes believed that those who held cash for the speculative motive were wicked and central bankers must stop this evil. However, as Hazlitt explained in The Failure of the “New Economics,” holding cash balances “is usually most indulged in after a boom has cracked. The best way to prevent it is not to have a Monetary Authority so manipulate things as to force the purchase of investments or of goods, but to prevent an inflationary boom in the first place.”

Keynesian central bankers leave time out of their calculus. While they think they are lending money, they are really lending time. Borrowers purchase the use of time. Hazlitt reminds us that the old word for interest was usury, “etymologically more descriptive than its modern substitute.”

And as Mises explained above, time can’t have a negative value, which is what a negative interest rate implies.

Borrowers pay interest in order to buy present assets. Most importantly, this ratio is outside the reach of the monetary authorities. It is determined subjectively by the actions of millions of market participants.

Deep down, Mankiw must recognize this, writing, “The problem with negative interest rates, however, is quickly apparent: nobody would lend on those terms. Rather than giving your money to a borrower who promises a negative return, it would be better to stick the cash in your mattress. Because holding money promises a return of exactly zero, lenders cannot offer less.”

But still, he approvingly cites German economist Silvio Gesell’s argument for a tax on holding money, an idea Keynes himself approved of.

Keynesian central bankers are now central planners maintaining the unshakable belief that low interest rates put people back to work and solve every economic woe. “But in reality,” writes Robert Murphy, “interest rates coordinate production and consumption decisions over time. They do a lot more than simply regulate how much people spend in the present.”

Murphy points out that low rates stimulate some sectors more than others. Lower rates generally boost housing and car sales, for instance, while not doing much for consumer goods.

More than half a decade of zero interest rates has not lifted anyone from poverty or created any jobs—it has simply caused more malinvestment. It is impossible for the monetary authorities to dictate the proper interest rate, because interest rates determined by command and control bear no relation to the collective time preference of economic actors. The result of central bank intervention can only be distortions and chaos.

Draghi and Mankiw don’t seem to understand what interest is or how the rate of interest is determined. While it’s bad when academics promote their thought experiments, the foolish turns tragic when policymakers use the power of government to act on these experiments.

ABOUT DOUGLAS FRENCH

Douglas E. French is senior editor of the Laissez Faire Club and the author of Early Speculative Bubbles and Increases in the Supply of Money, written under the direction of Murray Rothbard at UNLV, and The Failure of Common Knowledge, which takes on many common economic fallacies.

EDITORS NOTE: The featured image is courtesy of FEE and Shutterstock.

NATIONAL DEBT: If Only a Snow Shovel Could Dig Us Out of This

Amy Payne writes, “Thanks to Congress, the U.S. now doesn’t have a debt limit for the next year. Let two Heritage experts put this into perspective.”

“President Obama, after less than five years in office, has already increased the debt limit by more than any other president in U.S. history, including President George W. Bush over eight years in office,” report Romina Boccia and Michael Sargent, authors of the newly updated Federal Budget in Pictures.

For the next year, now that Congress has given Obama a blank check, we’ll be following the borrowing and the spending and all the debt Washington is piling on Americans. The national debt, at $17.3 trillion, already exceeds $140,000 per household.

140ksnow_v2-600px

Sargent and Boccia, the Grover M. Hermann Fellow, teamed up with Heritage’s Senior Data Graphics Editor John Fleming to bring us 20 charts that will convince you the country’s in trouble.

There are some scary fiscal times ahead.

Imagine all of America and all of the taxes people pay to the federal government every year. Do you have an overwhelming idea in your mind? Just 16 years from now, ALL of that money will pay for just two things: entitlement programs and interest on the debt.

All of it.

The entitlement programs include Social Security, Medicare, Medicaid, and Obamacare’s new entitlements. So if you think anything is important besides these mammoth entitlement programs—like national defense, a real constitutional priority—Congress needs to get going on some major reforms.

These are just a few of the mind-boggling facts you can see and share—if you dare—in this visual resource. Find out where your tax money went and get the latest on Obamacare’s tax hikes.

See & share the charts—and embed them on your website.

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Yellen: I Helped Blow Up The World

The most-destructive terrorists do not use guns or bombs.  They use their power and influence to lie in public, backed by force of law, destroying people, industry and even entire nations and their governments.  They are found in the halls of finance, and the more-powerful they are the worse they are.  Today, the head of same is found in the Federal Reserve, seated before Congress in the form of ChairSatan Janet Yellen.

First, let me acknowledge the important contributions of Chairman Bernanke. His leadership helped make our economy and financial system stronger and ensured that the Federal Reserve is transparent and accountable. I pledge to continue that work.

Uh huh.  The man who first claimed subprime is contained, who in fact invented and promoted the policies that led to the housing bubble in the first place (people seem to forget that) and then who invented and promoted the policies that have now led to the largest global asset bubble in history (second only to the one he built first, and which exploded in his face.)

The unemployment rate has fallen nearly a percentage point since the middle of last year and 1-1/2 percentage points since the beginning of the current asset purchase program. Nevertheless, the recovery in the labor market is far from complete.

There has been no recovery in employment rate of the population.  At all.

Since anyone driven from the workforce by Fed policy doesn’t count as “unemployed” Yellen’s statement is akin to arguing that the natural death rate has not gotten worse over time which may well be true but if you’re shooting people by the busload there are still more people dying — and you’re responsible for their deaths.

Among the major components of GDP, household and business spending growth stepped up during the second half of last year.

Uh huh.  All of it borrowed, I might add.  Median household income adjusted for inflation is not rising.  Therefore all of this increased spending must be borrowed money, which is not an improvement in the common man’s situation.

The same is true with businesses; they never saw their indebtedness decrease — not even in the depths of the recession.

We have been watching closely the recent volatility in global financial markets. Our sense is that at this stage these developments do not pose a substantial risk to the U.S. economic outlook.

The Fed caused that volatility.

Our current program of asset purchases began in September 2012 amid signs that the recovery was weakening and progress in the labor market had slowed.

There has been no recovery.  Not in inflation-adjusted incomes nor in the employment rate of the population.  Neither has improved one iota since 2009.  Borrowing more money is not an “improvement” as incomes must rise net-net to service the new debt.  They haven’t.

The Committee has emphasized that a highly accommodative policy will remain appropriate for a considerable time after asset purchases end.

Of course you have.  The government is blowing more money than it takes in too, and you know full well that this can’t continue forever either, but you won’t take the candy away from the baby – even when told, point-blank as Bernanke was on multiple occasions over the last few years, that Congress is incapable of rational fiscal management on its own without being forced to do so by market-based borrowing costs.

Regulatory and supervisory actions, including those that are leading to substantial increases in capital and liquidity in the banking sector, are making our financial system more resilient. Still, important tasks lie ahead. In the near term, we expect to finalize the rules implementing enhanced prudential standards mandated by section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. We also are working to finalize the proposed rule strengthening the leverage ratio standards for U.S.-based, systemically important global banks. We expect to issue proposals for a risk-based capital surcharge for those banks as well as for a long-term debt requirement to help ensure that these organizations can be resolved. In addition, we are working to advance proposals on margins for noncleared derivatives, consistent with a new global framework, and are evaluating possible measures to address financial stability risks associated with short-term wholesale funding. We will continue to monitor for emerging risks, including watching carefully to see if the regulatory reforms work as intended.

This is the biggest lie of all.

Derivatives are nothing other than a scam intended to get around margin requirements that would otherwise be imposed by the market in the absence of government bailouts and guarantees.  The “financial system” has repeatedly demonstrated that it has both, with the most-outrageous example of same being when Paulson and Bernanke literally corralled Congresspeople into a room and threatened them with economic nuclear winter if they didn’t get a $700 billion blank check.

That “need” came about due to The Fed and Congressional willful blindness toward the outright fraudulent declarations of “adequate” margin supervision and reserves against said positions.  What 2008 laid bare on the table was that these claims were outright lies, that is, public frauds, and yet none were either prosecuted nor were the firms that had made such outrageous and false statements allowed to fail, with only a couple of exceptions.

The fundamental reality is that The Fed believes, despite decades of proof otherwise, that it can successfully “manage” the business cycle and continually pump up asset bubbles without consequence. The problem with such an assertion is that every time The Fed has done this to date throughout history the balloon has found a pin and popped with dramatic consequence, and what’s worse, the severity of those excursions in terms of real-world economic impact has risen with each successive attempt and failure.

The Market Ticker

PODCAST: How Mother Nature will Accelerate the Looming Fiscal Avalanche

Many are writing about the looming fiscal cliff that Congress and the Obama administration will deal with upon return from the Thanksgiving break. Senator Mike Lee (R-UT) warns of a looming fiscal avalanche.

In After Fiscal Cliff Comes Fiscal Avalanche, Rejection of U.S. Debt, Senator Lee writes, “While Washington is preoccupied with the so-called fiscal cliff, little attention has been given to the fiscal avalanche that will occur if we continue down an unsustainable, long-term path, causing markets to turn sour on U.S. debt and leading to a spike in interest rates.”

Senator Lee states, “The Congressional Budget Office projects that under the most likely policy scenario, in 30 years, net interest payments on the debt could total $3.8 trillion in today’s dollars. That is more than total government spending for 2011.”

Robert Wiedemer co-author of America’s Bubble Economy – Aftershock wrote America has suffered through a number of financial bubbles and the aftershock following each. To date each of these bubbles, the most recent being the housing bubble, have burst and fallen onto two other looming bubbles. These two bubbles are the “dollar bubble” and the “debt bubble”. Wiedemer predicts these two bubbles will burst when pricked by the pin called “inflation”.

The government fiscal policies which have lead the US to the fiscal avalanche may be helped along by mother nature.

Relying heavily on the research of experts globally, as well as his own original research that correctly predicted the change in the Sun’s behavior, Mr. John L. Casey has spelled out in his book Cold Sun a convincing case that a new cold era has arrived. In Cold Sun, Mr. Casey presents the evidence showing:

1. Global warming ended years ago.
2. The Sun has entered an ominous state of ‘hibernation.’
3. The Earth’s ocean and atmospheric temperatures are dropping rapidly and are now on a long term decline for the next thirty years.
4. Glacial ice worldwide is growing again and the threat of rising sea levels is over.
5. Why we should be preparing now for the coming cold and its ill-effects including record earthquakes, and volcanic eruptions as well as global agricultural devastation.

Mr. Casey’s predictions of mother nature taking her own course fly in the face of current government policies at the national, state and local levels. In this exclusive interview Mr. Casey explains how mother nature will have her way no matter what we try to do:

While government is focused on reducing CO2 emissions to prevent global warming, the earth is in fact cooling. According to Casey this cooling will shorten the growing season causing food prices to increase, require more fuel and energy to heat homes and businesses. The US will experience an increase in the number of natural disasters costing human life loss and property damage on a grand scale. The US ability to recover from such natural disasters here and globally will be restricted by our debt and cost to service that debt in the long term.

The world’s growing population depends on food. Brian M. Carney in his article for the Wall Street Journal asks, “Can The World Still Feed Itself?“. Mr. Carney interviews Peter Brabeck-Letmathe, Chairman of Nestle’ the world’s largest food-production company. According to Mr. Brabeck-Letmathe, “Politicians do not understand that between the food market and the energy market, there is a close link.” That link is the calorie.

Carney reports, “The energy stored in a bushel of corn can fuel a car or feed a person. And increasingly, thanks to ethanol mandates and subsidies in the U.S. and bio-fuel incentives in Europe, crops formerly grown for food or livestock feed are being grown for fuel. The U.S. Department of Agriculture’s most recent estimate predicts that this year, for the first time, American farmers will harvest more corn for ethanol than for feed. In Europe some 50% of the rapeseed crop is going into bio-fuel production, according to Mr. Brabeck-Letmathe, while “world-wide about 18% of sugar is being used for bio-fuel today.”

What does this all mean?

If John Casey is correct in his predictions, and SSRC always is, then cold weather brings with it a shorter growing season and increased demand for fuel to keep people warm. Therefore, we must have policies that increase calories, not decrease the food supply.

These natural events will occur during the same 30 year period where our payments on the national debt will increase to $3.8 trillion.

RELATED COLUMN: Are we living in the Hunger Games?

Florida’s 303 public pension systems are unsustainable

Florida has the third highest number of public pension systems in the United States. According to the U.S. Census Bureau the states with the most public pension systems were Pennsylvania (1,425 systems), Illinois (457 systems) and Florida (303 systems).

The U.S. Census Bureau publishes The Annual Survey of Public Pensions: State- and Locally-Administered Defined Benefit Data, which is a census of all 222 state government pension systems and a sample of local government pension systems. The latest report was published in August 2013.

The six states with the largest amounts of total state and local cash and investment holdings in 2011 (the latest year data is available) were California ($600.0 billion), New York ($319.3 billion), Texas ($192.6 billion), Florida ($157.8 billion), Ohio ($152.4 billion) and Illinois ($127.7 billion) in total holdings and investments. Total holdings and investments in these states comprised just over half (51.2 percent) of total holdings and investments for the United States.

The Florida pension system is overseen by the State Board of Administration (SBA), which was created by the Florida Constitution and is governed by a three-member Board of Trustees (Trustees), comprised of the Governor as Chair, the Chief Financial Officer and the Attorney General.

The basic problem is there are fewer paying into public pensions with a growing number taking funds out of the systems. The report looks at active public pension members versus beneficiaries over time. The ratios of member to beneficiaries are: 1991 2.8 to 1, 2001 2.3 to 1 and 2011 1.7 to 1. Public pension systems are unsustainable.

For a larger view click on the chart.

The Florida Retirement System (FRS) carries the bulk of the public pension system load in the sunshine state. Cities, counties, school boards and public hospital employees pay into this system. According to the MyFRS website, “The FRS Pension Plan funding valuation takes place annually, available December 1st and was 86.9 percent funded, as of July 1, 2012. You can view a chart that compares the plan’s actuarial liabilities to the plan’s actuarial assets for the past five fiscal years. The annual benefit payments to FRS retirees and beneficiaries (shown in white on the chart) are a part of the overall plan liabilities. The market value of the total assets of the FRS Pension Plan is updated monthly.”

The Census Department reports the following public pension data for Florida (in thousands of dollars): Total contributions of $4,993,460, total employee contributions of $349,947, contributions from the state government $875,190, and from local government $3,768,323. Contributions from state and local government means from Florida taxpayers.

According to the report in 2011 Florida’s public pension systems payed out between $20,000 to $24,999 on average.

Defined benefit public pension programs are a growing financial burden for cities, counties, school boards and public hospitals. If one pension system fails Florida taxpayers will be left holding the bag.

RELATED: Florida’s public pensions still bleeding taxpayers

Obamacare’s Negative Impact on Florida’s Seniors

Column courtesy of the Heritage Foundation.

The Medicare program that provides health insurance to seniors faces a dire financial future. And Obamacare is making it worse.

Medicare’s Part A trust fund is projected to be insolvent by 2026 and the total program has a long-term unfunded obligation of more than $35 trillion. This means the government has made $35 trillion worth of benefit promises to current and future seniors that are not yet paid for — a staggering amount that is more than double the nation’s total current debt.

Despite the fact that the Medicare trustees have been warning of this financing disaster for many years, President Obama’s massive health care law makes the matter much worse, not better.

VIDEO: Ann Lorenz, who has Parkinson’s disease, worries about Medicare’s future:

Ignore the political rhetoric of keeping Medicare “as we know it.” Obamacare has already made significant changes to Medicare, namely through provider reimbursement reductions and the creation of an unelected board of bureaucrats, the Independent Payment Advisory Board (IPAB).

Here are three examples of Obamacare’s impact:

1) Huge payment reductions that reduce access to care. According to the Congressional Budget Office (CBO), Obamacare will reduce Medicare reimbursements by $716 billion over 10 years. These cuts will hit Part A providers such as hospitals, nursing homes, skilled nursing facilities, and hospices, along with Medicare Advantage plans. The trustees predict that if Congress allows these cuts to go into effect, 15 percent of Medicare providers would go in the red by 2019, 25 percent by 2030, and 40 percent by 2050.

This will absolutely impact seniors’ ability to access medical care. As the trustees explain: “Providers could not sustain continuing negative margins and would have to withdraw from serving Medicare beneficiaries or (if total facility margins remained positive) shift substantial portions of Medicare costs to their non-Medicare, non-Medicaid payers.” (Emphasis added.)

2) Medicare “savings” are spent on other parts of Obamacare. Obamacare’s Medicare “savings” and increased Medicare payroll tax are often touted as increasing the solvency of the Part A trust fund, but that simply is not true. The money is counted as paying for new entitlement spending in Obamacare.

As CBO plainly states, “CBO has been asked whether the reductions in projected Part A outlays and increases in projected [hospital insurance] revenues under the legislation can provide additional resources to pay future Medicare benefits while simultaneously providing resources to pay for new programs outside of Medicare. Our answer is basically no.”

3) The ominous and looming power of IPAB. The board will consist of 15 unelected and unaccountable bureaucrats, charged with meeting a newly created budget target in Medicare. When Medicare spending surpasses the target, IPAB will have to make recommendations to lower Medicare spending. The trustees project the much-hated IPAB will need to step up and make recommendations for the first time in 2016.

Obama’s Medicare agenda falls far short of what is necessary to put the program on a sustainable path, and his law’s negative impact on seniors is yet another reason the law must be repealed in its entirety before its most egregious provisions (Medicaid expansion and exchange subsidies) begin in 2014.

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VIDEO: Democrat Candidate Patrick Murphy Calls TEA Party “Extremist”

Democrat Congressional Candidate Patrick Murphy runs away from a reporter asking him to clarify his statement that the “Tea Party are Extremists” made during a debate with his opponent, incumbent Rep. Allen West (R). Murphy is Rep. West’s opponent for Florida’s new Congressional District 18 seat.

On Thursday October 4, 2012 during a debate with Rep. West, Murphy made the statement, “I used to be a Republican but because the TEA Party people are extremists, I decided to become a Democrat!”

J. Mark Campbell, investigative reporter for The United West, repeatedly asked Murphy to explain his statement about the TEA Party after the debate. Campbell approached Murphy and then, it was OFF TO THE RACES…as he literally, RAN-A-WAY!

Following the debate Rep. West stood outside in the parking lot answering press questions for 30 minutes. Murphy was no where to be found.

Rubio Votes Against Continuing Resolution

After his vote against H.J.Res.117, a short-term Continuing Resolution to fund the federal government for six months, U.S. Senator Marco Rubio issued the following statement:

“Today, the federal government once again left one of its most basic duties unfulfilled – the passage of an annual budget. After four consecutive years of trillion dollar deficits and a $16 trillion national debt, the American people deserve for their elected officials to come together with an action plan to reduce spending and encourage real growth. Instead, Congress passed a continuing resolution that merely extends federal spending at its current levels and punts away the responsibility of governing to another time.

“As I’ve done before, I voted against this short-term continuing resolution because I believe that times are too dire to continue this inaction. We are treading water while the water is boiling. Congress has a responsibility to move America out of this mess by charting a fiscally responsible path for the future, starting with a responsible and balanced budget.

“Instead of working with Republicans to address this issue a long time ago, President Obama merely proposed partisan budget plans that left his promise of deficit reduction behind and were so flawed not a single senator in either party voted for them. In order to move America forward, we need Washington to live within its means and stop borrowing money to support a bloated federal government. We can’t say that President Obama’s leadership has failed this time, because the truth is he hasn’t led at all.”

Florida to Lose 79,459 Jobs Due to Defense Cuts

The Jacksonville Business Journal reports that Florida stands to lose 79,459 jobs and $4.1 billion in labor income by the end of fiscal 2013 if $1.2 trillion in federal defense cuts take place in January as planned.  A report conducted by George Mason University by economist Stephen Fuller says Florida would suffer the sixth most job losses of all the states. The report measures the impact of both defense and nondefense employment reductions at federal agencies and their contractors, as well as at businesses that count them as customers. A little more than half of Florida’s lost jobs in the next fiscal year — 41,905 — would result from Department of Defense cuts, and the rest would stem from reductions at civilian agencies. During that period, Florida would also see gross state product losses of $8 billion. To read more click here. The George Mason University report concludes – The magnitude of economic impacts resulting from the Budget Control Act of 2011 over the combined FY 2012-FY 2013 period have been shown to be large and their impact on the U.S. economy to be significant:

• Combined DOD and non-DOD agency spending reductions totaling $115.7 billion in FY 2013 would reduce the 2013 U.S. GDP by $215.0 billion.

• These spending reductions would result in the loss of 746,222 direct jobs including cutbacks in the federal workforce totaling 277,263 and decreases in the federal contractor workforce totaling 468,959 jobs, thus affecting all sectors of the national economy.

• The loss of these 746,222 direct jobs and 432,978 jobs of suppliers and vendors (indirect jobs) dependent on the prime contractors would reduce total labor income in the U.S. by $109.4 billion.

• The loss of this labor income and the resultant impacts of reduced consumer spending in the economy would generate an additional loss of 958,508 jobs dependent on the spending and re-spending of payroll dollars associated with the direct and indirect jobs lost as a result of BCA.

• This loss of $215.0 billion in GDP and 2.14 million jobs in 2013 would erase two-thirds of the GDP gains projected for the year and raise the national unemployment rate by 1.5 percentage points by the end of 2013.

• These economic impacts would affect every state with their respective vulnerabilities to projected DOD and non-DOD spending reductions being determined by their agency mix and relative magnitudes of federal payroll and procurement. Based on current patterns of federal spending by state, ten states account for more than half of total federal payroll and procurement outlays. This significant concentration of federal spending represents a major threat to these states’ economies in 2013. While other states may appear less vulnerable to federal spending reductions, these may also suffer significant impacts dues to their smaller sizes or more specialized economic structures.

Florida is has twenty-one military installations, and is home to U.S. Central Command at MacDill AFB in Tampa.

Watchdog Wire Interviews Blaise Ingoglia, Sheila Krumholz and Marjorie Dannenfelser

Watchdog Wire interviews three citizens who are doing extraordinary things. Each heads their respective organization and tells the truth about the issue that is top of mind with them and their organization. Each organization is non-profit and issue oriented.

LISTEN TO THE EXCLUSIVE WATCHDOG WIRE INTERVIEWS WITH INGOGLIA, KRUMHOLZ AND DANNENFELSER.
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Our guests appear on the Podcast at the time noted below:

11:00 to 11:20 Blaise Ingoglia, www.GovernmentGoneWild.org. Blase speaks to government spending that is out of control and discusses his latest video “One Nation, Under Water”.

11:20 – 11:40 Sheila Krumholz, www.OpenSecrets.org. Sheila describes the influence of money on elections and how both political parties have focused on fundraising as the way to get elected, perhaps to the detriment of the election process.

11:40 to Noon Marjorie Dannenfelser, www.SBA-List.org. Marjorie describes the differences between the Democrat and Republican political platforms on the issue of the sanctity of life. She explains the history of the Susan B. Anthony List and its impact on statewide and Congressional elections.

Each guest provides special insights into why this election is so very important to them and their organization.

UPDATE:

This is a video released by SBA-List.org addressing what Marjorie discussed during her interview with Watchdog Wire – Florida:

Which Presidential Candidate Sides With You?

Charles Schelle and Mark Maley in their Sarasota Patch column “Online Tool Matches Voters with Ideal Presidential Candidate” note that “Floridians’ presidential preference leans more Libertarian in this online free quiz that takes an in-depth look at your stance on a range of issues, then compares them to candidates’ responses … A new website launched earlier this year to help voters match up with their ideal candidate, and it’s quickly gaining popularity through social media channels. In fact, according to iSideWith.com’s homepage, more than a million people have taken the free quiz to determine their ideal candidate since it launched in March.”

The free quiz may be taken by going to iSideWith.com.

According to Schelle and Maley, “The selection of U.S. Rep. Paul Ryan as Republican candidate Mitt Romney’s running mate has put presidential race into overdrive now that we know who all the players are.”

“But do you really know which presidential candidate best matches your stance on those issues? It may surprise you to find out who Floridians’ beliefs support,” note Schelle and Maley.

According to the iSideWith.com’s website Florida goes with Libertarian candidate Gary Johnson on domestic policy, healthcare and immigration issues. Who Florida sides with by party are: 51% are Democrat, 41% Green,  39% Republican and 37% Libertarian. This non-scientific survey shows Florida’s favorites in order: Libertarian Gary Johnson, Democrat Barack Obama, Republican Ron Paul and Republican Mitt Romney. Note that the three conservatives are most in line with how Floridians stand.

The question is will the Libertarian and Ron Paul vote go for Romney in November? Ideology may trump candidate support once inside the voting booth.

 

Watch Out Florida Here Comes Our “Bubble Government”

Recently in a radio interview Robert Wiedemer co-author of America’s Bubble Economy and Aftershock and Edward J. Pinto, resident scholar at the American Enterprise Institute discussed the idea of the United States having a “bubble government”. Wiedemer stated that America has suffered through “a number of financial bubbles” and the “aftershock following each”. To date each of these bubbles, the most recent being the housing bubble, have burst and fallen onto two other looming bubbles. These two bubbles are the “dollar bubble” and the “debt bubble”.

These two bubbles are primed to burst and the pin is called inflation.

The Wall Street Journal headline for April 5, 2012 was “Markets Fear End of Stimulus” written by Jonathan Cheng and Charles Forelle. What is the great concern? According to Cheng and Forelle, “European Central Bank President Mario Draghi indicated he would be hesitant to undertake more monetary easing, citing concerns about inflation.” Monetary easing (a.k.a. government stimulus or quantitative easing) is governments printing money. Today American is awash in money due to our government printing it with no end in sight – the dollar bubble is upon us.

Congress has failed in their Constitutional duty to pass a budget in nearly four years. The U.S. government runs on continuing resolutions and Congress has raised the debt ceiling to an astounding $15+ trillion dollars. In 2011 Congress spent nearly 55% more than it collect in revenues. The debt ceiling will be breached yet again before the November 6, 2012 elections. This all has caused our government to borrow at an unprecedented rate of 40 cents of every dollar – the debt bubble.

What does that all have to do with Florida?

Florida is especially vulnerable to the aftershock of either a dollar or debt bubble burst. Florida’s barely recovering housing market and our large population of fixed income retirees are in the cross hairs should inflation increase even fractionally.

According to Edward J. Pinto, “One in four [Federal Housing Administration] FHA loans outstanding in Georgia and New Jersey are now thirty-days-plus delinquent, with eight additional states having delinquency rates above 20 percent. The national rate is 17.79 percent.” Florida has a delinquency rate of 23.07%. Pinto points out, “FHA is estimated to have a current net worth of -$16.923 billion, approximately $18 billion less than the ‘economic net worth’ set forth in FHA’s 2011 Actuarial Study.”

Pinto states, “The Government Mortgage Complex (GMC), consisting of FHA, Fannie Mae, Freddie Mac, the Veterans Administration and Federal Department of Agriculture, is bankrupt. The Government Mortgage Complex guarantees about $6 trillion in in home mortgages, yet has zero capital backing it. Fannie and Freddie do owe the government nearly $200 billion and counting.”

When inflation kicks in, as it is in Europe, the bond markets will tank, as they have in Spain, and Florida will be facing a double dip recession because many retirees have invested in bonds.

President Obama, the Federal Reserve and Congress will do everything they can to not let this collapse happen before the November 2012 elections. However, they may not be able to stop it, as the markets are already reacting to failed attempts at austerity in the EU and the rising cost of debt.

These two bubbles are coming home to roost in America.

When they burst the burden will fall most heavily upon the American taxpayer a rapidly diminishing species. There is not the political will to address either bubble until they burst and a national crisis occurs. As the argument goes “never let a good crisis go to waste” but this time the austerity solutions will be Draconian.

A possible scenario is a replay of the October surprise of 2008 – a meltdown of the financial markets. Are we being set up for another TARP or Stimulus III? Time will tell.

Obama Turning Americans into “Economic Slaves”

Florida Congressman Allen West (R-22) stated at a Port Saint Lucie campaign speech President that President Obama wants to turn Americans into “economic slaves.”

At the event Congressman West spoke about the importance of lowering taxes, minimizing regulations on business and bringing jobs back to Florida. Congressman West criticized President Obama on his failure to create private sector jobs.

“Self-esteem comes from doing esteemable things. Sitting at home and getting a check from the government is not going to help your self-esteem. What it will do is make you an economic slave to people living in a far, far, distant place,” West remarked.

Congressman West stated, “He does not want you to have the self-esteem of getting up and earning and having that title of ‘American’. He’d rather you be his slave and be economically dependent upon him.”

Congressman West said during a Conservative Black Forum said that President Obama “doesn’t have a vision for the black community” in America. Congressman West’s website notes:

“In the beginning, in chapter one, it talks about over the past 30 years, billions of dollars have been poured into black communities across the country in hopes of curing well-documented socio-economic problems including failing schools and adequate housing, rampant crime and drug abuse, black on black killings, unemployment and more,” West said. “Despite the courageous efforts of many local institutions, agencies, school leaders, grassroots organizations and community residents, the problems remain.”

“In many instances, these problems have grown worse,” he continued. “I believe it will take new ideas and new voices to find solutions, and that is exactly why we’re here. We’re here today to talk about economic freedom as opposed to economic dependency. We’re here today to talk about four basic conservative principles and how they can apply to economic revitalization for the black community: That’s limited government, being fiscally responsible, individual industrialism that leads to self-sufficiency and the free market that grows business, and lastly and most importantly, it’s about equality of opportunity which comes from a good education.”

West points to the black community’s 14 percent unemployment rate as an indicator that the current economic policies aimed at helping minorities aren’t working, adding that “if you understand actual unemployment, it’s probably closer to 18 or 20 percent.”

On top of that, West pulled out statistics showing how blacks aren’t proportionally represented population-wise in the percentage of new start-up businesses around the country.

“60 percent of new startups are in the white community, 23 percent of new startups [are] in the Hispanic community, 5 percent [of] new startups [are] in the Asian community and, with 13 percent of the population, you’re only seeing nine percent of new startups coming out of the black community,” West said.

Over the more than two-hour-long discussion about issues facing these communities and possible solutions, President Barack Obama hardly came up. After the event, West told The Daily Caller that’s because Obama “doesn’t have a vision for the black community and economic development.”

“He doesn’t have a vision for America,” West told TheDC. “So, I think that’s why we see all of these horrible economic indicators turning in the way that they are. His vision is just to get re-elected and that’s not what I’m here talking about.”

West issued a warning concerning the Supreme Court’s recent decision to uphold the Affordable Care Act. “Now we find ourselves in a situation where the tax code of the United States of America is being used as a weapon against the American people. It is being used for behavior modification. That is exactly what came from the Supreme Court decision last week,” said West.

Congressman West is campaigning for a second term in the U.S. House in Florida’s newly-drawn district 18. He faces County Sheriff Bob Crowder in the GOP primary on August 14 for a chance at the party’s nomination.

Raising the National Debt – Doing Evil in the Name of Good

debt

Many people see government debt, over regulation and control of individuals, families and our natural resources as necessary to the good of the collective. May I humbly suggest that this is a violation of natural law as envisioned by our Founding Fathers in the Constitution?

Debt is in and of itself not immoral if the person encumbers himself for a his purpose – expanding a business, building a home or sending a child to college. It becomes an immoral act when debt is incurred without the consent of the indebted. The National Debt is taxation of the individual and future generations without representation.

This summer President Obama will ask Congress to raise the debt ceiling.

This effort will become political theatre of the first order with the media. Both sides will be touting the good and the bad of raising the debt ceiling. I predict that the debt ceiling will be raised, which is the consummate example of doing evil in the name of good. Progressives will argue that the poor will be harmed if the debt ceiling is not raised. Their plea is that only government can sustain the poor for the poor will never be capable of sustaining themselves due to a corrupted society.

Their argument is false on its face.

It is false because it is government that defines poor, not the poor defining themselves. There have been since time immemorial those who have more and those who have less. However, it has only been recently that those with less have been defined as a “class of poor”. Charles Murray in his book “Coming Apart: The State of White America, 1960-2010” notes, “Michael Harrington’s The Other America created a stir when it was published in 1962 partly because Harrington said America’s poor constituted a class separate from the working class – a daring proposition. At the time, the poor were not seen as a class, either by other Americans or in their own eyes. The poor were working-class people who didn’t make much money.”

The public debate is all about jobs. Jobs mean a working class. The working class consists of all those working or earning a living or having a job not supported by government subsidy. The private sector working class has shrunk under both Democrat and Republican administrations. There is a growing concern that today more people vote for a living than work for a living. The private sector creates prosperity, which in turn creates jobs, which in turn allows the working class to advance and be less poor. Prosperity comes from productive work, not government welfare.

Government at every level consumes wealth and uses it for its own ends. Our republican form of government was created to protect individual property. Property was defined in broad terms by James Madison, author of the Constitution. Madison wrote, “[Property] embraces everything to which a man may attach a value and have a right: and which leaves to everyone else the like advantage. In the former sense, a man’s land, or merchandize, or money is called his property. In the latter sense, a man has property in his opinions, and the free communication of them.”

Madison believed, “As a man is said to have a right to his property, he may be equally said to have a property to his right.”

Take away a man’s property and he is no longer a man but a slave. Government at every level has created reasons to limit man in both its property right and his right to property. For decades the federal, state and local governments have instituted laws and regulations designed to smother property rights. Government at every level is becoming what Thomas Jefferson called the “feudal-ruler form of government”. In the feudal-ruler scheme according to Brian Sussman, author of “Eco-Tyranny: How the Left’s Green Agenda will Dismantle America”, “The rights of the government become superior to the rights of citizens.”

Only when men and women own property are they truly free. We must be superior to our government or tyranny will reign supreme – forever.