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Who Do Economic Profits Belong To? by Sandy Ikeda

Do we deserve to keep the profits that result from our actions?

Most libertarians would maintain that any economic profit — the residual of revenue over cost — that you earn from voluntary exchange is indeed moral and rightly belongs to you. The puzzling thing is that standard microeconomic theory, which libertarians as well-known as Milton Friedman have used to defend their free-market beliefs, is completely irrelevant in justifying that belief.

I attended a talk recently given by Professor Israel Kirzner in which he addressed the question of whether economics can tell us who does and doesn’t deserve profit. I won’t summarize the entire lecture here, which I expect Professor Kirzner intends to publish, but I will touch on an important and often-neglected point he made.

Specifically, it’s that because microeconomic theory is utterly useless in morally justifying economic profit, we need to look beyond one of the most cherished slogans of economics: There ain’t no such thing as a free lunch, or TANSTAAFL for short. Indeed, in order even to begin seeing economic profit as moral, you have to set TANSTAAFL aside. (I wrote on a related theme in “But There ARE Free Lunches!” in May 2011.) Now, how does that relate to the question of who, if anyone, deserves economic profit?

The Value of the Marginal Product

Let’s say you want to sell a new kind of musical instrument. You buy or hire every single ingredient you need to produce it: the various kinds of skilled labor and equipment, the working space, management and financial knowhow, and whatever computing and power needs you require. You also contribute to production as the owner of the firm, and your contribution includes the risk you take to start the business as well as your industriousness, tenacity, and courage.

You then pay each and every one of these factor owners, including yourself, its “marginal value product,” which is the revenue the business earns from selling what each input produces. You pay wages or rents to everyone and a return to yourself to compensate for the resources you bring. Economists since John Bates Clark have used the marginal value product and continue to do so to explain how income from production is distributed. But there’s a problem.

Suppose, after paying all the input owners including yourself, there’s still something left over. That something, the residual of all actual revenue over all actual costs, is economic profit.

Again, you’ve paid every factor owner all of what each has contributed to the value of the musical instruments produced. That means that the value of the marginal product, the central concept in the modern microeconomic theory of income distribution, cannot explain who deserves to keep the economic profit because it cannot explain profit.

It’s important to keep in mind that economic profit is not “earned” in the same sense that wages and rents are earned. It is what’s left over after all other earned income has been paid out according to the value of its marginal product.

To whom then does economic profit properly belong?

The Concept of Entrepreneurship Offers a Clue

For Kirzner and other economists working in the tradition of Austrian economics, the key to answering that question, though not the complete answer, begins with the concept of discovery.

There is knowledge that we don’t possess because we choose not to know it. If someone asked me for the phone number of a person whose name is drawn randomly out of the New York City telephone directory, the chances are very good that I won’t know it. Although I’m aware of the existence of the directory, I haven’t memorized it, simply because I haven’t deemed it worthwhile. I’ve chosen not to know.

But if I didn’t even know of the existence of such a directory and I needed to call a particular person, my learning about the directory would come as a revelation. Moreover, I would have found out that I didn’t even know what I didn’t know — what Professor Kirzner calls “sheer ignorance.” He then defines entrepreneurship as that aspect of human action that discovers, and thereby removes, sheer ignorance.

What does the discovery of sheer ignorance result in? Economic profit!

Why marshal all the resources to produce a new musical instrument? Because you believe you see what no one else sees. You believe that it offers a better investment for you than what you’re doing now. Why do you think that? Because you’ve realized — made the discovery — that after compensating all the factors of production with the value of their marginal product, there will still be a pure residual left over that you couldn’t have gotten doing anything else. If you’re right, you get that residual, the economic profit; if you’re wrong, you suffer the economic loss.

This means, of course, that TAANSTAFL is wrong. Opportunities to make economic profit do exist. There are free lunches. In fact, in a world of sheer ignorance, such as ours, free lunches are everywhere.

Toward an Answer

I haven’t mentioned how Professor Kirzner addresses the issue of whether economic profit is moral or deserved. To get a good sense of what he says in the remainder of that lecture, have a look at his 1989 book, Discovery, Capitalism, and Distributive Justice.

(Also, see this book review by FEE writer Charles W. Baird.)

A good economist needs to have a firm grasp on standard microeconomic theory: supply-and-demand analysis and all that. At the same time, it’s important for her to appreciate its limits, which are severe indeed on the question of the morality, or even the origin, of economic profit.

Sandy Ikeda
Sandy Ikeda

Sandy Ikeda is a professor of economics at Purchase College, SUNY, and the author of The Dynamics of the Mixed Economy: Toward a Theory of Interventionism. He is a member of the FEE Faculty Network.

“Affordable Care”: Higher Premiums, Higher Deductibles, Worse Healthcare by Michael F. Cannon

Aside from one necessary clarification (see far below), it would be difficult to improve on what the New York Times, the Boston Globe, and the enrollees they interview have to say about ObamaCare.

First, from yesterday’s New York Times article, “Many Say High Deductibles Make Their Health Law Insurance All but Useless”:

For many consumers, the sticker shock is coming not on the front end, when they purchase the plans, but on the back end when they get sick: sky-high deductibles that are leaving some newly insured feeling nearly as vulnerable as they were before they had coverage.

“The deductible, $3,000 a year, makes it impossible to actually go to the doctor,” said David R. Reines, 60, of Jefferson Township, N.J., a former hardware salesman with chronic knee pain. “We have insurance, but can’t afford to use it.” …

“We could not afford the deductible,” said Kevin Fanning, 59, who lives in North Texas, near Wichita Falls. “Basically I was paying for insurance I could not afford to use.”

He dropped his policy. …

“Our deductible is so high, we practically pay for all of our medical expenses out of pocket,” said Wendy Kaplan, 50, of Evanston, Ill. “So our policy is really there for emergencies only, and basic wellness appointments.”

Her family of four pays premiums of $1,200 a month for coverage with an annual deductible of $12,700. …

Alexis C. Phillips, 29, of Houston, is the kind of consumer federal officials would like to enroll this fall. But after reviewing the available plans, she said, she concluded: “The deductibles are ridiculously high. I will never be able to go over the deductible unless something catastrophic happened to me. I’m better off not purchasing that insurance and saving the money in case something bad happens.”

“While my premiums are affordable, the out-of-pocket expenses required to meet the deductible are not,” said [Karin] Rosner, who makes about $30,000 a year. …

“When they said affordable, I thought they really meant affordable,” [Anne Cornwell of Chattanooga, Tenn.,] said.

And from today’s Boston Globe article, “High-Deductible Health Plans Make Affordable Care Act ‘Unaffordable,’ Critics Say”:

“We can’t afford the Affordable Care Act, quite honestly,” said Cassaundra Anderson, whose family canvassed for Obama in their neighborhood, a Republican stronghold outside Cincinnati. “The intention is great, but there is so much wrong. . . . I’m mad.” …

The Andersons’ experience echoes that of hundreds of thousands of newly insured Americans facing sticker shock over out-of-pocket costs. …

“This will be an issue at least one more time in the 2016 election. It could absolutely still hurt Democrats,” said Robert Blendon, a professor of health policy and political analysis at the Harvard School of Public Health. “Polls about the Affordable Care Act have a considerable amount of middle-income people who say either the program has done nothing for them or actually hurt them.” …

“Unfortunately, what we are headed toward now is universal crappy health insurance,” said Dr. Budd Shenkin, a California pediatrician. … “It’s just not a good deal for people,” he said.

“We’re in the process of looking at going without insurance,” [Cassaundra Anderson] said, calculating that the family will be better off financially just paying the $2,000 tax penalty for not abiding by the law’s mandate. “What am I even paying these insurance people for? Why should we reenroll?” …

“I cannot get anything with this insurance. Nothing,” said [Laura] Torres, who avoids seeking treatment for her thyroid condition and high blood pressure because of cost. “I just pay my monthly payments, try to take care of myself, go to work, and hope something serious doesn’t happen to me.” …

Amete Kahsay, 53, works as a temporary warehouse packer in Columbus. The Affordable Care marketplace is her only option for health insurance. She and her husband, an airport shuttle driver, pay $275 a month for a “bronze” plan with a $13,200 deductible.

Shortly after they signed up for insurance last year, her husband rushed her to the emergency room when she experienced dizziness. The visit, which included a CT scan of her brain, cost $1,700. She paid the charge from her savings, then returned to her native Ethiopia, where care is cheaper, to consult a neurologist and seek follow-up care.

“I support Obamacare. Without it, I wouldn’t have any type of insurance. But I’m not sure it’s worth the money,” said Kahsay, a US citizen who is registered as an independent voter. “Now, unless I get very, very sick, like only if it’s life-threatening, I won’t go to the doctor. I just lay down and take a rest.”

The necessary clarification is that these people are not complaining about high-deductibles in a market system. In a market system, consumers who choose high deductibles save money on their premiums and therefore have more resources to help them pay their out-of-pocket expenses.

ObamaCare, on the other hand, manages to pair high deductibles with higher premiums, stripping many people of this benefit of high-deductible plans and leaving them unable to pay their medical bills.

Cross-posted from Cato.org.

Michael F. Cannon
Michael F. Cannon

Michael F. Cannon is the Cato Institute’s director of health policy studies.

The Legacy of Arne Duncan, Common Core and So Much More: College (Part 2)

As noted in my last post, outgoing Secretary of Education Arne Duncan has done his part to transform America through K-12 education.  This has happened through Common Core and by expanding the Department’s reach into younger and older cohorts.  Duncan got the promise for an additional $1 billion for preschool education.  As the Chronicle of Higher Education noted, Duncan is also leaving a “big imprint” on higher education.  His legacy is one of “innovation and regulation.”  College is put into a seamless web of K-16, or P-20, with an unprecedented federal role in admissions, placement, assessment, and financing.

The Chronicle notes that Duncan has deviated from the standard practice of Democratic secretaries who have just doled out money.  He has been “personally upbraid[ing] colleges over rising prices and low graduation rates, their handling of cases of sexual assault, their lax academic standards for athletes . . . , and their resistance to greater oversight.” Patricia McGuire, president of Trinity Washington University, has become disillusioned with Duncan’s “top-down approach.” Institutions, like Yale University, get nervous about the Department’s investigations of “sexually hostile environments.”

The nonprofits, like the Lumina Foundation, that have been funding Common Core, however, give a positive assessment. Jamie Merisotis, President and Chief Executive, praises Duncan’s “strong leadership” in putting our higher-education system “a step closer to reflecting the needs of today’s increasingly diverse college students — and the changing meaning of ‘college’ to include all types of postsecondary learning.”  Competency-based programs that “measure learning” through demonstration of a skill set are among his many “innovations.”  Inside Higher Education calls it “new delivery model with the potential to improve degree completion, reduce costs to students, and improve transparency and alignment of learning outcomes to the needs of employers and society.”

Currently, over 600 colleges are designing, creating, or already have competency-based education programs. This number has grown from 52 last year. As with Common Core, it is being funded by the Bill and Melinda Gates Foundation, with “guidance” from the U.S. Department of Education.

The notion of “competency” changes the fundamental notion of education, taking it from learning for its own sake, with a knowledgeable, independent citizenry as an outcome, to producing workers with skill sets.  Colleges that have agreed to align financial aid to such tests have ceded their own power.

Funny, Arne Duncan, when he spoke at the 2013 meeting of the American Education Research Association (AERA) and promised a “sea-change” in assessments for K-12 students, included “competency-based education,” as well as “non-cognitive skills.”  Others at that AERA meeting of academics and researchers working at universities, federal and state agencies, school systems, test companies, and non-profit agencies were Linda Darling-Hammond, who oversaw the development of the SBAC (Smarter Balanced Assessment Consortium) tests, one of the two Common Core tests, and her close colleague, Bill Ayers.

Many colleges are following the Department of Education in emphasizing non-cognitive, “social and emotional learning” skills.  Seventeen colleges have received funds from the Department’s “First in the World” grants to identify and help at-risk students through the aid of a tool called Diagnostic Assessment and Achievement of College Skills to measure such emotional attributes as “grit.”

Colleges have been targeted strategically.  Jacqueline King, director of Higher Collaboration at SBAC, has been working to “create greater academic alignment between K-12 and higher education.”  Common Core tests are determining placement in college courses.  In 2014, college faculty in Tennessee attended workshops to learn how to “synch up with Common Core,” in effect to teach grade 13.

I reported that the Department of Education had funded the 2013 working paper, “The Common Core State Standards: Implications for Community Colleges and Student Preparedness for College.”   It described the “Core to College” program in ten states: Colorado, Florida, Hawaii, Indiana, Kentucky, Louisiana, Massachusetts, North Carolina, Oregon, and Washington.  Core to College is funded by the Lumina, the William and Flora Hewlett, the Bill and Melinda Gates, and other foundations.  Their report, “Making Good on the College-Ready Promise and Higher Education Engagement Core to College Alignment Director Convening, August 1-2, 2012,” provides a record of discussions by “alignment directors” and guest speakers on teaching “a new type of student, more prepared for college-level, discipline-specific work.”  (As a former college instructor I am skeptical: having “more prepared” students meant an easier time in teaching them—not the need for special workshops.)

The ten states are to serve as “bellwethers and models for the rest of the country.”  Among the strategies, directors suggested more data, outreach to other “stakeholders” and private colleges, and more meetings.  They are also looking beyond “the English and Math Departments” that receive Common Core-certified students.  Speakers proposed “engaging faculty in other disciplines that could be touched by Common Core implementation, such as history or the social sciences.”

WestEd, a major Common Core funder, is evaluating the initiative.

The push for new assessments (especially at community colleges) has been quickly followed by calls for free community college.  In his 2014 State of the Union address, President Obama cited Tennessee’s still-developing program as a model.  The American Association of Community Colleges welcomed the proposal.  This year, on September 9, Obama announced that the “College Promise Campaign” would be chaired by Second Lady Jill Biden.  AACC President Walter Bumphus and Trustee President J. Noah Brown will serve on the National Advisory Board.

Democratic front-runners, Hillary Clinton and Bernie Sanders, pushed free college in their first presidential debate on October 13, 2015.

To top it off, the federal government is providing a college “scorecard.”  Of course, those who continue to refuse federal aid, like Grove City College and Hillsdale College, will continue to be left off.

Students at these colleges will also find themselves at an increasing financial disadvantage. One of Obama’s first orders of business was to make the federal government the bank for student loans.  This “bank” practices “loan forgiveness,” by graduating payment to income and providing complete forgiveness through work in government jobs, such as in public schools or at Americorps, the federal agency.  Indiana University law professor Sheila Seuss Kennedy and Indianapolis Chamber of Commerce manager Matt Impink enthused about such a “tour of duty” that sounds like the “civilian corps” Obama put forth at the beginning of his presidency.

We are well on our way.  With schools producing graduates with competencies “align[ed] to the needs of employers and society,” and with Common Core spitting out high school graduates “college and career ready,” we will no longer worry about higher learning.

EDITORS NOTE: This column originally appeared on the Selous Foundation for Public Policy Research website. The featured image is of President Obama announcing free community college with Vice President Joe Biden and Second Lady Jill Biden.

U.S. Muslim Migrant Resettlement: How to follow the money

So many of our readers are eager to start researching the resettlement contractors working near you, so here are a few places to start to learn about how they are financed (this is in no way meant to be an all inclusive list, because I don’t know every place to research myself!).

But, first, although off-topic, I want you to see what a one-woman blogger accomplished in Chicago (not a refugee issue, but one involving fraud in the Chicago school system!).  See here (hat tip: Judy).  It can be done!

I’m tech-impaired, but if I can find stuff, so can you.  It just takes a little patience!

Call or write the non-profit group:

Start with contacting the resettlement agency near you (a handy list is here).  As IRS designated 501(c)3 organizations they are NOT allowed to keep their financial documents from you—they are required to give anyone who calls a copy of their financial statement and their Form 990 (if they have one).  Legitimate churches are not required to file Form 990’s so some of the contractors are doing this federal work (resettling refugees) pretending to be churches only.

Go to Guidestar:

Find their IRS Form 990’s on Guidestar by going here and registering to use Guidestar.  It can get tricky because you have to use their exact name as they filed on their Form 990.  For example, you won’t find the Hebrew Immigrant Aid Society, but you will find its Form 990 by typing in HIAS, Inc.

USA Spending.gov:

USA Spending.gov is a very handy site as long as you know the exact name of the entity you are searching for.  It also has the advantage of tracking across federal agencies and will give you grants and contracts!  Enter the name of the non-profit in the search window in upper right.

For example, you might find that a resettlement contractor is getting cashola, not just from the Office of Refugee Resettlement (in HHS), but from the US Justice Department from some voter registration grants.  If you don’t find the non-profit group listed, don’t give up right away, try to find the exact name it is using. I looked up a specific Catholic Charities this morning under its diocese name and nothing came up, but then I saw on their website that they had a slightly different name and found what I was looking for under that name.

Annual reports to Congress:

These are a treasure trove of information on grants and statistics on welfare use (among other things). I see here that they are late again.  FY2014 should have been released months ago.

Office of Refugee Resettlement:

Go here to programs and click on those of your choice to see who is getting all of the (your!) money!

Non-Profit Facts. com:

A reader sent me this website, which I have never used until today, so try it too by clicking here.  I did test it on the specific Catholic non-profit I searched at USA Spending.gov and was disappointed to see that this website did not mention the $140,000 HUD grant they had received in the last year.  However, there are still some useful bits of information here.  For example, I learned that this “church” group was not required to file a Form 990.

And, finally, you will need to check with your state and local governments about funding these ‘non-profit’ groups receive from you at that level.  This post is meant to address only federal money flowing to them.  You may have to use state public information laws to extract information from them.

Other suggestions that have worked for you?  Send them my way!

RELATED ARTICLES:

Iranian eBay founder having hissy fit over refugee resettlement backlash

Female genital mutilation in Minnesota Somali population not disappearing

Florida and Texas Win Again

The far Left’s actions with regard to tax policy rarely match up to their lingo. Whether it’s John Kerry’s tax savings by docking his boat in Rhode Island rather than Massachusetts to dodge the penalty, or the Clinton’s avoidance of a hefty real estate tax bill by using slick accounting, it’s clear that the far-left’s luminaries do not practice what they preach.

As I reported in August when I wrote about the mass exodus from high-tax states toward more profitable areas, a number of blue state residents are following the same “do as I say, not as I do” approach. To be fair, many of those fleeing blue states for more business-friendly environments are conservatives fed up with having their hard-earned money pilfered by the blue state tax-vacuum, but the laws of probability state this exodus cannot be comprised of conservatives alone.

With the release of a new batch of IRS tax migration data for the 2013-2014 filing year, the evidence keeps piling up that Americans are voting with their feet, and their feet are voting for lower-tax, business-friendly states.

With the release of a new batch of IRS tax migration data for the 2013-2014 filing year, the evidence keeps piling up that Americans are voting with their feet, and their feet are voting for lower-tax, business-friendly states. This data has to be devastating to tax-and-spend liberals who keep insisting that the economic arc of history bends in their direction, but when the IRS data—along with something as simple as market-based U-Haul rates—conclusively indicate otherwise, it’s time to reevaluate that approach.

So, who are the winners and who are the losers? Again, low-tax, business-friendly, Florida and Texas are the big winners, while the high-tax, big government states like New York, California, Illinois, and New Jersey are the big losers.

Recently released IRS tax migration data from the 2013-2014 year indicate that an astonishing 5.4 billion dollars in taxable income fled the state of New York alone, while 4.2 billion left California (hat tip to Jim Pettit, who has written frequently on this topic, for organizing the data). Where is the money going? Florida enjoyed an influx of 10.6 billion dollars in income and Texas gained 4.9 billion. This is in addition to the 17.5 billion, which flowed into the top four finishers, Florida, Texas, South Carolina and, North Carolina, in the 2012-2013 filing year.

To be clear, I am not suggesting that tax rates are the only reason that people are leaving blue states for lower-tax red states, but it defies common sense to insist that this isn’t a major contributing factor. I even had someone write to me that it’s “the weather” that best accounts for the shifts. Really, the weather? I’ve heard a number of complaints from Californians about things ranging from taxes to traffic, but I’ve rarely heard complaints about the weather.

Adding to this pervasive “do a I say, not as I do” phenomenon—in which liberals vote for higher taxes and then move away from regions where their policies have won the day—is that the migration is happening at the county level as well.

As reported by Andrew Blake in the Washington Times and congressional candidate Frank Howard, Washington D.C. and its surrounding suburbs, which overwhelmingly vote Democratic in local, state, and federal elections, witnessed nearly 2 billion dollars flee from the city and its surrounding bedtime communities.

I witnessed this firsthand during my campaign for Congress.

I witnessed this firsthand during my campaign for Congress. I would knock on doors in Frederick County, MD, a largely conservative county just north on I-270 from Montgomery County, a D.C. bedtime community, which has zero countywide elected Republicans. People in Frederick would tell me that they just moved in. When I inquired, “Where from?” they would often respond: “Montgomery County. You just can’t run a business there.”

There’s a crucial election cycle right around the corner. If you are running for office, or supporting someone who is, please do your future constituents a favor and tell them in a clear and well-thought out message why you are running, and why people are running away from tax-and-spend liberal governance.

EDITORS NOTE: This column originally appeared in the Conservative Review. FULL DISCLOSURE: Frank Howard, referenced herein, served as Dan Bongino’s campaign chairman for a brief period during his 2014 congressional campaign.

Muslim Refugee Resettlement Resistance Grows: Feds shifiting costs to State and Local Taxpayers

Fox News reporter, Melissa Jacobs, posted a very useful piece earlier this week entitled, ‘Obama’s refugee resettlement plan could stir battle with states.

Here is a bit that interested me (be sure to read the whole thing because she mentions several states and local communities resisting the resettlement of more refugees.  See if your city or state gets a mention!).

The Obama administration’s pledge to absorb thousands more Syrian and other refugees could run headlong into resistance from state and local officials worried about whether their communities can handle the influx.

[….]

“It’s a fiscal issue,” said Peter Steele, a spokesman for Maine Gov. Paul LePage. “You can only pay for what you can afford, and those funds should be going to the most needy citizens in our state.”

Don Barnett

Don Barnett, Center for Immigration Studies Fellow.

[….]

…. push back from the states could pose practical challenges.

According to a 1980 law, states can opt out of the program and need to be consulted in the process. However, Don Barnett, a fellow with the Center for Immigration Studies,describes refugee resettlement as a “secretive” and lucrative business for “non-profits” who operate with little coordination with state and local communities.

“In every encounter I’ve had with resettlement representatives, they will say if the locality doesn’t want it, we won’t resettle them — but this hasn’t been tested,” Barnett said.

Concern about the funding burden falling on local governments is hardly new.

The 1981 Select Commission on Immigration and Refugee Policy noted, “Many state and local officials are concerned that the costs of resettlement assistance will continue beyond the period of federal reimbursement and that the burden of providing services will then fall upon their governments.”

“There is a complete cost shift to the states,” Barnett said.

Indeed, federal funding, extended for 36 months at the beginning of the program, dropped to the current eight-month period by 1991. The Heritage Foundation estimates the total lifetime cost of government benefits at $6.5 billion per 10,000 refugees.

See Julia Hahn at Breitbart, here, for more on the Heritage Foundation study.

RELATED ARTICLES:

Maryland Senators want more Syrians resettled in the state; seek to streamline security screening

Coeur d’Alene, Idaho newspaper confirms it: No refugees to be resettled in Northern Idaho (“right now”)

‘Refugee’ security screening Greek-style

PODCAST: You Cannot Multiply Wealth By Dividing It

A sermon given in 1984 by Dr. Adrian Pierce Rogers, Baptist Pastor, Author, and Political Commentator titled, “God’s Way to Health, Wealth and Wisdom.”

“You cannot legislate the poor into freedom by legislating the industrious out of it. You don’t multiply wealth by dividing it. Government cannot give anything to anybody that it doesn’t first take from somebody else. Whenever somebody receives something without working for it, somebody else has to work for it without receiving. The worst thing that can happen to a nation is for half of the people to get the idea they don’t have to work because somebody else will work for them, and the other half to get the idea that it does no good to work because they don’t get to enjoy the fruits of their labor.”

Please listen to Dr. Roger’s entire sermon “God’s Way to Health, Wealth and Wisdom“:

Huckabee Hucksterism on Common Core?

Presidential candidate Mike Huckabee surprised many conservatives by sending a mailing asking them to “Endorse Mike’s Pledge to Kill Common Core.”  It reads, “I, Mike Huckabee, pledge allegiance to God, the Constitution, and the citizens of the United States: As President I will fight to kill Common Core and restore common sense.  Education is a family function—not a federal function.”

Huckabee then came out with another mailing in which he vowed not only to kill Common Core, but to abolish the Department of Education.

Huckabee declared his candidacy in May. Reporters and commentators questioned the motivations for his shift on Common Core. At the Daily Caller, Blake Neff called Huckabee’s “strong, total condemnation” a “relatively new trait” and questioned the governor’s explanation: “the unexpected involvement of the Obama administration.”  In January, at National Review Andrew Johnson noted that Huckabee had publicly praised Common Core standards that he claimed were developed by governors and state education officials.  A blog called “The Truth about Mike Huckabee” basically repeats these claims but in a heightened, defensive style, stating, “It is important to note that The National Governor’s Association Common Core IS NOT the same as the Common Core associated with the Department of Education Grants.  If you take the time to research this topic you will see that one of many differences is that the federal government requires those who administer the grant project meet certain diversity guidelines, which is completely foreign to the work done by the National Governor’s Association.  These are two completely different programs, begun by different organizations, with different implementation and operational objectives.”

Huckabee’s defense does not stand up to scrutiny.  Neff pointed to Huckabee’s 2011 book A Simple Government, in which Huckabee endorsed the role of the federal government, writing, “I fully endorse the new federal program Race to the Top, which has states compete for additional education funds, allowing them to decide what reforms to enact, rather than having specific reforms imposed on them from above.”  This was two years after the Race to the Top program required that states agree to adopt the federal Common Core guidelines as part of the application process.

As he contemplated his presidential run, Huckabee knew that his “complicated history with Common Core” could be the reason he’d lose a significant portion of the evangelical base that supported him in 2008, according to Johnson.  Conservatives already had a problem with Huckabee’s record as governor that included increases in taxes and pardons for criminals.

Furthermore, Huckabee’s efforts continued in 2013 and included sending a letter to Oklahoma lawmakers ahead of a vote to dump Common Core in that state; he encouraged them “to resist any attempt to delay implementation.”  That year, Huckabee also told the Council of Chief State School Officers to “rebrand” Common Core, and not “retreat.”

The authors of Common Core Report: Grading the 2016 GOP Candidates (by American Principles in Action and Cornerstone Policy Research Action) write that Huckabee’s “rebrand advice to the owners and supporters gut-stabbed the national grassroots movement right when it was gaining traction.” Rebranding, or renaming, the Common Core standards, while making superficial changes, has been a favorite strategy of politicians and bureaucrats trying to fool voters and legislators who really are trying to kill Common Core in their states.

Huckabee claimed his comments were “misconstrued.” By December of 2013, Huckabee was using his Fox News show to outline his concerns about “what Common Core has become” – a divisive issue.  He encouraged “activists on both sides of the issue to move past Common Core,” and “argued for a renewed, broader effort to improve education,” according to Johnson.

What is the federal government’s role, and specifically a president’s role, in improving education?  On his campaign site page Huckabee pledges to abolish the Department of Education, while insisting, “We must demand results, accountability and success for every child in every classroom.  I oppose watering down our education standards or automatically promoting every student.”

The rationale behind federal education programs, including the No Child Left Behind initiative of the George W. Bush administration, is precisely the demand for “accountability.”  NCLB was built on the false notion that every child can achieve “success” and that it is the federal government’s role to see to it. Indeed, the current education reauthorization spending bill is called the “Every Child Achieves Act” (ECAA).  Common Core was hustled through on such pretexts of accountability and standards.

The Common Core Report: Grading the 2016 GOP Candidates gives Huckabee a “C,” in spite of his “checkered past.”  (Grades range from “A-” for Ted Cruz and Rand Paul to “F” for Jeb Bush.)

Raising his grade is Huckabee’s “forceful general argument” of late about the problem of special interests currying the favor of the federal executive branch, which then puts mandates on the states.  State departments of education, state boards of education, and governors then become “supplicants” to the U.S. Department of Education.

Real Clear Politics puts Huckabee in ninth position in a field of 15 candidates.  Four major polls show him garnering four percent of the support.  It appears that Huckabee will not be the candidate who ends the system of “supplication” to the Department of Education.  Let’s hope we get one, nevertheless.

RELATED ARTICLES:

Increasingly Uncommon Common Core

Immigration Lowers Educational Achievement, Survey finds

EDITORS NOTE: This column originally appeared on the Selous Foundation for Public Policy Research.

6 Things Paul Krugman Gets Wrong on Medicare by Charles Blahous

My usual custom when writing about Medicare and Social Security finances is to simply present the relevant data instead of discussing others’ commentaries about the programs.

After this year’s Medicare trustees’ report was released, however, a subsequent Paul Krugman column prompted a number of questions from his readers, suggesting it would be helpful to address Dr. Krugman’s specific assertions.

The essence of Dr. Krugman’s column was to cite the latest Medicare report as evidence that “there never was an entitlements crisis.”

Dr. Krugman’s view of the Medicare financing outlook differs with the trustees’ perspective as reflected in our joint message, which states, “Medicare still faces a substantial financial shortfall that will need to be addressed with further legislation.” The difference between these two perspectives derives in part from problems of incomplete information and analysis.

Problem #1: Conflating expectations with reality.

Dr. Krugman’s piece points to long-term Medicare cost projections that now look less daunting than they did in 2009, and asserts that the entitlement cost problem is therefore “disappearing.”

That characterization, however, is incorrect. Comparing to prior projections is in this context a distraction, irrelevant to whether Medicare is now on a stable financial course (it is not).

The mistake is one of so-called “anchoring,” a behavioral economics concept referring to the powerful cognitive illusion whereby our perception of events is distorted by previous expectations.

Whether things are actually getting better or getting worse is not a function of the trend of expectations but of real-world data evolving in time. Medicare cost burdens are mounting, not easing, as the accompanying graph shows. Total program costs have been rising faster than our economic output, and are currently projected to continue to do so.

As many readers will intuit, it is highly problematic for any major spending program to grow significantly faster than the economy that must support it, as this can only lead to continually rising tax burdens, escalating debt, and/or crowding out other priorities.

Problem #2: Inconsistently measuring GDP

The graphs that Dr. Krugman reproduces to make his argument present projected Medicare spending as a percentage of GDP, contrasting this year’s projections with those of 2009. But in 2013 BEA redefined how GDP is measured, both historically and going forward. Adjusting the 2009 projections for this definitional change, one sees that a good portion of the apparent improvement to date is illusory.

Dr. Krugman’s piece does not as far as I can tell disclose this inconsistency. Correcting for it, the recent picture looks only slightly better than 2009 projections, and has actually been worse in some years.

Problem #3: The large apparent improvements are mostly projections that haven’t yet borne fruit.

As shown above, to date the Medicare cost picture is not greatly different than projected in 2009. All that’s really different are the future projections, especially over the long term. These anticipated improvements are due primarily to aggressive cost-containment provisions in the Affordable Care Act (ACA, or so-called “Obamacare”) as well as, to a lesser extent, the MACRA legislation passed earlier this year.

The ACA provisions involve ambitious reductions in the rate of growth of Medicare provider payments, while MACRA’s involve reductions in the long-term growth of physician payments. Similar past efforts have not been adhered to, and some experts are skeptical that these new measures will be. This is why the CMS Medicare actuary has prepared an alternative projection scenario showing much higher future costs.

We should all hope, whether we supported or opposed these laws, that their cost-containment provisions prove successful and sustainable. Were they to be abandoned, other provisions would need to be enacted in their place to achieve equal or greater savings – otherwise taxes and/or premiums must be raised.

That said, we cannot declare victory unless and until these provisions produce the savings now projected from them.

Problem #4: We haven’t fixed the entitlement growth problem, only changed the mix of entitlements.

Dr. Krugman’s graphs show 2015’s Medicare cost projections well below 2009’s, prompting the conclusion that any supposed spending crisis has been solved or never existed. But this leaves out a defining part of the overall picture.

True, the ACA reduced projected Medicare growth — but it also expanded Medicaid as well as created a whole new system of health insurance exchange subsidies.

If the thesis is that changes in spending projections since 2009 illuminate whether we really have an entitlement spending problem, one can’t simply show the one large entitlement where projected spending has gone down, and omit the ones where projected spending has gone up. Unfortunately, we cannot analyze the whole picture using the trustees’ methodology because the trustees do not issue projections for the ACA’s health exchange subsidies.

But earlier this year CBO estimated that by 2025, the ACA would add roughly $210 billion a year in new Medicaid and exchange subsidy spending, or roughly 0.8% of GDP. As it happens, 0.8% of GDP (adjusted for the changed definition of GDP) is roughly the amount by which the trustees have lowered (between 2009 and 2015) our projections for Medicare spending through 2025.

Given that these two effects almost net each other out over the next decade it seems inappropriate to state, as Dr. Krugman does, that “most of that projected (spending) rise has gone away.”

Problem #5: Crediting the ACA For Effects It Didn’t Cause.

Dr. Krugman’s column states in one place, “health spending began moderating after the passage of the ACA.” This is incorrect. The health spending slowdown began several years prior to the ACA’s 2010 passage (see CRFB’s “Exhibit 2”).

Dr. Krugman’s phrasing also lends itself to the misreading that the ACA is a primary reason for recent spending moderation. The CMS actuaries find, to the contrary, that the ACA’s effect has been on balance to slightly increase national health spending.

Problem #6: Not Reflecting Current Law.

Less egregious because it involves a relatively arcane aspect of budgetary scoring, the graphs shown by Dr. Krugman reflect the trustees’ estimates of the costs of paying scheduled Medicare benefits, which is not the same thing as would occur under current law (because, over the long term, current law does not provide for the financing of these benefits).

The distinction does not by itself undermine and indeed could be said to support Dr. Krugman’s argument that the entitlement crisis is overstated. It is, however, another reason why it is incorrect to credit the ACA for fiscal improvements, because on a literal law basis the ACA added on balance to federal entitlement spending, as CBOCRFB and others including myself have explained.

Conclusion

Dr. Krugman’s piece reaches incorrect conclusions about entitlement spending challenges “disappearing” based on incomplete information and analysis. When critical missing information is taken into account, it is more readily seen that lawmakers still face a substantial challenge to address unsustainable spending growth in federal entitlement programs.

This post first appeared at e21.

Charles Blahous
Charles Blahous

Charles Blahous is a senior research fellow for the Mercatus Center, a research fellow for the Hoover Institution, a public trustee for Social Security and Medicare, and a contributor to e21.

Toronto: Disabled man told that taxpayer-subsidized housing is for Muslims only

“Here you have a building for Muslims, and normally that would be discriminatory because other religions could not be accommodated there. But the Human Rights Code says if it’s a special-interests organization — religious, philanthropic, educational or social — they can discriminate in that way.”

Oh. Where is the taxpayer-funded housing for Christians only? For Jews only?

Ezra Levant weighs in on this travesty here. “Disabled man told subsidized housing is for Muslims only,” by Marco Chown Oved, Toronto Star, August 26, 2015 (thanks to Eli):

A young wheelchair user has been taken off the waiting list for a publicly subsidized apartment because he is not a member of the Muslim community that established the building — a practice that, while legal, raises concerns that accommodations for cultural and religious groups could be limiting access to affordable housing.

According to a letter that arrived at his mother’s house last week, Austin Lewis, 21, was removed from the waiting list at the Ahmadiyya Abode of Peace building on Finch Ave. W in North York because he is not a member of their faith.

“It was mostly confusing, more than anything else,” he said. “Why would a government segregate its own building?”

The 16-storey building, which provides a range of services to its residents including a prayer room that accommodates 250, was actually approved in the 1990s as part of a provincial program to encourage non-profits and religious groups to build affordable housing, according to its property manager.

Lewis, who has used a wheelchair since a disease attacked his spinal cord when he was 8, says he applied to more than 100 accessible buildings in Toronto, Brampton and Peel Region, and there was no notice that any of them were restricted to a certain community.

“We had no idea. The letter came as a complete shock,” he said.

The city provides a $1.7-million subsidy for 94 rent-geared-to-income units under a five-year agreement, which began Jan. 1, that restricts tenants to “members of the Muslim Jama’at.”

“The City’s mandate policy allows social housing providers to restrict their housing to individuals belonging to an identifiable ethnic or religious group if specific conditions are met,” says a statement provided by city spokesperson John Gosgnach.

There are eight such buildings in Toronto, catering to Muslims, Macedonians, Germans and seniors who are Christian, Chinese, Greek, Hungarian or Lithuanian.

Karin Tahir, Ahmadiyya Abode of Peace’s property manager, said the building does not discriminate on race, colour or ethnicity. “Ahmadiyya is in 200 countries,” he said.

“We’re not bumping anyone off the list,” Tahir added. “The real issue is the 90,000-person waiting list for an affordable unit. Where is the new stock?”

It’s already hard enough to find affordable housing in the GTA, Lewis says, but when you’re in a wheelchair, your options are limited even further.

“It does seem incredibly odd. There is housing for people 50 and over, but there is no housing specifically for people in chairs,” he said.

His mother, Laura Whiteway, is incensed that her son could be turned away from a wheelchair-accessible building.

“They’re being given a licence to discriminate. It’s just wrong,” she said.

Lawyer Barry Swadron, who has extensive experience in disability law, says the Ontario Human Rights Code allows for this kind of discrimination.

“Here you have a building for Muslims, and normally that would be discriminatory because other religions could not be accommodated there.

“But the Human Rights Code says if it’s a special-interests organization — religious, philanthropic, educational or social — they can discriminate in that way,” he said. “It’s very unfortunate, but that’s how the law was written.”

While the intention was to create safe spaces for minority communities, this kind of permissible “positive discrimination” inevitably produces collateral damage, Swadron said….

No kidding, really?

RELATED ARTICLE: Muslim “Breaking of the Crosses” in Syracuse, NY as Catholic Church converted to mosque

Federal Student Loans Make College More Expensive and Income Inequality Worse by George C. Leef

One day, Bill Bennett may be best remembered for saying (in 1987, while he was President Reagan’s education secretary) that government student aid was largely responsible for the fact that the cost of going to college kept rising. What is called the “Bennett Hypothesis” has been heavily debated ever since.

A recent report by the Federal Reserve Bank of New York lends support to the Bennett Hypothesis.

Authors David Lucca, Taylor Nadauld, and Karen Shen employed sophisticated statistical techniques to analyze the effects of the increasing availability of federal aid to undergraduates between 2008 and 2010. They conclude the institutions that were most exposed to the increases “experienced disproportionate tuition increases.”

By the authors’ calculation, there is about a 65 percent pass-through effect on federal student loans. In other words, for every $3 increase in such loans, colleges and universities raise tuition by $2.

It is very good to have a study by so unimpeachable a source as the New York Fed supporting the conclusion that quite a few others have reached over the years: Increasing student aid to make college “more affordable” is something of an impossibility. The more “generous” the government becomes with grants and loans, the more schools raise their rates.

Other studies have reached the same conclusion.

In his 2009 paper Financial Aid in Theory and Practice, Andrew Gillen showed that the Bennett Hypothesis was true, although more so at some institutions than others. In their 2012 study, Stephanie Riegg Cellini and Claudia Goldin found that for-profit schools unquestionably raised tuitions to capture increases in federal aid.

Such analyses are amply supported by personal observations about the way college officials look at federal aid. Peter Wood, president of the National Association of Scholars writes that when he was in the administration at Boston University:

The regnant phrase was “Don’t leave money sitting on the table.” The metaphoric table in question was the one on which the government had laid out a sumptuous banquet of increases of financial aid. Our job was to figure out how to consume as much of it as possible in tuition increases.

Similarly, Robert Iosue, former president of York College, writes in his book College Tuition: Four Decades of Financial Deception (co-authored with Frank Mussano), “Common sense dictates a connection between government largess to the buyer and higher prices from the seller. For me it began in 1974 when grants and loans were given to students based on the cost of college. Higher cost: more aid from our government.”

It has always been difficult to defend the position that federal student aid has nothing to do with the steady increase in the cost of attending college; the publication of this study makes it much more so.

Despite their conclusion that financial aid increases costs, the authors of the New York Fed report suggest that aid is beneficial on the whole. They wrote, “[T]o the extent that greater access to credit increases access to postsecondary education, student aid programs may help to lower wage inequality by boosting the supply of skilled workers.” Now, while that is not a finding of the paper, it aligns with one of the justifications commonly given for policies meant to “expand access” to college — that it ameliorates the presumed problem of growing income inequality.

In this speech in 2008, for example, former Federal Reserve chairman Ben Bernanke said, “the best way to improve economic opportunity and reduce inequality is to increase the educational attainment and skills of American workers.”

That argument is grounded in basic economics: if college-educated workers are paid a lot and workers without college education are paid much less, then by increasing the supply of the former, we will lower their “price” and thereby reduce the earnings differential between the two groups.

That sounds plausible and egalitarians embrace the idea. In a recent paper published in the Cambridge journal Social Philosophy and Policy, however, Daniel Bennett and Richard Vedder argue that, after decades of government policy to “expand access,” we have reached the point where doing so now exacerbates income inequality.

“It has become an article of faith that higher education is a major vehicle for promoting a path to the middle class and income equality in America,” the authors write. The trouble, they argue, is that while policies to promote college enrollment had a tendency to do that in the past, we passed the point of diminishing returns.

Key to the Bennett/Vedder analysis is that fundamental economic concept — diminishing returns. As someone buys or enjoys more and more of something, the benefit from each marginal unit eventually starts to fall. That applies to education as well as other goods and services. It applies to individuals, since there is some point beyond which the benefit from additional time spent on education isn’t worth what it costs.

It also applies at the societal level. At first, Bennett and Vedder observe, the students drawn into college by government aid were overwhelmingly very able and ambitious. They benefited greatly from their postsecondary education. Society not only became more prosperous due to the heightened productivity of those individuals, but, the authors show, more equal. Measured by Gini coefficients, income became less dispersed in the early decades of federal policies to promote higher education.

But what was apparently a beneficial policy at first is producing increasingly bad results today. Not only is federal student aid making college more costly, it now leads to a growing income gap. “Additional increases in [college] attainment,” Bennett and Vedder write, “are associated with more income inequality.”

Why?

The reason is that subsidizing college has led to a glut of people holding college credentials. As a result, we have seen a huge displacement in the labor market — college-educated workers displacing those without degrees. I have often called that the “credentialitis”problem; workers who have the ability to do a job can’t get past the screening by educational credentials that is now widespread.

Consequently, the latter group — the working poor — now faces increasing difficulty finding jobs in fields that used to be open to them.

Federal student aid programs were expected to have nothing but good economic and social consequences for America. Instead, however, they are simultaneously making higher education more costly (that is, soaking up more of our limited resources) and, owing to credentialitis, making the distribution of income more unequal.

Of course, the politicians who started us on this path meant well. Most of those who keep pushing us further down the college for everyone path probably believe that they’re pursuing greater equality and productivity. The truth of the matter, as studies like the two I have discussed here show, is that continuing to push the “college access” agenda is making America worse off.

This post first appeared at the Pope Center.

George C. Leef

George Leef is the former book review editor of The Freeman. He is director of research at the John W. Pope Center for Higher Education Policy.

Economists Steve Forbes, Larry Kudlow, Dr. Arthur B. Laffer, Steve Moore Launch the Committee to Unleash Prosperity

NEW YORK /PRNewswire-USNewswire/ — Economists Steve Forbes, Larry Kudlow, Dr. Arthur B. Laffer, and Steve Moore have launched the Committee to Unleash Prosperity. This group aims to end America’s growth slump and restore faith in the American Dream.

The Committee to Unleash Prosperity was founded to combat America’s “growth gap” by promoting an agenda that will revitalize America’s economy. In the past decade and a half, under both Republican and Democratic presidents, U.S. economic growth has diminished to roughly 2% annually—a significant decrease from its Post-World War II average of 3.5%.

This subpar growth rate has come at tremendous cost to American families, household incomes, employment opportunities, investment, and poverty levels. Above all, the lack of growth has led some to doubt the attainability of the American Dream and to wonder if our current economic climate is the new norm.

The Committee to Unleash Prosperity is working to change this. In pursuit of rapid growth, the Committee promotes the following six economic principles:

  1. A broad-based, low rate, flat tax
  2. Limited government spending
  3. Decreased regulation
  4. Sound money
  5. Free trade
  6. Rule of constitutional law

Thus far, the Committee has hosted several Presidential candidates to discuss their economic platforms including Governor Scott Walker, Governor Bobby Jindal, Governor John Kasich, Governor Mike Huckabee, Senator Ted Cruz, Senator Lindsey Graham, and Carly Fiorina. The Committee has invited other Republican and Democrat presidential candidates to attend future events.

Today, the Committee will host a luncheon with former Texas Governor Rick Perry to discuss how to restore economic growth and opportunity for all Americans. The event is sponsored by Margo and John Catsimatidis.

Prominent thought leaders have joined the four founders in their mission:

David L. Bahnsen
Richard Breeden
Travis H. Brown
Andrea Catsimatidis
John Catsimatidis, Sr.
John Catsimatidis, Jr.
Margo Catsimatidis
Veronique de Rugy
Steve Elieff
Dr. Edwin Feulner, Jr.
Harold Hamm
Kevin A. Hassett
Roger Hertog
James Kemp
Lewis E. Lehrman
Adele Malpass
David Malpass
Betsy McCaughey
Dan Mitchell
Georgette Mosbacher
David Mullins
Mary Ann Mullins
Deroy Murdock
Liz Peek
Alexandra V. Preate
Andrew F. Puzder
Avik Roy
Rex Sinquefield
David Webb

The Executive Director is political strategist Jon Decker. The Committee to Unleash Prosperity looks forward to promoting its optimistic vision for America’s economic future.

STEVE FORBES

Steve Forbes is Chairman and Editor-in-Chief of Forbes Media. In both 1996 and 2000, Mr. Forbes campaigned vigorously for the Republican nomination for the Presidency. Key to his platform were a flat tax, medical savings accounts, a new Social Security system for working Americans, parental choice of schools for their children, term limits, and a strong national defense.

LARRY KUDLOW

Larry Kudlow is CNBC’s Senior Contributor. He was previously host of CNBC’s primetime “The Kudlow Report.” He is also the host of “The Larry Kudlow Show,” which broadcasts each Saturday from 10:00 a.m.–1:00 p.m. on WABC Radio and is syndicated nationally by Cumulus Media.  Kudlow is the author of “American Abundance: The New Economic and Moral Prosperity,” published by Forbes in January 1998. He served on the transition committees for Reagan-Bush in 1980 and Bush-Cheney in 2000. During President Reagan’s first term, Kudlow was the associate director for economics and planning, Office of Management and Budget, Executive Office of the President, where he was engaged in the development of the administration’s economic and budget policy.  He was formerly chief economist and senior managing director of Bear Stearns & Company. Kudlow started his professional career at the Federal Reserve Bank of New York where he worked in open-market operations and bank supervision. He is co-authoring a forthcoming book about President John F. Kennedy’s tax cuts.

DR. ARTHUR B. LAFFER

Dr. Arthur B. Laffer is founder and chairman of Laffer Associates and was a member of President Reagan’s Economic Policy Advisory Board for both of his two terms. Dr. Laffer also advised Prime Minister Margaret Thatcher on fiscal policy in the U.K. during the 1980s. He has been a faculty member at the University of Chicago, University of Southern California, and Pepperdine University. Dr. Laffer received a B.A. in economics from Yale University in 1963. He received a MBA and a Ph.D. in economics from Stanford University in 1965 and 1972 respectively.

STEVE MOORE

Stephen Moore, who formerly wrote on the economy and public policy for The Wall Street Journal, is the Distinguished Visiting Fellow, Project for Economic Growth, at The Heritage Foundation.  Moore, who also was a member of The Journal’s editorial board, returned to Heritage in January 2014—about 25 years after his tenure as the leading conservative think tank’s Grover M. Hermann Fellow in Budgetary Affairs from 1984 to 1987. He was a senior economist under Dick Armey’s Joint Economic Committee, and he played a large role in the creation of the FairTax proposal.

MARGO AND JOHN CATSIMATIDIS

John Catsimatidis is the Chairman and CEO of the Red Apple Group, a Fortune 500 company with annual revenues in excess of $5 billion. The Red Apple Group is a diverse holding company comprised of an energy sector which includes oil refineries, bio-diesel plants, and extensive New York area storage facilities with a deep draft tanker facility on the eastern shore of Long Island.  The Red Group also carries a real estate portfolio valued at nearly $1 billion. In addition, Red Apple Group has an aviation component which leases corporate aircrafts as well as a major supermarket chain in New York City.  Margo Catsimatidis is the President of MCV Advertising and is heavily involved with philanthropy. One of Mrs. Catsimatidis’ primary charities is the Hellenic Times Scholarship Fund which has provided college scholarships for the past 25 years. Margo and John are parents of Andrea and John Jr., both graduates of NYU and now work alongside their parents in all facets of their businesses.  Margo and John are firm believers in giving back to the community and they have a large portfolio of charitable interests which have a common theme of assisting young people.

RELATED ARTICLE: The Path to Repeal Obamacare With Just 51 Votes

PRAVDA: U.S. Taxpayers pay $3.5M to Study Lesbian Obesity

Pravda.Ru reports:

The U.S. Department of Health and Human Services has conducted a research to find out how the sexual orientation influences the body build.
The U.S. taxpayers have already paid $3.5 million for the ‘significant’ project, and it is to last till June 30.

Sexual Orientation and Obesity: A Test of a Gendered Biopsychosocial Model,” seeks to determine why there is a disparity in the obesity rates between straight women and lesbian women and straight men and gay men.

According to the study, “It is now well-established that women of minority sexual orientation are disproportionately affected by the obesity epidemic, with nearly three-quarters of adult lesbians overweight or obese, compared to half of heterosexual women. In stark contrast, among men, heterosexual males have nearly double the risk of obesity compared to gay males.”

Meanwhile, the U.S. government debt is going to beat ‘records’ of WWII.

Read the full article here.

The Government Cannot And Will Not Solve Poverty

Jesus Christ stated that the poor you will always have amongst you.  However, he did not say that the problem of being poor could not be solved.  In fact, again He said “the poor you will always have amongst you.”   I interpret that to mean that despite viable solutions to poverty, people, especially progressive government officials eventually increase poverty, not decrease it.  America is still reeling from the awful effects of Lyndon Baines Johnson’s “War on Poverty.”  After $20 Trillion and counting spent to fight poverty with tax-payers dollars has resulted in a higher poverty rate now than in the 1960s.

I find it ironic when those who have never run a business, vie for political office and declare they will provide jobs.  I guess I will give Donald Trump a pass after saying “I will be the greatest jobs president God ever created” because he has provided both jobs and business opportunities for many thousands of people.  But government has never, ever created jobs without extracting monies from the wealth producing economy to pay for government jobs.  Many of which are wasteful duplications and don’t get me started on economy draining burdensome departments like the IRS, Department of Education, the Just us uh Justice Department and everyone’s favorite, the EPA all of which have the problems they were supposed to address, much worse.

Unfortunately, that practice has run most of America’s once gleaming major cities into the ground politically, morally, economically and economically.  Under liberal/progressive policies have been immorally manipulated to barely function under the false premise that American style inequality and unfairness entitles certain people to your hard earned money.  How long do you think that “We the People” can afford to allow ourselves to be seduced by the evil lies of the progressive game of lying to us and draining us of our earnings, while making it more difficult for the next generation to reach their vision of the American dream?

Because of the non-stop onslaught of lies, government school indoctrination, trillions of dollars of annual wasteful spending, then the many international trade agreements that always grant advantages to competitor nations America is in a heap of hurt.  Right now, our republic is on the brink of utter collapse.  Despite the obvious situation, government officials continue to methodically shrink the U.S. economy.  Of course, as a result there are more and more so-called dependents every single year.  The thirty plus million illegal immigrants, who President Obama, presidential candidate Hillary Clinton and California governor Jerry Brown want taxpayers to pay for everything the illegals desire and demand.  So now, some Americans are asking why should I bust my hump just to have my earnings taken away and given to illegal immigrant moochers?

The Congressional Budget Office recently warned that if congress does not soon reign in over spending, over taxation and I’ll throw in over regulations, our prosperous way of life will be negatively altered permanently in less than ten years.  By now it would seem that America would have learned from the five-plus decades of offensive progressive blunders foisted upon Detroit.  That once great city was per capita the wealthiest city in the world in 1962.  In November of that year progressive democrat Cavanaugh was elected as mayor.  The changes in policies he enacted were a dramatic departure from the previous republican administrations.  Almost immediately, there was a piling on of regulations and layers of taxes that set that city on a downward spiral she has yet to recover from.

Right now the percentage of working Americans is declining while the dependent class is rapidly multiplying.  What can be aptly described as the American welfare state is not shrinking as we are so often told by progressive democrats and rino republicans.  In fact the $1 Trillion a year fighting poverty fighting budget is a planned abysmal failure.  Most politicians, including president Obama know this.  I remember telling people, long before Obama was elected as president that he and many others want to do to America what was done to Detroit.  Unless some major changes are made in the very near future they will reach their goulash goal.

For example, federal and overall welfare spending is going up.  The federal government alone currently funds and operates 126 different welfare or anti-poverty programs.  Federal welfare spending alone totals more than $14,848 for every poor man, woman, and child in this country.  For a typical poor family of three, that amounts to more than $44,500.  Combined with state and local spending, the government spends $20,000  for every poor person in America, or $61,830 per poor family of three.

Yet government economic no growth policies such as draconian environmental regulations with our republic being the most taxed on earth, stymies the ability to create new economic opportunities, while chasing away or killing off existing businesses.  This brutal assault on America’s onetime prosperous economy only serves to threaten our blessed way of life, while whetting the appetites of our enemies both foreign and domestic who seek to overthrow us.

May America soon seek Providential guidance and reclaim the wisdom that made her the onetime envy of the world, before it is much too late.

FLORIDA: 25 Reasons NOT to Take Federal Dollars to Expand Medicaid

Monday, The Florida Legislature opened a special session to decide on the state budget and debate how Florida should move forward in regards to our healthcare future. The Senate offered a plan that supporters, including many business interests, sugarcoated in conservative buzzwords such as “a free market approach,” even though the plan is anything but. As we say here at The James Madison Institute, pro-business isn’t always pro-free market. House Republicans and Governor Rick Scott, for good reason, oppose expanding federal control and a flawed program in our state. The Senate approved its plan Wednesday and the House is set to debate the bill today and vote on it this Friday [May 5th].

The Tampa Bay Times recently released an editorial giving 25 reasons Florida should take the money and encouraging Floridians to “tell (lawmakers) to listen to the powerful moral and financial arguments for taking the money and providing access to affordable health care.” Yes, there is a powerful moral and financial argument to be made. Yes, solutions exist to provide access to affordable healthcare. No, the Times does not have the right answers for either.

As Forbes opinion editor, senior fellow at the Manhattan Institute for Policy Research, and friend of JMI, Avik Roy points out, “Progressives have long enjoyed wielding the straw man. “If you oppose expanding Medicaid,” they say, ‘you oppose health care for the poor. Plain and simple.’ But the truth is, if you support expanding Medicaid, you’re doubling down on a failed system, one that shuts the door on real reforms that could provide quality health care to those who most need it.”

The James Madison Institute offers “25 Reasons NOT to Take Federal

Dollars to Expand Medicaid.” Share our infographic today and tomorrow through social media. RT on Twitter here. Share through Facebook here. Find on our website here.

  1. Medicaid already takes up more than 30% of Florida’s budget: Currently, Medicaid takes up more than 30 percent of Florida’s budget and crowds out other public priorities such as education, public safety and infrastructure.
  2. Medicaid payment rates are well below market rates:Payments to healthcare providers under Medicaid are well below market rates. Exasperating this system would be anathema to free-market reforms in healthcare.
  3. The federal government is already $18 trillion in debt; Obamacare costs rise daily:The federal government is $18 TRILLION in debt with the cost of Obamacare rising daily, requiring even more money from taxpayers to feed the beast.
  4. The supply of doctors accepting Medicaid is shrinking: As a consequence of federal Medicaid price controls, the supply of doctors that will accept Medicaid patients is shrinking — this shrinkage will become more rapid under an expansion of Medicaid.
  5. Medicaid expansion leads to greater use of ERs, not less: A March 2015 survey of 2,098 emergency-room doctors showed Medicaid recipients newly insured under the health law are struggling to get appointments or find doctors who will accept their coverage, and consequently wind up in the ER.
  6. Arkansas’s “private option” costs state taxpayers tens of millions: Medicaid expansion is not working in Arkansas. The Arkansas legislature passed a “private option” healthcare plan similar to what the Senate in Florida is proposing and the price tag is rising by the month under Obamacare’s Medicaid expansion and state taxpayers will now have to pay tens of millions to cover the unexpected costs. The proposed plan in Florida could cost far more than projections indicate.
  7. Mandated premiums create inefficiencies in supply and demand for healthcare services: When premiums for healthcare plan participants are mandated and set by legislative action, it is nothing more than market distorting price controls, which ultimately create inefficiencies in the supply and demand for healthcare services
  8. Feds won’t approve Senate’s special waivers; Florida left with traditional Obamacare expansion: The Senate’s plan includes a requirement that enrollees work, attend classes or prove they are seeking work in order to maintain eligibility for healthcare coverage. However, to date the federal government has rejected all state-run expansion plans with a work requirement. They will deny this special waiver and we’ll be left with traditional Medicaid expansion.
  9. Oregon study revealed Medicaid enrollees hardly better off than uninsured: Medicaid expansion is not working in Oregon. In Oregon, a study was conducted among Medicaid enrollees that found Medicaid “generated no significant improvements in measured physical health outcomes.”
  10. Medicaid Expansion will do nothing to lower cost of overall healthcare delivery: Medicaid expansion would not lead to any type of price transparency in healthcare delivery, which does nothing to help lower the cost of healthcare delivery.
  11. Medicaid expansion does not lead to better health outcomes for the poor: Research consistently shows Medicaid patients frequently receive inferior medical treatment, are assigned to less-skilled surgeons, receive poorer postoperative instructions, and often suffer worse outcomes for identical procedures than similar patients both with and without health insurance.
  12. New Hampshire feels the financial burn and is reconsidering Medicaid expansion: Medicaid expansion is not working in New Hampshire. According to the National Association of State Budget Officers’ annual report, in New Hampshire Medicaid grew from 24 percent of the overall state budget in 2012 to 27 percent in 2014. In January 2015, the state’s Department of Health and Human Services announced that it was $82 million over budget, thanks to Obamacare, Medicaid expansion and to the original Medicaid program expanding with additional enrollees. Lawmakers are now deciding whether to continue the expanded Medicaid program which sunsets in 2016.
  13. The federal government’s promises aren’t reliable: The U.S. Supreme Court told the federal government mandating Medicaid expansion was unconstitutional. However, they admitted this year that if Florida didn’t expand Medicaid under Obamacare, they would not be incentivized to continue the Low Income Pool funding. If they would pull funding from some of the most vulnerable in the system, what wouldn’t they do?
  14. Florida taxpayers will foot the bill for billions: Florida taxpayers will be responsible for a tab of billions of dollars as the federal government requires increasing shares from Florida’s budget after a certain point if the state expands Medicaid under Obamacare. Even if the federal government keeps its “promise” on the funding percentage, Florida taxpayers will be responsible for 10 percent of the total cost of expansion, a tab that will run into the billions based on even the most conservative estimates.
  15. Having health insurance isn’t the same as receiving healthcare:Medicaid is socialized health insurance, not access to healthcare. There is no guarantee that just receiving socialized insurance means an individual receives quality service.
  16. The majority of the Medicaid expansion population consists of working-age adults: The overwhelming majority of the Medicaid expansion pool are made up of childless, able-bodied, working-age adults. Expanding a failing entitlement program for this population will only lock people into the cycle of dependence.
  17. Medicaid expansion creates a perverse disincentive to improving one’s financial status: In many cases, making just a few more dollars per year will actually cost a person thousands in copayments, deductibles, and out-of-pocket expenses resulting in being pushed out of Medicaid rolls.
  18. Illinois faced unanticipated cost increases in the billions:Medicaid expansion isn’t working in Illinois. Forbes’s Akash Chougule reports, “Health officials originally estimated it would cost $573 million from 2017 through 2020 when the state’s funding obligation kicked in. But nearly 200,000 more people enrolled in the program in 2014 than originally projected. State budget officials were forced to revise their cost estimates to $2 billion—more than triple initial estimates.”
  19. Medicaid will cost Florida way more than anticipated: The cost projections for a Medicaid expansion in Florida are unreliable and grossly underestimated. Several states are experiencing the financial strain of Medicaid enrollment figures well higher than initial projections.
  20. Medicaid expansion wouldn’t necessarily result in more coverage or access to care: Florida’s own Medicaid director stated that he couldn’t guarantee the expansion would result in more coverage or access to care.
  21. Medicaid expansion increases private insurance rates: Expanding Medicaid rolls will inevitably distort the risk pool causing private insurance premiums to rise, effectively shifting more of the cost of expansion onto taxpayers and those not receiving Medicaid benefits.
  22. Ohio taxpayers face a $400 million bill: Medicaid expansion isn’t working in Ohio. Ohio’s Medicaid expansion is expected to be nearly $1 billion over budget in June. With Ohio on the hook for 10 percent of the expansion’s cost by 2020 (if the federal government keeps its promise) that will result in an annual cost of over $400 million for Ohio taxpayers.
  23. Expanding Medicaid will likely increase fraud: Medicaid expansion will increase the amount of fraud and abuse within an already strained government program
  24. The systemic issues in the healthcare system will not go away:Expanding Medicaid does absolutely NOTHING to address systemic issues facing Florida’s healthcare system that impact everyone.
  25. Dependency cycle will expand beyond true safety net intent: 
    The idea behind the safety net programs has always been to serve individuals in need, while providing mechanisms to pull out of dependence into productivity, not to create generations of citizens who know nothing except government reliance. By expanding Medicaid to populations that are outside the typical safety net composition, we effectively enlarge and encourage the cycle of dependency to grow and become more ingrained in our culture.