Posts

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.

Collectivism in SW Florida

Ayn Rand wrote a short nineteen page paper asking: What is the basic issue facing the world today? Rand, in her paper makes the case that, “The basic issue in the world today is between two principles: Individualism and Collectivism.” Rand defines these two principles as follows:

  • Individualism – Each man exists by his own right and for his own sake, not for the sake of the group.
  • Collectivism – Each man exists only by the permission of the group and for the sake of the group.

The idea of collectivism is alive and well not just in Washington, D.C. but also in SW Florida. Specifically, in the Englewood Water District, which has decided to forsake the individual and vote in favor of the collective. Government at every level has a propensity to expand, and with that expansion it takes power from the poor in the name of the “greater good”.

According to the Englewood Water District website:

A small group of members from the Englewood Chamber of Commerce formed a “water committee” in 1955 to look into the water “situation.” During the next 4 years they had the perseverance, determination, and dedication to make the Englewood Water District a reality. They fought the odds, and the obstacles, because they saw the need to develop a high-quality, clean water system that would provide for the present and future Englewood. As they moved forward in their efforts, they learned the water and sanitary system could be owned and managed by the people of Englewood and not an outside source. They realized not only would residents’ health conditions be jeopardized without a water and sanitary system, but also the Lemon Bay environment. [Emphasis added]

So what is it that this “water committee” is proposing that has residents of the V9C District of Englewood, FL and others so agitated? The Englewood Water District has decided that for the “greater good” a group of citizens living in the V9C District of Englewood who currently use septic tanks must now pay (read imposed tax) to hook up to the city sewer system, whether they want to or not. Data shows there is no threat to the existing water quality or health conditions of those living in Englewood.

The bottom line: The 314 families living in Englewood’s V9C District are being forced to do something that they do not want to do, nor need to do.

Kathy Bolam, member of the Board of the South Venice Civic Association and the Governmental Affairs Committee, at a Sarasota Board of County Commission meeting testified:

Government was formed by the people to protect our rights and defend us from enemies whether foreign or domestic. That’s why we are asking your voice to be added to ours, because Englewood Water District in a bill passed by the Florida legislature in 2004, called their Enabling Act took away all property rights from the people living in the V9C district. The people in this district never were told about this bill, didn’t get the chance to read it or respond. As a result the EWD board of Supervisors feel empowered to expand their sewer program whether there is a public health or environmental need and whether the people want it or can afford it.

The results of their program will result in several families losing their homes. The area is mostly made up of retirees on fixed incomes and working single mothers, and small families. Those who cannot make the full payment when invoiced of $8,666.94 will then have $834.99 added to their property tax bill for 15 years. If they do not pay those taxes, the tax lien will be sold, and they will lose their home. One lady’s current tax bill is less than $500.00 and she stated that after paying her mortgage, etc. she has barely enough money to eat. Instead of decreasing the amount of homeless people, this action by EWD will increase it. U.S. Senator Elizabeth Warren said in a speech on Jan 7, 2015 quote “Since 1980, guess how much of the growth in income the 90% got? Nothing. None. Zero. In fact, it’s worse than that. The average family not in the top 10% makes less money than a generation ago.” Close quote. People just cannot afford to pay for something, they don’t need and don’t want just because a government body assumes they have the authority and power.

According to the Florida Constitution at Article 1 Section 1, it states that “All political power is inherent in the people.” Therefore, the voice of the people supercedes the goals of the EWD Board of Supervisors. Therefore, we ask you to send a fax, e-mail to that Board requesting that they be true to their Oath of the U.S. Constitution and the Florida Constitution and not violate the “voice of the people.”

According to Bolam, “Jerry Paul who was the local state representative for this area will be at the meeting talking about funding. He was the state representative in 2004 and was responsible for the Enabling Act.  He currently is a lobbyist (Capitol Energy Florida) for EWD and for Key Agency (EWD co-chair Mr. Fogo is financially connected to Key Agency). EWD renewed their insurance coverage with Key Agency.”

The Englewood Water District is moving forward and a final vote on taking the property of these families will occur on Thursday, June 4th, 2015 at 8:00 a.m. Citizens may call the Englewood Water District at 941-474-3217 to voice their opinions on this issue or attend the meeting at 201 Selma Ave, Englewood, FL.

Some Basic Economic Truths

During the summer of 1985 my oldest son, Mark, decided to leave his job as a chemistry teacher in a Silver Spring, Maryland, Catholic Boy’s High School to complete his Master’s thesis and his Doctoral work in Metallurgical Engineering at the University of Oklahoma.  With little money to finance the move, he was looking for ways to transport his wife; his five-year-old stepson, Chris; and his four month old infant son, David, from Washington, D.C. to Norman, Oklahoma.

Having recently retired from my job with a major oil company in suburban Philadelphia, I offered to help with the move.  So, on the appointed day I drove to Silver Spring and loaded every cubic foot of my trunk and my rear seat with some of their belongings.  As we headed west on Interstate 70, my son took the lead in a borrowed Mercury station wagon, with every cubic foot filled to capacity; my daughter-in-law followed close behind in their worn-out old Toyota, the baby strapped into a car seat beside her; and I brought up the rear with five-year-old Chris riding “shotgun” in the passenger seat beside me.

The trip across the country was not up to my usual standard for cross-country driving.  Since the Interstate highway from Indianapolis to St. Louis was completed, but unposted, I had always taken that to mean that they wanted me to use my own discretion.  As a result, I was accustomed to driving the 1.030 miles from Philadelphia to St. Louis in just under fifteen hours.  But on our trip in August 1985, from the D.C. area to St. Louis, it was drive two hours, nurse the baby, drive two hours, nurse the baby, and on and on.  Then, after a night’s rest in St. Louis we set out again the next morning for the last leg of our trip from St. Louis to central Oklahoma.

As we had lunch in a roadside restaurant in Joplin, Missouri, I remarked that we were just a few miles north of Camp Crowder, Missouri, where I spent the first week of my U.S. Army military career, and that I’d like to revisit the place sometime just to see if it was the same as it was in the summer of 1953.

That was the last word on the subject until we crossed the Missouri/Oklahoma state line fifteen or twenty minutes later.  It was then that young Chris said, “Grandpa, tell me about some of your war wounds.”

Not wanting to go into detail on how I was machine-gunned by a group of South Koreans in a “friendly fire” incident during basic training, I decided to tell him some stories about wounds I received when I was a boy, just a few years older than he.  So I proceeded to describe a long ugly scar I have on my right knee that I received when I was just ten or eleven years old.  When I had described the scar, Chris said, “Grandpa, how did you get that wound?”

I said, “Well, as I recall, my friends and I were at the local ballpark in my hometown, crawling around under the bleachers, when I knelt on a broken soda bottle.”  To which he replied, “What were you doing crawling around under the bleachers?”

I said, “We were looking for small change, nickels and dimes that people had inadvertently dropped while watching a softball game.”

“Why were you looking for nickels and dimes?” he asked.

To which I replied, “We wanted to buy some sodas.”

He thought for a moment, a puzzled look on his face.  Then he said, “Grandpa, you can’t buy a soda for five or ten cents.  Sodas cost sixty cents.”

Not when I was your age,” I replied.  “When I was your age we could by a soda for five cents.”

That came as a big surprise to him.  He said, “How did that happen, Grandpa?”

I said, “The Democrats did it.”

“The Democrats did it?  Why did they do that?”

Thinking I’d impart a bit of economics wisdom, I said, “Well, the Democrats discovered many years ago that if they passed a law taking money away from people who have jobs and who work for a living, and give it to people who don’t have jobs or who don’t want to work, the people who get the free money will always vote for them on election day.  That helps to create what we call inflation and that’s why a soda costs a lot more than five cents today.”

This was obviously a new concept for him and I could almost hear the wheels turning in the seat beside me.  Finally, he said, “Grandpa, could the Democrats pass a law that would make candy free?”

I replied, “Sure they could.  But think about it… if the Democrats made a law saying that candy would be free, how long do you think the people who make candy would continue to make it?”

New concept; I could hear the wheels turning again.  Then he said, “Grandpa, am I a Democrat?”

I said, “Well, it’s too early to tell.  We’ll have to wait a few years to find out.”

Then he asked, “Grandpa, could the Democrats make a law that some candy would cost money and some would be free?”

I replied, “Yes Chris, the Democrats could make some candy free and others that would cost money.  But are you asking whether the Democrats could make a law saying that the kind of candy you like would be free and all the rest would cost money?”

A big smile crossed his face.  He nodded his head and said, “Yeah!”

I said, “You’re a Democrat.”

I’m happy to report that my step-grandson has turned out just fine, in spite of his Democratic leanings as a five-year-old.  He graduated from the University of Oklahoma with a degree in Economics and is now a successful executive with a major Oklahoma City bank.  But now, thirty years later, there is evidence that many who were as ignorant of basic economic principles as my grandson was at age five, are still burdened by the same economic illiteracy.

The proof of what I say can be found in the television commercials of a company called Lear Capital, Inc.  In their most recent TV ads they tout the current low price of silver, showing a two dimensional graph in which the abscissa, or x-axis, represents time, and the ordinate, or y-axis, represents the fluctuations in the price of silver.  If one were to believe the graph, the market price of silver during a significant time period represented on the graph dipped to less than the price of production.  In fact, that claim is made quite clearly in the Lear Capital voice-over.

When I saw the ad I couldn’t help but be reminded of my grandson’s attitude toward the candy market when he was just five years old.  The fact that a precious metals marketing firm would continue spending big bucks attempting to convince television viewers that mining companies are continuing to mine silver when the market price is less than the cost of production, is proof that there are some adults out there in TV land who still believe in the Tooth Fairy.

When I posed the hypothetical question to my grandson thirty years ago, asking him how long he thought candy manufacturers would continue to make candy if there was no profit in doing so, it never occurred to me that, some thirty years later, silver miners might be doing just that.

However, there is some empirical evidence that there are fewer consumers who might fall for that advertising scheme than we might think.  Another Lear TV ad that has run on a daily basis for many months proclaims that the first one-hundred callers to their 800 number will receive up to $500 worth of free silver… just for calling their number.  If, in fact, callers to that 800 number are actually given silver coinage, they could be given a silver ten-cent piece, just for their taking the time to listen to a sales pitch, and the marketer could still claim truth in advertising by hanging their hats on the words “up to.”

Nevertheless, it is frightening to think that Madison Avenue advertising firms have such a low opinion about the economic smarts of the American people that they would air such an insulting advertisement.  My step-grandson has discovered some important economic truths.  Apparently, some in the corporate world and on Madison Avenue have not.

VIDEO: IRS Commissioner Admits the Tax Code Cannot Be Understood

“The best thing [Congress] could do would be simplify the tax code,” Koskinen told the National Press Club on March 31. “I don’t know how anybody understands all the ramifications of it.”

The IRS Commissioner also quipped that, “the IRS code is longer than the Bible, with none of the good news.” Read more.

A Handy Glossary for Tonight’s Class Warfare State of the Union Speech

Let me preface this piece by saying that if you have convinced yourself that the government, by taking more of our money through higher taxes, will make us all more prosperous, then you need not read any further. I have come to learn that any attempt to persuade the far-left “tax-and-spend” crowd is a fruitless endeavor despite the obvious disconnect between what these people say, and what they do. This piece is directed at ordinary Americans who, as evidenced by the mid-term election results, have lost patience with the “big-government-is-best” crowd.

Whether it’s John Kerry’s tax avoidance scheme…or the Obamas spending $1,000 on just one meal at a club that charges an unbelievable $500,000 for membership, it’s clear that the leaders of the far-left are living by the credo “do as I say, but never as I do.”

I have asked many of the tax-and-spenders two simple questions and I rarely, if ever, get a reasonable answer.

Question #1: Do you voluntarily pay more in taxes? Hint; they always say no (despite demanding that we pay higher taxes).

Question #2: How does taking more of my money make me better off?

If you decide to tune in to Tuesday’s State of the Union speech or to ask your tax-and-spend friends the above questions, I have provided you below with a glossary of key buzzwords and phrases you will find in the president’s speech and in their answers:

“WE NEED TO” – The tax-and-spend crowd never discuss taxes in terms of “I need to” and “you need to,” largely because they avoid higher tax rates themselves and they know you don’t want to pay higher taxes either. Using the term “we” rather than the terms “I” or “you” is a clever rhetorical-trick they use to make you believe that the “other guy” is going to be hit by the new taxes, not you. Whether it’s John Kerry’s tax avoidance scheme by parking his $7 million luxury yacht in Rhode Island to avoid paying the $500,000 Massachusetts tax bill, the Clintons avoiding hundreds of thousands in estate taxes by using shady loopholes to divide their real-estate holdings into trusts, or the Obamas spending $1,000 on just one meal at a club that charges an unbelievable 500,000for membership, it’s clear that the leaders of the far-left are living by the credo “do as I say, but never as I do.”

“IT’S AN INVESTMENT” – I love this one because it requires tax-and-spend types to completely exit the world of the real for the world of wishful thinking. An “investment” is something individuals CHOOSE to do with their money where they put off immediate satisfaction for future payments based on a reasonable expectation of future gain. When government takes your money in the form of taxes to “invest” they do the following:

Tragically, this scene is repeated everyday inside the D.C. inner circle and rhetorically disguised as public “investments.”

1) They have CHOSEN for you what you chose not to do in the first place. If you wanted to “invest” in Solyndra then the opportunity was there, and the fact that Americans didn’t invest in Solyndra should have been a sign to the government that something was wrong. Instead, they took your money and gave it away at an incredible loss to all of us. Tragically, this scene is repeated everyday inside the D.C. inner circle and rhetorically disguised as public “investments.”

2) They distort the markets they enter by giving away your money to their connected friend’s businesses and, at the same time, assisting their connected friends in crushing their unconnected business competitors. If you have money, then it pays to make government connections to ensure your “investments” never lose.

3) They take your dollar and make it worth less before the “investment” is even made. The government bureaucracy siphons off a large percentage of your money before it arrives back in the economy, a phenomenon economist Arthur Okun called the “leaky bucket.” What “investment” have you ever made that is guaranteed to lose money before it’s even proposed? Only in government-speak is this a sound “investment.”

“FAIR SHARE” – An inconvenient series of facts for the tax-and-spend crowd, which they contort themselves to explain away, is that the government is taking a historic amount of money from you, and the highest income-earners already pay a significant share of the taxes. For the first time in American history the government took over $3 trillion from you in taxes, an astounding $1 trillion more than they took from you in the year 2000. Also, the top 20% of income-earners already pay 70% of the taxes and earn about 52% of income. Think about that, just 2 out of 10 Americans pay 70 cents of every tax dollar the government takes. If this isn’t a “fair-share” then you owe it to us to explain what percentage is, and how you figured that out.

Obamacare is decimating middle class incomes by hiking premiums while, at the same time, increasing the costs of healthcare for business owners and dramatically reducing the take-home-pay for their employees, as employee salaries stagnate to compensate for the increased healthcare costs.

“THEY DON’T NEED ALL THAT MONEY” – This one is ironic because most of the leadership of the modern tax-and-spend crowd seem to “need” a whole lot of money themselves. Whether it’s liberal rock-star Elizabeth Warren, or Bill Clinton, both with a net worth in the tens of millions of dollars, they appear to “need” millions of dollars for themselves, while telling the rest of us that we “need” a whole lot less.

“WE NEED TO BUILD THE MIDDLE CLASS” – This is an often used, yet ironic, statement considering so few of the tax-and-spend crowd are defined as “middle-class” yet, the people they preach to, are. Doubly ironic is that President Obama has rode roughshod over our economy with a hapless class warfare agenda of new and higher taxes on income, investments, capital gains, payroll, healthcare, and more. But, with each new tax, the rich get richer and the middle class are stuck in the mud. Here’s the painful truth about why this is happening:

1) The high corporate tax is driving quality manufacturing jobs out of our country, and to countries with more reasonable tax rates. This is harming the middle-class that needs these jobs to keep pace with the increasing cost of living.

2) The compliance costs for the massive new piles of red tape regulations the Obama administration has thrown at us are costing American businesses billions of dollars. But, here’s the catch, big businesses with connections get richer because they already have massive legal departments to deal with the regulations and their smaller competitors go out of business trying to comply. Again, the middle-class and small-business owners get screwed.

3) Obamacare is decimating middle class incomes by hiking premiums while, at the same time, increasing the costs of healthcare for business owners and dramatically reducing the take-home-pay for their employees, as employee salaries stagnate to compensate for the increased healthcare costs.

In conclusion, the President will deliver his State of the Union speech this Tuesday and, at some point in the speech, will use one, if not all, of the above terms and phrases as he proposes $320 billion in NEW taxes on us. He will disguise these taxes on us in flowery, class warfare rhetoric designed to divide us into artificial groups but, he will never be able to answer the simple questions I posed above without resorting to verbal judo and linguistic gymnastics.

EDITORS NOTE: This column originally appeared in the Conservative Review. The featured is by Charles Dharapak | AP Photo.

A Year In Review for Big Government

obamacare 2Last year may have been that inflection point where it all turns around and, although nothing is permanent, I am confident that the tide of big government that has rolled upon our shores may be beginning to recede. A series of electoral and policy failures which have blackened the eyes of big government acolytes piled up in 2014, and the devastating results have made it impossible for the media to hide under the bed. Here are just a few of 2014’s big government low-lights:

  • Big government candidates running under the Democratic Party banner suffered humiliating defeats in the 2014 elections. The Republican Party will now control 54 of the 100 seats in the U.S. Senate, 247 of the 435 seats in the US House of Representatives, and 68 of the 98 partisan legislative chambers. They will also control both branches of state legislatures in 29 of the 50 states and, incredibly, will control the governorship in 33 of the 50 states, including deep-blue states such as Illinois, Massachusetts and my home state of Maryland.
  • Even the Republican losses to big government Democratic candidates in deep-blue states were extremely close. Big government Democratic Governor Dannel Molloy of Connecticut barely slipped by Republican Thomas Foley and Vermont’s big government Democrat Pete Shumlin hardly survived reelection in deep-blue Vermont, defeating Republican Scott Milne by just over one point. At the federal level, a number of big government Democrats in the U.S. House of Representatives barely slipped by their opponents, even in “safe” Democratic congressional districts. Despite winning a series of congressional elections by double-digits, New York Congresswoman Louise Slaughter defeated Republican Mark Assini by just one point.  I lost my race to unseat Maryland Democrat John Delaney by only one point in a race Delaney won by 21 points just two years ago.
  • millionaires tax quoteBig government programs are failing at an alarming rate. Obamacare has reached new lows in approval, with just 37% of Americans approving of this legislative disaster. Obamacare costs are projected to rise dramatically in the coming years as doctors drop out of the program and the new penalties and taxes are enacted. Also, the Obama administration’s takeover of the student loan industry is on the verge of collapse as forbearance requests, defaults, and requests for loan forgiveness under Obama administration programs reach catastrophic levels.
  • France, taking a lesson from outgoing Maryland Governor Martin O’Malley, instituted a “Millionaire’s Tax,” which was described by one critic as “Cuba without the sun.” Despite warnings from rational economists about its destructive effects, big government French President Francois Hollande pressed ahead with his plans to institute the 75% tax rate. After a near rebellion in the business community, a slap-down by the courts and, as happened in Maryland after their version of the “Millionaire’s Tax,” an abject failure to raise even close to the tax revenue anticipated, the tax expired and will not be renewed. As it turns out, even committed Socialist Francois Hollande’s calculator and abacus cannot make 2 + 2 = 6.
  • jobs obama last two yearsAmerican workers and businesses have finally managed to escape the yolk of big government as it appears that the economy may finally be recovering. But this is now the worst statistical recovery from a deep recession in modern American history. To reach the Reagan or Clinton-era job-production numbers, over ten million jobs would have to be created by the economy in the president’s final two years. Even if the best month of job creation under President Obama was replicated every month for his final two years, he would still be nearly 4 million jobs short. Also, it takes about 4 to 5 quarters to get through the average recession and to reach recovery, while this president took an incredible 16 quarters to reach the level of a “recovery.” President Obama’s big government ideology has managed to produce a labor participation rate (the actual number of people working) which is the lowest in 40 years, all while presiding over a government with the largest number of people ever receiving government assistance.

The good news is that 2016 is approaching and, with the right leadership, this economy is ready to explode. I am confident that the future is bright because the American people cannot be held down for long. Eventually they will rebuild their lives and their futures, in spite of big-government doing its best to anchor itself to their backs.

If you want to know where your member of Congress stands on the conservative spectrum and receive updates on the issues that matter most to conservatives, sign up for FREE HERE.ign

Rep. Vern Buchanan (R-FL 16) Busts the Budget — Votes for Amnesty and Obamacare

The Republican co-Chair of the Florida delegation is Congressman Vern Buchanan representing District 16. Buchanan’s campaign website states, “Washington’s irresponsible pattern of borrowing and spending has put our country on a road to bankruptcy.  Unbelievably, America borrows $188 million every hour.  This is simply unacceptable.”

In a December 6th email to constituents Buchanan wrote, “The national debt this week surpassed $18 trillion for the first time in our nation’s history. Since President Obama took office six years ago, the debt has ballooned by nearly $7.5 trillion. Washington’s addiction to spending is putting our nation on the path to bankruptcy.”

In a December 7th InstaPoll Buchanan asked constituents: What action do you think Congress should take to reduce the federal debt, which surpassed $18 trillion this week? Sixty-nine percent of those responding answered “reduce spending.

Buchanan wants a balanced budget amendment to reign in Congress, but in October 2013 Buchanan voted to raise the debt ceiling and now has given President Obama a victory. The victory is passing a bill that busts the budget, continues to fund pork projects, Obamnesty, Obamacare and will increase the national debt.

The Conservative Review reports:

“This 1700+ page, $1.1 trillion Omnibus spending bill granted President Obama full funding for 11 of 12 federal departments for the remainder of the fiscal year – without any congressional restrictions on his unilateral action on amnesty, Obamacare, and environmental regulations. Worse, this bill actually provided Obama with an additional $2.5 billion in funds to facilitate his executive amnesty. Most egregiously, this 1700-page bill was crafted as a backroom deal by lame duck senators who were rejected by the American public in the November election. Speaker Boehner placed the bill on the floor with only 48 hours to read all 1700 pages.” [Emphasis added]

The Conservative Review gives Buchanan an “F” rating on fiscal responsibility with a score of 53%.”

Did Congressman Buchanan read the bill or did he vote for it first to see what was in it?

Buchanan sits on the House Ways and Means Committee. Does he not understand what he did by voting for this omnibus spending bill? Is Buchanan exhibiting the very “irresponsible pattern of borrowing and spending” that he campaigned against?

Buchanan’s campaign website states, “As a businessman for 30 years, and past Chairman of the Florida Chamber of Commerce, I know what it means to balance a budget, meet a payroll, and exercise the fiscal discipline necessary to keep a business moving forward.” But Buchanan is no longer a businessman. He is a member of Congress. The only payroll he is now meeting is that of the federal bureaucrats in Washington, D.C., at the taxpayers expense.

Buchanan has not exercised “fiscal discipline”. The only thing he is moving forward is President Obama’s agenda. Is that why those in his district re-elected him? Is Buchanan “grubering” those who elected him?

Buchanan’s campaign website rightly states, “Government does not create jobs, small businesses like the thousands located in Southwest Florida create the jobs.” Buchanan has a jobs plan, but it does not help small businesses. Rather it is to provide jobs to even more Washington bureaucrats and Congressional staffers while his constituents pay higher taxes. Small businesses are harmed by Obamacare’s healthcare mandate, which kicks in in 2015. Florida continues to suffer because of omnibus spending bills like the one Buchanan and many of his fellow Republicans helped passed.

Perhaps it is time to hold the Vern Buchanan’s responsible for their irresponsibility! Buchanan ends emails to constituents with “tell me what you think.” Perhaps those who voted for him should?

Here’s a Couple Of Charts That Might Explain Why Congressmen Voted For The ‘CRomnibus’ Spending Bill from IJReview’s Kevin Boyd:

imrs-1024x687

 

imrs_1_-1024x764

 

imrs_2_-647x1024

RELATED VIDEO:

RELATED ARTICLES:

What the $1.1 trillion spending bill contains

FL Rep. Buchanan votes to fund government by defunding America

FL Senator Rubio and Rep. Buchanan get Special Obamacare Subsidy

Why is Rep. Vern Buchanan (R-FL 16) worried about the West African black rhino?

Illegal aliens get Social Security Benefits thanks to Boehner and his RINOs

Text and Analysis of Florida Amendment 1: “The Water and Land Conservation Initiative”

Dan Peterson, Executive Director of the Coalition for Property Rights, provides the following detailed analysis of Florida Amendment 1:

BALLOT TITLE:

Water and Land Conservation – Dedicates funds to acquire and restore Florida conservation and recreation lands.

BALLOT SUMMARY:

Funds the Land Acquisition Trust Fund to acquire, restore, improve, and manage conservation lands including wetlands and forests; fish and wildlife habitat; lands protecting water resources and drinking water sources, including the Everglades, and the water quality of rivers, lakes, and streams; beaches and shores; outdoor recreational lands; working farms and ranches; and historic or geologic sites, by dedicating 33 percent of net revenues from the existing excise tax on documents for 20 years.

Amendment 1 alters SECTION 28. Land Acquisition Trust Fund to include:

a) Effective on July 1 of the year following passage of this amendment by the voters, and for a period of 20 years after that effective date, the Land Acquisition Trust Fund shall receive no less than 33 percent of net revenues derived from the existing excise tax on documents, as defined in the statutes in effect on January 1, 2012, as amended from time to time, or any successor or replacement tax, after the Department of Revenue first deducts a service charge to pay the costs of the collection and enforcement of the excise tax on documents. b) Funds in the Land Acquisition Trust Fund shall be expended only for the following purposes: 1) As provided by law, to finance or refinance: the acquisition and improvement of land, water areas, and related property interests, including conservation easements, and resources for conservation lands including wetlands, forests, and fish and wildlife habitat; wildlife management areas; lands that protect water resources and drinking water sources, including lands protecting the water quality and quantity of rivers, lakes, streams, springsheds, and lands providing recharge for groundwater and aquifer systems; lands in the Everglades Agricultural Area and the Everglades Protection Area, as defined in Article II, Section 7(b); beaches and shores; outdoor recreation lands, including recreational trails, parks, and urban open space; rural landscapes; working farms and ranches; historic or geologic sites; together with management, restoration of natural systems, and the enhancement of public access or recreational enjoyment of conservation lands. 2) To pay the debt service on bonds issued pursuant to Article VII, Section 11(e). c) The moneys deposited into the Land Acquisition Trust Fund, as defined by the statutes in effect on January 1, 2012, shall not be or become commingled with the General Revenue Fund of the state.

IMPACT ON PRIVATE PROPERTY

Amendment One departs From a Historical Philosophical Perspective of Private Property

In the first half of our nation’s history, it was the practice of the government to encourage private ownership through land grants and other such vehicles. This amendment reverses that tradition. It seems to embrace a philosophy found in this quote (a philosophy which is supported by many of the pro-conservation/sustainable development organizations):

“Land…cannot be treated as an ordinary asset, controlled by individuals and subject to the pressures and inefficiencies of the market.

Private land ownership is also a principal instrument of accumulation and concentration of wealth and therefore contributes to social injustice; if unchecked, it may become a major obstacle…

Public control of land use is therefore indispensable to its protection as an asset…”

From the Preamble, UN Conference, Vancouver, Canada, 1976

Amendment One Departs From Our Founding Fathers’ Intent For Private Property

Our Founding Fathers placed safeguards into our Constitution as a hedge or safeguard against government tyranny. As a result, America became an exceptional and unique place on earth by virtue of being founded upon the right of private citizens to own and use property.

Amendment One dangerously opens the door for government to own and control more land. That means less land is owned and control by private property owners. This amendment presents an alternative view to that intended by our founding fathers.

Today, more than 50% of the American west is owned by government. In the state of Utah, 87% of the land is owned and controlled by the federal government. Despite efforts by the state to reclaim their land, the federal government refuses to return it.

Giving government large sums of money to buy land puts Florida on a trajectory similar to Utah. The intent of this amendment is primarily land acquisition for the purpose of conservation.

IMPACT ON LOCAL GOVERNMENT BUDGETS

As the amount of government owned lands increases, two things happen fiscally:

First, the amount of private lands on the tax rolls will be decreased. Therefore, tax revenues will decrease making less funding available for things like law enforcement, first responders, local services, infrastructure maintenance, and local education. Local governments will have to raise property taxes or take the rarely seen step of cutting their budgets.

Second, more taxpayer money will need to be diverted to pay for increased maintenance costs of ever increasing amounts of conservation lands. Currently, the state lacks money to maintain the properties owned by government.

Counties with the most land in government owned conservation lands, have the highest tax rates.

IMPACT ON THE STATE BUDGET

It is the Florida Legislature’s constitutional responsibility to work with the Governor to craft an annual balanced budget to meet the needs of our state. Through the Legislature, all the needs of the state are considered, debated, and approved by elected representatives. This is designed to address in a balanced way, the comprehensive state needs.

Amendment One restricts the Legislature’s ability and flexibility to budget or allocate funding for an array of state-wide critical needs such as transportation, education, affordable housing, and economic development, etc.

The purchase of land by government is a one-time expense. But, the maintenance of government property is a growing, on-going expense to also be remembered. As government ownership of land increases, so maintenance costs increase requiring more employees (and their pensions) , more facilities, and more equipment.

IMPACT ON THE STATE ECONOMY

Nearly one-third of Florida land is used for agriculture. Agriculture, including farming and ranching, is the backbone of our state’s economy providing jobs and produce. Amendment One names both for acquisition. The majority of lands put into conservation make little to no contribution to the economy.

As private land, with its real or potential contribution to our state’s economy, is removed from production, it moves from being a producer of revenue to becoming a user of revenue. Thus, the state’s economy is weakened. Less land in production means our state is less productive and less competitive in the world.

IMPACT ON THE ENVIRONMENT

Today, more than 27% of Florida is already in conservation according to The Florida Natural Areas Inventory. Add lands for government facilities and the amount of land owned by government is more than 30%.

Florida has more land per square mile under government ownership than any other state east of the Mississippi River. The amount of government owned land will be greatly increased if a projected $18 B were to become available for additional land purchases.

Environmentalist groups have plans to purchase millions of additional acres for additional parks, wildlife refuges, wildlife corridors, forests and conservation areas, just to name a few. Amendment One supplies the cash to do so.

SUMMARY

Amendment One would be bad for Florida because it is an unneeded and harmful addition to the Florida Constitution. It will reduce the amount of privately owned property and negatively impact local revenues. It also intrudes on the legislature’s fiduciary responsibility to allocate our state’s revenues in the interests of our entire state.

Nearly one-third of our state is owned by government. Approximately another third is in agriculture. Documentary transaction stamps are already used to fund a number or environmental programs. The Florida Forever program continues to receive millions of dollars annually through the legislature to acquire conservation land. A growing economy already allows for more money to be allocated for government land purchases.

A more radical option should be considered. Doc stamps are expensive, adding significantly to the transaction costs of real estate. Why not reduce or eliminate the Doc Stamp tax altogether to help, in no small way, all Floridians to exercise their rights of property ownership?

Rave reviews for the Wealth Building Home Loan

The Wealth Building Home Loan (WBHL), a new approach to home finance, opened to rave reviews at the American Mortgage Conference held September 8-10.  Six leaders of national stature made favorable comments from the podium.

Lewis Ranieri, considered the “godfather” of mortgage finance, in his keynote address praised the WBHL:  “Fundamentally, what I find exciting is the wealth building nature of the product.  Anyone who knows me knows how concerned I am that too often the mortgage has been utilized as an ATM for a boat or big screen TV, as opposed to building equity; if we’re to meet the needs of Americans who desire a home, this type of SAFE experimentation will be critical.”

Carol Galante, FHA commissioner,David Stevens, Mortgage Bankers Association CEO and former FHA commissioner, Joseph Smith, monitor of the National Mortgage Settlement of the State Attorneys General and Lenders, and James Lockhart, former director of the Federal Housing Finance Agency also made note of the innovative approach taken by the WBHL.

Bruce Marks, CEO of the Neighborhood Assistance Corporation of America (NACA), announced that the WBHL, which provides low-income borrowers a straight, broad highway to building wealth based on a 15-year, fully amortizing, fixed-rate loan, will be available in an initial rollout undertaken by NACA and the Bank of America within 60 days.

Long-time industry observer Tom LaMalfa, in an email, stated:

“In an industry in which few agree on much, there was remarkable agreement on the value of the WBHL among an array of industry leaders speaking at the AMC this week.”

Stephen Oliner (codirector of AEI’s International Center on Housing Risk) and I announced that additional WBHL pilots are in the works with lenders around the country.

Smith spoke extensively about the challenge in providing access to credit and home ownership, particularly among low- and moderate-income borrowers.  He asked:

“[I]s the thirty year fixed-rate mortgage what we need?  Contrary to the opinion of many people whom I admire and respect, the thirty year fixed rate mortgage is neither a Constitutional nor human right…. While it is a proven ‘affordability product’ of long standing, the thirty-year fixed-rate mortgage does not build equity very quickly. Further, a lot of things can happen to a borrower over those thirty years – job loss, health problems, divorce. [a]s Monitor of the National Mortgage Settlement, I have done a lot of listening in the last two and a half years; including to distressed borrowers, the people who represent them, and public officials who deal with the fallout from increased foreclosures and bankruptcies. What I have heard confirms what I know from prior experience: that one or two of those life issues – or, in many, many cases, the trifecta – have resulted in real financial crisis on a large scale. Absent substantial home equity at the outset, the thirty-year fixed rate mortgage increases the fragility of a borrower’s overall financial position and puts the borrower at risk for a very long time.”

Smith went on:

“The traditional answer to the concerns I have just expressed is to require a substantial down payment. That’s certainly effective – for the people who can afford it. But it reduces access to credit and home ownership, particularly among low- and moderate-income borrowers.  If we want to keep homeownership an option for an expanding portion of the population, we should build some additional features into the mortgage product to reduce fragility. At the very least, we should consider the inclusion of product features that allow and even encourage early equity build-up. In that regard, I am pleased to note AEI’s Wealth Building Home Loan.”

Steve and I created the WBHL to serve the twin goals of providing a broad range of homebuyers – including low-income, minority, and first-time buyers – a more reliable and effective means of building wealth than currently available under existing policies, while maintaining buying power similar to a 30-year loan.

A WBHL has a much lower foreclosure risk because of faster amortization and common-sense underwriting. Its monthly payment is almost as low as 30-year, fixed-rate loan while providing the buyer with more than 90 percent of the buying power. It requires little or no down payment and has a broad credit box, meaning sustainable lending for a wide range of prospective homebuyers. While the WBHL is designed to reduce default risk for all borrowers, this is a critical importance for borrowers with FICO scores in the range of 600-660.

The WBHL will help these borrowers reliably and sustainably build wealth.

EDITORS NOTE: The featured image is courtesy of SNMC.

Happy Capital Day? Why not? by Lawrence W. Reed

Any good economist will tell you that as complementary factors of production, labor and capital are not only indispensable but hugely dependent upon each other as well.

Capital without labor means machines with no operators, or financial resources without the manpower to invest in. Labor without capital looks like Haiti or North Korea: plenty of people working but doing it with sticks instead of bulldozers, or starting a small enterprise with pocket change instead of a bank loan.

Capital can refer to either the tools of production or the funds that finance them. There may be no place in the world where there’s a shortage of labor but every inch of the planet is short of capital. There is no worker who couldn’t become more productive and better himself and society in the process if he had a more powerful labor-saving machine or a little more venture funding behind him. It ought to be abundantly clear that the vast improvement in standards of living over the past century is not explained by physical labor (we actually do less of that), but rather to the application of capital.

Harmony of Interest

This is not class warfare. I’m not “taking sides” between labor and capital. I don’t see them as natural antagonists in spite of some people’s attempts to make them so. Don’t think of capital as something possessed and deployed only by bankers, the college-educated, the rich, or the elite. We workers of all income levels are “capital-ists” too—every time we save and invest, buy a share of stock, fix a machine, or start a business.

And yet, we have a “Labor Day” in America but not a “Capital Day.”

Perhaps subconsciously, Americans do understand to some extent that those who invest and deploy capital are important. After all, most people would surely have an easier time naming the “top ten capitalists” in our history than the “top ten workers.” We take pride in the kids in our neighborhoods when they put up a sidewalk lemonade stand. President Obama continues to be roundly excoriated for his demeaning remark, “You didn’t build that; somebody else made that happen.”

Bad Eggs

That’s not to say there aren’t bad eggs in the capitalist basket. Some use political connections to get special advantages from government. Others cut corners, cheat some customers or pollute a stream. But those are the exception, not the rule, in a society that values character. Workers are not all saints either—who among us doesn’t know of one who stole from his employer, called in sick when he wasn’t, or abused the disability or unemployment compensation rules? Those exceptions shouldn’t diminish the importance of work or the nobility of most workers.

Like most Americans, I’ve traditionally celebrated labor on Labor Day weekend—not organized labor or compulsory labor unions, mind you, but the noble act of physical labor to produce the things we want and need. Nothing at all wrong about that!

But this year on Labor Day weekend, I’ll also be thinking about the remarkable achievements of inventors of labor-saving devices, the risk-taking venture capitalists who put their own money (not your tax money) on the line and the fact that nobody in America has to dig a ditch with a spoon or cut his lawn with a knife. Indeed, what could possibly be wrong about having a “Capital Day” in odd numbered years and a “Labor Day” in the even-numbered ones?

Labor Day and Capital Day. I know of no good reason why we should have just one and not the other.

EDITORS NOTE: This article first ran on September 3, 2012.

larry reed new thumbABOUT LAWRENCE W. REED

Lawrence W. (“Larry”) Reed became president of FEE in 2008 after serving as chairman of its board of trustees in the 1990s and both writing and speaking for FEE since the late 1970s. Prior to becoming FEE’s president, he served for 20 years as president of the Mackinac Center for Public Policy in Midland, Michigan. He also taught economics full-time from 1977 to 1984 at Northwood University in Michigan and chaired its department of economics from 1982 to 1984.

INFOGRAPHIC: How Unions Are Chewing Through Taxpayer Dollars

Nicole Rusenko and Kelsey Harris write and graphically display on The Daily Signal:

Did you know your tax dollars are financing unions?

Thanks to what the federal government calls “official time,” government workers spent 2.4 million hours on union work in 2010. In fact, the Internal Revenue Service alone has 286 full-time employees who work exclusively for the National Treasury Employees Union.

Check out the infographic below for more details on whose special interests (and pockets) your money is going.

WARNING: This infographic may upset your stomach and shrink your wallet.

OfficialTime_Infographic_Rusenko-011

COMMENTARY BY

Portrait of Nicole Rusenko Nicole Rusenko@ncrusen20

Nicole Rusenko is a senior designer at The Heritage Foundation.

 

Portrait of Kelsey Harris

Kelsey Harris
Kelsey Harris is the visual editor at The Daily Signal and digital media associate at The Heritage Foundation.

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.

EPA Still Wants to Garnish Your Wages Without a Court Order

A few weeks ago, EPA quietly tried to reinterpret its authority and wanted to garnish wages from those who owe it a debt. After a storm of criticism from Members of Congress and the public, EPA pulled back.

However, the agency is still trying to grant itself this power, only this time it’s going through the standard notice-and-comment process that most federal regulations go through.

What’s is the problem EPA wants to solve by having the ability to dig to go after your wallet? Will this stop polluters? Is EPA inundated with deadbeats?

Apparently not, according to Catrina Rorke and Sam Batkins at the American Action Forum who looked at EPA’s data.

They point out that, over the past six years, EPA has imposed more than $2.3 billion in “non-major” fines against companies and individuals that committed “infractions that do not involve large facilities emitting tons of toxic pollutants annually.”

However, Rorke and Batkins found, “the majority of fines for individuals involve paperwork infractions – not environmental contamination.” Individuals or businesses were fined for failing to file notification or reports with EPA.

And as for a delinquency problem, here’s their key finding:

[T]he average length of time that individuals were delinquent paying EPA was zero quarters. In other words, people generally pay their fines on time.

So why does EPA want to be able to garnish an individual’s wages? Based on its data, it’s not to ensure a cleaner environment nor solve delinquency problems. Roark and Batkins conclude (correctly in my view):

EPA’s proposal to grant itself wage garnishment authority more closely resembles a power grab than an appropriate administrative step to rectify an observed issue in their fine repayment process.

Stay tuned.