Ruminations From the Void

I have had a lot to say about our budget issues.  I will never be the first to say that we tax too little, although we probably do tax too little.  But, before the pitchfork and torch crowd makes it's way to my front door, let me explain.  We tax too little for a few reasons.

1. Tax rates are too high for top earners - when tax rates are too high, income is shifted, hidden or lost which means that fewer taxes are collected.  Solution - lower tax rates for top earners.
2. Loopholes are too big and there are too many - high tax rates combined with too many loophole deductions means fewer taxes collected.  Solution - lower tax rates while closing the loopholes (deductions).
3. 45% of Americans pay no income tax - the Reagan and Bush tax cuts have moved too many off the tax rolls.  Refundable tax credits remove many more.  It's hard to believe that those who have cell phones, computers, satellite tv, blue ray players and an x-box can't pay a small share of income tax.  Solution - set a minimum tax rate of 5% that all income earners pay.

Some will agree with me, many won't.  It's easy to just say the rich can afford to pay more.  Our top rate is now 35%, yet the super rich 400 paid an average tax rate of 17% last year.  Rep. Paul Ryan's The Path to Prosperity plan would close many loopholes and lower the top rate to 25%.  Far from a giveaway to the rich, his plan like mine, may just collect higher revenues from these rich than President Obama's plan to end the Bush tax cuts.  Obama is fond of saying that's it's a question of fairness, but it's not.  It's a question of math and his is fuzzy.

For a better look at the math of spending cuts compared to tax rate increases, please read this paper, Large Changes in Fiscal Policy: Taxes Versus Spending by Alberto F. Alesina and Silvia Ardagna.  At 36 pages, it's half the length of Ryan's budget plan, but will do more to convince you of the wisdom of Ryan's approach on spending and taxes.  In it, Alesina and Ardagna write,

For fiscal adjustments we show that spending cuts are much more effective than tax increases in stabilizing the debt and avoiding economic downturns. In fact, we uncover several episodes in which spending cuts adopted to reduce deficits have been associated with economic expansions rather than recessions

After reviewing the data of many fiscal adjustments (attempts to lower deficits), they find,

In successful episodes total primary spending as a percentage of GDP falls by about 2 percent of GDP. Total revenues actually decline of about half of percentage point of GDP.  Thus, successful fiscal adjustments are completely based on spending cuts accompanied by modest tax cuts! On the contrary, in unsuccessful adjustments total revenue goes up by almost 1.5 per cent of GDP and primary spending are cut by about 0.8 of GDP. Once again this comparison points in the direction of spending cuts as the more successful ways  of fixing budget problems.  Regarding the composition of spending and revenue the most striking comparison is given by the transfers item. In successful adjustments transfers fall by 0.83 per cent of GDP, while in unsuccessful adjustments they grow at about 0.4 per cent, a huge difference between the two episodes of 1.2 percent of GDP. This comparison points in a clear direction: it is very difficult if not impossible to fix public finances when in trouble without solving the question of automatic increases in entitlements. Regarding the composition of revenues, again as above the most striking difference is on income taxes.

I am not a rich person.  If solving our problems was about figuring out who has all the money and then going and taking some of it, I'd be more inclined to listen to what Obama has to say since it's not my money he's after.  But his math and economics couldn't be more wrong.  The truth is that taking more of their money will more likely cause me to be poorer.  And when we run out of their money, then they will come for yours €€and mine.

A Wall Street Journal article by Stephen Moore and Richard Vedder Higher Taxes Won't Reduce the Deficit, points out their research that shows for every dollarthat taxes are raised, the gov't creates more than a dollar of new spending.  Keep this in mind if you still think that raising taxes will fix our problems.

Just ask yourself this question.  If you are in debt because your spouse charges too much on your credit card, is getting a second job to bring in more income your first move?  Don't know about you, but cutting up the credit cards would be my first choice.  Returning some of the purchases would be the second.  Cut back on dining out would be third.  Getting a second job would be somewhere around 15th on my list.  Bringing in more income with a second job, but not fixing the spending issue will move me closer to divorce, not solvency.

Charles Krauthammer makes a worthwhile argument that we should fix the spending side first, get that in order, then consider the tax side.  That should be a decent compromise.  But it won't be seen as one.

On illegal immigration, the conservative position has been to secure the border first, then discuss where we go from there as far as amnesty is concerned.  The question of amnesty isn't the core problem.  The problem is that they are still crossing the border as I write.  Granting amnesty will not eliminate the real problem.

On that same note, higher taxes will not eliminate the deficit.  Spending is the core problem.  Only after that is fixed, can we adjust taxes to fit properly.  I troubleshoot at work all the time.  Identify the core problem first and fix that, then address any secondary issues afterward.

As always, feel free to tell me where I'm wrong, but I ask that you take a moment to read Alesina and Ardagna's paper and Paul Ryan's plan first and please come at me with at least a few facts or stats.  I don't feel like responding to claims of greedy Republicans with ties to shady Wall Street types who want to kill your grandmother and blow up nursing homes so Bush & Cheney can enrich their oil buddies.  I've seen that movie before and it's a bit boring.

>>  On a related note, former Democrat Presidential nominee Walter Mondale, whom I mention in an earlier blog post, writes in the Washington Post,

We will not be able to control our budget deficits without raising taxes. That simple reality has brought us to a moment of truth in American politics. President Obama’s speech Wednesday lived up to that moment, and now Democrats and Republicans in Congress must take a similar stand.

Many have described my 1984 presidential campaign promise to raise taxes as exemplifying the folly of proposing tax hikes during an election. Although the rebounding economy and improving job picture that year probably had more to do with President Ronald Reagan’s reelection than my pledge did, there are certainly political lessons for anyone considering tax increases today. In particular, avoid generalities, and clearly link taxes to addressing concrete national needs.

Well, if old Fritz wants to starkly contrast the boom of the Reagan Recovery to our current convalescence under President Obama by claiming that a promise to raise taxes will be politically viable now, since we don't have that pesky booming economy and millions of jobs being added quarterly to distract the masses, I will quote the President and say "Go for it."

>>  This headline over at FoxNews is not surprising at all,  Obama's $5 Billion Weatherizing Program Wastes Stimulus Funds, Auditors Find.  Read and we find that in Deleware,

...costs for the low-income housing program stemmed from paying contractors to do simple, inexpensive fixes -- like insulating attics or sealing gaps -- but who instead went the path of replacing furnaces, windows and doors, all at a much greater cost. Much of the work was authorized by an administrator and a contractor, neither of whom is still employed with the state program, the newspaper reported.

"The cash grab that went on was just amazing," Allen Luzak, a weatherization expert with the Delaware Energy Office told the newspaper.

So far, only 689 homes have been retrofitted while roughly 6,000 families are on the waiting list for help. The attorney general's office has been investigating the program for the past year but hasn't filed criminal charges yet

Of the $5 billion allotted, only $2.4 billion has been spent, which by my math means we could be $2.4 billion closer to closing the deficit by cancelling this program right now.

>>  Even as I am preparing to send my daughter off to college in the fall, I can't help but take note of the many voices (with whom I tend to agree), that continue to warn of the burgeoning Higher Education Bubble.  Now Paypal founder Peter Thiel has joined in and even funded an unothodox program that will take 20 kids under 20, remove them from the college system and pay them for two years to start a company. 

Dilbert creator Scott Adams writes that college should teach entrepeneurship, but Thiels plan sounds like a better approach.  The key is the difference between training and educating, as NRO's Phi Beta Con blog addresses. 

Mr. Adams commits an error described in Albert Jay Nock’s 1931 Theory of Education in the United States — confusing education with training. Higher education should develop the mind; trade schools and work experience should develop vocational skills.

And now even one of my favorite comic-strips, Pearls Before Swine, has noted the problem with the overselling of college. (Yes, I am willing to listen to guys who write for the funny papers.  If anyone knows about wasting money on a degree that has little use for them, it's probably these guys.)

>> There are indications that a few NATO nations will request a new resolution from the UN authorizing regime change in Libya.  Based on the current results, either this will happen or the status quo will be locked in moving forward.  Short of a more clear directive, along with boots on the ground, Gaddafi does not appear to be going anywhere, anytime soon.  For the European nations that depend on Libyan oil, this will be an unacceptable result. 

For the Obama administration, the lesson should be that over the last 50 years it has become clear that for success, military action must be an "all-in" action.  From Vietnam to Grenada, Panama to Bosnia and Iraq to Somalia, that lesson should now be clear.  America can no longer choose to act in a half-hearted manner with our military.  Determine a goal and use whatever means necessary to achieve that goal.  The current UN resolution, with it's restriction on ground troops, is wholly antithetical to US involvement and shows the inadequacy of the UN's multi-lateral approach.

>>  Ed Morissey at HOTAIR notes an article in The Fiscal Times by James Cooper that shows "For the first time since the Great Depression, households are receiving more income from the government than they are paying the government in taxes."

As you can see from the chart, tax revenues are not too low.  Even with the recession, our tax revenue as a percentage of household income in still higher than it was just prior to the JFK tax cut when the top effective rate was around 90% of income.  The problem is that transfer payments, which topped out at 5% during the Great Depression are now approaching 20% of personal income.  That, of course is not healthy and definitely not sustainable.

The key to our nation's solvency must come from pro-growth policies that limit federal spending.  President Obama's policies seek to do the opposite.

>>  Not sure if I will be doing much blogging this week.  After work tomorrow, I will be here -

I will be taking my son Nate to a ballgame at Busch stadium.  His birthday was Saturday and this was one of his presents. (Rain, rain, stay away)

After leaving work on Thursday, I will be leaving town with my family - destination Dauphin Island.  I am looking forward to a sunrise Easter church service on the beach.

Please don't be jealous.  This trip will be a replacement for our normal summer vacation.  I will be spending much of the summer negotiating a new collective bargaining agreement on behalf of my union and am unable to make any plans until we have a new agreement in place.  Unlike our President, my travel plans are dictated by my job responsiblities.  (sorry - I had to get a little dig in there)

So, envy me now & I will envy you in the summertime.

God Bless.

O Waiver, Where Art Thou?

On May 2nd, I will personally become acquainted with our President's failed promise that under his health care reform law, we could keep our current insurance if we wanted to.  On that day, our union will begin negotiating a new collective bargaining agreement with management to replace the contract that will end on June 30th.  First order of business on May 2nd will be a presentation on health insurance.  Even now, many of our senior members are choosing to retire under the current agreement, rather than take a chance on what our health care benefit will look like on July 1st.

My employer has been self-insured for the vast majority of health care expenditures for many years now.  There are two primary exceptions to this.  One, they pay a third party insurance carrier for a catastrophic coverage plan for its employees and two, our insurance coverage has a lifetime benefit maximum.  On average, less that 1% of employee's health care expenses meet the catastrophic limit each year and as far as I know, none have ever met the lifetime cap.

Over the life of the current five year contract, the cost of our health care plan has averaged a yearly increase in the low single digits with a cumulative increase under 10% over the last four years.  Both management and our union have worked to keep expenses low.  Part of that plan was having our union members cover a greater portion of the health care costs.  Under the previous contract, employees paid less than 20% of expenses, but in the most recent year, employees paid just under 30% of the total cost of the insurance plan.

Additionally, management began offering certain preventative care provisions free of charge to employees.  As they examined the data, the company realized that less than 5% of covered employees would use over a third of the health care dollars spent each year.  It was cheaper to treat and find issues early rather than wait until they became health problems.

Despite the inherent faults in the health care system, my employer, working with my union brothers and sisters had found a way forward to bring what were formerly 15 - 20% yearly increases and created a sustainable program that worked well.  Negotiations for this next contract brought hope that any wage increases would do more than simply pay for the additional health insurance costs.  That, of course, is now out the window.

A Parent's Prayer

I reach out my hand to grasp it, but it falls through my fingers like, well... sand.  Try as I might, I cannot grab a hold of time and stop it.  Time is a journey; not a destination.  And no matter how I might attempt to restrain it, this train will keep to it's schedule.  It knows no reverse and makes no stops.

Often, I convince myself that I am the conductor of the train; that I, and I alone, am in control of the ride.  I imagine that I am the man in charge.  Steering a train is pretty easy - you just follow the track.  At least until you come to a switch.  Left or right?  I choose left, but the train goes right.  Suddenly, I realize that I never was steering the train. It was a delusion of mine.  The train was just following the path that was laid out for it.

Sometimes, we are so eager to feel that we have control, that we will consciously ignore the tell-tale signs.  Our mind plays tricks on us and we are more than happy to play along.  But our delusion emits a false sense of security and that can put us in danger.

Tonight was my daughter's Senior Prom.  It's a good bet that everyone of those teenagers believe that they are in control of their life.  But they couldn't be more wrong.

On all the large events such as this, my daughter wonders if this will be the night that she will lose one of her classmates.  As invincible as her and her classmates feel, they recognize that control is illuoisory.  Yet by their own actions, they choose to believe the illusion.

Until morning, when they all return home safely, I will be up all night praying for them.  Earlier this evening, a memorial was held to remember a young man who didn't make it home safely one night a few years back.  I can't imagine the grief that our friends went through in losing their child.  But on nights like this I try.  I don't want to, but often the mind is as uncontrollable as the movement of time.

I lost one of my best friends during college.  I never imagined our lives could end so soon.  Before my life had really even started, his was over.  We were only a year removed from where my daughter now stands.

In a few months, she will be leaving our home and heading off to college.  At that point, I will have done all that I have been tasked to do.  Any remaining illusion of control that I have in her life will fade.

Leaving this town, she will seek to make a new life for herself and I couldn't be happier for her.  Small towns tend to skew perceptions.  The big lights of the bigger cities may expose faults that were hard to see before or enable them to see the beauty that lies hidden deep in the shadows.   My beautiful daughter has yet to realize how wonderful she really is.  The truth lies out there for her; she just needs to go and find it.

Whatever she makes of her life, I want her to understand, though, who is really in control of her life.  No matter the desires of her heart, I hope that she always remembers that it is God who is in control.  In the Bible, Paul points out that we must die to live; we must lose to win.  Faith is taking our hand off the wheel and allowing God to do the driving.

Last week at church, my son Nate and I sang one of my favorite songs, Jesus is For Losers.  It's a song Steve Taylor wrote after his failed attempt to achieve rock stardom his way, rather than following what God wanted.  As the sands of time continue to fall through my fingers and my Nicole's journey continues forward, I pray she never becomes too successful to realize that she is still a loser like me, broken at the foot of the cross.

The only thing we can control in this world is our own actions; and even in this we often find ourselves losing the battle with our sinful nature.  For me tonight, Faith is allowing my illusion that I can protect my family at all times to fade.  All I can do is pray that I have done my part as her parent so that her actions will be safe and then pray that God will find a way to protect her from the hundreds of other dangers that are beyond her control....and mine.

Go; go with God, but go...

Jesus is For Losers
by Steve Taylor

If I was driven
Driven ahead by some noble ideal
Who took the wheel?

If I was given
Given a glimpse of some glorious road
When was it sold?

So caught up in the chase
I keep forgetting my place

Just as I am
I am stiff-necked and proud
Jesus is for losers
Why do I still play to the crowd?

Just as I am
Pass the compass, please
Jesus is for losers
I'm off about a hundred degrees

If I was groping
Groping around for some ladder to fame
I am ashamed

If I was hoping
Hoping respect would make a sturdy footstool
I am a fool

Bone-weary every climb
Blindsided every time

Just as I am
I am needy and dry
Jesus is for losers
The self-made need not apply

Just as I am
In a desert crawl
Lord, I'm so thirsty
Take me to the waterfall

And if you're certain
Certain your life is some cosmic mistake
Why do you shake?

And if you're certain
Certain that faith is some know-nothing mask
Why do you still ask?

They don't grade here on the curve
We both know what we deserve

Just as you are
Just a wretch like me
Jesus is for losers
Grace from the blood of a tree

Just as we are
At a total loss
Jesus is for losers
Broken at the foot of the cross

Just as I am
Pass the compass, please
Jesus is for losers
I'm off about a hundred degrees

Just as I am
In a desert crawl
Lord, I'm so thirsty
Take me to the waterfall




Visions of America

After speechifying VP Joe Biden into a restful sleep on Wednesday, President Obama began what Bill Kristol at the Weekly Standard has dubbed Obama's Orwellian Deficit Reduction Tour to "Discuss his Vision for Bringing Down our Deficit Based on Shared Responsibility and Shared Prosperity".  This plan, of course is a plan that looks pretty much like his big spending 2012 budget proposal, except with more tax increases added in.   Obama proposes to appoint a commission to tackle future deficit reductions, despite having already had a deficit commission whose recommendations the President has chosen to ignore.

What the President refuses to acknowledge publicly is that raising taxes on the rich cannot close the deficit.  While he seeks to raise tax rates for those making $250,000 per year, if we took everyone who makes at least $100,000 per year and taxed them at 100%, that would only add $1.5 trillion in revenue.  Our current year deficit is $1.6 trillion.  So either he knows that the deficit cannot be taxed away on the rich & he fully intends to raise taxes on the middle class too or he just doesn't really care about the deficit & is in campaign mode.

Note the scalpel

 

Where Two Paths Diverge...

Here is the truth about the future: We are living on borrowed money and borrowed time. These deficits hike interest rates, clobber exports, stunt investment, kill jobs, undermine growth, cheat our kids, and shrink our future. 

- Walter Mondale, Democratic Presidential nominee, July 19, 1984 Democratic National Convention

Today, President Obama acknowledged reality.  Just two months ago, he submitted a 10 year budget that said and did nothing to lower our deficit in the near term.  Unusual as it is for a President to scrap his own plan, Obama was forced to present a new plan due to the reasoned response to Paul Ryan's The Path to Prosperity and it's acceptance as a serious proposal.  His choice was to either allow the Republicans to direct the narrative or attempt to offer a competing vision on how to accomplish the same goals.

 

Despite acknowledging reality today, the President chose to offer a 12 year plan that will do little other than make it seem he is doing something.  Talk of commissions, defense cuts and future year triggers means that he has no intention of changing his current spending plans.  Instead, he offered numerous tax increases as his planned "spending cuts".  His new approach sounds like his old approach and brings to mind another failed liberal politician.  

“If Dukakis is elected, he would act next year as he acted last week: trim here and there, but then take a frequent flyer to the last resort [new taxes]. He would accelerate rather than break the spending urge in Congress.”

- William Safire
New York Times
6/29/88

Americans have come to the realization that the status quo is not sustainable.  In Ryan's plan, the Republicans have offered a real plan that will seek to balance the budget over the long term by overhauling our taxcode to make it fairer and making changes to Medicare and Medicaid now in order to make these programs sustainable.  In responding to the Republicans 2012 budget proposal, Obama has chosen to champion a course that would make Michael Dukakis proud by pledging to tax our way to prosperity. 

For all the faults with the President's plan, the greatest is that he attempts to hijack the narrative with a falsehood.  The only real spending cuts he offers are tax increases.  As I'm sure many of you have heard, we don't have a revenue problem, we have a spending problem.  In using an Orwellian nomenclature of calling a tax increase, a "spending cut", Obama seeks to confuse the issue.

In the 1990's a combination of events led to a few years of budget surpluses.  Following the fall of the Soviet Union, National Defense was downsized to cash in on the Peace Dividend.  After being elected, Bill Clinton raised taxes on an expanding economy and then two years later, a Republican congress began reigning in discretionary spending.  Looking at the chart, we can see spending increased back to 20% of GDP following 9/11 and was held there until Nancy Pelosi and the Democrats regained control of Congress.  From there, spending took an immediate upswing.  Under Obama, this spending has been made worse.

Deficits are expected to increase in a recession as revenues decrease, which did happen in 2008.  But by shifting our spending baseline in such an extreme way, Obama has accelerated our impending demise.  The truth is that with or without our current increases in discretionary spending, our spending will soon drive us into a hole that threatens to swallow us.

The President's response to raise taxes while leaving entitlements untouched will only delay by a few years the inevitable.  Soon our entire revenue stream will be spent on entitlements.

Raising tax revenues from the historic level of 18% of GDP will only offer us, at best, a temporary respite.  Of course, raising tax rates has no guarantee of increasing revenue.   As Larry Kudlow writes at National Review,

Of course, the president’s formula of estimating higher revenues to lower the deficit is completely wrong. The reality is that higher tax rates will slow the economy, inhibit new start-up companies, penalize investors, and may very well lose revenues and increase the deficit.

It is questionable what raising tax rates will do to our economy.  What is not questionable is what will happen to our debt if we do not address the real source of our future troubles.

No amount of tax increases will ever be able to manage debt of this size.  Any plan that does not seek to alter or amend Medicare spending is not a serious plan.  Today, our entitlement spending is 58% of our spending.  Add in interest payments and we're now over 75%.  National defense and discretionary spending are left with only 1/4 of our budget.  In the past, our defense spending was close to half of all spending.  Today it sits at 20% and the President looks to cut if further.

 

While he presents us with cuts from a declining slice of the pie, he makes no offer to deal with the programs that will soon make up the entire pie.  What happens then?  Imagine a government shutdown that never ends.

As I have tried to make clear, we cannot ignore the real driver of our budget deficit.  It's the huge twinkie in the room.  Last week's budget showdown over spending cuts in our non-defense discretionary spending is chump change compared to the real issue - entitlements.

That's a big twinkie and it will continue to grow no matter how high taxes are raised. 

In 2008, a very liberal Senator Barack Obama ran as a centrist, promising to cut the budget, not raise taxes on the middle class and be pragmatic and do what works.  Now, when his leadership has been challenged to a large degree by Rep. Ryan, a very liberal President Obama showed us his true colors - tax and spend.  His proposal will soak the rich while cutting defense in order to keep spending more on "investments".

40 years ago, Medicare, Medicaid & Social Security spending was 4% of GDP.  Today it is 10%.  In another 40 years, it is projected to be at 18% - the historical average for tax revenues.  At that point, we have no other money left for defense, interest payments or running the government.  Then, or even sooner, those programs, along with a whole host of other government spending will be cut or eliminated - unless we make changes now.

In choosing to confront Ryan's Path to Prosperity, the President, instead chose to offer up a European vision for a Path to Austerity.  As the two paths diverge, the choice is clear.

Budget Battle Bongo

Last night, the US House & Senate came to an 11th hour agreement on a budget that will prevent a partial shutdown of the government.  All sides made statements about the necessity to live within our means & find ways to bring our budget deficit under control.  The agreement will cut approximately $38.5 billion.

As part of the agreement, Sen. Reid agreed to allow stand alone votes on Planned Parenthood funding & Obamacare repeal & Speaker Boehner removed policy riders from the budget bill.

Naturally, it's hard to see how the President & Sen. Reid are being very sincere about the need for spending cuts, when their original offers included spending increases & not cuts.  Reid, in particular, noted that an earlier proposal of $32 billion in cuts was "draconian".  Yet, last night he heralded the deal as historic.

While the deal is historic, that is not a difficult standard to meet in the light of our historic budget deficits. Even with the $38.5 billion in cuts, our deficit this year will be more than 38.5 x $38.5 billion. Historic, but just a drop in the bucket.

Moving forward, we must re-evaluate where our $$ go.  Too often our govt is funding groups because of the desires a few rather than on the need for the funding.  Planned Parenthood & NPR will not disappear without tax dollars.  The DC Scholarship program will.

Over the past few days, the Democrats made all sorts of wild, exagerrated claims about Republican efforts to kill women & harm women's health.  Speaker Boehner, meanwhile quietly went about restoring funding for the DC Scholarship program that benefits minority students in DC.

No wild claims about how the Democrats hated black children.  No effort to portray them as racist or anti-education.  Instead, Boehner continually & quietly fought for a successful program that the President wanted to cut.

Today, pundits will try to decide who won the budget battle.  But it wasn't the Republicans & it wasn't the Democrats.  It wasn't even the President.  The American people won last night.  Nearly $40 billion of tax payer dollars was saved last night.

But the war is not over.  This was just the first battle.  Now it's time to look toward next year's budget.  Read Paul Ryan's The Path to Prosperity - a 2012 budget proposal.  Don't complain to me what the press says about it.  Read it - it's under 75 pages long & a quicker read than Sports Illustrated or Cosmopolitan.  It even includes pictures (well, graphs).  Learn for yourself & decide for yourself.  Then we'll talk.

Budget Nonsense & Hyperbole

As of 9:35 AM CST today, we still have no budget deal and are heading toward a government shutdown tomorrow night.  In an effort to head off a shutdown, the Republican house has proposed another Continuing Resolution similar to what has been done to keep the government funded up to this point.  This stop-gap bill also includes a measure that will fully fund the military for the rest of the year.  This would prevent any potential shutdown from affecting our soldier's pay or harming our military actions around the world.

For Senate majority leader, Harry Reid  (D-NV), every moment not spent sleeping or in negotiations is being used to make the most strangely ironic claims.  In a speech on the Senate floor yesterday, Reid said,

Now we learn that House Republicans are going to make another excuse, create another diversion, and avoid another tough choice. Instead of solving the crisis the way we should, instead of saying yes, they say in fact what they are going to do is pass what they will call another short-term stop-gap measure. They will say it is short term, but what that really means is it’s a shortcut, a short cut around doing our jobs. Instead of solving problems, they are stalling; they are procrastinating. That’s not just bad policy, it’s a fantasy. We all heard the president of the United States say yesterday that he won’t accept anything short of a full solution, and why should he? We’re six months into the fiscal year now.

Perhaps it should be brought to Sen. Reid's attention that his party controlled the House, Senate & Presidency last year when they chose to avoid solving problems, they stalled and they procrastinated. 

The Obama Group

Welcome to the Obama Group - starring Barack Obama as Mediator-in-chief.

It's beginning to look like a great idea for a television show.   The Healthcare Summit....the Budget Summit....the Beer Summit....all these summits between opposing groups with our Mediator-in-chief standing as the voice of reason between them.  Except, that's not in his job description and he's still campaigning as a Democrat, right?

During yesterday's meeting, he seemed to be moderating a debate between the GOP and the Dems, as if the Dems were some outside group having nothing to do with him.  Our problem isn't that we need a counselor to effect the issue of conflict resolution.  What we need is a President who wants to act like a President.  Obama kicked off his re-election campaign this past week, but he needs to show he really wants the job now, first.

The Democrats controlled the House of Republicans, the Senate and the Presidency for every day of 2010.  The Democrats could have passed a budget at any time last year and the Republicans had little to no leverage in stopping them.  All they had to do was find a couple Republican votes in the Senate and they would be unstoppable.

They did nothing all year long.  Then after the November elections when they realized that they were about to hand the 2011 budget creation to the Republicans in the House, the Democrat leadership created a huge pork-filled omnibus spending bill that was so terrible, it was never even brought up for a vote.  The Democrats wasted their opportunity to lead in 2010.

Today, the President is wasting his opportunity to lead.  In 2006, when the Democrats took power in Congress, the budget deficit was $162 billion.  Under Democrat leadership, Congress and this President has raised the yearly budget deficit to over $1.5 trillion.

The Republican budget proposal seeks to cut $61 billion from a $3.5 trillion dollar budget.  Our Federal revenue only projects to be about $2 trillion.  The Democrats are playing a game of "I'll meet you halfway" rather than actually looking at the budget as an adult.  Isn't it time that our politicians stopped doing the political thing and started doing the right thing?

The real problem is that the Democrats, as a party, are beholden to such a large collection of disparate groups that depend on the Federal government for money.  Planned Parenthood, NPR, PBS, AARP, green companies, Fannie & Freddie, the Post Office along with a whole host of smaller community groups will be devastated by needed budget cuts.

This isn't to say that no groups owe their existence to Republican votes, but ending agriculture and energy subsidies will be a welcome trade-off to Republicans if it means the end of subsidizing other non-vital spending such as the groups that Harry Reid and Barbara Boxer seek to protect.

Which of course brings me back to Paul Ryan's The Path to Prosperity.  Is it perfect?  No.  But it is the closest we can come to a reset on spending, while avoiding a dismantling of our entitlement programs.  In it he proposes ending the politically popular agriculture and energy subsidies, as well as privatizing Fannie & Freddie.  There is enough in his proposal for both sides to hate, that it makes for what can only be described as a truly fair proposal.

Medicare and Medicaid spending growth is unsustainable if left alone.  Something has to be done - either now or later.  If we act now, we can preserve the current plan for those at or near retirement.  If we wait, that option goes away.  Even if you are in favor of using tax dollars to promote certain causes, entitlement growth will squeeze that option away.

For a left leaning perspective on Ryan's plan, here's SLATE.

...liberals might want to consider whether some of what he proposes doesn't in fact serve their own ultimate goals....it's hard to make a principled liberal case for the program in its current form. To do so, you have to argue that government-paid health care should be a right only for people over the age of 65, and for no one else. Medicare covers doctor and hospital bills at 100 percent, regardless of income. This gives doctors and patients an incentive to maximize their use of the system and waste public resources. Choosing to pay 100 percent of Warren Buffett's medical bills while cutting Head Start reflects a strange set of social priorities, to say the least.

Ryan's alternative to Medicare hardly seems as terrible as Paul Krugman makes out. Seniors would enter the health care world the rest of us live in, with co-payments, deductibles and managed care. But starting with a value of $15,000 per year, per senior—the amount government now spends on Medicare—Ryan's vouchers should provide excellent coverage. His change would amount to a minor amendment to the social contract, not a fundamental revision of it.

Effectively constraining the growth of Medicare could make it possible for Democrats to do a lot else that's important to them in the future.

It's important to understand the two very different budget discussions taking place in Washington today.  The one taking place between the President and Congress right now is about stepping back from the excessive spending that is harming our present economy.

The other is about finding a long term solution to our long term debt and spending that threatens to unleash a financial calamity unlike anything we can possibly even imagine. 

Brian Kaller has an article that describes the effects of the economic crisis as they have been felt in Ireland.  In The Wreck of the Irish, he writes,

Serious crashes can happen, of course, and our technology does not make us immune to them. There is a reason Ireland has so much open country and so many ruins; in an earlier age of railroads and mass communications, one crop failed, and a third of the island’s eight million people died or fled. We Americans have lived for decades at the other extreme of prosperity. Most nations live somewhere in-between—which is where the U.S. is likely to find itself sooner rather than later.

At some point America will witness a crash much worse than the Great Recession.

The United States of America has stood up to the great British army, the Nazis and Communism, but we will be brought down by ourselves if we do not soon make a change.

The problem is worse than you think...

If the President really wants to be a leader, he needs to stop coddling the interest group constituencies and not only take the Republicans offer, but raise the stakes.  Accept their proposed cuts and offer some more. 

It's time to stop being the man in the middle and start being the man in charge.  President Reagan, after taking office in 1981, sent a tax proposal to Congress and told them to send it back without changing anything or he wouldn't sign it.  They passed it, without amendment and he signed it.  The result was an era of prosperity and unprecedented economic growth.

Paul Ryan has stepped into the void created by President Obama's lack of leadership on the budget.  If the President really wants to shut down the government over $30 billion during the same week the Republicans propose a plan to balance the budget and eliminate the $14 trillion national debt, then the President really has taken leave of his duties.  Not exactly a great way to kick off a re-election campaign, is it?

Finally..."The Path to Prosperity"

Paul Ryan has released his 2012 budget proposal:  The Path to Prosperity.  It is perhaps, the boldest budget plan ever offered.  As the editors at National Review put it,

Paul Ryan’s budget proposal for next year is the most ambitious conservative initiative since — well, actually, since ever.

Our current budget deficit will be $1.6 trillion this year.  The total national deficit is $14 trillion.  A few months back, President Obama proposed a budget that will never break even over a ten year period and will ultimately end with spending levels at 40% of GDP.

Ryan's budget proposal will cut spending $6.2 trillion compared to Obama's budget.  It will cut spending back to the historical average of 20% of GDP.  His plan will completely pay off the national debt by 2050.  And he will do this without raising taxes.

I wish this graph was lying about our current path.  I wish that everyone understood how perilous our future is.  But wishing doesn't make it so.  Our current path is not just unsustainable, but implies a total disaster awaits us.

Obamacare - Accelerating Toward the Abyss

Do you remember the world before Obamacare?

Let's go back to the world of healthcare as it existed 18 months ago.  It's expensive, some go without any insurance and for too many Americans, a serious illness can cause bankruptcy, home foreclosure and other financial pitfalls, but care is available; if not at the doctor's office, then at the ER.  For some, the high price of prescription medication is cost prohibitive.  Our system is heading for the abyss.  Something must be done. 

Obamacare (Health Care Reform Law - PPA) was passed a year ago.  It provided that:

• All Americans must buy insurance that meets certain minimum standards (regardless of cost) under penalty of a fine
• Eliminate normal market incentives to purchase insurance before medical care is needed
• Insurance companies must cover young men and women up til the age of 26 as 'children' on their parents coverage - even if they are married and have a job
• The Federal government will pay large corporations and unions money not to drop coverage for retirees (even if they hadn't planned on dropping coverage)
• The Federal government will stop offering a tax benefit to employers that continue to cover Medicare aged retirees
• Employers that choose to offer insurance coverage to employees may not implement any lifetime cap on benefits paid.
• Funnel money away from patient care into lawyers fees
• Mandate that insurance companies spend a minimum % of fees toward care
• Enroll an additional 30 million into Medicaid
• Incentivize employers to drop all healthcare coverage

Does this new healthcare system fix the problems of our current system?  Does it fix anything?  Have we avoided the abyss or are we now moving faster toward it?  Nancy Pelosi said we had to "pass it to see what's in it".  Well, do we like what's in it?

In truth, Obamacare is a misnomer; the President was just as uninvolved with the formation of this healthcare reform law as he has been on most legislation.  He gave the Democrat leadership a set of parameters of what he wanted and let Congress fill in the details.  He gave many speeches taking ownership of the end product, but it would really be more proper to call this Pelosicare.  At the end of the day though, it's his signature issue, so Obamacare is a reasonable tag.

Back to my point.  In what world would anyone devise a system with this list of provisions and believe they have done anything constructive for our problems?  It has absolutely no chance of 'bending the cost curve down'.  Even with a large increase in taxes, the plan will add to our deficit.  Instead of turning the wheel, we have simply stepped on the accelerator.

Senator Evan Bayh, who voted for the reform law said, [h/t Hotair.com]

The real issue that was not addressed, Laura, that you’ve raised now, and I think appropriately, is the cost, the cost to both the government and to your listeners. We need to take steps now to get the costs of health care under control. That was not dealt with really in an aggressive way in this legislation. I think it now needs to be.

I may be wrong, but I thought cost was the primary reason for the healthcare reform.  But wait, there's more.

The AP is reporting that one of the effects of the new law is that the market for concierge doctors is expanding allowing the wealthy to put a personal physician on retainer.  At the opposite end, the NYT notes that expanding the Medicaid rolls doesn't increase access to healthcare since many care providers refuse to accept Medicaid, which often pays less than the cost of the care provided.

Recently the Obama administration admitted that they had payed out $1.7 billion in payments, as part of Obamacare, called the Early Retiree Reinsurance Program.  It's designed to pay companies to continue coverage for their early retirees, but most of the money has gone to companies such as GE and ATT, along with the United Auto Workers.  This isn't going for a new benefit, but simply to pay them to continue what they already offer.

In addition, AARP will reap a fortune from the new law.  The CBO has admitted that the law will destroy 800,000 jobs and cost states $118 billion over the next 12 years.  The law raises taxes and increases costs.  In fact, HHS Secretary Kathleen Sebelius finally admitted that the law double counts money.  They have to do this to make it seem cost-effective.

In another month, I will begin negotiating our union's new collective bargaining agreement with my employer.  The issue of healthcare has always been contentious, but it will even be more so this year.  Rather than allowing us to negotiate between our two sides, we are limited by the new healthcare law.  Certain provisions must be part of our agreement's healthplan, even if neither the union or management want it.  Our hands are tied, while my employer has been provided incentives by the new law, to simply drop coverage.

The new healthcare law is so bad, that employers and unions all over the country are requesting waivers from certain provisions.  Even states are seeking waivers.  The state of Maine has received a waiver from the required care percentage.  Some politicians have said that all 50 states should be exempted if one is.

Other employers that have formerly offered coverage below the new minimum standards, may simply drop coverage now if they do not receive a waiver.  Even employers, such as Starbucks, that supported its passage are now showing concern for the costs.

Some insurers, unable to charge for pre-existing conditions, can no longer offer coverage at a profit and have simply stopped offering coverage to certain segments of the population.

The mandate that all Americans must purchase insurance is being fought in the court system and stands a good chance of being struck down by the Supreme Court as unconstitutional; and it should be.  Let's hope so, because the IRS has increased hiring in preparation to enforce it.

Despite claims that the negotiations for health care reform would be broadcast on CSPAN, the Obama administration has been less than transparent.  When the House Energy and Commerce Committee requested records of healthcare meetings held by the White House, the administration denied the request.  As one of the participants in those talks, Kaiser CEO George Halvorson was reported to have said, "the real discussion this time, behind those closed doors, is about changing the way care is delivered. Not about the cost."

In over 2000 pages, Obamacare manages to stick it's finger into every pie of our healthcare system and will leave us poorer, less healthy and with a system that is less fair than what we had.  The law manages to be wrong in just about every way imaginable.

If you watch the NFL, you have seen how instant replay has changed officiating.  In addition, the NFL officiating committee has sought to clearly define certain issues that are still ambiguous under replay.  One, the 'tuck rule' creates a highly complex determination of whether the quarterback has fumbled, by attempting to discern what his intent was.

Another complex rule states that when a receiver goes to the ground in the process of catching the ball, he must retain possession throughout the entire process.  What this means is that if he falls down making the catch, rolls around a few times the ball cannot become dislodged during that movement.  In practice, by the letter of the law, when a receiver dives to make a catch in the end zone and he, in his exuberance to celebrate, tosses or drops the ball on his way back up from the ground, the pass has to be ruled in complete; even when it's obviously a catch.

I offer this as a way of saying that we need to keep the rules simple.  When we make the rules complex, we allow too much room for unintended consequences.  A basic principle in life is that the rules always progress further and further into complexity until the system becomes inoperable and must be scrapped or reformed.  This complexity creates injustice.

Our tax code is a good example.  It's jam-packed, full of loopholes and complexity that create injustices as profitable companies pay no taxes while the middle class pays its share.  It needs to reformed.  Try and imagine a tax code reform that used 2000 pages to create a system that is even more complex than what we currently have. 

Reform should be a do-over - a chance to remake the system, but our healthcare reform instead pushes us further down the hole.  It doesn't remake anything and it doesn't reform anything.  It simply gives us more of what's already wrong with our system, thereby accelerating its demise.

It's time to hit the brakes and stop the madness before the full implementation of Obamacare.  If we don't, I'm afraid of where we will end up.  We must repeal it and replace it with a few commonsense reforms instead.

1. Allow insurance coverage to be sold across state lines.  Currently, each state regulates coverage seperately creating a complex web of 50 different set of regulations for insurance companies to navigate.
2. Tort reform.  Eliminate one of the chief cost drivers.  In obstetrics, malpractice insurance is driving doctors from the market.  Lower supply means higher costs.
3. De-link coverage from employers.  The greatest turmoil in healthcare is caused during the loss or change of employment, but why?  Changing employment doesn't affect your car insurance or your electric bill.  It shouldn't affect your healthcare coverage either. 

Some have used these issues to propose universal (single payer) coverage, but this does nothing for the cost.  In fact it would cause a larger problem.  Increased demand with lower supply will send costs higher than ever.

These three reforms will enhance competition, put real purchasing power into the hands of individuals (which is lacking) and stop putting our healthcare dollars into the pockets of high priced lawyers.  The end result will be more care for less money.  Isn't this the real reason we wanted reform anyway?

Ruminations From the Void

Strange things are afoot at the Circle K.

• Rhianna sings at a country music awards show.
• Russell Brand has seemingly become mainstream here in America.
• The University of Missouri apparently picked their new head coach by pulling a name out of hat, but no one remembers putting the name Frank Haith into the hat.
• A NYU group celebrates Stalin on April 1st, but they were, ironically, very sincere.
• Despite his seeming disinterest in the job, Obama has decided to run for re-election anyway.
• The Horizon League's Butler University Bulldogs will make back-to-back appearances in the NCAA Men's Basketball Championship.
• The temperature hit 90 degrees yesterday, but will drop back to the 30's tonight.

Every single item on that list can be traced back to Global Climate Change - just ask Al Gore.

>>  Speaking of the NCAA Tournament, did anyone notice this guy attending the Final Four in Houston Saturday night.



Dear Mohammed, I am blending in well with the infidels.

We're watching the games and they flash across the UConn student section during the pregame announcements and this guy caught my eye.  Aside from the collegiate gear, he had such a stereotypical Mideast Jihadi look, while surrounded by a sea of lily-white northeasterners, that is was hard not to notice him.

 

I'm guessing he probably got a little extra attention upon entering the stadium.  I attended the Final Four in Atlanta a few years back and they took great care inspecting us on the way in.  But keep in mind, that he appears to be a student dressed in full UConn gear sitting with a seat in the Student section, so maybe they took it a little easy on him.  Of course, in today's politically correct world, they might not have even gave him a second glance.  I can't say that would make me feel any better.

>>  Freshman Senator Rand Paul (R-KY) is causing trouble for the Democrat leadership in the Senate.  On Wednesday, he attached an amendment to a bill that condemns the President's Libya policy by having the Senate adopt the Senator Obama's words, "The President does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation." as the 'sense of the Senate'.

Still, during a testy floor exchange Wednesday with Sen. Dick Durbin (D., Ill.), the Kentucky freshman argued that his amendment deserves a vote, and fast. “In Afghanistan and Iraq, with all the complaints from many people on these wars that we were involved in, President Bush did come and ask for the authorization of force,” he said. “We’ve had two to three weeks of this issue. They had time to go to the U.N. They had time to go to the Arab League. They had time to go to everyone. I think you should be insulted the way I am insulted they never came to Congress.”

Durbin fired back that Bush, by coming to Congress, actually “broke precedent.” Paul looked on, bemused.  [h/t NRO's Corner]

I'm not sure how a flustered Durbin says that Bush broke precedent by following the constitution.  Well, unless he thinks that Clinton's failure to come to Congress created a new precedent.

Harry Reid seemingly had no interest in having his members forced to vote on this amendment, so he adjourned until Monday without scheduling a vote.  I guess we'll see what he does today.

>>  As I said above, the President has officially announced his re-election campaign.  Can't say I'm too happy about this. 

• Spending under Obama has nearly doubled (up 84%)
• He has tripled the annual deficit from $455 billion under President Bush to $1.6 trillion this year.
• Unemployment has jumped above and beyond even the White House's projections of what would happen without a stimulus package in 2009.
• The Obamacare legislation increases costs, raises taxes, decreases competition and harms research and innovation.  It's so bad that states are lining up to receive waivers from it's provisions as Maine has already done.  Over a thousand companies have received waivers.
• New regulations and policies have aided Big Business and Big Labor to the harm of small businesses and competition.
• Foreign policy has been consistently inconsistent, his first instincts tend to be wrong so he often tries to wait out the important issues that affect our nation, which means when he does speak and act, it's usually too little and too late.
• His current Energy policy includes increased costs & decreased supply, hurting job creation and pushing more businesses to send jobs overseas.
• He likes to say one thing, but his actions do another.  He says he's for more oil drilling and nuclear power, but no action.  He wants to cut the deficit, but raises it instead.  He wants to lower spending, but raises it instead.  He wants to lower corporate taxes, but no has no proposal.  He wants to follow science, yet ignores science.  He's personally against gay marriage, but suddenly finds it unconstitutional.  He gives a speech outlining how we will cut oil imports after returning from a trade mission where he agreed to import oil from Brazil. (I won't complain about the contradictions between his words and actions as to our homeland defense since I'm fine with those)

>>  On a related note, I don't have any idea who will be the Republican candidate against him.  Michelle Bachman raised more money than Mitt Romney in the first quarter, but neither one of them can win.  Michelle is not the idiot the press makes her out to be, but I can't see her as Presidential material at present.  Myself, I'd prefer one of the Indiana guys, Mitch Daniels or Mike Pence, but neither are running.

I do like Godfather's Pizza, so I'll be giving Herman Cain, the former CEO of the pizza chain, a good look.  Is that a good way to pick a candidate?  No, but neither was using one good speech, which worked for Barack Obama.  At least we know Cain has some executive experience, which we are definitely lacking at the moment.

>>  Pastor Terry Jones finally does the stupid deed of burning the Koran.  It was stupid, dumb, idiotic, unecessary and unproductive, but is it worse than burning an American flag?  No and of course, we Americans don't flip out no matter who is holding the match when that happens.  While the twin towers were still smoldering, we saw clips of our flag burning all across the Mid East. 

So, no, Jones isn't to blame for the needless deaths caused by his actions.  At least not anymore than the press who happily reported the news and made the actions known to the murderous thugs.  Senator Lindsey Graham (R-SC) is way off base when he talks of the need to limit free speech on this issue. 

I'm not much on the rape defense that she had it coming, so I don't want to hear anyone try to say that a group that commits murder on one continent, because some random person commits an act of political speech on another continent is somehow justified in their actions. 

That just doesn't fly with me.  But that doesn't mean that the parents of our overseas troops aren't justified in walking up to Jones and punching him in the nose.

>>  Negotiations between the Senate Democrats and House Republicans on a 2011 budget continue.  The House has sought $62 billion in spending cuts and the Senate has agreed to as much as $33 billion if some reports are to be believed.  The last time spending has been cut from year to year was during the Clinton presidency under a Republican led Congress.  We can raise the question of taxes during a Presidential election, but we all must understand that the real issues of our budget are decided in Congress.

Take a look at budget deficits over the past few decades and you will see a better correlation by the party leading Congress than which party holds the White House.  In good times and bad, Congressional Democrats never ask whether we need to spend the money; they just ask how much more (excluding defense of course).

>>  Tonight I am pulling for Butler as any proper conservative should.  Seeing the underdog rise up and conquer the evil Power (BCS) Conferences is the epitome of what we want to see take place in our economy.

Conservatives want small businesses to succeed against Big Business.  But that only works on a level playing field.  Just like the NCAA committee often give spots in the tournament to questionable BCS conference schools while overlooking many deserving mid-major squads, Washington regulations inhibit competition from small business by favoring the Bigs.

Remember, small businesses create lots of jobs on their way up the ladder until they become big and achieve market saturation.  After that, they maximize profits by cutting jobs and downsizing.  Then they lobby Washigton to protect them from competition. 

Sounds pretty much like the BCS/NCAA to me.

Enjoy the game tonight.  Plenty of food at my house, so come on by...