What’s the point?

Today, President Obama releases a new policy governing the of nuclear weapons.  He breaks with over 60 years of American foreign policy and promises not to use nuclear weapons against non-nuclear states that are in compliance with the nuclear non-proliferation treaty even should they attack the United States with biological, chemical, or other weapons of mass destruction.

This is the second time Obama has demonstrated his hallmark foreign policy dictum: unilateral preemptive concession. But unlike some others, I’m not as amazingly incensed by this latest absurdity.

Sure, it’s bad negotiating; you don’t announce in advance what you’re willing and not willing to do.  You leave those options available and you remove them from the table in return for concessions. (Hillary Clinton made exactly this point during the campaign, in response to candidate Obama’s howler about taking the use of nuclear force off the table.)

And sure, it certainly seems to privilege the health of foreign states over the security of the American people, which is rhetorically troubling and makes me wonder where what Obama’s priorities actually are.

But really, it’s just silly.  Strategic and tactical decisions will still be made in response to actual developments.  The decision about whether or not to deploy nuclear weapons–in any case that even remotely argues for their use–will not be decided by a statement sheet issued on a slow-news Tuesday. These kind of policy statements do not bind the current administration, much less future ones. This is the foreign policy equivalent of a campaign promise.

“I will not use nuclear weapons–even in self defense–to protect the American people from countries that have signed this treaty.”

is as meaningful as,

I can make a firm pledge, under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.”

But, you know, he did get a Nobel Peace Prize for nuclear nonproliferation.  Maybe this is his effort to earn it.

With a meaningless, pointless, empty promise.

Glory, glory, hallelujah

The health bill will penalize businesses if they fail to offer a certain minimum standard of coverage… if any of their employees requires federal subsidies to afford such coverage.

The consequence of that policy will be that some businesses, to avoid the penalties, will avoid hiring employees that require subsidies. Low-income workers and low-income single mothers in particular will be the hardest hit.

The bill will result in lower employment for low-income single mothers.

That’s a consequence of the legislation, unintended to be sure, but a consequence none-the-less.

The bill will also cause small health insurers to close. From Steve Horowitz,

The support for the bill coming from the major insurers should be one piece of evidence that they expect it to be good for them, particularly due to the provision that requires Americans to buy health insurance. In addition, as is the case with almost all regulation, larger firms are better able to absorb the fixed cost of compliance than are smaller firms. Given that this bill authorizes the hiring of over 16,000 new IRS agents to enforce its tax code provisions, such compliance costs are sure to be high, which will have a higher relative burden for the smaller firms.

The bill’s mandate to cover pre-existing conditions will work in a way similar to the fixed costs of bureaucratic compliance. Such coverage isn’t really “insurance” as pre-existing conditions have a high probability, if not certainty, of requiring expenditures. It’s as if you wanted to buy insurance on a car that was near certain to have brake failure. You aren’t buying “insurance,” you’re getting a straight subsidy of your medical costs. In order to cover the known costs associated with such conditions, firms would normally have to raise premiums on other customers who are genuinely buying insurance. If the new law limits that, the fixed costs will have to come from elsewhere in the firm, much like the compliance costs. And it is big firms who can better absorb these costs than smaller ones.

The law’s mandate that no “stand alone” company can sell dental insurance will drive small dental-only insurers out of business as well, leaving that market to the big firms. The result of all of this will be increased concentration and market power in the medical insurance industry, which is sure to lead to more questionable behavior and more complaints about insurers.

The irony, of course, is that the very same progressives who have supported this bill will be summarily outraged by the decline of small health and dental insurers and the oligopolistic behavior of the remaining large ones. Not that they will accept it, but they have no one to blame but themselves for supporting this bill as its changes will be the cause of those problems.

And sadly, you can bet that their proposed solution will not be opening up interstate competition and repealing elements of this current bill, but calling for the even worse solution of a single-payer system as the very market they destroyed continues to get more inefficient.

Obamacare

I’m recycling an earlier post on health care. New comments are in red.

From Obama’s health care speech of Sept 9, 2009:

“But thanks to the bold and decisive action we’ve taken since January, I can stand here with confidence and say that we have pulled this economy back from the brink. ”

Really? This doesn’t pass the smell test. Unemployment malingers on at 9.7%, higher than any of the administration’s worst-case scenarios and far, far worse than their projected numbers. We face a $56 trillion unfunded liability in Medicare/Medicaid/Social Security, we’re $12 trillion in debt and will need to raise the “debt cap.” (While a member of the opposition party in the Senate, Obama voted against raising the debt cap.)

March, 2010 and the numbers look even worse. The deficit has risen faster still. The economy is still tottering and Treasury Bills are now riskier investments than Proctor and Gamble.

“I am not the first President to take up this cause, but I am determined to be the last. ”

Really? The last? This is just sophomoric delusion. Politics is a battle of ideas, of principles and law. The arguments cycle and the debate rages on. That’s the point, people. The only way anything is ever “finally decided” is with a bullet. more than anything, this comment indicates that the administration is already–in its first year–caught up in its own hagiography.

“Some can’t get insurance on the job. Others are self-employed, and can’t afford it, since buying insurance on your own costs you three times as much as the coverage you get from your employer.”

That’s because of the absurdist tax code! Nothing in the administration’s proposals would do anything to change this. Extend the tax deduction!

Extend the FREAKING TAX DEDUCTION! he said this and then urged Congress to pass a 40% excise tax on private insurance.

“We are the only democracy — the only advanced democracy on Earth — the only wealthy nation — that allows such hardship for millions of its people.”

All the cool kids are doing it! Really, we can be just like France! Or Sweden! Or Greece! They have great health care, fantastic rates of growth and thriving economies! Except they ration their health care, their growth is absymal and their debt is completely crippling and utterly unsustainable. I know, I know, facts will be in short supply in this speech.

Turned out, facts were in short supply during the debate and the vote as well.

“There are now more than 30 million American citizens who cannot get coverage. In just a two-year period, one in every three Americans goes without health care coverage at some point. And every day, 14,000 Americans lose their coverage. In other words, it can happen to anyone.”

Do the math. These numbers make no sense. If one in three “goes without” (for how long?) that’s 100 million over two years or 50 million a year. if 14,000 lose their coverage every day that’s only 5 million a year. He’s making it up.

“One man from Illinois lost his coverage in the middle of chemotherapy because his insurer found that he hadn’t reported gallstones that he didn’t even know about. They delayed his treatment, and he died because of it. Another woman from Texas was about to get a double mastectomy when her insurance company canceled her policy because she forgot to declare a case of acne. By the time she had her insurance reinstated, her breast cancer had more than doubled in size. That is heart-breaking, it is wrong, and no one should be treated that way in the United States of America. ”

I’m guessing that both anecdotes will turn out to be slightly more complicated than presented here, but assuming we take the President at his word, these are examples of breach of contract and are the proper subject of litigation. If they do represent legitimate issues that could be addressed with regulation, then do that.

Anecdotes like these are vile. They substitute emotion for reason and play to the worst in both supporters and opponents of a particular policy. There’s an anecdote for every position and millions of anecdotes that never get told.

“Then there’s the problem of rising cost. We spend one and a half times more per person on health care than any other country, but we aren’t any healthier for it. ”

So let the government run it! It’ll be like the Post Office of Health Care! Or the GM of Health Care! Or the VA of health care!

“And it’s why those of us with health insurance are also paying a hidden and growing tax for those without it — about $1,000 per year that pays for somebody else’s emergency room and charitable care. ”

OK… wait a minute… he wants to increase that hidden tax! 40% excise tax!

“Finally, our health care system is placing an unsustainable burden on taxpayers. When health care costs grow at the rate they have, it puts greater pressure on programs like Medicare and Medicaid. If we do nothing to slow these skyrocketing costs, we will eventually be spending more on Medicare and Medicaid than every other government program combined. Put simply, our health care problem is our deficit problem. Nothing else even comes close. Nothing else. ”

That’s true. But his answer to that is to increase government liability without increasing funding. If he wants to control spending in Medicare and Medicaid, then do that! But adding an entirely new government entitlement does not lower costs.

The CBO score is the tortured product of pure fiction. The bill imposes costs immediately but delays benefits in an attempt to create the ridiculous figures. When the Doc fix is applied even the fictional savings evaporate.

Now, these are the facts. Nobody disputes them. ”

Oy. This has been a constant refrain and it’s purely and plainly despicable.

“There are those on the left who believe that the only way to fix the system is through a single-payer system like Canada’s — (applause) — where we would severely restrict the private insurance market and have the government provide coverage for everybody. On the right, there are those who argue that we should end employer-based systems and leave individuals to buy health insurance on their own. I’ve said — I have to say that there are arguments to be made for both these approaches. But either one would represent a radical shift that would disrupt the health care most people currently have.”

Well… no. Extending the tax deduction would allow individuals to purchase health insurance. Allowing insurance companies to sell products across state lines would increase choice and opportunity. I’m not entirely sure how either proposal would disrupt anyone’s health care, unless they wanted it disrupted.

“Well, the time for bickering is over. The time for games has passed.”

Nice partisanship. Expressing deep reservations about a policy proposal is not “bickering.” Expressing deep reservations about a policy proposal is not “bickering,” it’s democracy. Perhaps the President is as confused as Friedman.

Well, the “bickering” didn’t end then and it won’t end now. The legislation was forced through in the most partisan manner imaginable. And how should we characterize the “deem and pass” strategy or the reconciliation method if not as legislative games?

“Now is when we must bring the best ideas of both parties together, and show the American people that we can still do what we were sent here to do. Rob the people blind, cheat on our own taxes, and ruin the economy for the benefit of politically connected cronies! (Sustained, rapturous applause)”

OK… I added that last bit. He didn’t actually say that. But he did do it. God help us all. He did it.

“And one more misunderstanding I want to clear up — under our plan, no federal dollars will be used to fund abortions, and federal conscience laws will remain in place.”

See, the federal money will have sparkles and hearts on it and will smell all fresh and tangy, like mountain mist on a mid-summer day. We won’t use the pretty money on abortions, we’ll use other money! Say your kid has two dollars and wants to buy a sandwich and candy. Each costs two dollars. You give him another two dollars and tell him that he can only buy the sandwich with the money you gave him and he has to use his own money on the candy. You just bought your kid candy. The money’s all the same, people. If you don’t want the feds to fund abortions, then you’ve got to keep the feds from funding health care. If they fund health care, they’ll fund abortions. It’s like pretending that because you can’t use WIC coupons on cigarettes that WIC money doesn’t ultimately support tobacco companies; it’s a fiction.

After all the backroom deals, the funding for regional airports and the shiny new executive order… ugh.

“Now, I have no interest in putting insurance companies out of business. They provide a legitimate service, and employ a lot of our friends and neighbors. … But an additional step we can take to keep insurance companies honest is by making a not-for-profit public option available in the insurance exchange. ”

In fact, we’re going to REQUIRE you to buy insurance from them! That’s how we’re going to “control” them, by forcing you to buy their products! Ha! Take THAT insurance companies!

“First, I will not sign a plan that adds one dime to our deficits — either now or in the future. ”

Uh huh.

Bullshit then. Bullshit now.

“I will not sign it if it adds one dime to the deficit, now or in the future, period.”

Bullshit then. Bullshit now.

“And to prove that I’m serious, there will be a provision in this plan that requires us to come forward with more spending cuts if the savings we promised don’t materialize.”

Bullshit then. Bullshit now.

“Now, part of the reason I faced a trillion-dollar deficit when I walked in the door of the White House is because too many initiatives over the last decade were not paid for — from the Iraq war to tax breaks for the wealthy.”

So, when faced with a trillion dollar deficit, Obama stared it down and did the most courageous thing he could; he doubled it. In six months.

“I will not make that same mistake with health care. ”

Like I made with the stimulus bill. And the cap and trade bill.

Bullshit then. Bullshit now.

“And that is why not a dollar of the Medicare trust fund will be used to pay for this plan.”

Bullshit then. Bullshit now.

Costs

From Cato, in its entirety.

It’s NOT a Health Bill, NOT a Medicare Tax
and It Can’t Possibly Cost Only $940 Billion

  • The “reconciliation bill” is not a “health bill” but an anti-health bill.  It relies heavily on price controls, taxes and fines to punish doctors, hospitals and formerly innovative companies the produce prescription drugs and medical devices.  If we treated farmers, food companies and grocery stores the way Congress threatens to treat the health industries would anybody expect food to become better or cheaper?
  • The 3.8% tax on both labor and investment income is not a “Medicare tax.”  It’s surtax on income that goes into the slush fund, not the Medicare trust.
  • The bill could not possibly cost “only” $940 billion unless it contained a sunset provision — repealing the law after 2019.

In fact, new spending is negligible for four years.  At that point the government would start luring sixteen million more people into Medicaid’s leaky gravy train, and start handing out subsidies to families earning up to $88,000.  Spending then jumps from $54 billion in 2014 to $216 billion in 2019. That’s just the beginning.

To be unduly optimistic (more so than the CBO), assume that the new entitlement schemes only increased by 7% a year.   At that rate spending would double every ten years — to $432 billion a year in 2029, $864 billion a year in 2039, and more than $1.72 trillion by 2049.  That $1.72 trillion is a conservative projection of extra spending in one year, not ten.  How could that possibly not add to future deficits?

Could anyone really imagine that the bill’s new taxes and fines could possibly grow by 7% a year?   On the contrary, most of the claimed revenues are either a timing fraud (such as treating $70 billion for long-term care premiums as newly found treasure) or self-defeating.

The hypothetical tax on Cadillac plans (suspiciously postponed until 2018), for example,  is designed to discourage such plans from being offered by employers or wanted by employees — that is, it’s designed to yield less and less over time.

Moreover, the accumulating penalties on reporting joint incomes above $250,000 — a 39.6% tax, a 3.8 % income surtax, a 0.9% Medicare surtax, rapid phasing-out of deductions and exemptions — would greatly discourage any activity that would push income above $250,000.   Most obviously, no sensible family whose income is normally below that pain threshold would be so foolish as to sell enough assets to let capital gains to push them over the line.

(If even half of the punitive tax plans are enacted, I plan to launch a “249 Club” whose members pledge to never again report more than $249,000).

anger

I’m angry.

It’s anger that sits in the gut like spoiled milk.  Fermenting, curdling, and nauseating.

The world will not end because of an act of Congress. But both I and my children–and you and your children–have been made poorer.

I’ve worked hard and consider myself lucky, but I’m not wealthy. I have health insurance. As it happens, I have excellent insurance. Last night’s bill will impose a surtax on that insurance that will effectively double my annual tax bill. I’ve been careful and prudent and I am being punished and penalized. That 40% tax is simply, plainly unaffordable. I’ll have to reduce my insurance.

Of course there are others who will profit from this mess. But why, I ask, am I supposed to cheer this nakedly partisan, political decision as a triumph for social justice? Am I to understand that I had too much insurance? Was I too careful? Too prudent? Too responsible?

Why is it that those whose wealth far exceeds mine are so comfortable taking my money and making decisions about my family’s health?

What gives them the right?

Am I to understand that we have so perverted the ideals of the republic that we are to suppose that preferential treatment for Florida residents, special money to Kansas, and a last-minute, late-night $700,000 kickback are elements of social justice? I am to understand that because they could get the legislation passed that therefore it must have been right?

Universal insurance. Through a mandate. They’ve insured everyone because they’ve made it criminal to be uninsured.

Let’s be clear about this: if you do not buy health insurance you will be fined. If you do not pay the fine, you will go to prison.

If you buy too much health insurance, you will be fined. If you do not pay the fine, you will go to prison.

And this, this… monstrosity, this affront to liberty masquerades as justice?

Please don’t tell me that this is the “price of freedom” or other such nonsense. The price of freedom is not compulsion. War is not peace. Slavery is not freedom.

And please, please don’t tell me that this a recognition of a basic human right. We don’t recognize rights by criminalizing their exercise.

Pull the lever

Philosophically, I’m a radical.  Politically, I’m an independent and have been for as long as I could vote.  I do homework before election day (sometimes more, sometimes less) and am diligent about my civic responsibility to stay informed and educated on the policy debates of the day. In a typical election I flip the switch as often for Democrats as I do for Republicans.

Not anymore.

I’ll be pulling the lever for the GOP until the current leadership gets the boot. That goes for local elections as well.

Free Speech

The Supreme Court today reversed decades of campaign finance laws and held that corporations and unions, as voluntary associations of individulas, have all the first amendment rights that individuals have.

First, I don’t think that’s a wild interpretation. It seems far more bizarre to argue that an individual loses his constituional rights when he associates with other individuals. That, it seems to me, goes to the very heart and soul of the first amendment.

However, I do understand–and even to some extent sympathize with–the instinctual revulsion at the idea that elections might be bought and candidates sold to the highest bidder. But that’s politics as usual. Indeed, that’s politics as the parties and politicians have  designed it.

Second, laws limiting the abilities of corporations or unions from spening money on elections are pure mummery. When billions are at stake, the loopholes in the law will be found and they will be stretched wide. McCain-Feingold did nothing to slow or stop corproate influence in American electoral politics. All campaign finance laws serve to do is drive donations through opaque, circumlocuitous routes; transparency suffers and the electorate is denied information.

But really, if you want money out of politics, get politics out of money.

The President had this to say,

[The ruling] is a major victory for big oil, Wall Street banks, health insurance companies and the other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans.

Big Oil (like Saudi Arabia? Where 14 year old girls are flogged and homosexuals crucified?) , big banks and big insurers marshal their power in Washington because Washington gives them hundreds and hundreds of billions of dollars of taxpayer money. This Administration and Congress have literally handed hundreds of billions of dollars in payouts to connected bankers and friendly corporate lobbyists.

Don’t want politicians being bought? Elect better politicians.