New Taxes, Anyone?

By Eddie Howell

 The late conservative columnist Robert Novak said that God put the Republican Party on earth to cut taxes. The GOP has a very mixed record in this regard; their opponents the Democrats have been very consistent in their efforts to increase taxes and spending. Since it's hard for tax revenues to keep up with massive spending programs, stratospheric deficits have resulted, to which both parties have contributed.

Both presidential candidates have spending plans that would strain the deficit, but depending on the makeup of the Congress over the next few years, there could be some restraint applied. Of the two candidates, Hillary Clinton has the most aggressive spending plans, seeking to provide everything liberals could wish for, and maybe even outdo Bernie Sanders' admittedly socialist agenda. Free or nearly free college, more government regulation and enforcement for mandatory benefits for workers (child care, paid family leave, equal pay for equal work), more refugee and other immigration with benefits, plus more military adventures abroad. If you listen to Hillary's speeches, you may note that almost everything she proposes will require more government, more regulation, and much more spending, not to mention more in-your-face and on-your-back government. While supposedly aiming the financial burden at the “rich,” it turns out that the rich are everyone who owns a business, and ultimately anyone who has a job and is currently paying income taxes. But it's true that higher incomes are hit harder as percentages, due to the Buffett Rule.

According to Tax Foundation analysis, Hillary's plan, if enacted would increase tax revenue, and decrease after-tax income across the board, and reduce economic output. In other words, it would lead to a recession. There would be reductions in jobs, wage rates, and capital investment. Not a good prospect for middle-class earners who haven't seen a real raise in years.

Donald Trump's plan calls for significant corporate and individual tax reductions that would stimulate economic growth. According to Tax Foundation analysis for Trump's plan, wages would increase, jobs would increase, and capital investment would increase.

Neither plan looks likely to decrease the national debt, but progress on that can be made only by cutting spending. You can be sure that Hillary's plan will exacerbate the deficit problem more than Trump's. Her plans for more social engineering and massive immigration would preclude any deficit-reducing progress. Spending cuts would be easier to find in a strong economy than in a declining one.

Economically, it's a clear choice: pro-growth with Donald Trump or no-growth (except government) with Hillary Clinton.

Obama’s and Democrats’ Debt and Deficit Trade-Off

The ol’ U.S. National Debt clock keeps ticking. It’s now up to $12,139,146,898,976.64 or an estimated $39,479.46 per person as of 12/16/2009, 5:57 PM CST. [1]

The Treasury Department says the debt was $12.079 trillion as of Tuesday 12/15/2009 and should reach its current limit of $12.1 trillion by month-end. The House voted 218 to 214 to raise the debt limit to $12.394 trillion, which should finance the government for about two months. [2]

Reuters quoted Rep. Mike Pence (R-IN) as saying, “When will it stop? When will Washington get the message that we can't borrow and spend and bail our way back to a growing America.” [3]

House Democrats discarded the proposed debt increase of more than $1.8 trillion. Of course, this is good news. The House is still expected to consider a “jobs” bill of tens of billions, which would add to the deficit. The Senate apparently won’t consider that item until they finish with health care. [4]

“Fiscal conservatives in the Senate, meanwhile, led by Budget Committee Chairman Kent Conrad (D-N.D.), had been seeking the creation of a bipartisan commission with authority to force spending cuts or tax increases through Congress.” [5]

House Speaker Nancy Pelosi has rejected this idea as giving up too much congressional authority. I almost agree with her. I would say it gives up too much congressional responsibility. If you (or your staff) can’t do your job, hire consultants or contract it out. That seems to be a frequent response by government officials in general, both parties and all levels. The idea is to avoid accountability and tough decisions.

There seems to be concern among Democrats over the deficit and federal spending, yet they press for the health care “reform” bill which will significantly increase spending and the deficit, as well as taxes. There will be serious tax increases, but these won’t really cover the added expense.

The chief actuary of the Centers for Medicare and Medicaid Services, Richard S. Foster, reports that national health care spending will increase by $234 billion over ten years under the Senate bill. The report does not allow for increasing Medicare to cover people aged 55 to 64 years. [6]

Also, public support is decreasing, as Senate Republican Mitch McConnell says:



[Politico video at Examiner.com]

President Obama and Democratic Party leaders are determined to get some kind of health care bill passed soon, regardless of what changes might be needed. If they discard the public option, abortion funding, etc., you can be sure these will be added back later.

The high level of public opposition remains the best reason to think this bill might not pass. But Obama and some others are adamant about nationalizing the health care industry as part of their restructuring of American society. Cap and trade and health care socialization are the cornerstone pieces of Obama’s grand plan to spread and consolidate federal government power. Compared to these items, concerns about jobs, the deficit, and the economy in general are strictly secondary.

If that were not the case, steps to greatly help the economy (including discarding health care “reform” and cap and trade) would already be in progress and we would be seeing good results already. But the economy has a hard time flourishing in an environment of increasing massive deficits with no end in sight, high taxes with more on the way, and a regulatory burden that’s quickly becoming unbearable. Current policies have serious risks. Higher levels of debt are harder and more expensive to finance. Will China cooperate indefinitely? Is high inflation on the way? Can interest rates stay low?

Fat cat bankers aren’t the problem. Government is.

[1] U.S. National Debt Clock, 12/15/2009, 5:57 PM CST, at http://www.brillig.com/debt_clock/

[2]Andy Sullivan, “House backs $290 billion debt limit increase,” 12/16/2009, Reuters.com, at http://www.reuters.com/article/idUSTRE5BF58220091216?type=politicsNews

[3] Ibid.

[4] Paul Kane, “House Democrats discard larger debt limit,” 12/15/2009, Washington Post.com, at http://www.washingtonpost.com/wp-dyn/content/article/2009/12/14/AR2009121403933.html

[5] Ibid.

[6] Terry Hurlbut, “CMS actuary warns Senate bill will cost more,” 12/11/2009, Examiner.com, at http://www.examiner.com/x-28973-Essex-County-Conservative-Examiner~y2009m12d11-CMS-actuary-warns-Senate-bill-will-cost-more

Photo: Dreamstime.com

Unemployment and Deficit Increase: What Should Be Done?

“THE EMPLOYMENT SITUATION -- OCTOBER 2009

“The unemployment rate rose from 9.8 to 10.2 percent in October, and nonfarm payroll employment continued to decline (-190,000), the U.S. Bureau of Labor Statistics reported today. The largest job losses over the month were in construction, manufacturing, and retail trade.

“Household Survey Data

“In October, the number of unemployed persons increased by 558,000 to 15.7 million. The unemployment rate rose by 0.4 percentage point to 10.2 percent, the highest rate since April 1983. Since the start of the recession in December 2007, the number of unemployed persons has risen by 8.2 million, and the unemployment rate has grown by 5.3 percentage points….” (Source: U.S. Bureau of Labor Statistics)
* * *
“I have always been a great supporter of Winston Churchill's statement about the United States. The United States can be counted on to do the right thing, after having tried all other conceivable alternatives.” – Former Federal Reserve Chairman Alan Greenspan [1]

Unemployment to Remain High
From all indications, including the White House’s own projections, unemployment is expected to remain high through much of 2010. Depending on the legislative results of the current Congress, a lot of variation is possible, but with policies now in place, things are bad, with the potential of getting much worse if we get Obamacare and cap and trade.
I and many others have made suggestions for improving the economy. The following are some I have made before, but here, I have added some detail and support.

Deficits to Increase
The situation is difficult at best, but is not being helped by the $787 billion stimulus. The overall business environment discourages business expansion and hiring. In general, what is needed are policies to encourage private sector economic activity. Also, in general, this can be done best by reducing taxes and pulling back on some regulations. Reducing the deficit will happen if these things are done, because increased production will lead to more employment, more taxpayers and more revenues to government.

Part of the answer to huge deficits is to reverse some of the things that have brought them on. Also, the government and the Fed need to consider the magnitude of their actions. Trillions of dollars, amounts hardly comprehensible, should not be handled so carelessly. This is the stuff of economic ruin.

Martin Crutsinger, in an Associated Press article, says:
“What is $1.42 trillion? It's more than the total national debt for the first 200 years of the Republic, more than the entire economy of India, almost as much as Canada's, and more than $4,700 for every man, woman and child in the United States.
“It's the federal budget deficit for 2009, more than three times the most red ink ever amassed in a single year.” [2]

Also, the national debt could rise to $17 trillion by 2019. [3]

Crutsinger also points out that increasing deficits will make it harder to sell this debt to investors, resulting in higher interest costs. He has the following quote:
“We should be desperately worried about deficits of this size,” says Mark Zandi, chief economist at Moody's Economy.com. “The economic pain will be felt much sooner than people think, in the form of much higher interest rates and much higher rates of inflation.” [4]

First Things First
First priority ought to be to get America back to work. The Administration’s priority is not this, but rather, putting in place their socialist agenda of Obamacare and cap and trade, etc. They say that huge government spending and deficits are justified for the purpose of boosting the economy, but their fiscal “stimulus” is not particularly stimulating to the economy, and must be paid for by taxpayers.

The economy is going to be a serious political problem for Obama as time goes on. Already, he has lost a significant amount of favor among voters. According to Rasmussen’s survey of likely voters, 49 percent at least somewhat approve of Obama’s performance, and 50 percent disapprove (11/09/2009). [5]

Suggestions:
1. Forget Obamacare. Take up health care issues later and forget nationalizing it. If this was done, our nation could breathe a large sigh of relief. This plan, in whatever final form it takes, will definitely increase the deficit. It also will not meet the goal of insuring everyone. The resulting tax increases will slow the economy. It might be hard to measure how much the deficit would increase, since one bundle of a trillion dollars of deficit looks pretty much like another. The people in charge now don’t mind throwing around trillions.

2. Forget cap and trade. Recognize it as the fraud and hoax that it is. Cap and trade is a great job killer and will result in hardship for many Americans. There will be more foreclosures, more bankruptcies, lower tax revenues in a fairly short time (not higher as the government expects), and the number of “green jobs created” will be small compared to the number of better-paying jobs lost. Also, the creation of a new “carbon credits” market is an invitation to a great amount of fraud and abuse. Trading in credit default swaps has been a huge mistake (and a failure of government regulation), and carbon credits would probably be worse. Not to mention that all this would do nothing to help the environment. It’s a nightmare waiting to happen.

3. Keep the Bush tax cuts in place, and don't reduce tax deductions. If businesses and individuals knew in advance that taxes would not be raised, they could confidently spend and invest. Tax increases are a strong disincentive to economic activity. The Reagan and Bush tax cuts were a major factor in the 25-year economic recovery, and proved their worth. Higher taxes would not help the deficit, but would actually increase it. Also, Obama wants to decrease tax deductions for medical care and charitable deductions. Both of these would penalize the people he supposedly most wants to help.

Forget the notion that tax cuts only benefit the rich. About 47 percent of Americans don’t pay income taxes. High taxes for “the rich” translate to fewer jobs and therefore less tax revenue to the government. Taxpayers are over-taxed at best from federal, state, and local taxes.

“Those who argue that the Bush tax cuts were a ‘give-away’ to the rich assume that incomes grow at a constant rate, regardless of how heavily they are taxed. That is the fallacy of the recent [2004] CBO [(Congressional Budget Office)] study. The report concedes: ‘Our analysis does not account for incomes changing in response to the tax cuts.’ It’s like assuming that you’re not going to take off any weight if you stop eating hot fudge sundaes with whipped cream and cherries on top. This is the same whimsical logic that compelled the tax accountants on Capitol Hill to famously estimate that a 100 percent income-tax rate would bring in billions of dollars in federal revenue….
“The CBO estimate says that the share of income taxes paid by the richest 20 percent of earners fell from 82.5 percent to 82.1 percent in 2004. The report also states that the top 10 percent of earners will pay ‘only’ 66.7 percent of 2004 taxes, with the top 1 percent paying 32.3 percent. Fully 80 percent of Americans pay less than 18 percent of total income taxes….” [6]

As of 2005, the latest year for which I found data, the top 25 percent of earners paid 85.99 percent of federal income taxes. The top 1 percent paid 39.38 percent. [7]

4. Reduce corporate tax rates to 15 percent or less. The U.S. has a higher corporate tax rate than other industrialized countries, which puts us at a competitive disadvantage. If businesses could have lower tax rates, they could more readily hire people and buy new equipment. Unemployment would quickly decrease if businesses could be confident about continuing lower tax rates. And another result would be increased tax revenues to the government. While we’re at it, reduce capital gains tax rates, too.

5. Sell government interests in GM, Chrysler, AIG, etc. Recover as much as possible of the billions that were spent on these transactions.

6. Recover all TARP funds possible as quickly as possible. Don’t do any more bailouts, period. If a business fails, it fails. That’s why we have bankruptcy courts and established processes for failed banks. Why should taxpayers be on the hook paying for big banks’ big mistakes? There is no bank or business firm that is “too big to fail,” or that government should bail out at taxpayer expense. If some big banks or other businesses fail, this will discourage the kind of behavior that led to their failure, and the market will adjust.

It is unjust and unnecessary to force the taxpayers to bail out banks that failed. Capitalism is based on the principle of risk-taking. Risk involves the possibility of failure. With the massive Fed and Treasury bailouts, Americans are on the hook for such huge amounts that the taxpayers are now the ones at risk. If large banks are assured of being bailed out in case they have large losses, they lose incentives to operate efficiently and the system loses competitiveness. The large banks, already lacking a good level of competition, will operate even more like a cartel.

I have said that the financial meltdown is largely the fault of government, in that the government forced banks to make bad mortgage loans, and Congress stood in the way of regulation of the misbehaving Fannie Mae and Freddie Mac. Common sense about loans, and proper regulation, could have prevented much of the problem. That said, the big banks did take extreme undue risks by issuing and trading in derivatives that never should have been created or traded. This is a failure of the banks, but also a failure of government regulation. The SEC should have seen the danger and acted.

The Bush Administration, to their credit, tried, though unsuccessfully, to regulate Fannie and Freddie, but they erred terribly in yielding to the bullying tactics of Henry Paulson as well as the Fed. To approve legislation of the magnitude of the TARP bailouts, handing over virtually a blank check for $700 billion to Paulson, and doing so without significant debate or discussion was foolish at best. The Fed and the Treasury Department decided the winners and losers of this “bailout bingo,” dividing and distributing bank assets at will. There should be a full accounting and public disclosure of who got what and under what circumstances with all the bailouts.

An inspector general’s report concluded that banks were forced to take money even when they didn’t need or want it. [8] To hand out money like that is nonsense.

A Federal Reserve Board book states that according to the Federal Reserve Act, the Fed’s purpose is “to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.” [9] It appears that the Fed is also interested in bailing out favored large banks at taxpayer expense. I support the proposed legislation to audit the Fed.

7. Get out of foreign financial entanglements. The U.S. should not participate in any international financial bailouts nor contribute to any kind of international bailout fund. The world’s central banks are infatuated with bailouts. Foreign banks got a considerable chunk of the TARP money and Fed bailouts. These things threaten not only national solvency, but national sovereignty, and ultimately, national security.

8. Back off on “stimulus” bills. Repeal the remainder of the $787 billion stimulus and don’t do any more of them. If tax rates are made more reasonable and the high-cost, job-destroying Obamacare and cap and trade proposals are defeated and discarded, the private sector will be “stimulated” to the point that the recession will soon be over and employment will soon be back to normal.

But the Administration is apparently about ready for a second stimulus:
“There is growing recognition in the White House that the stimulus package wasn’t enough. The White House is considering further stimulus measures -- a combination of more infrastructure investments, more money to weatherize homes and businesses, more tax cuts for businesses, and/or more steps to promote lending. This will be a matter of weeks not months. They know they have got to turn this job cycle around.” [10]

Dealing with the longer-term problems
Even if the changes mentioned above could be made, after our economy began to look normal, we would still have very serious longer-term problems with unsustainable entitlements.

Phasing out Social Security and Medicare over a 25 to 30-year period should be considered, because these programs are not sustainable, and are in themselves capable of toppling our economy. These entitlements currently represent unfunded liabilities of about $83 trillion. [11] It is, arguably, impossible for this to ever be paid.

Younger people should be encouraged to finance their own retirements and provide their own health care. The welfare system should be reduced to a basic safety net, not permanent incentives to refrain from working. This seems to be a problem that is beyond anyone’s expertise to solve, and something politicians routinely pass along to their successors. But it’s going to be a “sudden” big crisis in not many years if nothing is done.

Unless significant changes in direction are made, the actual current economic outlook is not encouraging. There is a likelihood of a second “stimulus,” and the Administration is pushing hard for Obamacare and cap and trade. More taxes are on the horizon. More international arrangements that entangle the U.S. in banking and climate commitments will add to the problems.

Conclusion
My own view is that if the Administration were more concerned about the unemployed, and the suffering of American families in this time of economic hardship, more concerned about restoring long-term prosperity, and less concerned about getting their socialist-fascist program in place, they would take steps similar to what I have described above, and many others have suggested. That would improve the economy fairly quickly. Their own political fortunes will ultimately depend on the economy.

But Obama is determined to fundamentally change American government and social structure, and that is his priority. Other considerations must serve that objective. This kind of “change” is destructive and unconstitutional, and, I believe, will ultimately be rejected by the American people. The more successful this agenda is, the more that economic “hope” will decline.

[1] Martin Crutsinger, Associated Press, “2009 federal deficit surges to $1.42 trillion,” 10/16/2009, at Google News, http://www.google.com/hostednews/ap/article/ALeqM5iPlbcTnWEfuKimEaDq0UdU2Uxk1gD9BCG27O0.

[2] – [4] Crutsinger, see [1].

[5] “Daily Presidential Tracking Poll,” 11/09/2009, Rasmussen Reports, at http://www.rasmussenreports.com/public_content/politics/obama_administration/daily_presidential_tracking_poll.

[6] Stephen Moore, “Killing the Class-Warfare Argument,” 08/19/2004, National Review Online, at http://www.nationalreview.com/moore/moore200408191201.asp
The CBO study cited was touted by the Kerry-Edwards campaign as finding that the Bush tax cuts unduly favored the rich.

[7] Rush Limbaugh.com, at http://www.rushlimbaugh.com/home/menu/irs_screen_grab.member.html

[8] Matt Cover, “Inspector General: Treasury Secretary Forced Banks to Surrender Ownership Interest to Government,” 10/05/09, CNS News.com, at http://www.cnsnews.com/news/article/55017

[9] The Federal Reserve System: Purposes and Functions, Board of Governors of the Federal Reserve System. Ninth Edition, June 2005, page 15. Ebook available at
http://www.federalreserve.gov/pf/pf.htm

[10] Jake Tapper, “Wave After Wave of Bad News,” 11/07/2009, ABC News at
http://blogs.abcnews.com/politicalpunch/2009/11/wave-after-wave-of-bad-news.html

[11] Gary North, “Social Security and Medicare: The Twin Disasters That Will ‘Break the Bank,’” Gary North’s Specific Answers, at http://garynorth.com/public/department30.cfm

FDR and the Great Depression, Barack Obama and the Great Recession

Ted Roelofs of The Grand Rapids [MI] Press reported as follows on a debate between authors Joseph Alter of Newsweek and Bloomberg columnist Amity Shlaes on the effectiveness of FDR’s Depression-era policies.

“Alter conceded Roosevelt made missteps.
But he argued there is no alternative to ‘massive’ government stimulus
when an economy is plunging.

“‘It would be nice if there was an alternative,’ he said.

“Shlaes maintained virtually nothing Roosevelt did helped pull the
United States out of the Depression, short of entry into World War II in
1941.

“Unemployment stood at 19 percent in 1938, despite the flurry of social
engineering Roosevelt spearheaded in the preceding years. By 1942 with
the massive war effort under way, it stood at about 5 percent.

“In her book [The Forgotten Man: A New History of the Great Depression], she argued Roosevelt's biggest failing was a ‘lack of faith in the marketplace….’” [1]

Examples for Obama?
President Franklin Delano Roosevelt wasted no time getting to work on the Great Depression problem after taking office in 1933. He immediately declared a bank holiday, an idea he had rejected three days earlier when Herbert Hoover had suggested it. [2]

FDR’s policies worsened and prolonged the Depression. In spite of a strong and sustained effort, the remedies were mostly misguided, ineffective, and counterproductive. They were also short-sighted, not giving adequate consideration to other factors outside the immediate environment of a particular issue, or longer-term effects.

Of course, FDR inherited the Great Depression and Barack Obama inherited a recession and a financial meltdown. Obama’s was and is a difficult situation but there are some lessons that could be taken from history. He need not repeat all the previous mistakes.

Barack Obama’s economic policies have been referred to as “The New New Deal,” and Obama is apparently an admirer of FDR’s policies. In the numbered items below, I mention some of FDR’s policies (italicized) and make applications to current policies (non-italicized).

President Roosevelt was supposedly attempting to help the unemployed and the poor. His policies did economic injury to many workers and others in the following ways:

1. Minimum wage laws froze many workers, especially African-American, out of hiring possibilities.

Minimum wage laws still hamper employment today. Teen unemployment is the highest since the government started keeping records of this in 1948, over 25 percent. [3] Factors other than minimum wage laws have more effect, but minimum wage requirements exacerbate the problem.

2. Many lawsuits, anti-trust and the like were filed against large employers which undermined their ability to hire and pay workers. [4]

Left-leaning governments always want to go after large companies that might be commercially successful, wanting to assert power over them and tax them if they are profitable. Witness the government’s vendetta against Microsoft in recent years. The failing companies, such as Wall Street banks and the auto manufacturers, they want to “bail out,” i.e. take control at great taxpayer expense, saying they are “pulling the economy back from the brink,” and “restoring stability” to the financial system. Really? More likely, they have set the financial system and the American economy up for disastrous failure through unpayable debt.

We are a long way from seeing the “stability” they talk about. Also, The Obama Administration is greatly endangering national sovereignty through international arrangements on finance, “climate change,” etc. I do not like conspiracy theories, but the one about the international banking cartel, starting with the Rothchilds and the Rockefellers plotting to take over the world’s money and reduce the population to serfdom begins to have some plausibility. I don’t endorse it, but what would be different if it isn’t true? It is true that we are in danger of a massive economic collapse simply because of our national debt and endless deficits. Not all Obama’s fault, but he was on board with the bank bailouts and was the principal operator in the auto company takeovers.

According to The New York Times, “Beyond the $700 billion bailout known as TARP, which has been used to prop up banks and car companies, the government has created an array of other programs to provide support to the struggling financial system. Through April 30, the government has made commitments of about $12.2 trillion and spent $2.5 trillion — but also has collected more than $10 billion in dividends and fees.” [5] (emphasis theirs).

3. Under FDR, increasing tax rates put potential employers in a difficult position for hiring. Also, they could see that if they were successful, their profits would be largely taxed away. [6]

Every dollar a company pays in taxes is a dollar that is unavailable for hiring or investment in plant and equipment. Today’s employers face some of the highest corporate tax rates in the industrialized world, and see more coming as the Bush tax cuts expire. Also, they could hardly be blamed for waiting to see what happens with the Obamacare and cap and trade proposals before deciding on major hiring or investments. The business environment is very difficult and hardly improving in terms of employment.


4. Excise taxes were placed on many consumer goods. This especially hurt the poor.

We still have a lot of “hidden” taxes, on products and services. But the Democratic Congress also wants to tax sugar-sweetened drinks and other popular consumer items in connection with Obamacare. This would take more money out of the pockets of people they claim they’re trying to help. And these taxes are just the beginning. Even if they don’t pass their health care bill, they’ll still try to control everyone’s diet and shopping habits through costly taxes. And then there’s VAT that seems to be up for discussion.

5. FDR destroyed much food while millions were hungry. In an ill-advised attempt to create artificial shortages and thus raise prices, the government paid farmers to plow under 10 million acres of crops and to slaughter and discard six million farm animals. Then they paid farmers for not producing. [7]

Well, the Obama Administration hasn’t yet sunk to the level of destroying farm products. They do, as their predecessors did, still cling to unwarranted farm subsidies and government controls on farming. And they continue the previously existing harmful practices of mandates and subsidies for ethanol.

Bad Economics
According to Robert Higgs, “In their understanding of the Depression, Roosevelt and his economic advisers had cause and effect reversed. They did not recognize that prices had fallen because of the Depression. They believed that the Depression prevailed because prices had fallen. The obvious remedy, then, was to raise prices, which they decided to do by creating artificial shortages. Hence arose a collection of crackpot policies designed to cure the Depression by cutting back on production. The scheme was so patently self-defeating that it’s hard to believe anyone seriously believed it would work.” [8] (emphasis his).

FDR went a long way toward nationalizing industry, in effect, through the National Industrial Recovery Act, which was later struck down by the U.S. Supreme Court:
“Chief Justice Charles Evans Hughes wrote that, ‘extraordinary conditions do not create or enlarge constitutional power.’ Congress ‘cannot delegate legislative power to the President to exercise an unfettered discretion to make whatever laws he thinks may be needed.’” [9]

FDR unconstitutionally confiscated gold by an Executive Order, which also made it illegal to own most kinds of monetary gold. It did nothing to help, and amounted to legalized thievery. [10] This harmed individual savers and investors, and, more indirectly, workers. And it threatened and reduced everyone’s freedom. If gold can be confiscated, what’s to stop government confiscation of other things (over and above taxes), in the interest of “fairness,” of course.

Liberal governments see a problem and they think the federal government must act to correct it. Their corrections may benefit, temporarily, some group experiencing hardship, but what is usually ignored is the effect on others, and what their actions mean down the road. This recalls the “Forgotten Man” of William Graham Sumner:

“As soon as A observes something which seems to him to be wrong, from which X is suffering, A talks it over with B, and A and B then propose to get a law passed to remedy the evil and help X. Their law always proposes to determine what C shall do for X or, in the better case, what A, B and C shall do for X. As for A and B, who get a law to make themselves do for X what they are willing to do for him, we have nothing to say except that they might better have done it without any law, but what I want to do is to look up C. I want to show you what manner of man he is. I call him the Forgotten Man. Perhaps the appellation is not strictly correct. He is the man who never is thought of. He is the victim of the reformer, social speculator and philanthropist, and I hope to show you before I get through that he deserves your notice both for his character and for the many burdens which are laid upon him.” [11]

Henry Hazlitt quotes this and observes that in the 1930’s, the “forgotten man” label was applied to X. C was still forgotten [12] (Amity Shlaes uses this phrase in the title of her book.)

The Congress is currently considering legislation to mandate a week of annual sick pay for all employees, as a result of the swine flu scare. Many companies cannot afford to pay employees when they aren’t working, so if this passes, unemployment or underemployment will likely increase. But the squeaky wheel gets the grease. More government micro-management. Another reason to believe the government is less concerned about the economy than with finding excuses for expanding government power.

Unemployment was 3.1% before the stock market crash of 1929 and 24.8% when Franklin D. Roosevelt took office. The rate was in double digits until 1941. [13] The published rates do not count people who have given up looking for work or have taken part-time jobs.

Well, the Great Depression is over. World War II lifted America out of it. But the current recession is not over, except perhaps in some narrow technical sense according to some “experts.” And over or not, its ill effects linger, and from all indications will linger for some time. There are too many instances of Obama following FDR’s ill-advised prescriptions, when we should have learned better. FDR didn’t have a previous great depression in memory to serve as his example. Previous depressions were left to the market and recovery was fairly quick. But Obama has the example of the Great Depression. Circumstances and technologies change, but the laws of economics still apply. The sooner the government ends its love affair with deficit spending and embraces something more oriented toward free markets and individual liberty, the sooner things will begin to improve. But don’t hold your breath.


[1] Ted Roelofs, The Grand Rapids Press, “Authors debate: Did FDR’s social programs make the Great Depression worse?” 10/12/2009, at http://www.mlive.com/business/west-michigan/index.ssf/2009/10/authors_debate_did_fdrs_social.html.

[2] Robert Higgs, “How FDR Made the Depression Worse,” Feb. 1995, Ludwig von Mises Institute, at http://mises.org/freemarket_detail.aspx?control=258.

[3] Catherine Rampell, The New York Times, “Teen unemployment at record level,” 09/08/2009, SF Gate, at http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/09/07/BU6H19IVRT.DTL&type=business.

[4] Jim Powell, “Tough Questions for Defenders of the new Deal,” 11/06/2003, Cato Institute, at http://www.cato.org/research/articles/powell-031106.html.

[5] The New York Times, “Adding Up the Government’s Total Bailout Tab,” 02/04/2009, at http://www.nytimes.com/interactive/2009/02/04/business/20090205-bailout-totals-graphic.html.

[6] Powell, see [4].

[7] Ibid.

[8] Higgs, see [2].

[9] Ibid.

[10] David J. Heinrich, “FDR’s Heinous Crimes,” 10/21/2004, Mises Economics Blog,
at http://blog.mises.org/archives/002627.asp. Text of the Executive Order is here.

[11] William Graham Sumner, “The Forgotten Man,” 1883, The Forgotten Man and Other Essays, at The Online Library of Liberty, at
http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php&title=1654&search=%22Forgotten+Man%22&chapter=108194&layout=html#a_2270750.

[12] Henry Hazlitt, Economics in One Lesson, Ludwig von Mises Institute, 2008. Originally published by Harper & Brothers, 1946, page 179

Photo: Dreamstime.com. FDR statue

Is Obama President Yet?

Candidate Barack Obama spoke like a man who was very confident about solving America’s economic, social, and foreign policy problems. That’s the impression his silver-tongued oratory was trying to leave, and he succeeded enough to get elected by a majority. His speeches were long on platitudes and short on specifics, but, to many, he looked like the man with some answers, and they bought his message of “hope and change.”

When Does It Become Obama’s Presidency?
What we continue to see too much of is Obama’s willingness to blame all present problems on “the mess we inherited” from the previous administration, and to wish his critics would be silent. After all, they are, according to his statements, the ones who created the mess. To him, apparently, they have no right to criticize, or, for that matter, to even speak. George W. Bush is the great villain who caused all the trouble, the president and his people would have us think, and he is the one they continue to campaign and run against.





(See Jay Leno clip here.)

But Obama’s attempts to blame Bush for his (Obama’s) own situation is becoming tiresome to many of the American people, and possibly wearing thin among his supporters – certainly among many of his former supporters.

Every president inherits a situation of some great difficulty. A man who runs for president must accept this as a challenge. It is the height of bad form to blame your predecessor for everything when you’ve based your campaign on claims to understand and accept the challenges that are being faced, and claimed to have the desire and ability to deal effectively with them. Truman’s oft-quoted advice still stands: “If you can’t stand the heat, stay out of the kitchen.” (Biden explains to George Stephanopoulos how they “misread the economy” in video found here.)

Past Presidents Inherited Troublesome Situations, Too
Franklin D. Roosevelt faced a dire situation in 1933. He didn’t spend his terms of office whining about what a mess Mr. Hoover left him. While (in my opinion) his economic “solutions” prolonged the Depression, he at least took it as his responsibility to deal with it. Did he claim that everyone had “misread the economy”? I don’t think so. Correct me if I’m wrong.

Ronald Reagan inherited quite a mess from Jimmy Carter. But he didn’t repeatedly remind everyone of that fact as a political strategy in his White House. He didn’t waste time and energy blaming others for his troubles. He devoted his efforts to restoring prosperity and winning the Cold War.

Bill Clinton said there couldn’t be a middle-class tax cut because the economy was so much worse than they thought when they came into office. That kind of excuse was lame then, and it’s lame now. Get some competent economic advisers. Still, we didn’t hear Clinton harping on the problems left by the previous administration after he was well into his first term.

Can We Blame Everything on Bush?
Yes, Bush left an economic mess. Liberals would have us believe it was entirely Bush’s fault, when in fact there was plenty of blame to go around, most of which ought to be placed on Democrats. The housing crisis that led to the financial meltdown was anticipated long before it broke open. The warning signs were there. When the Bush Administration tried numerous times to get effective regulation of Fannie Mae and Freddie Mac, they were rebuffed by Congress, who wanted to attack the regulators. How dare they accuse these GSE’s of anything? They were surpassing their goals (after creatively adjusting the books) in providing affordable housing, i.e., buying mortgage loans made by banks under duress to people who were obviously unable to repay them. But the execs, mostly ex-Clinton people, got their huge bonuses. (See video about Congressional hearings here).

Then there’s the deficit. Bush left two wars, as well as “compassionate conservative” programs, such as a Medicare drug benefit, No Child Left Behind, and other costly items. OK. But: “Under President Obama, government will spend more on welfare in a single year than President George W. Bush spent on the war in Iraq during his entire presidency.” [1] Does Bush’s admittedly large deficit justify the astronomical deficits we’re already seeing under Obama, to be followed by even more? How much is too much? We may learn the answer.

Further Reading
I found three good articles on Obama’s insistence on blaming the Bush Administration, one by National Review’s Rich Lowry, one by Peggy Noonan at The Wall Street Journal, and one by William McGurn, also at WSJ. Polls have indicated that many Americans still blame Bush for the continuing economic problems, but they also show Obama’s support, especially among independents, declining. Maybe that reflects some significant reality about a president who obsessively apologizes for America and blames George W. Bush for his own lack of success.

[1] Robert Rector, Katherine Bradley and Rachel Sheffield, “Obama to Spend $10.3 Trillion on Welfare: Uncovering the Full Cost of Means-Tested Welfare or Aid to the Poor,” 09/16/2009, at Heritage.org.
http://www.heritage.org/Research/welfare/sr0067.cfm.


Photo: Dreamstime.com

Obama and Democrats vs. the America We Have Known

Barack Obama, his administration, and his supporters in Congress, who claim to be trying to speed up an economic recovery, are in effect orchestrating a multi-pronged attack on American security and sovereignty, the American economy, and the Constitution. Is this what they meant by “remaking America?” Somehow, the president has persuaded a large number of people that he is going to help them. The liberals have done things to “help” add to the percentage (now about 47) of Americans into the non-income-tax-paying category. More are being added since more people have joined the non-earning category due to layoffs.

1. Sovereignty and Security – Obama is undecided on Afghanistan, or so he seems to indicate, after saying fairly recently that it’s a necessary war. No, he doesn’t want to use the word “victory.” Who, including his top commanders in that country, knows what he’s going to do? Also, the Administration is investigating, with a view to prosecuting, prisoner interrogators under the Bush Administration for simply doing their jobs, and, in the process, protecting America from further terrorist attacks.

And, Obama wants to move America closer and closer to deeper ties (read entanglement) with other countries through world banks, world courts, and world climate-change nonsense. To try to improve things with Russia, Obama abandoned the planned missile defense shield in Poland and the Czech Republic. What did he get? No progress on persuading Russia to provide more help with the Iran situation, in recent talks between Hillary Clinton and her Russian counterpart.

The Obama Administration has in mind cutting various weapons system developments, such as the F-35, and unilaterally reducing our nuclear arsenal. It may save dollars but the money will be/is being spent on doubtful social programs, while defense is weakened.

2. Obama vs. the Economy – The Democrats are spending like there’s no tomorrow, and indeed, by the time they get into gear on their plans, there may be but a bleak tomorrow, economically, for the U.S. With the bank bailouts (yes, started under G.W. Bush), auto company takeovers, and stimulus bill, the federal government is leading us in the same direction as the state of California, and even though the federal government can print money, there is definitely a limit to how much deficit we can stand. In just a few years, we’ll likely be finding out what that limit is.

There is a great spending and tax burden on the American people coming if Obamacare is passed. Over $500 billion in new taxes over ten years, and more than that if the Medicare cuts prove unacceptable. Medicare alone has $43 trillion in unfunded liabilities to people living today.

The Social Security trust fund is just a fictitious accounting device. Its assets are Treasury IOU’s that are non-negotiable government bonds. When net cash flow goes negative in this program, as will happen in a few years, the government will have to do the same things, whether there exists a “trust fund” or not, because the “trust fund” is worthless.

George W. Bush tried to get some action going on dealing with this, only to be laughed to scorn and told that the program was quite all right, thanks. It wasn’t, and isn’t. Time is running out to deal with it. We may see what an actual government bankruptcy looks like. It won’t be pretty.

The Social Security and Medicare ticking time bomb is not President Obama’s fault. The problem with Obama, is that he proposes to add massive new taxes and regulations, via Obamacare and cap and trade, on businesses that are having a hard enough time just trying to keep their doors open, and individuals struggling to get by. These taxes will result in many more foreclosures, personal bankruptcies, lost jobs and business failures, thereby reducing actual revenues to the government. Every economic level will suffer, whether they pay these taxes or not. Rep. Paul Ryan has some thoughts and proposals on these problems, as he discusses in an interesting video:



Speaking of unemployment, the stimulus appears to be working exactly as Obama wants it to, with unemployment rising with a projected peak in 2010, if we’re fortunate. And yet this is a “recovery.” Employment does lag in a recovery, but we are likely to see high unemployment for years, and another recession on the heels of this one. But government has the situation precisely where they want it – to encourage growth in government power and control to deal with continuous “crisis” situations, which government itself is creating.

3. The Constitutional Problem – It hardly needs mentioning that the Obama Administration and Democrats in Congress are tearing the Constitution to shreds day by day. Neither Obamacare nor cap and trade can be justified under the Constitution. Nor can the bank bailouts, nor can the auto industry takeovers. The fact that no one was or is (apparently) able to stop any of these things does not make them permissible under our Constitution. Obama, in a constant campaign mode, and unmindful of the Constitution, through his populist demagoguery, has a lot of people convinced he’s on the right track.

The track we are on leads to socialism, decreased freedom, increased poverty, unpayable debt, high inflation, declining health, and eventually, more things influenced by foreign powers, and weakened defense that may invite enemies to try their luck.

Phot: Dreamstime.com

Unemployment Continues To Increase Despite Stimulus

“THE EMPLOYMENT SITUATION SEPTEMBER 2009

“Nonfarm payroll employment continued to decline in September (-263,000), and the unemployment rate (9.8 percent) continued to trend up, the U.S. Bureau of Labor Statistics reported today. The largest job losses were in construction, manufacturing, retail trade, and government.

“Household Survey Data

“Since the start of the recession in December 2007, the number of unemployed persons has increased by 7.6 million to 15.1 million, and the unemployment rate has doubled to 9.8 percent….”

(Source: Bureau of Labor Statistics, 10/02/09)

Forecasts: Joblessness To Increase
Unemployment continues to worsen in the U.S., with increasing unemployment expected through 2010 and beyond.

Former Federal Reserve Chairman Alan Greenspan, appearing on the ABC-TV program This Week, said the United States is likely to see 10% employment levels “for a while.” [1]

“The [BLS] report shows that the worst recession since the 1930s is still inflicting widespread pain and underscores one of the biggest threats to the nascent economic recovery: that consumers, worried about job losses and stagnant wages, will restrain spending. Consumer spending accounts for about 70 percent of the nation's economy.” [2]

“The uncertainty that surrounds the recovery has made employers reluctant to hire. The Business Roundtable, a group of CEOs from large corporations, said earlier this week that only 13 percent of its members expect to increase hiring over the next six months.” [3]

Even top presidential adviser Larry Summers has predicted that we are facing years of “unacceptably high” rates of unemployment. [4]

Political Problems for Mr. Obama
It is widely agreed that continued high unemployment will not help President Obama’s political situation. For example:
“Persistent joblessness could pose political problems for President Barack Obama, who pushed through an ambitious $787 billion stimulus package in February intended to "save or create" 3.5 million jobs by the end of 2010.” [5]

Robert Kuttner noted the political difficulty that President Obama may experience as a result of the unemployment situation: “If the unemployment numbers keep rising into 2010, the Republicans are primed to pick up dozens of seats in the House, crippling the Obama administration's capacity to recoup in the second half of the president's first term.” [6]

The $787 billion stimulus is not showing job-creation results. It is mainly a political pork program designed to reward Obama’s political allies. Only a small percentage has been spent thus far, with the rest to be spread over several years, with most spending to be in the out years. While the stimulus may be of some benefit to direct recipients, it cannot stimulate the economy in general, and will contribute significantly to the federal deficit.

Liberal Prescriptions Won’t Solve the Problems
Robert Kuttner’s liberal suggestion: “The president should be making the case for increased deficit spending on job-creation in 2010 and 2011, followed by a program of deficit reduction financed by progressive taxation.” [7]

Liberals rely on a Keynesian approach of deficit spending, while conservatives recognize that such a program would only put us into a deeper hole. The solution to unemployment is to encourage economic activity in the private sector. This should be done by cutting taxes and increasing tax deductions for those who are paying income taxes. Liberals would have us believe that “progressive” tax increases affecting the “rich” would not affect those who aren’t “rich,” but in fact such increases would cause even greater suffering. Workers would feel the most pain, and the “rich,” i.e., those who could create jobs if the economic environment was encouraging, would refrain from doing so, seeing no opportunity for a good return on investment in the current economic climate.

Experience has shown, in the Kennedy, Reagan, and Bush tax cuts, that reduced tax rates will yield increased revenues to the government, which will reduce deficits if spending isn’t increased.


More Trouble Looms If Obamacare and/or Cap and Trade Are Passed
The outlook at present is rather bleak, since deficits would likely increase if Obamacare or cap and trade is passed, Passage of both will assure us of years of double-digit unemployment.

It should be acknowledged that the current government program is not going to help the unemployment rate, and that increasing taxes and deficits won’t either. Perhaps some actual constructive steps will be taken before we see Great Depression II.

Still, There Is Some Hope for Improvement
A hopeful aspect of the current situation is that the market is strong and resilient and self correcting, if its mechanisms aren’t destroyed or stopped by government. Also, Americans have always found ways to work around bad laws to some extent. And, the 2010 elections could very well take away Obama’s Democratic majority in Congress. People are more inclined, I think, to vote for prosperity rather than a program of increased government controls that might fit some liberal-socialist theory, but not citizens’ real life needs.

We are now seeing something of the results of a comprehensive government program: increasing unemployment and continued economic stagnation, when we should have already been in a strong recovery mode. It doesn’t look very promising through 2010. But maybe after that ….


[1] “Greenspan sees 10 percent unemployment,” UPI.com 10/04/09 at http://www.upi.com/Top_News/2009/10/04/Greenspan-sees-10-percent-unemployment/UPI-64121254679910/.

[2] Christopher S. Rugaber, Associated Press, “Jobless Rate Reaches 9.8 Percent in September,” 10/02/09, CNS News.com at http://www.cnsnews.com/news/article/54963.

[3] Ibid.

[4] Eamon Javers, “Adviser: High unemployment for years,” Politico.com, 09/12/09 at http://www.politico.com/news/stories/0909/27052.html.

[5] Rugaber, see [2].

[6] Robert Kuttner, “It’s the Unemployment, Stupid,” 10/04/09, The Huffington Post, at
http://www.huffingtonpost.com/robert-kuttner/its-the-unemployment-stup_b_309205.html.

[7] Ibid.

Photo: Dreamstime.com

Obama Won’t Take Responsibility for Latest Economic News

The White House has released some depressing economic forecasts. According to an Associated Press article by Jim Kuhnhenn [1], the current fiscal year (ending September 30) will post a deficit of almost $1.6 trillion. The 10-year deficit is estimated at $9 trillion. This is more than the sum of all previous deficits. Unemployment is expected to reach 10 percent. The AP story quotes Mitch McConnell, Senate Minority Leader (KY) as follows:
“The alarm bells on our nation’s fiscal condition have become a siren.”

This appears to be bad news for Obama since, according to the story, he will have trouble
(1) cutting the deficit in half by 2013 and (2) getting his $1 trillion-plus health care enacted.

This government is doing nothing to help the situation. As noted in my previous post, the measures they are promoting will greatly harm our economy. This is not hard to understand. Higher taxes produce greater unemployment and ultimately less revenue to the government. The combination of health care “reform” and cap and trade will produce another depression. That’s the direction we’re currently heading.

Yet Obama is so pleased with the progress the economy is making that he has appointed Ben Bernanke to another term as Federal Reserve chairman. I’ll deal with that in a future post.

Here are a few things to remember, that should help us understand Barack’s strategy:

1. As noted above, they are doing nothing that can help the economy. They are OK with massive debt and deficits.

2. The economic situation is bringing increased misery to Americans. These are real problems and real suffering for real people. Obama doesn’t care. He wants more turmoil and chaos in our country, because it should cause people to cry out to the government for help, which he will answer with more socialist programs, which also won’t help.

3. To all the economic problems, add other fear-mongering and new “crises,” like the swine-flu panic they are trying to stir up, etc. We’ll need government help with that, right? Even though the swine flu has yet to become the epidemic they seem to want.

4. One of the most reprehensible things (and there are many) about the Obama Administration is their cowardly attempt to blame the previous administration for the current problems, which they and fellow Democrats mainly caused, and which they have made much worse just since the start of the Obama presidency.

“This recession was simply worse than the information that we and other forecasters had back in last fall and early this winter,” according to Obama economic advisor Christina Romer, quoted in the above-mentioned AP article.
This cannot be believed. All the relevant data was there and available. The day is coming when blaming the Bush Administration won’t work. I think it has already come. If not for the Obama Administration’s attempts to deal with the recession, it probably would have been over by now. Recessions normally don’t last too long if left to the market. Government interference with the free market doesn’t help.

The Great Depression was directly caused by the Federal Reserve. Milton Friedman explains:



The Depression was made worse by the New Deal. For a discussion of this see Robert Higgs’ article at http://mises.org/freemarket_detail.aspx?control=258. That’s all past history, I suppose, but the present government hasn’t learned from it, or else think they can do what FDR did better than FDR did it. Not likely.

To Obama, it is more important to get his fascist program in place than to actually improve the economy or anything else. That’s what we’re up against.

It becomes more important each day that citizens continue to contact their representatives and speak out against Obama’s socialist plans, and prepare for the 2010 elections.

[1] "Long-term deficit put at $9 trillion," AP article by Jim Kuhnhenn, appearing in Fort Worth Star-Telegram 08/26/09

Your Federal Government Loves You! How About a Big Hug?

YOUR GOVERNMENT is working night and day to take control… er, make your life easier. We only want to help! Everything will be all right! Just relax! Our historic, dear leader will bring us all together and restore our proper place in the world, alongside China, Venezuela, Uganda, Nicaragua, and of course, the workers’ paradise, Cuba. We’re even going to be friends with Iran soon. But that pesky Israel needs to get in line.

Rest assured we’re on the job making the economy better and preventing future prosperity … uh, meltdowns and bubbles. This can be done by regulating those greedy financial institutions and seizing, uh, that is, helping manage them so that it works out best for us, we mean, for all. Even though you might have been laid off with no job prospects for the next year or two, we want you to enjoy this time and look forward with great HOPE. No need to do anything, we’ll take care of it. That government health care is starting to look better, right?

And if you want to trade one of those gas-guzzling clunkers, we’re here to help. Yeah, we’ve already run out of money once on this program, but not to worry, we’re busy printing more. So what’s a few billion in a multi-trillion-dollar deficit? We’ll get it back under cap and trade. Just wait till you see your electric bill then! That is, we’re going after those mean corporations that insist on making a profit when others are losing ground. They’ll pay through the nose for warming the globe. And they won’t be anxious to drill for oil or gas, mine coal, or build dangerous nuclear plants. Won’t it be great when we’re all driving those cute little electric 20-horsepower cars? Of course our leaders will have to keep using limos and personal jets. Darn!

We hope you’re grateful for all the trouble we’ve gone to in order to help you pay your mortgage. Too bad we couldn’t get to everyone, and several million have been foreclosed on. Tough luck, but hang in there, we’re working on it. It’s those silly banks! Just because we’re not too sure what we’re going to be doing in the future in the financial world (other than try to regulate more), they use this as an excuse to hold up on their lending plans, etc.

But mostly, we’re just glad to be able to assist the American people with their day-to-day decisions and life activities. We know that the people have a very hard time making decisions for themselves, especially when it comes to meal planning, education, housing, jobs, toilet tank size, and extremely complex issues like that. We know what a burden adulthood can be, having to think for yourself. We’re here to help, even to the point of seeing to it that you vote correctly, and that you have your financial and medical decisions made for you, etc.
You can think of us as your mama if it makes you feel better.

We want Americans to renounce their self interest and devote themselves to the great, all-encompassing national plan. But sometimes, we sense a lack of gratitude for all our hard work, and impatience about the results. But please understand, all our problems can be traced to George W. Bush, and the deficits and recession we inherited, and also the Founding Fathers, who wrote a Constitution that tried to tie our hands in carrying out our plans today. Thank goodness for our liberal courts! They interpret a lot of that away.

Our goal is to eventually have your daily schedule prepared in advance and emailed to you, with a requirement that you report back several times a day on your progress. Of course, if anyone shows signs of uncooperativeness, we will have to counsel and possibly retrain them, all in a loving spirit, of course. And as people get older and nearer to death, we want give them counseling and encouragement, and make sure they understand the options available to them to take them out of this world with comfort and convenience.
Then they’ll be off our Social Security and Medicare rolls, uh, but still in our hearts.

As soon as we can retrain the members of the “conservative” (that is, extremist right-wing fanatic) movement, we will be well on our way to our dream of utopia. We’ve got our messiah, we just need a lot of cooperation.

Hugs,

Your Federal Government
Executive, Congress (D and a few R), and much of the Judiciary

Obama Wants Quick Action on Health Care “Reform”

“We’re Gonna Get This Done!” says the President.
Well, I certainly hope not. If the Republicans have any fight left in them, they should oppose this tooth and nail.


The Plan Is Unconstitutional.
Where does the Constitution give the federal government the power to control health care and healthcare insurance? It doesn’t. This plan is illegal since it is unconstitutional.

What Kind of Support Does This Plan Have?
This is simply another Obama power grab. He claims there is widespread consensus when in fact most Americans are satisfied with their current coverage, and many uninsured Americans are satisfied with their current status. He claims that various health-related professional groups and insurance companies and even pharmaceutical companies are on board, since he was able to meet with some “representatives” of these groups and do enough arm-twisting to get some kind of agreement to cut costs, etc.

Doctors – Many doctors are strongly opposed to government healthcare. It would reduce their incomes considerably. It would provide a disincentive for people to go to medical school, since the government would end up with close control over their compensation.
And the formerly sacred “doctor-patient relationship” would suffer a devastating blow.
Many doctors would probably take early retirement. Other providers would share similar concerns.

Pharmaceutical companies – The pressure this plan would put on them to lower costs of medicines would seriously damage their ability and willingness to develop new drugs, ultimately lowering health care effectiveness.

Insurance companies – Health insurers and agents are greatly concerned that a government plan would burden them with compliance costs, reduce their profits and finally put them out of business.

Hospitals – In this great drive to cut costs, hospitals would be less likely to invest in high-tech equipment and would necessarily reduce the quality of care. Hospitals, already burdened with Medicare and Medicaid compliance costs, would see their record-keeping, bookkeeping and documentation costs rise significantly, while in effect they would be under price controls and therefore more hard-pressed to earn a profit.

Politicans – People who are most strongly in favor of Obamacare would be those politicians who want America under a socialist, central planning environment in general, and those who want to get back at the hated insurance and pharmaceutical industries and other entities that have enjoyed commercial success.

The Public – Public support would come from people who want to see everyone covered by affordable insurance and people who are losing their jobs and coverage, or feel they can’t afford coverage, and would like some government help.

The Cost – Ah, There’s the Rub.
Cost figures over a ten-year period are variously estimated at $1 trillion to $1.5 trillion. And this may be just a low, preliminary estimate. Budget deficits are already gigantic and growing steadily, with no letup in sight. All this debt has to be repaid with interest. Tax increases and cost cuts, we are told, will be needed. Any problem with that? In fact, it is the big problem. Consider:

We are in a severe recession. Tax increases of any kind would only aggravate this and lead to more job losses and suffering for American families. This is common sense. The government thinks that taxing “the wealthy” wouldn’t harm Americans who are not wealthy, and would generate a lot of revenue. In fact it would be the most definite way to reduce employment, slow investment and close businesses. This is not rocket science, but more like Economics 101. And when taxes are raised, overall revenues will in fact drop.

Various taxes are being considered, such as taxes on Cheerios, Pepsi, and similar products. Most people are already paying sales taxes on most items anyway and don’t need further price increases. Also, the government will perpetually use phony health care concerns to take ever more control of what people can buy, eat, etc. Between that and environmental issues, they’ll run our lives morning, noon, and night.

Obama looks to save billions by cutting waste, etc. They always say that, but never do much about it. One thing of concern is that he plans to stop government “giveaways” to insurance companies for Medicare and Medicaid. In fact, the insurance companies are saving the government a lot of money by administering Medicare supplement and “advantage” plans much more efficiently than government can do it. Older folks, look out, you could easily lose these plans. And eventually Medicare and Medicaid entirely, with everyone on the public “option.” When that happens, older people and the chronically ill will find themselves to be low priority. AARP ought to oppose this plan, not support it.

Why Is Obama So Anxious To Do This Right Away?
The plan is quickly losing public support. People are expecting yet more 1000-page bills which no one has read, or possibly even seen, to be voted on. We hear what the spokesmen are saying, but who knows what’s really in the bill?

Obama’s popularity is fading. Therefore, he needs to rush this through now, or it won’t be possible.

Also, this is not an election year. If it were, congressmen and senators would be much more reluctant to support it, since it would likely be a mark against them come election time. They who support it hope the public has a short memory, but by November 2010, they may already have bad experiences with this plan if it passes.

There is hope that it won’t pass. People weren’t ready for Hillarycare in the ’90’s and this is worse. Republicans don’t like it. Blue Dog Democrats are seriously concerned about the cost. When Obama says “deficit-neutral,” that is about as reliable as the Administration’s predictions on unemployment. There’s no way! It simply isn’t possible. The only way to reduce deficits or business losses caused by this plan will be to ration care, and that is an inevitable consequence of government health care. Just check Britain and Canada.

There are better ways for government to help with healthcare, and without creating unpayable debt. Provide tax incentives for employers to provide coverage. Encourage insurance companies, with incentives, to provide more affordable portable coverage.
Provide taxpayers with better deductibility of health care expenses. Don’t even think about taxing health care benefits. Many other ways are also available, if the focus could be off government control of every step of the process. The private sector knows how to run their businesses. The government does not.

I think there will be massive voter communications with elected officials over this, similar to what we saw when the immigration “reform” bill was up for consideration. If that happens, congressional incumbents must pay attention. Here’s hoping.