Another piece in the health care puzzle

This article describes the response by major health insurers to the new “no preexisting conditions” provision for children:

http://articles.latimes.com/2010/sep/21/business/la-fi-kids-health-insurance-20100921

The socialized medicine supports will use this as a spear to demonize the insurance companies.  You will see commercials and ads depicting the helpless children abandoned by the money grubbing insurance companies.  The next step will be to enact legislation that creates a Federal solution to this great social crisis.  This will be one more piece in place of the socialized medicine puzzle.

Just cut it

The Cato Institute is running the following full page advertisement in these publications, Wall Street Journal, Washington Post, New York Times, Los Angeles Times, Washington Examiner and Politico:

http://www.cato.org/files/DownsizingAd.pdf

If my math is correct the federal spending cuts suggested in this ad would total $650 billion per year.  That’s a lot of money, even in Washington D.C.

Zero Tolerance

Your federal government is here to help you once again. Recently the United States Department of Health and Human Services has begun a campaign to stamp out a threat to our society, free speech. The following letter was mailed by Health and Human Services Secretary Kathleen Sebelius to the executive director of America’s Health Insurance Plans (AHIP), (the national association of health insurers):

http://www.hhs.gov/news/press/2010pres/09/20100909a.html

Some of these statements are hard to believe but here is what her letter says:

It has come to my attention that several health insurer carriers are sending letters to their enrollees falsely blaming premium increases for 2011 on the patient protections in the Affordable Care Act. I urge you to inform your members that there will be zero tolerance for this type of misinformation and unjustified rate increases.

This is nothing more than a threat by a government agency to suppress criticism of the Obama administration’s programs.

According to our analysis and those of some industry and academic experts, any potential premium impact from the new consumer protections and increased quality provisions under the Affordable Care Act will be minimal.

What about the analysis of other experts? Are we now only allowed to view favorable studies?

Moreover, I want AHIP’s members to be put on notice: the Administration, in partnership with states, will not tolerate unjustified rate hikes in the name of consumer protections…… Later this fall, we will issue a regulation that will require state or federal review of all potentially unreasonable rate increases filed by health insurers, with the justification for increases posted publicly for consumers and employers. We will also keep track of insurers with a record of unjustified rate increases: those plans may be excluded from health insurance Exchanges in 2014.

I knew that this day would come but I am surprised at how quickly it arrived. The Federal Government is in the process of drafting a regulation that will effectively control the rate increases of private insurers. Over time the Government will force the private insurers out of business by preventing adequate rate increases and presto the United States Government will be the “insurer of last resort”. You will then be in a single payer government controlled health care system.

If you doubt the effectiveness of this process I suggest you study the history of public transportation. Street cars and buses were once owned and operated by private enterprise. Over time government regulation dictated what the private operators could charge their customers. By keeping the rate increases below the cost inflation of the service provided the government put the private operators out of business. Government then placed itself in charge of public transportation.

The following quotation is from Friedrich Hayek in his book The Road to Serfdom:

When the state has the final say on the economy, the political opposition needs the permission of the state to act, speak, and write. Economic control becomes political control.

The most expensive school ever constructed

A friend of ours sent me the following article:

http://online.wsj.com/article/SB10001424052748703959704575454013855538920.html?mod=WSJ_Opinion_LEADTop

The following paragraphs highlight the orgy of spending involved in this Los Angeles public school project:

At $578 million—or about $140,000 per student—the 24-acre Robert F. Kennedy Community Schools complex in mid-Wilshire is the most expensive school ever constructed in U.S. history. To put the price in context, this city's Staples sports and entertainment center cost $375 million. To put it in a more important context, the school district is currently running a $640 million deficit and has had to lay off 3,000 teachers in the last two years. It also has one of the lowest graduation rates in the country and some of the worst test scores.

"It wasn't cheap, but it was saved," says Thomas Rubin, a consultant for the district's bond oversight committee, which oversees the $20 billion of bonds that taxpayers approved for school construction in recent years.  I asked Mr. Rubin whether some of the school's grandiose features—like florid murals of Robert F. Kennedy—were worth the cost. "Did we have to do that? Hell no. But there's no accounting for taste," he responded.

The Kennedy complex is Exhibit A in the district's profligate 131-school building binge. Exhibit B is the district's Visual and Performing Arts High School, which was originally budgeted at $70 million but was later upgraded into a sci-fi architectural masterpiece that cost $232 million.


Even more striking is Exhibit C, the Edward Roybal Learning Center in the Westlake area, which was budgeted at $110 million until costs skyrocketed midway through construction when contractors discovered underground methane gas and a fault line. Eventual cost: $377 million.

If you find this unaccountable spending outrageous you may ask yourself how this can occur. The answer is in this paragraph from the above article:

Expect more such over-the-top and inefficient building projects in the future. Los Angeles voters have approved over $20 billion of bonds since 1997 and state voters have chipped in another $4.4 billion of matching funds. Roughly a third of the cost of the Kennedy complex will be shouldered by state taxpayers.

This is the recipe that government has found so effective. Place a referendum on a ballot that asks voters to approve more government spending.

Giving money and power to government is like giving whiskey and car keys to teenage boys.

Just say no to government spending.

Increased tax revenue leads to increased spending

Recently there has been much discussion about enacting a Value Added Tax in the USA. Experience in the real world shows us that this new tax will solve nothing. The following article from Investor’s Business Daily examines this subject:

http://www.investors.com/NewsAndAnalysis/Article/545596/201008311833/If-VAT-Is-Rx-For-Deficits-And-Debt-Why-Are-VAT-Users-On-The-Brink-.htm

The moral of this story is summed up in this paragraph:

The Organization for Economic Co-Operation and Development reported that since the 1960s, when the VAT began to be widely adopted, government spending by OECD member countries with a VAT soared from 30% of their GDP to 50%. Governments tend to spend all available revenue, and then some.

Just say no to raising taxes.

Let the buyer beware

The Securities and Exchange Commission recently settled a fraud claim against the State of New Jersey.  The details are in this Bloomberg News article:

http://www.bloomberg.com/news/2010-08-18/new-jersey-settles-sec-claims-of-misleading-bond-investors-on-pension-fund.html

Here are the highlights:

New Jersey settled claims that it misled investors in $26 billion of municipal bonds by masking underfunding of its two biggest pension plans, in the first Securities and Exchange Commission case to target a state.

Documents for 79 bond offerings from 2001 to 2007 “created the false impression” that the Teachers’ Pension and Annuity Fund and the Public Employees’ Retirement System were adequately funded, hiding that the state couldn’t make contributions without raising taxes or cutting services, the SEC said in a statement today.

The suit marks the first time the SEC has sued a state for violating federal securities laws and marks an early salvo in the agency’s plan to crack down on fraudulent practices in the $2.8 trillion municipal bond market.

State and local governments all across America have substantial unfunded pension liabilities. Can bond holders now file claims against these bond issuers due to misrepresentation of their pension liabilities? If so this could be a bonanza for trial attorneys.

Tax exemptions for any cause

New York City will soon consider tax-free financing for the Ground Zero Muslim center:

http://www.reuters.com/article/idUSTRE67Q5BW20100827?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FtopNews+%28News+%2F+US+%2F+Top+News%29&utm_content=Google+Feedfetcher

The Muslim center planned near the site of the World Trade Center attack could qualify for tax-free financing, a spokesman for City Comptroller John Liu said on Friday, and Liu is willing to consider approving the public subsidy.

The mosque's backers hope to raise a total of $70 million in tax-exempt debt to build the center, according to the New York Times. Tax laws allow such funding for religiously affiliated non-profits if they can prove the facility will benefit the general public and their religious activities are funded separately.

Whether you support or oppose the building of this project the fact that it may be financed by tax exempt bonds is outrageous. This is what happens when someone else is allowed to spend your money. Just say no to government spending! (Please note that handing out tax exemptions has the same effect as increasing government spending).

Where are the Government ethics courses?

The following article "Business 'ethics' wrong focus, It's government, not the corporate world, that is inherently unethical" is written by Thomas DiLorenzo a professor of economics at Loyola College, Maryland, and a senior fellow at the Ludwig von Mises Institute:

http://articles.baltimoresun.com/2010-08-22/news/bs-ed-business-ethics-20100822_1_business-ethics-unethical-behavior-wrong-focus

Professor DiLorenzo offers a strong argument that teaching business ethics is counterproductive. What students should learn is that government is the root of all corruption, and that more government unavoidably leads to more corruption.

This is an excelent article, short but directly to the point.  I encourage you to read the entire article, but here are some of the highlights:

Under the dubious proposition that the current economic crisis was caused by a sudden outburst of greed (as though greed did not always exist), a new growth industry in America is the teaching of "business ethics" at the university level.

Business ethics courses typically combine anti-business moralizing with advocacy of more government regulation of business and, subsequently, a greater politicization of society. In doing so they actually encourage unethical behavior because it is politics, not markets, that is inherently immoral.

... when government uses its legal monopoly on coercion to confiscate one person's property and give it to another, it is engaging in what would normally be called theft. Calling this immoral act "democracy," "majority rule" or "progressive taxation" does not make it moral. Under democracy, rulers confiscate the income of productive members of society and redistribute it to various supporters in order to keep themselves in power. The government also pays itself very well out of these confiscated funds. Today the average federal bureaucrat makes about double the salary and benefits of the average private-sector worker according to the U.S. Department of Labor. State and local government bureaucrats make about one-and-a-half times their private-sector counterparts.

In order to finance a campaign, a politician must promise to steal (i.e., tax) money from those who earned it and give it to others who have no legal or moral right to it. There are (very) few exceptions, but politicians must also make promises that they know they can never keep (i.e., lie). This is why so few moral people are elected to political office. The most successful politicians are those who are the least hindered by strong moral principles. They have the least qualms about confiscating other peoples' property in order to maintain their own power, perks, and income. In his bestselling 1944 book, "The Road to Serfdom," Nobel laureate economist F.A. Hayek described this phenomenon in a chapter entitled "Why the Worst Get on Top."

In short, universities perform a disservice with their relative neglect of the real ethical problem in America — the politicization of society and the growth of government — while greatly exaggerating ethical problems in private enterprise.

The lone voice of reason

Thomas Hoenig the president of the Federal Reserve Bank of Kansas City may be the only member of the Federal Open Market Committee who is willing to honestly review the role of the Federal Reserve Bank in our recent financial crisis.

The Federal Open Market Committee (FOMC) consists of twelve members--the seven members of the Board of Governors of the Federal Reserve System; the president of the Federal Reserve Bank of New York; and four of the remaining eleven Reserve Bank presidents, who serve one-year terms on a rotating basis.

The FOMC holds eight regularly scheduled meetings per year. At these meetings, the Committee reviews economic and financial conditions, determines the appropriate stance of monetary policy, and assesses the risks to its long-run goals of price stability and sustainable economic growth.

The FOMC determines Federal Reserve polices that control short term interest rates.

In the following article Thomas Hoenig is quoted after the most recent FOMC meeting:


http://www.kansascity.com/2010/08/13/2149021/kc-federal-reserve-president-rips.html

Here are some of his remarks:

The Federal Reserve’s zero-interest-rate policy amounts to a “dangerous gamble” that may be holding back the recovery and risking a repeat of the financial crisis that put us here, the president of the Federal Reserve Bank of Kansas City said Friday.

Hoenig said low interest rates and lax regulation during a deflation scare in 2003 helped bring about the debt-driven boom and subsequent financial collapse. And the Fed is risking a future crisis.

“If we again leave rates too low too long out of our uneasiness over the strength of the recovery and our intense desire to avoid recession at all costs, we are risking a repeat of past errors and the consequences they bring,” Hoenig said.

 I agree with Thomas Hoenig. The Federal Reserve held interest rates too low for too long causing an orgy of excess speculation. The current zero interest rate policies of the Federal Reserve will cause the same phenomenon to occur at some point in the future.

A deadly virus

The following editorial is from the 8/19/10 edition of the Washington Times:

http://www.washingtontimes.com/news/2010/aug/19/we-cant-afford-this-government/

The title “We can't afford this government” and subtitle “Costs of bureaucracy spread like a deadly virus” are strongly worded but are directly to the point.

Consider these 2 facts referenced in the editorial:

…Congressional Budget Office estimate that this year's federal deficit will be well above $1.3 trillion for a second straight year and remain above $1 trillion next year as well - causing as much debt in three years as government built up in the previous 219.

…the announcement by Americans for Tax Reform (ATR) that yesterday (8/19/10) was the 2010 "Cost of Government Day," which is "the day on which the average American has earned enough gross income to pay off his or her share of the spending and regulatory burdens imposed by government at the federal, state and local levels." Just two years ago, Cost of Government Day fell an astonishing 34 days earlier. This year, the average American worked 231 days just to support government, which consumes 63.41 percent of national income.