Obama Care A Mess? Liberals Say Go Single Payer

More suspicious voices on the right warned that the Left would use a collapsing Obama Care as an excuse for a single payer medical care system. The “train wreck” of the Obama Care roll-out has underscored its incredible complexity, contradictions, and peccadilloes, and we are just beginning to scratch the surface. Who knows what horrors lie buried in the thousands of pages of regulations that no one has read?

The warning that the Republicans will be blamed for the crash of Obama Care is already coming true. As ueber-Liberal Robert Reich writes from his Ivory Tower of Berkeley (Don’t Blame Dems. We Wanted Single Payer):

“Had Democrats stuck to the original Democratic vision and built comprehensive health insurance on Social Security and Medicare, it would have been cheaper, simpler, and more widely accepted by the public.”

The Left is champing at the bit to go single payer, even before Obama Care has begun. The employer mandate has been delayed and thousands of exemptions have been granted. Of the major provisions, only the individual mandate and fines remain, and even they may be delayed. But the liberals say:  Let’s change the venue and the rules before the game even starts.

The oracle of the Left, New York Times columnist Paul Krugman (The Big Kludge) explains that Obama Care, as constituted, is too complicated a mix of  the private and public sectors. (Why did he not say that when the bill was before Congress?)  Krugman explains that Obama Care was given to us by the Republicans in cahoots with Big Insurance, Big Pharma, and Big Hospital. Poor Obama and the Democrats had to take what was possible not what was best because of the rascally Republicans.

Krugman then issues his siren song for the single payer system:

go to forbes.com

Obama's Fatal Mistake on Social Security

In a speech in Rockville, Maryland today, President Barack Obama blew up the Democrat’s social-security “third rail” in eighteen words.  Usually, Obama’s gaffes come off-the-cuff. Today’s remarks were, however, prepared; namely:

“In a government shutdown, Social Security checks still go out on time. In an economic shutdown — if we don’t raise the debt ceiling — they don’t go out on time.

go to forbes.com 

President Obama’s Legacy: $20 Trillion in Deficits for 2016 Victor

The fiscal-cliff negotiations have deteriorated into an embarrassing travesty of competing press conferences, off-the-record remarks,  closed meetings,  and sound bites. The Republican side is frustrated and flabbergasted by the absence of  a concrete proposal from the President  that can be scored by the Congressional Budget Office and then “marked up” by Congress according to standard procedures.  Vague offers of so and so many trillions of revenue increases and spending cuts spread over a decade are just words, not real proposals. 

The last serious fiscal-cliff projections date back to the Congressional Budget Office’s (CBO) August 2012 assessment of the budgetary effects of various fiscal policy alternatives. In its August study, the CBO –  the “gold standard” of budget projections -- calculated the budgetary consequences of going over the fiscal cliff in its “baseline projection.” It then projected the budgetary effects of alternative fiscal policies, among them, extending the Bush tax cuts and shelving the sequestered spending cuts.

We may agree or disagree with the CBO’s projections, but they are the most authoritative we have. President Obama has been vocal with respect to  the fiscal policies he wants, and each item on his wish list can be scored using the CBO’s August study. Therefore, we can approximate the five-year deficits that would result if President Obama gets what he wants. This is not rocket science. Anyone can do this using the CBO’s excel files.

go to forbes.com

On the Failed Job Creation Front, Obama Has Completely Run Out of Ideas

Unemployment is the millstone around President Obama’s neck in the 2012 election campaign. Attentive voters understand he is offering excuses — a worse-than-expected economy, financial crises requiring longer recoveries, bad luck of tsunamis, droughts, and the Euro — not solutions. Obama cannot deliver solutions because a real jobs program contradicts his core principles, alienates his base, and infuriates his crony contributors. He can only promise more of the failed policies –stimulus and tinkering — of his first three and a half years
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Obama’s last foray into job creation was his American Jobs Act (AJA) submitted to Congress on September 12, 2011.  Labeled “Stimulus 2” by its critics, Obama’s shopworn list of remedies, promised to “put more people back to work and put more money in the pockets of working Americans….without adding a dime to the deficit.” The AJA’s temporary tax credits to businesses that hire, extension of the payroll tax holiday, and more money for teachers and infrastructure stalled in both Houses and had to be taken up piecemeal.  The payroll tax holiday extension passed Congress. Small businesses decided his tax credits for hiring were not worth the trouble.

A deafening silence followed.  Obama’s vaunted Jobs Task Force has not met for more than a half year. Obama is out of ideas. He can only offer excuses, criticize those offering new solutions, and divert attention from the worst recovery in history with chatter about the rich not paying their fair share and his opponent’s tax returns.

One year ago, on the eve of the President’s jobs address, I wrote Why Obama Cannot Support a Real Jobs Program.  In this piece, I showed what a real jobs program looks like and how it largely would have increased jobs, to use Obama’s AJA message, “without adding a dime to the deficit.” Here is the substance of what I wrote then as advice to the President:

go to forbes.com

Add 400,000 More to the Unemployment Count

The official unemployment figures count the conventional number employed, those on involuntary part time, and discouraged workers. The official unemployment rate is 8.2%. If other categories are added, the unemployment rate rises by more than one percentage point.

Now we have another category: People who take early social security (and sacrifice higher pensions from later retirement) due to the fact that they cannot find jobs.

According to an analysis by Steve Goss, chief actuary for the Social Security Administration, about 200,000 more people filed initial claims in 2009 and 2010 than the agency had predicted before the recession, and he said the trend most likely continued in 2011 and 2012, though that is harder to quantify. The most likely reason is joblessness. If we assume that as many people were forced into early retirement by unemployment in 2011 and 2012, the total number of “forced” early retirements would be 400,000.

If these forced retirements were added to the unemployment rate, it would rise by two tenths of one percent; namely, from 8.2 to 8.4 percent.

Krauthammer is Right: We Are Defunding Social Security

In my A Shame Republicans Let Politics Trump Economics, I bemoaned the terrible politics of “compromise” that led to the ill-conceived extension of the payroll tax cut.

Charles Krauthammer nailed this issue in recent commentary, which I heard on the radio (I cannot find it on Google). Here is the gist of what he said:

If this were a Republican administration, the Democrats and media would be screaming about a Republican plot to do away with social security.  We should not allow the Obama administration to call this a tax cut. We should call it by its true name: The defunding of social security.  What’s worse, we are defunding social security for short run political gain on both sides of the aisle. All economists know there will be no economic gain from such short term measures.

We have reached the strange point where Congressional Republicans are being congratulated for cooperating with the Obama administration for passing harmful legislation, both for the purpose of short-run political gain.

Americans Believe in Conservative Principles, According to Public Opinion

American voters better understand what’s wrong than our politicians and chattering classes.  Public opinion polling shows voters have three basic insights about government that support the Republicans:

First, government is too large, tries to do too much, and regulates too much.

Second, government is run by crooked politicians for special interests.

Third, government is more likely to make things worse rather than better.  Two thirds believe that “big government” is the biggest threat to America and a majority believes government action will make the economy worse. 

Any Republican candidate who speaks to these three core American concerns can easily defeat Obama’s attacks on free enterprise and arguments for a redistributive regulatory state. 

Accordingly, the Republican platform should state two core principles:  

First, oppose to all special interests as creating massive waste when government is large and interventionist. This waste leads to generally lower living standards and less prosperity.  With small government and minimum intervention, special interests have little to gain from government, and the problem disappears.

Second, recognize that politicians and bureaucrats do not remotely have the knowledge to intervene successfully in the economy. Instead, interventions produce negative unanticipated consequences, to the perennial surprise and shock of Washington pros.

These two core principles suggest specific policies, which include:

1. Cap federal spending at a low percent of GDP and balance the federal budget over the course of the business cycle.

2. Limit government to creating stable legal and fiscal rules of the game that encourage the private sector to do its job efficiently. These rules must protect private property from seizure “in the public interest” or de facto confiscation by excessive regulation.

3. Reject all subsidies and bailouts of business, no matter how big. The private enterprise system functions well only if those making economic decisions bear their consequences, positive or negative. Reject government-private partnerships and industrial policy that let the state pick winners and losers. Taxes, bailouts and subsidies favor special interests, do not serve the general welfare, and divert resources from their highest and best use. 

4. Forego counter-cyclical fiscal policy. Instead, create a tax system that promotes growth and efficiency and entitlement programs that we can afford.

5. Review all existing and new regulations using meaningful cost-benefit analysis that does not overstate benefits. Special interests disguise regulations that favor them using false public interest arguments that overstate benefits.

6. Lower marginal tax rates across the board in conjunction with the removal of all subsidies and tax preferences.

7. Require that all government decisions on taxation, spending, and subsidization be perfectly transparent, exposing anyone seeking or receiving preferential treatment to public scrutiny.

8. Support free trade so as to raise living standards, competition, and efficiency. Resist the onslaught of special interests that stand to lose markets through free trade.

9. Insure that health care is provided by markets based on private insurance and co-payments with limits on malpractice damage claims.

10. Continue social security as a payroll tax based system but increasingly give participants ownership of their accounts.

11. Transfer political decision-making to the state and local level and reduce the influence of Washington. Decisions made closer to voters better reflect their preferences.

For a longer version of this piece, see Public Opinion Says a Conservative Message Wins In 2012.

It’s Not the Tea Party Stupid: Why the Bond Market Does Not Like What It Sees

Those who blame the kamikaze, hostage-taking tea party for ruining the U.S. credit rating do not see what the bond market sees. The last-second budget deal, which was really about nickels and dimes, underscored two things:

 First, it again revealed a political system unable to address the big issues. And if it tries to address them, it is likely to make things worse.

Second, it shows a nation that is no longer able to grow itself out of fiscal difficulties.

Experts know that the deficit and debt figures tossed around in public discussion are only the tip of the iceberg. The real iceberg is the unfunded liabilities of Social Security and Medicare. Their unfunded liability is how much money we would have to set aside to meet the future obligations of these two programs.  Our national debt, which may soon reach the size of GDP (say $17 trillion), is dwarfed by the unfunded Social Security and Medicare liabilities that may have already reached $100 trillion!

The bond market is looking at our deficits and our unfunded liabilities, and it does not like what it sees.  Moreover, it sees that any and all serious attempts to deal with these fiscal problems impose huge costs on potential reformers.

As examples, I would cite:

The savaging of George Bush’s attempt at the start of his second term to reform Social Security via partial privatization.

The demogoging of Paul Ryan’s plan to salvage Medicare and Medicaid by turning it into an insurance grant program.

The passage of Obama Care under the fig leaf of a deficit reduction plan, with all parties understanding it raises unfunded liabilities.

In the past, we have been able to ameliorate deficits and unfunded liabilities by economic growth. There is now doubt as to when or whether we will return to healthy growth. We have an economy that does not lend, does not take risks, does not buy, and is strangled by regulations. We have an administration that is perceived as anti-business and more interested in redistribution than growth and efficiency. If we are doomed to European-style growth, our fiscal woes will grow worse and worse and worse.

The S&P downgrade speaks to all these concerns. It surely did not help that the Obama administration ordered the free coverage of a wide variety of women’s health costs in its latest administrative guidelines for Obama Care. As more of these administrative rulings come out, the colossal unfunded mandates of Medicare will be better understood.

If things are so bad, you might ask, why is our federal government not already paying higher interest rates? The answer is that although things are bad here, they are worse elsewhere. It is like a marathon with some of the world’s slowest runners. We are running very slow but others are slower.

That’s not the way to win a race – by relying on the ineptitude of others.

Must We Sacrifice Social Security Checks? Whatever Became of the GAO Report on Waste and Duplication in the Federal Government?

Today’s Sunday talk shows obsessed with the possibility of default. Treasury Secretary Geithner made the rounds with doomsday warnings: The elderly will not get social security checks, the unemployed will miss unemployment benefits, and the poor will be denied medical care, if the rascally Republicans force a default on sacred government debt.

Geithner refused to spell out what steps his treasury department is taking to prepare for the possibility that a deal will not be reached in time. According to him, there are no plans. There is no prioritization. The only possibility is a disaster from which we will not recover. Surely, it is time for the recalcitrant Republicans to come to their senses.

We seem to have forgotten the May 25, 2011 GAO report entitled “Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue.” Less than two months have passed since its release. Washington, I guess, has a very short memory span.

The GAO report was prepared to meet the statutory requirement to identify federal programs, agencies, offices, and initiatives—either within departments or government-wide—that have duplicative goals or activities. In this report, the GAO identified 81 areas of opportunities for eliminating duplication, reducing operational costs, or enhancing revenue. Although the total savings are difficult to add up, they equal hundreds of billions of wasted federal dollars.

The reaction of one Senator to the report sums it up well: “At a time when our country has an unsustainable debt of $14 trillion, there simply can be no excuse for such waste, duplication, and inefficiencies.”

I include for Secretary Geithner a link to the GAO appendix (Appendix 1) that identifies federal-government waste and duplication. (http://www.gao.gov/new.items/d11635t.pdf)

In particular, he might look at the seven agencies for the homeless, ten agencies on teacher quality, twenty four agencies on federal data, thirty one agencies for war fighter urgent needs, and five agencies for surface transportation.

I recommend to the treasury secretary that he consult this appendix to prepare for the doomsday scenario. There are more than enough cuts that can be made without jeopardizing the effectiveness of the federal government. More than one agency is already taking care of the problem. In some cases, we have more than thirty doing the same thing.

The treasury secretary is fortunate that the GAO has done his work for him. Let him cut the areas of waste and duplication so that he can send out the social security checks on time.