Now That We Know A Little More About Health Care: How Will It Play Out?

The health care bill was passed under the greatest veil of secrecy of any major legislation in modern times. More special deals, most lawmakers unaware of its contents, hence less debate, more arm-twisting and a near blackout of public awareness.

Now that it is law, it is coming under more opposition than could be mustered in the Houses of Congress and as the States become increasingly aware of the impacts it has made to their fiscal budgets, the bill will face new legal challenges in the judicial branch as well. Unknown until the past few days are the impacts on individual Americans and how it will affect their lives.

Those new questions are just now coming to the forefront:

Will the young Americans who normally take the position that they don’t need health insurance get with the program?      Or will they opt for the fine instead?

Will the higher pay for Medicaid payments for primary care doctors attract new practitioners into the field and slow the      doctors’ refusal to take on new Medicare patients?

How will the States cope with this new intrusion into their health care programs?

Jonah Goldberg, in a recent editorial, called attention to an interview President Obama had with George Stephanopoulos of ABC news where Stephanopoulos actually read the dictionary definition of a tax to the President: “a charge, usually of money, imposed by authority on persons or property for public purposes.” He asked the President how he could not call the health care bill a tax. Barack Obama waved the definition aside. Other observers have wondered the same thing, especially since the Internal Revenue Service is going to be the agency responsible for collecting the “fines” for non-payment. If it walks like a duck, quacks like a duck, usually you can bet it is a duck.

Let’s call a spade a spade:

The Health Care Bill,

collected by the IRS,

is a TAX.

The gamble that the Democrats have made, with the support of the Congressional Budget Office, is that their assumptions are all right regarding the health care bill. You all know the definition of an assumption! First of all, historical precedent tells us that the programs launched by the government ALWAYS dramatically cost more than they were supposed to. Secondly, government has a dismal track record in any economic venture. All we know at this point is that we all are going to pay more so that the 30 million uninsured can have health care. It doesn’t take much imagination to see European-style taxes coming next over the transom to support this latest “tax” – indeed, a tax upon a tax. This doesn’t even take into account the externalizations that we cannot even anticipate yet.

Critics point out that not just the States will be bankrupted by this monstrous intrusion and interference on our economy. Our AAA credit rating is becoming more suspect every day. Banks are in the process of coming under the control of Washington, which means our entire free market is in jeopardy due to the lack of credit and capital flows. The automobile industry is now partially owned by the government. Unemployment still is a major problem. The housing market has yet to show any signs of shaking off the foreclosures which experts say will plague it until 2012. Now, here comes health care adding another one-sixth of our economy to the portfolio of businesses that Washington wants to control. It is very possible that if the Progressives are wrong, guess wrong, make the wrong moves, or have just plain lied to the American people that our nation itself will face bankruptcy.

That is, unless the rest of the world takes the position that The United States is just too BIG to fail. Somehow, I don’t think we have that many friends in other countries to pull that off and instead they will gladly watch the cost over-runs and debt load which are sure to come with the new health care bill bankrupt us and our way of life will wash down the drain.

Mr. President: Stop our Government’s Destructive Attempts to Solve Unemployment

Having exhausted Americans’ patience for healthcare reform (still pending with no agreement in sight), President Obama used his State of the Union speech to shift to job creation as his new top priority. I suspect he will continue this theme in the coming weeks as unemployment continues to hover at 10%, nearly double the rate during the Bush years. However, an examination of the root causes of unemployment, coupled with the Administration’s legislative agenda of increased taxes, government spending and regulations, suggests that Obama will also fail at this next “priority.”

Farrell Block writing for the CATO Institute states: “Economic growth and employment go hand in hand. Taxation and regulation discourages business and the demand for labor.” He is joined in this assessment by many other economists including Llewellyn Rockwell of the Ludwig Von Mises Institute who comments: “All this talk of unemployment is preposterous. There is always work to be done, and therefore, always jobs. There is not a lack of work to be done.” The reason this work does not translate into new jobs is a function of labor costs which are aggravated by government intervention and policies that distort the labor markets.

Perhaps the best example of counterproductive government labor policy is mandatory minimum wage laws that price labor out of the market. This is especially true of immigrant labor, unskilled workers and new entrants into the labor market such as teenagers. Simply put, a teenager may be worth $5.00 per hour but no more. So, with the minimum wage artificially set at $8.25, no new job is created. Not surprisingly, today’s unemployment rate among youth exceeds 20%. While minimum wage laws may be well-meaning, they effectively knock out the bottom rungs of the employment ladder. Worse still, they help create what Professor Martin Haberman from the University of Wisconsin calls “a perpetual unemployed class of workers [with] behaviors and beliefs which form an ideology that is the source of their failure in the workplace.”

High payroll taxes are also a problem. These taxes prohibit employers and employees from setting their own wage rate by adding to it the cost of the employee and employer contribution to Social Security Medicaid and Medicare.

Still other culprits include:

• Laws that threaten employers with lawsuits if an employee is terminated.
• Laws that establish conditions on new labor such as hiring quotas based on ethnicity or gender.
• Exceedingly generous terms for unemployment “insurance” that pay people not to work for almost a year.
• Labor union contracts and work rules that force employers to keep union labor in a job even if the work could be performed at a lower cost or though another means.
• Employer mandates and restrictions imposed by various regulatory bodies including the complexity and high cost of compliance.

Economist David Rosenberg, formerly of Merrill Lynch, expects the unemployment rate to keep rising in the near term. Furthermore, he believes that the manner in which the government counts unemployed workers actually understates the real number. For example, he cites the fact that 9.3 million Americans work only part-time, so “technically” they are not unemployed – but they fully-employed either.

Another significant problem with the “official” unemployment rate is the fact that the government stops counting unemployed people when their unemployment insurance runs out. Here is a group of people that have been out of work so long that their unemployment insurance has expired and yet, somehow, they are conveniently dropped off the statistics? How can the official number, ignoring this still very valid element, possibly be an accurate reflection of what’s really going on?

We can expect a flurry of speeches and activity out of Washington in the coming weeks and months as our elected officials attempt to publicize all their solutions but the bottom line is that unemployment is currrently running at 10% when economists try to tell us that America’s full employment rate is really closer to 5%. It is important that we keep the pressure on Washington and judge their policies based on their results. Yes, they may get kudos for their fine speeches but at the end of the day, if the unemployment rate does not begin to really fall back towards an accurate 5%, then we should demand new policies that include significant reductions in government spending, taxation, deficits and regulatory relief. In short, we should demand that government stop trying to fix the problem and let the free market, small businesses and entrepreneurs succeed where government has failed.

Voters Take the Risk for Democrats’ “Bold” Increase in the Federal Debt Ceiling

In what the mainstream media is calling a “bold, but risky year-end strategy,” Democrats are setting the stage to raise the federal debt ceiling by $1.8 trillion before the end of this year to avoid having to deal with the issue again before the 2010 elections.

At first, the size of the increase numbs the mind making the figure almost meaningless to the average voter. After all, how often has anyone ever dealt with 1.8 trillion of anything?

It seems beyond comprehension and therefore, we almost ignore it. Unfortunately, we’re talking about debt that has been taken out “on our behalf” – and thus we will each have to contend with repaying our portion via higher taxes or inflation.

So, what’s your share of this incomprehensible obligation? Well, actually, that part is a relatively easy calculation:

There are approximately 300 million citizens in the United States today, so your portion is $1.8 trillion divided by 300 million.

That works out to about $6,000 per citizen.

I don’t know about you, but I didn’t budget for a surprise year-end expense on my national credit card of $6,000.

If that’s not bad enough, you have to understand that not all 300 million citizens actually work, much less, pay their fair share of taxes – if any at all. For example, your spouse may or not work and your under-aged children probably don’t. So, if you’re a family of four with a non-working spouse and children in school, the burden you’ll shoulder personally is actually four times that amount or $24,000.

“But wait!,” you say, “I can’t afford that!”  Well, perhaps it’s time, then, that you share your concern to Washington because they seem to think “Yes, you can!”

“We’ve incurred this debt. We have to pay our bills,” House Majority Leader Steny Hoyer stated. POLITICO reports that the Maryland Democrat confirmed that the anticipated increase could be as high as $1.8 trillion (or twice as high as what Congress assumed during last spring’s budget resolution for the 2010 fiscal year).

It appears that the House leadership held back the bill for weeks (saving it for when they thought we’d all be distracted by our own holiday spending). Well, the holidays have arrived and appropriations clerks have been instructed to have a final package ready to go. The leadership is betting that it’s better for the party to take its lumps now rather than risk further votes in the new year. Some might consider this a reckless strategy, however, over in the Senate Budget Committee Chairman Kent Conrad (D-N.D) revealed: “This is a defining moment.”

There are signs that the magnitude of this debt increase may be having some effect.

Senator Judd Gregg, the panel’s ranking Republican, is maneuvering to add deficit reduction legislation as an amendment to any bill tapped to carry the debt increase. This could create its own dynamic similar to another past debt ceiling fight in 1985 which gave rise to the Gramm-Rudman deficit reduction act mandating across-the-board spending cuts. Already in the Senate, there is talk in both parties for the creation of a bi-partisan task force empowered to force expedited votes in the next Congress on deficit reduction steps.

But with respect to this year, it appears our leaders in Washington are set. “It is December. We don’t really have a choice,” House Appropriations Committee Chairman Obey recently stated. “The bill’s already been run up, the credit card has already been used. When you get the bill in the mail, you need to pay it.”

The fact is that fiscal year 2009 ended Sept. 30 with a $1.4 trillion deficit. This demanded higher-than-expected Treasury borrowing resulting from the downturn in the economy and spending commitments in place before Barack Obama took office. So, as much as Republicans point to the president’s economic recovery bill as the cause, only a portion of that $787 billion package was spent by Sept. 30.

While the White House has vowed to be more deficit-conscious in its forthcoming 2011 budget due out in February, these appear to be just words as the Obama Administration is predicting the stimulus will hit its stride with much more spending. For example, transportation and housing resources would grow by 12 percent, including $2.5 billion for high-speed-rail investments on top of the $8 billion already added by the White House to the giant stimulus bill in February. A $163.5 budget for the Departments of Labor, Health and Human Services, and Education would add an additional $8.6 billion to annual spending and the Veterans Health Administration’s spending would grow to $45.1 billion – a $4.1 billion increase. Furthermore, the House could vote as early as this week on a $446.8 billion year-end package covering more than a dozen Cabinet departments and agencies, representing a healthy 9 to 10 percent increase over current spending for the same accounts.