More Random Thoughts

The president in his speech to Wall Street on September 15 said that the days of "reckless behavior and unchecked excess at the heart of this crisis" are over. Au contraire, it is continuing. Only this time it is the government that is engaging in reckless behavior and unchecked excess. How else would you describe the $2 billion deficit, TARP, stimulus, cap and trade and health care reform?

Given the dislike for both parties, some are advocating a third party - like the Libertarian party. The problem is that given the structure of our political process a third party will insure permanent power being ceded to the Democrats. This is because the libertarians will come from the Republican base leaving the democrats with solid majorities in congress. America traditionally is divided into thirds. One third calling themselves democrats, one third republicans and one third independents. The power goes to the party that can sway the independents to their side. If members of the republican base have had it with the Washington republican establishment, then they need to vote them out of office and replace them with conservative republicans.

Isn't it interesting that the left's reaction to Joe Wilson's singular outburst has been the charge of "racism"? I personally don't know how they got there from there but it has been the manta of the media and the left ever since. This tells me that they have lost the battle over healthcare. The cry of "racism" is a last desperate attempt to get votes from the opposition to such an odious package. "I can't vote against this because I don't want to be accused of racism." Well I guess we are all racists now. I oppose health care "reform" - actually its health care takeover - for the reasons given in the editorial below. Since I will put my bona fides up against anyone (with the possible exception of John Lewis), dare they call me a "racist"?

Health Care Overhaul Not Needed

This article appeared in the Knoxville News-Sentinel on September 6, 2009.



The nation is engaged in a spirited debate on health care, and it is wonderful to see democracy in full voice. Is there justification for a government takeover of health care?

First, is the debate over the quality of health care itself? Certainly, there is no dispute that cancer survival rates in the United States are dramatically higher than in managed-care countries. What about the delivery of health care? In Canada, a million people are waiting to see specialists, while another million are waiting for operations. This is in a country of 33 million! Can you imagine 18 million Americans waiting either to see a specialist or for an operation? Certainly, the issue is not access to health care since hospitals do not deny treatment to those who show up at their doors. Thus, the reason cannot be poor U.S. health care.

Second, is the debate over insurance? The Administration's estimate of 47 million "Americans" without insurance is bogus. Of that number, perhaps 12 million are illegal immigrants. Some 16 million make more than $50,000 a year but opt not to have insurance, and 9 million are unemployed but are typically without insurance for less than four months.

That leaves about 10 million citizens or 3 percent of the total population. It is irrational to dismantle U.S. health care for so small a number. A system could be constructed to cover this 3 percent and to provide catastrophic care for a fraction of the costs of a government takeover.

Third, is it because the rising costs of health care are the result of little competition? The president argues that a "public option" run by the government would create competition in the insurance marketplace and drive down costs. His example of the postal service giving competition to FedEx and UPS is laughable, and everyone knows it. It is the other way around. The postal service loses $7 billion a year and would lose more if its monopoly on first class mail were repealed. The reason why there is little competition and that costs are high is because the government prohibits competition. States set the rules, prohibit interstate competition and set costly mandates that drive up rates. If the president wants competition, the way to provide it is to take the government-imposed restrictions off the provision of insurance.

Fourth, is the proposed takeover because of costs? The president has stated that we pay a larger percentage of our gross domestic product (17 percent) for health care than any other industrialized country and that this cost is a "threat to our economy?" As Craig Karpel pointed out in the Wall Street Journal, would we be less threatened if we spent 8 percent like Haiti? Health care would be a threat to our economy only if it resulted in a net loss to the country. But does it?

Health care is a good like any other good. It employs 10 percent of the U.S. work force, contributes significantly to American exports, and its existence has lessened the impact of the recession. Karpel points to a study by Bob Hall of Stanford University and Charlie Jones of North Carolina State University that finds that by mid-century, the optimal amount of U.S. health care spending should be 30 percent of GDP.

If the president's assertion of a "threat" is true, it is true not for the health care industry, which is a productive part of U.S. society. The threat comes from the portion of the economy that is a net loss. It comes from the net loss of enterprises such as the post office, Amtrack, Social Security, Medicare and Medicaid. It comes from the federal government.

Is this the change we were promised?

Remember the old saying "If you can keep your head while all those around you have lost theirs - then you probably have misinterpreted the situation?" Well thats how I feel about this administration and its actions. The president as a candidate constantly berated the Bush administration for running up record deficits of $400 billion. Bush was irresponsible so said candidate Obama by increasing federal spending while cutting taxes. Never mind that tax receipts increased - it was just because that spending increased by more. So instead of getting fiscal responsibility, we are getting just the opposite - fiscal irresponsibility. The budget deficit is projected to increase by a factor of four to $2 trillion. The administration is saying that they had to do this because they didn't realize the depth of the mess that Bush had gotten us into. Only an Obama loyalist would believe such nonsense. The surge of spending on bailouts, on TARP II, on "stimulus" packages, on cars-for -clunkers, on the takeover of banks, the domestic automobile industry,of Fannie Mae and Freddie Mac, the obscenity of AIG and on you-name -it had less to do with Bush than to do with an attempt to increase the federal government's reach in the economy. This reach is going to manifest itself in a projected budget deficit of $10 trillion over the next ten years. Yet this projection from CBO is a rosy scenario. It assumes dramatic increases in tax revenues that could only occur if all the Bush tax cuts lapse, if the dreaded alternative minimum tax is kept and if taxes are raised across the board. If these all do not occur then the deficit will be $2 billion more. Lest we have short memories, the electorate voted out the first President Bush for violating the "read my lips, no new taxes" pledge. The current president has also made a pledge of not raising the taxes in any form for those making $250,000 or less. He cannot possibly keep that promise. If he violates it, he will be shown the door. The only alternative is to see huge tax increases during a second Obama term - if he somehow gets re-elected. However, keep in mind. If he is re-elected and pushes through these tax increases, then all those out side of "safe" districts will be defeated. You would think that these vulnerable politicians in swing districts would know this and vote against "change".

Congratulations Ben!

Ben Bernanke has been nominated by the President for a second term as Fed chairman. Congratulations Ben! You earned it having provided the most accommodating monetary policy for the administration since oh Alan Greenspan. Since you were a governor at Greenspan's Fed, your reward from the Bush administration was being given the chairmanship. So accommodating is nothing new for you. Some have written that Larry Summers was a candidate for the job but the president did not want to give the impression of appointing a lap dog that would compromise the Fed's independence. As if the Fed's independence can be compromised more! However, I understand that the Fed can be intoxicating and that the chairmanship can be downright addictive. Reserach shows that the Fed is usually most accommodating when a chairman seeks to be reappointed by a new president. However, thereafter the Fed regains its stones. Anyway, if Larry Summers had been appointed, the president is smart enough to know that the Fed chairman has only one vote on the Open Market Committee. An appointment of an outsider would cause friction enough. An appointment of an obvious flunky might cause an outright rebellion. One thing to note is that some talking heads are contending that the policies of this president are intended to destroy the country. I for one find this hard to believe because it would lead to the defeat at the polls of his supporters in congress - and nothing is more important to our elected officials in Washington than re-election. Indeed, if the president wanted to wound the country, he would have not re-appointed Bernanke. That would have lead to a sharp decline in the stock market. The market would realize that all bets were off. The Fed would be in crisis. There would be never ending relenting monetary ease, higher rates of inflation and more monetarization of the national debt. So the president had his chance to spur a severe economic downturn and spurned it. So congratulations Ben. You sucked up to the president and got renominated. Hopefully after your confirmation by the Senate, you will regain your integrity and assert Fed independence. I can only hope.

So Where are Willie and LaToya?

Remember when people wonder why hurricanes were only named after women? Obviously, if they were named after men they would have to be called himacanes. Well the esteemed congresswoman Sheila Jackson Lee now famous for chatting on her cell phone during a recent town hall also is notable for two other things. First she asked if the Mars probe could take a picture where Neil Armstrong landed and second she wondered why the National Hurricane Center didn't have black names for hurricanes. Now before you laugh look at the following names for future hurricanes. For the complete list go to http://www.nhc.noaa.gov/aboutnames.shtml.

Atlantic Names

2009 2010 2011
Ana Alex Arlene
Bill Bonnie Bret
Claudette Colin Cindy
Danny Danielle Don
Erika Earl Emily
Fred Fiona Franklin
Grace Gaston Gert
Henri Hermine Harvey
Ida Igor Irene
Joaguin Julia Jose
Kate Karl Katia
Larry Lisa Lee
Mindy Matthew Maria
Nicholas Nicole Nate
Odette Otto Ophelia
Peter Paula Philippe
Rose Richard Rina
Sam Shary Sean
Teresa Tomas Tammy
Victor Virginie Vince
Wanda Walter Whitney

Audit the Fed?

I have made little secret the fact that I do not care for the Bernanke Fed. Although it appears that Bernanke is campaigning for re-appointment, his actions are consistent with those his predecessor used while President Bush was in office. Recall that government spending exploded under George Bush. Even though tax revenues increased federal expenditures increased by even more causing an increase in the deficit. The Fed accommodated by purchasing the Treasury bills used to finance the deficit resulting in driving down interest rates and keeping them down. The result was the boom in the mortgage market and the eventual bursting of the bubble. Then came the ill-fated stimulus programs under Bush and the TARP fiasco. Ignoring history which shows that stimulus programs always fail because consumers and businesses seek to pay down debt during recessions rather than increase spending, both Bush and Obama felt the political need to endorse such a program. There is little evidence that Obama’s stimulus has stimulated the economy. Rather it was used to bail out state governments.

In the meanwhile the Fed has continued to provide accommodative monetary policy. Now the Congress led by Ron Paul is seeking an audit of the Fed. They want to know who the Fed is lending to and how much. The Fed argues that such an audit would have an adverse impact on the borrowers as their clients and the market would react negatively to the information. Some back Paul’s bill because they are Fed conspiracy theorists and believe that the Fed is just helping to enrich a precious few. Others back Paul because they want more openness in government. So who is right – the Fed or Ron Paul?

Both. Revelation of the lending information will have an adverse market effect. However, that effect will be short-lived. Second, the congress should know what the Fed is doing. My proposal is for an annual audit to be conducted of the Fed and the information be given to the House and Senate banking committees in a closed door session. Much like the CIA reveals its operations to congress behind closed doors, so should the Fed.

Read my lips?

The President is fast becoming the poster child for "How can you tell a politician is lying?" In his speech July 20, 2009 on health care I was wondering what country he was talking about. It was certainly no country with which I was familiar. Here is a sampling of what was said "We spoke about the amount of time and money wasted on insurance-driven bureaucracy. We spoke about the growing number of Americans who are uninsured and underinsured. We spoke about what's wrong with a system where women can't always afford maternity care and parents can't afford checkups for their kids, and end up seeking treatment in emergency rooms like the ones here at Children's. We spoke about the fact that it's very hard even for families who have health insurance to access primary care physicians and pediatricians. In a city like Washington, D.C., you've got all the doctors in one half of the city, very few doctors in the other half of the city. And part of that has to do with just the manner in which reimbursement is taking place and the disincentives for doctors, nurses, and physicians assistants in caring for those who are most in need." "Now, we've talked this problem to death, year after year. But unless we act -- and act now -- none of this will change. Just a quick statistic I heard about this hospital: Just a few years ago, there were approximately 50,000 people coming into the emergency room. Now they've got 85,000. There's been almost a doubling of emergency room care in a relatively short span of time, which is putting enormous strains on the system as a whole. That's the status quo, and it's only going to get worse." I thought for a moment he was talking about the doctor "shortage" in Canada where there are few doctors and dentists in rural areas. Or maybe he was talking about emergency room usage in Massachusetts going up after institution mandatory statewide health care. Or maybe he was talking about the administrative waste in medicare where the cost per patient is 25 percent higher than under private plans. What about cost containment? Would someone please tell me how the federal government is supposed to contain the cost of health care? Lets look at medicare and medicaid. Medicare's growth in spending is outpacing its revenue growth and its spending is expected to double in the next 25 years. We all have seen the projects that the Medicare Trust fund will run out of money by 2025. Medicaid, an open ended entitlement with no defined limit on beneficiaries or costs, is projected to grow at an annual rate of 7.9 percent by 2017 almost double the projected growth in the economy. One study finds that Medicaid has encouraged overutilization of health care resources without real evidence of improving health of the poor. Lastly, overutilization of emergency rooms is given as one of the country's major problems because the uninsured are forced to seek medical care there. Well a study of ER use in Massachusetts is an eyeopener. If finds that "non-urgent — use of the Emergency Room was not limited to uninsured populations. It showed up across the board. People covered by private insurance, Medicaid and Medicare were just as likely to use the ER for non-urgent care as people without health insurance. About 20% of all ER visits by privately insured and Medicare patients were for non-urgent purposes. About 24% of all ER visits by Medicaid beneficiaries and people without any insurance were for non-urgent purposes.
Second, another 25% of all ER visits for each group were for primary care treatable/preventable maladies. In other words, almost half of all ER visits were either for conditions that could have waited at least 24 hours to be addressed, or could have been solved in a doctor’s office."

What all of this means is that the President is trying to manufacture a crisis in order to ram through his health care takeover. Never mind that the Federal government has failed at containing costs of its health care programs. Never mind that the problem of ER use will not go away. Never mind that the proposed solutions are no solutions at all. I think the President really knows - just like the rest of us - that a national healthcare system will not improve health care, will not contain costs and will make all of us worse off. However, it will give the government control of one-sixth of GDP and control over the most vital aspect of our lives. So is it any wonder that he and the democrats are rushing this through at breakneck speed?