Contrasting State Cross Border Business Health Compared to a Freedom Index

A recent discussion I was in with other alumni of Case Western Reserve University about the sorry state of Cleveland, which was just recently chosen by Forbes Magazine as the most miserable city in America, caused me to consider some of the effects on Cleveland of being in a state with a bad business climate.  Of course, the city of Cleveland does much to cause its own problems and can be said very reasonably to have a bad influence on the politics of the whole state of Ohio.  This case also caused me to think about the strange underdevelopment of southern New Jersey.  Then today, I read an article on the strong business performance of Northern Virginia compared to Washington, D.C. and the Maryland suburbs of Washington, D.C.  What explains these differences?

There are major differences in the ability to do business based on regional factors such as location, geography, population density, transportation, and other factors besides political factors.  This makes it hard to fully compare doing business in South Dakota with doing it in New Jersey or Maryland.  But, if one is a business owner or prospective owner, there is often a fair equivalency in many of these other factors if you are deciding whether to establish your business in Northern Virginia or in the Maryland suburbs of Washington, D.C.  Similarly, it is very reasonable to consider putting your business in southeast Pennsylvania, Delaware, or Southern New Jersey.  Once again, one can choose Ohio, or one of Michigan, Indiana, Kentucky, or Pennsylvania for many types of businesses.  Specifically, if one is considering the Cleveland, Ohio area, it is easy also to consider Pennsylvania.

I want to explore how far political freedom can be correlated with these remarkable differences in economic and business performance.  William P. Ruger and Jason Sorens have published Freedom in the 50 States: An Index of Personal and Economic Freedom through the Mercatus Center of George Mason University, dated February 2009, which I previously discussed in a post here.  They rated and ranked the states for economic freedom and then again for personal freedom and provide an overall freedom ranking.  They correlate the degree of freedom with rates of internal net migration.  People, at least those willing to move, find freedom attractive.  Economic growth rates may also be suspected to be dependent upon economic freedom, and at least secondarily upon personal freedom as well.  Start-up companies commonly need to be able to attract bright, hardworking professionals.  It is reasonable to expect that many of them value personal freedom.

Consider the issue of the growth of Northern Virginia versus the Washington suburbs of Maryland.  In 1970, Northern Virginia accounted for 27.0% of the Gross Regional Product, with Suburban Maryland having a 34.5% share, and D.C. a 37.5% share.  In 2009, D.C.'s share had shrunk drastically to 22%, while Suburban Maryland had shrunk slightly to 32%.  Northern Virginia rose startlingly to 46% of the Gross Regional Product.  In absolute terms, all three sub-regions grew their gross product, but clearly the rate of growth in Northern Virginia greatly outstripped that of the Suburban Maryland and D.C. areas.

How did Virginia compare to Maryland in the freedom indices?  Virginia was ranked 13th on the Economic Freedom Index, while Maryland was ranked 34.  Virginia was ranked number 9 on the personal freedom index, while Maryland was ranked 50th.  For overall freedom, Virginia was ranked number 9 and Maryland was ranked number 46.  While other factors can be critical in starting a new business, many businesses will have a fairly balanced choice between Virginia and Maryland for other reasons and will then choose more economic and personal freedom.  D.C. is not ranked, but it is almost certainly worse than Maryland for freedom, so its more greatly fallen share of the Gross Regional Product is surely to be expected.  These freedoms are not just luxuries being chosen.  In many cases, they are the difference between business success and failure.

I have a friend who lives in Southern New Jersey and he has told me many stories of the poverty there, the miserable schools, and the very high local unemployment rates.  This was true prior to the recession.  Of course such a situation can make an area already look unattractive to a business.  But, there is plenty of relatively undeveloped land in Southern New Jersey and locations close to Philadelphia and densely populated Delaware areas.  It is also in the middle of the mid-Atlantic area.  Why is this area so highly undeveloped when Northern New Jersey has a high degree of development?

Well, if we look at Northern New Jersey and compare freedom there to that in New York, we find that New Jersey does relatively well, because New York is miserable.  On the Economic Freedom Index, New Jersey is 46, while New York is 50.  Both are awful, but New Jersey is at least competitive and even better.  On the Personal Freedom Index, New Jersey rates a 45 ranking, while New York is 48.  On the Overall Freedom Index New Jersey is 49 and New York is 50.  So Northern New Jersey can compete for businesses with New York.

But, Southern New Jersey has to compete with Pennsylvania and Delaware for businesses.  One has to expect that the fact that health insurance, as mandated by the respective states, being twice as expensive in New Jersey compared to Pennsylvania, for instance, might have some impact on how businesses will fare in the respective areas.  The Economic Freedom Index takes into account many other factors as well.  Comparing New Jersey to Pennsylvania and Delaware, we find that PA is 19, DE is 24, and NJ is a lowly 46.  On the Personal Freedom Index, PA is 29, DE is 36, and NJ is 45.  The Overall Freedom Index says PA is 20, DE is 26, and again we have our lowly NJ at 49.  The inducement here is clearly to choose Pennsylvania for your new business, or maybe Delaware.  But, Southern New Jersey looks like a hard choice to justify.

Cleveland is not quite so strongly affected by conditions in a state which is really close to it.  But still, many businesses might reasonably say that they have reason to be in the Eastern Mid-West and then choose a state to be in.  This will affect Cleveland.  Of these states, the nearest is Pennsylvania.  But, Michigan, Indiana, Kentucky, and West Virginia also border Ohio.  Let me list the states, their Economic Freedom Index ranking, their Personal Freedom Index ranking, and their Overall Freedom Index ranking:

PA, 19, 29, 20
WV, 40, 17, 33
KY, 33, 26, 32
IN, 16, 19, 13
MI, 15, 20, 14
OH, 32, 46, 38

On Overall Freedom, Ohio is dead last in its local region.  It is particularly poor with respect to Indiana, Michigan, and Pennsylvania.  It is hardly a wonder that Ohio is having a hard time economically.  This, in turn, hurts Cleveland.  To be sure, the fact that it is very hard to start a business in Cleveland is an outstanding reason for it to be a basket case.  John Stossel recently pointed out that a Cleveland official recently boasted that they helped a company set up a business in Cleveland in a mere 18 months.  In comparison, a company was started in Houston in one day.  Cleveland has 22 zoning categories, while Houston has none.  Cleveland has a penchant for electing kooks as mayor.  Dennis Kucinich was one of the worst.  Dennis the Menace is blatantly opposed to the profit motive.  He is now in the House of Representatives and for a long while opposed ObamaCare because it was not a single-payer program.  He caved after a ride with Obama in Air Force One.  [Did Obama threaten to throw him out the door at altitude?  Dennis should have held true to his convictions.]

The Progressives view freedom as the archaic and quaint coin to be paid for the aid of the needy.  Or so they say.  They do have an uncanny penchant for making the politically-connected wealthy much more wealthy and even those who are only politically connected wealthy.  But, history tells us that man's condition was little improved for eons until capitalism and the free market system began its rapid development in the 1800s.  Comparative studies today of the countries around the world show huge advantages in overall prosperity and the prosperity of the poor in nations for those nations with higher degrees of freedom.  The little study above also shows that there is some considerable reason to believe that even the differences between adjacent states in the United States are very important for the economic development of states and regions in those states.

Trading freedom for redistributionist schemes is a fool's errand.  The average wealth and income will fall, as will the median wealth and income, as will the wealth and income of the poor.  No one wins, except those who are consumed by envy and must level everyone to poverty to slake the thirst of that lowly envy.  Frankly, every state should be in a keen competition with the states near it to provide its citizens with more freedom than those neighboring states do.  Of course, the politicians would hate to see such a competition be widely recognized as important by the People.  They do everything they can to avoid letting us know about this, including insisting that the government-run schools not teach students about this source of American Exceptionalism.  We are prosperous because we are free.  As we lose our freedom, we will lose our prosperity.

ObamaCare and the IRS Thugs

I have been trying to find out what the role of the IRS is in ObamaCare.  It seems that the Democrats, at least those who voted on the bill, have not read it, so they cannot tell us.  Perhaps this is by design.  They do not seem to want us to know what the role of the much feared and much despised IRS will be.

IRS Commissioner Douglas Shulman testified to Congress that IRS agents are not going to be auditing taxpayers to verify that they have acceptable health insurance.  He claimed the IRS would not be looking at our health records.  But, he was unclear about the IRS role in collecting the penalties for those who failed the individual mandate requirement for acceptable insurance.  This seems like the classic politicians run-around.

The CBO and the Joint Committee on Taxation estimated that 46% of Americans who will pay the individual mandate penalty will have incomes under 300% of the poverty line.  Presently, that is $32,500 for an individual and $66,150 for a family of four.  It will be interesting to see what will happen to people's attitudes about ObamaCare and Obama when they have the IRS bullying them.

One idea of how this will work is this:  The individual will attest that he has acceptable health insurance on his tax return.  The IRS will receive something like a 1099 Form from every insurance company offering health insurance.  The IRS will match the insurance company forms to individual tax returns and chase down those who do not have an acceptable match.  In 2014, the penalty for not having a match is 1% of income.  In 2015, the penalty is 2% of income.  In 2016, the penalty is 2.5% or $2,085 per person, whichever is greater.  Note that this process does not involve an audit in the usual sense, so IRS Commissioner Shulman gave Congress and the People the run-around.  His job is just to match and collect a penalty if there is no match.  Since we have to provide him with our bank account information also, it makes it very easy for him to simply transfer the penalty directly from our bank accounts as he sees fit.

Those of us who believe whether we have health insurance or not is none of the government's damn business are going to become very intimate with the IRS.  I joke!!  No one could ever possibly be intimate with the despicable IRS.  Well, I guess sadists do exist.  Hmmm.... yes, of course, many of them work for the IRS.  Unfortunately, we will be their victims and the IRS has been chosen to eat us for lunch.

There is no such thing as a free lunch, unless you are with the IRS.  Yes, some people are more equal than others in the new, changed Obama Nation.  I liked America better.

Government Appreciation for a Great Family Physician

This is not a post about abstract effects of government controls on our medical profession.  This is a small note on my offense that the best family doctor I have ever met has recently been given a raw deal by the federal government.

This family doctor has been practicing family medicine for a good 30 years.  He loves being a doctor and relieving his patients of pain.  His fees are very reasonable and he takes a strong personal interest in his patients.  He takes the time to talk over how they feel and he is careful to check up on the medicines given to many of his patients by specialists, who often do not check for conflicts with other medicines the patient may be taking.  His patients respect and care for him in return.  He and my father and mother became friends over the many years they were and are his patients.  This doctor saved my father's life many times and helped guide him and my mother through the last four years of my father's life when my Dad was on dialysis due to his kidneys failing after another doctor damaged them with radiation in prostate cancer treatment.  The average 80 plus year old patient lives about 1.5 years on dialysis, but with this doctor's help, my Mom's help, and my Dad's indomitable soul, Dad lived on dialysis from 85 to 89 years of age.  My Dad died at home Christmas morning in 2007.  His doctor visited him at home on Christmas Eve to say goodbye.

In his entire career, this great man and family doctor was sued only once.  Despite that, his malpractice insurance went up by 25% from last year to this year.  He treats many Medicare patients.  Very recently, he sent in a Medicare reimbursement request for my Mom and he soon after received a letter telling him that he was being fined $3,000 by Medicare because he had allowed his Medicare registration to expire.  It turns out that a doctor taking Medicare patients not only has to put up with low payments and much paperwork, but he also has to pay $2500 every five years to register with Medicare.  Medicare had never notified him that his Medicare registration was expiring and he forgot, as a very busy man with much more important things on his mind might do, after 5 years.

Not only was he fined $3,000, but he has to reapply for his registration with Medicare and pay for that.  That may take months.  Meanwhile, none of his Medicare patients will be reimbursed by Medicare for their medical costs.  So the good doctor sent a letter to all of his patients telling them about the problem and telling them he would give them all a 25% discount until his Medicare registration is complete.  His waiting room is still overflowing with patients.  They all love him and are hardly willing to go to a run-of-the-mill doctor in order to be reimbursed.  But, the loss of income due to his discount and in the face of the 25% increase in malpractice insurance is making it hard for him to continue his practice.  Nonetheless, he told my Mom he would continue as long as she was alive, so she would never have to worry that he would not be her doctor.

Being a doctor who treats Medicare and Medicaid patients is very much as though you or I had to deal with the IRS on a daily basis.  Can you imagine the daily trauma?  Their payments for medical care are too low and they are miserable to deal with.  They turn a profession dedicated to healing pain and extending life into a drudge.  And now, ObamaCare will extend this misery for doctors.  No one seems to fully understand the role of the IRS in ObamaCare, but I sure hope that it is not such that our heroic and good doctors have to deal more often with them as well as Medicare, Medicaid, and the well over 100 other federal agencies and panels which are to play roles in ObamaCare.  Can anyone imagine the horror of having to deal with that many uncaring, mean-hearted, money-grasping, you-wait-forever, they-want-it-yesterday government agencies?

The day after my Mom dies, I hope this good and heroic man retires and says he has had enough.  No one like him should serve a day of slavery to the likes of these government bureaucrats.  Doctors have the same sovereign individual rights to life, liberty, and the pursuit of happiness that the rest of us have.  Remember, these inalienable rights are equally sovereign to us all.  There is no exclusion of doctors.

Utah Challenges Federal Land Ownership

Utah Republican Gov. Gary Herbert signed a bill on 27 March 2010 authorizing Utah to file eminent domain proceedings against federal land that limits access to state land that may be used for energy development.  The federal government holds an outrageous portion of Utah, as it does of most Rocky Mountain and West Coast states.  In the case of Utah, the federal government holds 57.4% of the state and that land is generally used not at all or very unproductively.  This fact considerably constrains the income earning ability of the people of many of these western states.  It also reduces our energy supply, intelligent forestry, mineral extraction, ranching, and who knows what other productive uses of this forever fallow land.  In a time of recession and when Washington is controlled by people of a very different political persuasion, this particularly rankles.

There is virtually no chance that this act by Utah will succeed in the courts.  The courts have ruled that the Constitution grants the federal government sovereignty over state lands that it acquires.  This Utah attempt to condemn federal land is an exercise in frustration, but as such, it is significant.  The Governor has said he will first try to negotiate access to state lands across federal lands before going to court.  He hopes the eminent domain authorization will at least get the federal government's attention.

The Obama administration announcement that they are declaring the polar bear an endangered species has angered state officials in Alaska.  The polar bear population has in fact not been in decline, so this is purely an act of environmental political correctness on the part of the Obama administration.  This and other federal interferences are preventing the drilling of oil and gas in many areas in Alaska.

In the late 1970s, the Sagebrush Rebellion attempted to get the federal government to reduce its land holdings in the West.  Anger rose during the Clinton years, as the federal government cut back on logging, mining, and ranching on federal lands.  George W. Bush opened the lands for more use and the anger receded.  After Obama took over, his Interior Secretary canceled 77 drilling leases in Utah in February.  The Utah legislature, hard pressed for tax revenues, as most states are, had been hoping to use tax revenue on leases of state land and income of energy-producing companies to help cover education costs.

Heidi McIntosh, associate director of the Southern Utah Wilderness Alliance, chortled that the state was just frustrated that the federal government owned land that blocked the development of state land and that the state could do nothing about it.  They probably cannot, but the Sagebrush Rebellion is being given new life.

Steyn -- The Nationalization of Your Body

Mark Steyn has written an article called The Nationalization of Your Body in which he points out, in total agreement with me, that ObamaCare means the end of our owning our own bodies.  He says ObamaCare will make the citizens dependent upon the state and illustrates this with the example of the United Kingdom.  He says:

When health care is the government’s responsibility, it becomes its principal responsibility. Because the minute you make government the provider of health care, you ensure that, come election time, the electorate identifies “health” as its number one concern. Thus, in a democracy, the very fact of socialized medicine seduces the citizenry away from citizenship. Buying health care is no more onerous than buying a car or buying a house – which, pre-Barney Frank, most Americans seemed able to manage. Indeed, most of the complications are caused by existing government interventions. If you were attempting to devise a “system” from scratch, you might opt for insurance for catastrophic scenarios and, for PAP smears and colonoscopies and whatnot, something similar to the tax breaks for a Simplified Employee Pension: C’mon, how difficult can it be? Back in the day, your grampa managed to go to the doctor without routing the admin through Washington. Matter of fact, the doctor came to grampa. That’s how crazy it was.

But the acceptance of the principle that individual health is so complex its management can only be outsourced to the state is a concession no conservative should make. More than any other factor, it dramatically advances the statist logic for remorseless encroachments on self-determination. It’s incompatible with a republic of self-governing citizens. The state cannot guarantee against every adversity and, if it attempts to, it can only do so at an enormous cost to liberty. A society in which you’re free to choose your cable package, your iTunes downloads and who ululates the best on “American Idol” but in which the government takes care of peripheral stuff like your body is a society no longer truly free.

Howard Rich -- ObamaCare: "The Bigger the Lie"

Howard Rich is the Chairman of Americans for Limited Government.  His recent article called ObamaCare: "The Bigger the Lie" demonstrates that he really understands the purpose of ObamaCare.  He says:

President Barack Obama and his Congressional allies are spending money that they know we don’t have on a program that they know isn’t going to work – all in an effort to expand government’s control over the private sector and its reach into the private lives of American citizens.

Sound a bit conspiratorial?

It’s not – at least not when you turn down the partisan rhetoric (on both sides of the debate) and start examining what this monstrosity actually does.

“ObamaCare is really about who commands the country’s medical resources,” an editorial in The Wall Street Journal noted the day before the legislation was passed. “It vastly accelerates the march toward a totally state-driven system, in contrast to reforms that would fix today’s distorted status quo by putting consumers in control.”

With government already purchasing nearly half of all health care services in America (a system that’s rampant with fraud and anti-competitive price-fixing), just who did you think was responsible for the “distorted status quo” that Obamacare ostensibly seeks to correct?
Here’s a hint – it’s not those “evil” insurance companies, which will be receiving nearly a half-trillion dollars in “Obamacare” subsidies.

Consistent with the core fallacy of other recent socialist misadventures (like former President George Bush’s TARP bailout or Obama’s so-called “stimulus”), Washington politicians are once again attempting to solve problems that have been exacerbated by excessive government interventionism with additional government interventionism. “Dumping buckets of water on the head of a drowning victim,” if you will.

Even though America can’t even begin to afford its current entitlement obligations, Washington’s answer is to create yet another new entitlement program – something that Republicans who voted in favor of Bush’s prescription drug benefit know all about. And even as Medicare and Medicaid have failed spectacularly (and expensively) to provide cost-effective health care, Obama and his allies are using this failure as an excuse to dramatically escalate their “government knows best” approach to include individual mandates and huge fines for families and small businesses who fail to comply.

It’s a power grab, pure and simple. And a money grab, which is why “Obamacare” spends $10 billion to hire 17,000 new tax collectors at the IRS to rake in billions of dollars from America’s newly-created class of “illegally uninsured” citizens.

The central theme of the Obama administration is that it wants massively more power over the individual, who he wants begging for crumbs at his feet.  He will pick winners and losers.  The winners will be made very aware that they are soon likely to be among the losers.  Obama will extort money and services until no money is left and the People have learned that slaves can produce but very little.

John Goodman on ObamaCare Effects

John Goodman's Health Policy Blog has compiled an impressive list of numbers indicating many of the effects of ObamaCare.  Goodman works with the National Center for Policy Analysis and is the father of the health savings accounts (HSA).  These HSAs are a wonderful invention and should be encouraged so individuals would have some stake in the cost of their medical care.  ObamaCare aims instead to reduce or eliminate their role and to make us as careless and wasteful consumers of health care services as possible.

Goodman points out that there have been 8 versions of ObamaCare and there has not yet been enough time to refine the numbers for the present version, but he thinks these numbers are fairly close:

“If you like the plan you are in you can keep it.”

19 million	Number of people predicted to lose their employer plan (Lewin Group)
8 to 9 million	Number of people predicted to lose their employer plan (CBO)
$11,543	Employer incentive to drop coverage for a $30,000 a year worker with family [Tax subsidy in the exchange minus tax subsidy at work minus $2,000 fine] (IRET)
8.5 million	Number of seniors and disabled people at risk of losing their Medicare Advantage plan (Medicare Chief Actuary)
3 million	Additional people who will likely lose Medicare Advantage plan benefits (Medicare Chief Actuary)
$816	Average annual benefit loss for 11 million seniors and disabled in Medicare Advantage plans (CBO)
33 million	Number of people in traditional Medicare at risk of losing access to care because of $523 billion in cuts in Medicare spending (Medicare Chief Actuary)
20%	Fraction of hospitals that would become unprofitable after Medicare spending cuts (Medicare Chief Actuary)

“There will be no tax increases for anyone who earns less than $200,000.”

73 million Number of people who earn less than $200,000 who will see their tax bill rise (Joint Committee on Taxation)     40% Tax rate on “Cadillac” plans (Reconciliation Summary)     2.3% Hidden tax on wheelchairs and other medical supplies (CBO update)     $27 billion Hidden “medicine cabinet” tax on drugs (Reconciliation Summary)     10% Tax on tanning salons (Reconciliation Summary)     $60 billion Hidden health insurance tax (Reconciliation Summary)

“Health insurance reform is…about creating a climate where our entrepreneurs and small businesses can succeed [and] about giving you the chance to prosper and grow.”

$100 million Cost of ObamaCare mandates for Caterpillar, Inc. in the first year alone (Caterpillar, Inc.)     60% Implicit marginal tax rate for workers earning as little as $25,000 (IRET)     65% Implicit marginal tax rate for families earning as little as $50,000 (IRET)     0.9% New payroll tax on the wages of entrepreneurs and small business owners (Reconciliation Summary)     3.8% New tax on the capital income of entrepreneurs and small business owners (Reconciliation Summary)           “The average family will save $2,500 in health care costs by the time I complete my first term as President of the United States.”

111% Premium increase for individual insurance (AHIP)     54% Premium increase for individual insurance (BlueCross BlueShield)     106% Premium increase for individual insurance (Wellpoint)     $2,100 Premium increase for the average family (CBO)

Did you see any numbers there that you liked?  I sure did not.  It is hard to believe that 42% of Americans oppose the repeal of this turkey, according to the latest Rasmussen poll.  The good news is that 54% favor its repeal, though why that number is not higher is somewhat mysterious.  Apparently, few Americans are familiar with the numbers above and few have thought about their consequences.  But even that leaves much of the conundrum for me, since I would think they would rise up as the Minutemen did in 1775 and fight for the principle of their unalienable, sovereign individual rights to life, liberty, and the pursuit of happiness.  Don't they
realize that this is a fight for their very lives and for the ownership of their own bodies?

The National Center for Policy Analysis seems to be doing some good work.  I have just given them a donation.

ObamaCare Long-Term Care Withholdings

One of the little-discussed provisions of ObamaCare is that beginning in 2012 money will be automatically withheld from your paycheck for long-term care.  The amount has not been decided, but numbers from $146 per month to $240 per month are being discussed.  It will be possible to opt out of this plan, but we do not yet know how difficult or easy that may prove to be.

I am a bit puzzled at the numbers being discussed here.  Then again maybe I am not.  My wife and I started paying for long-term care insurance just a few years ago and the amount we pay was a function of how late in life we began paying for it.  The average worker is surely much younger than we were when we started paying for this insurance, so one would think they would pay less than we are paying.  But, what we are paying is about equal to the $146 per month figure.  So why would the government withholding be so high?

I suspect the answer lies in the supply and demand expected.  First, many Baby Boomers will eventually need long-term care and when that wave hits the limited supply of long-term care providers, costs will go way up.  Second, this program of automatic withholdings will likely also increase future demand greatly for long-term care.  So, the government must plan for major future cost increases for long-term care.  But, nobody can reasonably pretend to predict now what that care will cost given the new uncertainties introduced by ObamaCare.  I expect our insurance will become quite the bargain given how much ObamaCare will increase the costs.  Of course, that may bankrupt our private insurance company and be a disaster for us.

Will the people who are put on the ObamaCare long-term insurance plan be doing so in the same way that people are put on Medicare and Social Security?  That is, is this a plan in which they have no right to expect benefits and those benefits may be taken away at the whim of Congress?  Is this another Ponzi scheme?  Or will the government actually invest their money for their future use?  Given that this is a Democrat plan, I expect they will use the money for current expenditures on the general budget and write IOUs to be redeemed later when the government has no expectation of being able to honor them or can attempt to do so only in the midst of huge deficits due to Medicare, Medicaid, and Social Security.  Good luck with that "investment" scheme.

Postscript Summarizing the Comments below of Scott A. Olson, a professional long-term care insurance seller with 15 years experience and licensed to sell long-term care insurance in 37 states:

The CLASS Act long-term care insurance will allow people with any health history to have long-term care insurance.  It will cost people below the poverty level income only $5 per month.  The plan is operated with a "trust fund" similar to that of the Social Security program.

Added Retiree Drug Benefit Costs to Business of ObamaCare

The 2003 Medicare prescription drug benefit threatened to induce companies who provided prescription drug benefits to retirees to substantially end that benefit.  The result would be that these retirees would wind up on the Medicare D prescription drug program and cost the taxpayers more than if the private companies continued their drug benefit programs for their retirees.  In order to give such companies an incentive to keep their retiree drug programs, the money the companies spent on the retiree drug benefit was entirely tax deductible, beginning in 2006.  Given a 35% corporate tax rate, this meant that for each dollar spent on the drug benefit, the company saved $0.35 of taxes.  In addition to this, the company was given a 28% subsidy, or $0.28 per dollar spent.  Thus, the company was effectively reimbursed $0.63 of every dollar spent to continue the retiree drug benefit plan.  But, one of the really odd things about this was that if the retiree paid a part of the cost himself, the company got to treat that money as though it was spent by the company for the sake of these tax benefits!  So, it is not necessarily the case that the company was paying $0.37 per drug cost dollar to keep the retiree from being switched over to Medicare D.

ObamaCare now has changed the rules on this subsidy/tax deduction.  The company still gets a 28% subsidy, but it cannot expense the 28% of the cost covered by the subsidy or any amounts paid by the retiree himself.  They now get to expense the remaining 72% of the cost minus the amount spent by the retiree himself.  For each dollar spent, including by the retiree personally, the company now gets $0.28 + 0.35 ($0.72 - x) = $0.532 -0.35x /dollar spent on the retiree drug benefit program, where x is the amount spent by the retiree himself.  The company has lost at least $0.098 per dollar of drug costs for each present and future retiree on the program.  This expense has to be written off, just as the future income expected from this source was added to the books of many companies in 2004.

The Democrats did not think the expensing of money not spent by the company was right, so they changed that.  Of course they were on a desperate quest to find ways to reduce the horrible costs of ObamaCare.  It was odd that the companies could deduct the variable amounts which were actually spent by the retirees out of their own pockets.  This means that it is possible that some companies were directly getting a windfall profit on the program, while others were providing a net benefit to the taxpayer by keeping people off of Medicare D at some expense to the company.

Since Medicare D offers many plans, but all require the retiree to pay part of the cost, there is no simple way to figure out if the old company subsidy/tax deduction actually saved the taxpayer any money or it cost the taxpayer money, except to look at the average cost figures.  Mark Steyn says that the old corporate retiree drug benefit subsidy plan was costing taxpayers about $665 per person covered, while the equivalent Medicare coverage cost is about $1,200 per person.  So the way that subsidy system worked was strange, but on balance, it was effective.

In any case, companies with retiree prescription drug plans now have a decrease in their expected tax asset and they must, under federal law, declare that decrease in the quarter they become aware of it.  Obama may not like the timing of the losses declared by many companies, but they have no choice but to do as they have done.  AT&T declared a loss of $1 billion, John Deere a loss of $150 million, Caterpillar a loss of $100 million, 3M $85 - 90 million, AK Steel $31 million, Valero Energy $15 million.  Verizon has announced that its health care benefits costs are going up, but not how much.  The Wall Street Journal on 26 March 2010 said 1400 companies are thought to still offer retiree prescription drug benefit plans.  But, Mark Steyn thinks about 3,500 businesses are and that they cover about 5 million retirees.  David Zion of Credit Suisse, is quoted in the 26 March 2010 Wall Street Journal as estimating that the S&P 500 will take a first quarter hit of $4.5 billion to earnings due to this ObamaCare change.

In many cases companies have dropped such plans for retirees, but it can be hard for those companies with many union retirees whose benefits are subject to union agreements to do so in any case.  Some of them will just have to suffer the higher expenses for some time.  These costs will be passed on to consumers and to those who own the companies' stocks.  American corporations already pay much higher corporate taxes than most other countries corporations do.  In fact, only Japanese corporations have it as bad as American corporations in the OECD.  These higher health care costs, and this is just the tip of the ice berg, will make American companies less competitive in the international markets.  John Deere, Caterpillar, 3M, AK Steel, and Valero Energy are certainly greatly affected by higher costs due to their substantial exports.

Another company which has announced that it is affected adversely by ObamaCare is Medtronic.  Medtronic makes medical devices, which are now to be hit with new taxes.  Medtronic says it may have to layoff 1,000 employees as a result.  In the interest of disclosure, Medtronic is a customer of my materials analysis laboratory.

The announcements by these companies of the adverse effects of ObamaCare on them, has made Representative Henry Waxman, D - CA and chairman of the House Committee on Energy and Commerce, furious.  He is claiming that these companies are exaggerating the effects on them.  He is also livid that their announcements are tarnishing the celebration of the socialist enthusiasts.  He is attempting to intimidate them with an order that they must explain their claims at a 12 April hearing before his investigative subcommittee.  They are to supply the subcommittee with masses of paperwork and all internal communications on their health care costs and their estimates of the effect of ObamaCare on them.  Note that Waxman is an accomplished extortionist of private sector companies and his committee chairmanship gives him great power to do selective harm to any company that does not bow low enough before him.

Kenya Must be Misinformed

Apparently, the Kenyans were misinformed about where Barack Hussein Obama was born.  See this article from 2004 from the Sunday Standard of Nairobi, Kenya.

Law Should Minimize the Violence in a Society

Our Founding Fathers in America thought of the function of government in very fundamental terms.  They realized that a people with no government were the prey of internal gangs of thieves and warlords and of foreign nations whose armies might sweep over them and extract tribute and servitude from them.  On the other hand, they also knew that where nation states existed, they had usually generated too many laws and had too arbitrarily changed those laws with the effect that their people were subjugated and suppressed.  The government itself, not brigands, was the main source of violence against the people in these nations.

The People of America could not freely and effectively exercise their sovereign, unalienable individual rights to life, liberty, and the pursuit of happiness without a government to protect them or with a government whose powers were too great, as was the case with every government of Europe at that time and of most governments throughout history.  Rational laws were essential for the purpose of giving the People the protection they needed to exercise their individual rights, but these laws had to be developed in a careful balance and with great care to keep them from becoming excessive restraints on the freedom of the People.

How could the right balance be attained?

• It had to be clear that any law was justified only to the extent that it protected the equal rights of the individual.
• The laws must be consistent with justice.
• The laws must be consistent with domestic tranquility.
• They must be consistent with the general welfare of the People and their posterity.
• The laws must be within the powers delegated to the federal government, which powers were few and explicitly delineated by the Constitution.
• The laws should be few enough and simple enough to be understood by the People.  The Supreme Law of the Land, the U.S. Constitution, was written as such a simple example.
• The laws were to be made by a bicameral legislature and had to be signed into law by the President, which was to ensure that laws were made deliberately and with a high measure of consensus by the representatives of the People.  The process was to be rather slow and to help ensure that too many laws would not be passed and that the laws could not become too complicated.  This slow, cumbersome process was also to keep the laws from changing too often.
• Because some rights of the individual had been commonly trampled by governments, many of those most often trampled were explicitly protected in the Bill of Rights and then in later Amendments to the Constitution.  In realization that men had still other rights, the 9th Amendment provided for their protection.
• Some legitimate functions of government were recognized as being best provided by the states and other local government.  The federal government was prevented from interfering with the state governments' powers by the 10th Amendment.

The Framers of the Constitution carefully crafted a federal government with all of the above limitations.  They recognized that the federal government did not have the purpose of providing for the General Welfare of the People in a broad sense, because much of the General Welfare was provided by the People for themselves and by their local government.  It had the purpose of protecting their equal, unalienable individual rights within the context of exercising some few and precisely defined powers in a manner consistent with their General Welfare.  This was an additional restriction, not a source of unenumerated powers.  One can similarly substitute the words Justice or Domestic Tranquility for General Welfare in the sentences above in this paragraph.

What is the consequence of a federal government exceeding these many strict limitations laid upon it by the Constitution?  The consequence is almost always one of suppressing the freedom of the individual to exercise his right to life, liberty, and the pursuit of happiness.  In almost every excessive law, or every law exceeding the powers granted to the federal government by our Constitution, there are acts of violence called for against the individual.  This is because the individual has the sovereign, unalienable right to his life, his liberty, and his pursuit of happiness.  Every American individual has the right to think for himself, to express his thoughts in speech, to associate with and trade with others, to earn his living, to develop and own property, to choose his own values, and to manage his life in accordance with his chosen values.  But, if an individual asserts his rights and tries to defend them against their suppression by an excessive government, the response of government is to use force to enforce its laws.  But government which does not protect the rights of the individual is illegitimate and tyrannical, just as our Declaration of Independence clearly states, and such government is properly overturned by the People.  Fortunately, in the United States of America, we can do that in the next few elections.

It is a constant tactic of the Democrat socialist party that when the People become angry at the federal government and the socialists in control, that they scream that the People angry about their endangered individual rights are violent.  In the wake of the recent socialist federal government's takeover of medical care in complete disregard for the rights the People and their clearly and vehemently stated opposition to this takeover, the Democrats have used this tactic shamelessly to frighten other Americans and to seek sympathy.  Yet, these same Democrat socialists have just passed an unconstitutional law for which they have no delegated power in the Constitution and which is a clear violation of the individual's right to his own life, his own freedom to act to preserve his health and the ownership of his body, and his ability to pursue his happiness.  They have also forced the states to take on duties, which they have no power to do.

The law has established several layers of penalties for individuals who do not bow to this suppression of their liberties.  It tries to intimidate those who would dissent by putting us all further under the heel of the much despised IRS.  It forces many companies to provide a health insurance plan to be determined by government for its employees or pay a fine of $2,000 per employee.  In some cases, if a company does provide this health insurance coverage, the government may still fine it $3,000 per employee if the employee complains that the plan is too expensive for him.  In some cases, the fine for someone non-compliant with the law is $25,000 and up to 5 years in prison.  These are draconian threats which are meant to scare the People into compliance and submission to this tyrannical and unconstitutional law.  In this way, the socialist rulers hope to avoid the awkwardness of actually having to use force often to suppress the many angry Americans who rightly see this law as an infringement of their rights.  Of course, should any American proceed to actually protect his rights by taking up arms against this tyrannical government, he will be killed.  After all, these socialists are great admirers of Mao and Castro and other great socialist leaders, who would brook no resistance on the part of any backward peasants who had ancient and out-dated ideas of having individual rights.

It is socialists who are the ultimate in violent people.  They are brutal in enforcing their tyrannical laws and decrees.  It takes a great deal of violence to overcome a People's love of their individual rights, especially a People who have a long tradition of enjoying such rights, as the American People have had.  The socialists have added laws enforcing new socialist powers of government over the last 100 years at the federal government level and, periodically, the People have pushed back.  When these laws have been added slowly and in pieces, the socialists have generally managed to suppress more and more of our individual liberties.  Since Obama became the great socialist leader with the socialist radicals Pelosi in the House and Reid in the Senate, they accelerated their socialist program for the suppression of the American People.  Over and over, they have taken our hard-earned money, put us in intolerable debt, and mandated that we will do this, that, and everything else at their command.  They have consistently attacked the private sector and sucked its blood and vitality to feed the carnivorous public sector.  They have bought off some industries and special interests and damaged many others.  They have attacked our property rights and our freedom of contract.  They have gained even stronger control over education, so they can better indoctrinate our youth.  They want more power to deny us energy, which they largely do already.  They want more controls over industry and our finances.

How ridiculous that these violence-loving, tyrannical socialists are making a habit of complaining that Tea Party Americans are violent.  I have been at several Tea Party demonstrations and the police have never put on shields and visors for protection, they have never been attacked, and they have never been verbally abused to my knowledge.  The Tea Party People believe in the bulleted principles I laid out above, including the desire for Domestic Tranquility.  To be sure, if the ruling socialists were to refuse to hold the 2010 election or they were to steal even more votes than they usually do, then perhaps some Tea Party People might decide the time for armed rebellion had come.  After all, that is what our Declaration of Independence says the People will do.  It says:

WE hold these Truths to be self-evident, that all Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness -- That to secure these Rights, Governments are instituted among Men, deriving their just Powers from the Consent of the Governed, that whenever any Form of Government becomes destructive of these Ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its Foundation on such Principles, and organizing its Powers in such Form, as to them shall seem most likely to effect their Safety and Happiness.  Prudence, indeed, will dictate that Governments long established should not be changed for light and transient Causes; and accordingly all Experience hath shewn, that Mankind are more disposed to suffer, while Evils are sufferable, than to right themselves by abolishing the Forms to which they are accustomed.  But when a long Train of Abuses and Usurpations, pursuing invariably the same Object, evinces a Design to reduce them under absolute Despotism, it is their Right, it is their Duty, to throw off such Government, and to provide new Guards for their future Security.

The socialists have certainly shown us real Americans, who love our individual rights and our liberty, this long Train of Abuses and Usurpations, pursuing invariably the same Object, and evincing a Design to reduce us under an absolute Despotism.  They had better not interfere with the elections in 2010 and 2012, or freedom loving Americans will throw off such a tyranny, as is their right and their duty.  However, it is unlikely that these cowardly socialists will interfere with those elections to such a degree that we will not throw all of the rascals and scalawags out of office.  We must then roll back the many laws anchoring socialist tyranny about our necks and renew American understanding of the necessity of constitutional, republican government in the Land of the Free and the Home of the Brave.  We must renew our commitment to the leadership of our Founding Fathers and the Framers of the Constitution who tried so hard to establish the Principles of individual Rights in the great American Experiment, making America the most Exceptional Beacon of Freedom and Prosperity the World has ever known.  It is the Right of the American People and their Virtue to live their Lives in American Liberty.

Bob Hope on Zombies

I need a laugh.  Maybe you do also.  This was not a good week for America.  Actually, it was a horrible week for America, except that many Americans clearly remain very angry about the Democrats refusing to listen to them and the D.C. Court of Appeals case that at least says ordinary Americans can associate to make their views known.  The latter means the angry Americans cannot be entirely shut up, however much the elitist Democrats want us to shut up and just do as they tell us to do.  But in relief, here is Bob Hope:

A First Amendment Free Speech and Free Association Victory

The valiant defenders of liberty at the Institute for Justice and the Center for Competitive Politics have partially won a free speech, free association, and elections court case before the D.C. Court of Appeals on behalf of SpeechNow.org.  The recent U.S. Supreme Court decision in Citizens United v. FEC expanded the free speech rights of incorporated entities, including corporations, unions, and non-profits, but did not address the right of independent citizens to form an unincorporated association to pool their money and perhaps other resources to advocate a particular viewpoint at or near election time without undue restrictions administered by the Federal Elections Commission (FEC).  Those restrictions included limits on how much one person could donate to the political action committee, despite the fact that one person acting alone has no limits.  Some of these restrictions on free speech and free association were due to the infamous McCain-Feingold so-called election reform law, which was designed to protect incumbent politicians from public criticism.

A September 2009 decision by the D.C. Court of Appeals in EMILY's List v. FEC struck down a number of FEC regulations that severely limited the ability of non-profit organizations to raise and spend money for political purposes.  It ruled that such entities could raise unlimited funds for non-federal political campaigns.  If they set up a federal political action committee (PAC), for most practical purposes they could use unlimited funds as long as they do not coordinate with candidates.

Incomprehensibly, the SpeechNow.org D.C. Court of Appeals decision, however, retained some restrictions on private individuals banding together for political free speech purposes which were deemed by the U.S. Supreme Court to be too restrictive of free speech for corporations and unions.  It removed the individual limit on contributions, but it retained disclosure requirements and other regulations on political action committees. One would think that this part of the decision should not long stand, given its absurdity!

The announcement of the court case win from the Center for Competitive Politics is here and that from the Institute of Justice is here.  Bradley A. Smith, Chairman of the Center for Competitive Politics and a former FEC chairman said,

It's unfortunate that the court did not recognize how political committee status regulation by the FEC places restrictive burdens on grassroots political groups.  The court's decision means that the FEC regulatory regime will continue to favor large, established special interests over ad hoc groups of like-minded citizens who gather together to enhance their voices in politics.

I certainly agree with him.  The rise of the many small groups in the Tea Party movement will surely challenge the right of the FEC, on behalf of incumbent politicians, to make it difficult for these groups to challenge the many incumbent Senators and Representatives who will not listen to us, who look down their elitist noses at the vast majority of the American People, and who find our sovereign rights an inconvenience.  The SpeechNow.org ruling may be carried on to the Supreme Court to try to remove more FEC restrictions for unincorporated associations.  If they do so, they might lose something they have already gained, but that is quite unlikely given the Citizens United v. FEC ruling by the Supreme Court.  If they do not carry this case onward, there will soon be other cases to challenge these continued unconstitutional restrictions on our freedom of speech and on our freedom of association.

It would be best to get these issues straightened out before the November 2010 elections.  It is clear that the incumbent Democrats and perhaps some incumbent Republicans too, would like to use such FEC restrictions to prevent the People from challenging them for their wanton disregard for our individual liberties and for the financial soundness of America.  We know we can count on the Democrats playing dirty pool.  They are specialists in deception, lies, and dirty tricks in their never-ending quest for the power to subjugate the American People!

Medicare and Social Security Liabilities Prior to ObamaCare

Let us review the status of the Medicare and Social Security liability situation in 2009 according to the Social Security and Medicare Trustee Reports.  Their combined unfunded liabilities are $107 trillion!  To this, we are now going to add the liabilities of ObamaCare.  It is also important to note that the Congressional Budget Office was not allowed to calculate the cost of ObamaCare borne directly by the public, which it had done for ClintonCare.  For ClintonCare, 60% of the added cost was to be borne by the private sector, while only 40% was borne by the government, which of course taxes the private sector for that amount.  This is at least likely to be roughly true for ObamaCare.  So, the real price of ObamaCare will really be about 2.5 times the price admitted by the CBO numbers.  In the end, all of these costs will be borne by the private sector, even as the private sector staggers under the crushing load of previous commitments to Medicare and Social Security.

Pamela Villarreal, a senior policy analyst of the National Center for Policy Analysis, prepared an excellent and brief summary of the Medicare and Social Security future burdens in 2009.  Medicare and Medicaid spending has grown at an average rate of 2.5% faster than GDP since 1970.  So, they are taking more and more of our productive output year after year after year.  This retards GDP growth considerably.  Now, ObamaCare has just added greatly to the cost of Medicaid by putting at least 15,000,000 more people on that program.  But, we will ignore that sudden spurt in growth and just assume these programs will "plod" along with a growth rate in excess of GDP by 2.5%.  The consequences:

• Social Security, Medicare, and Medicaid would have consumed almost half of the federal budget by 2050, just as today's recent college graduates are nearing retirement.  Remember that much of the cost of Medicaid is passed on to the states, which are already staggering on the brink of bankruptcy in many cases under its burden.
• By 2082, Medicare alone will devour almost the entire federal budget.  Of course this is of no concern to most people now, since they will be dead by then.  But, today's children will be living in those dire times, unless the medical system is so deteriorated by then that life expectancy has shortened to that of the old Soviet Union or of Russia.

Let us consider the popular fiction that tax rates can be increased and people do not change their behavior.  Politicians who support tax increases like to make such projections to calculate the increase in tax revenues.  Of course, tax increases actually usually mean lower tax revenues over time, given the high rates we already start at now.  So, what tax rates are now needed to maintain all of the programs of 2009 in the federal budget at their current levels of spending under a balanced budget under the fiction that everyone will work as hard as now?

• The lowest marginal income tax rate of 10% goes to 26%.
• The 25% rate goes to 66%.
• The highest rate of 35% in 2009, which Obama now wants raised, goes to 92%.
• The corporate tax rate of 35% goes to 92%.

It would seem there soon will not be any wealthy people to shift the tax burden to for long. Imagine the entire middle class paying 66% of income to taxes!  There surely will not be a middle class for long either at these tax rates.  This was our future before ObamaCare made matters worse!

Let us look at an article from the Washington Post last year by Amy Goldstein on the financial problems of these programs.  She notes that the financial status of both Medicare and Social Security deteriorated at an accelerated rate in 2009.  This would largely be due to the recession and the shrinking payroll tax take that resulted as people lost jobs, went to shorter hours, and took pay cuts.  Of the two, Medicare is in the worse shape.  By 2017, Medicare will not be able to pay all of its hospital bills, which is two years earlier than was projected in the 2008 Trustee Report.  Social Security will be unable to pay retirees full benefits by 2037, which is 4 years earlier than was projected in the 2008 report.  That, I caution you, assumes the government honors the IOUs it has given the Social Security program for previous taxes it used for the general budget.  The situation has further deteriorated since the 2009 report was issued on 12 May 2009.  The part of the Social Security program for disabled Americans will run out of funds in 2020.  That report, however, predicted that the Social Security tax fund will begin to spend more money in 2016 than it takes in through the Social Security payroll tax each year.  As I recently noted, the recession has caused this milestone to be reached this year!

At that time, before the problems continued to become worse as this government-caused recession has dragged on and on, the Social Security problem, provided you consider the IOUs to be good and without problems, could be solved by increasing the payroll tax from 12.4% to 14.4% or by reducing benefits by 13%.  I believe increasing the tax rate will only lead to a compounded reduction of growth in the economy and is a bad idea.  The proper thing to do is to raise the retirement age enough to greatly reduce the costs.  People have been living longer and they are certainly more healthy at age 65 or age 70 than they used to be.  They can work longer.  Since they would then be working longer, they can continue to pay for their own health care costs longer also.  This is clearly the right and moral way to solve the financial crises of these programs.  Of course, I would also encourage programs to allow people to save and invest more, such as a huge reduction in government spending for many purposes, so people will have more take-home pay to save and invest.

Increasing taxes is not the answer.  We must become more hard-nosed and cut the many unconstitutional government programs so people can do a much better job of managing their own lives.  Going on as we are is not a realistic option.  It is the option chosen by the Obama administration, however.  Well, not really, since the Obama administration thought it would be better to make the situation much worse yet and has given us ObamaCare as one of many ways to make it worse.  The young Americans who still like Obama and his socialist programs need to consider very carefully whether they really want the future implied here of incredibly burdensome taxes.  It is time for you young people to focus on trying to live rewarding personal lives in the real world.  But, if you want to continue with your fervor for socialist programs, you need to do a few things:

• Work incredibly hard for the collectivist good and earn a lot of money to be taxed at very high rates.  Never stop working.  It is your duty to the collective good.
• Get used to spending little money, because you will have little left after taxes.  Save all of that money for your old age.  No luxuries, no big homes, no fancy cars, clothes from the thrift shop, and squeeze every penny ten times before spending it.  No, don't spend it.  You cannot afford to.
• Have lots and lots of children to support you in your old age after Medicare and Social Security have gone broke or to keep them hobbling along.  Remember, they are Ponzi schemes and they require lots of young workers to support the older geezers, which you will one day be.  You hope.  If ObamaCare and Medicare do not kill you before what we now think of as our time.  Remember those death panels, they are a-coming, unless retirement and Medicare ages are greatly increased.  As I keep reminding you, Supply and Demand will not be denied.  It is the Grim Reaper of Life.
• Teach your children that they are slaves to your future need as an old geezer.  You must indoctrinate them really, really thoroughly to work like demons and to want nothing from life, but to support you in your old age.

Darn, I missed John Stossel's program again on Fox Business News.  He was going to talk about how the needs of the old require the young to give them their all.  I missed his 8:00 PM show and the re-run at 11:00 PM.  I hope you did not miss his show.

I later realized that an important clarification was needed on the solution of the Social Security funding shortfall with a mere 2% increase in the payroll tax and added the above color-coded caveat on 27 March.

Roll Call Vote List on ObamaCare Vote of 21 March 2010

The final vote results for the roll call 165 on HR 3590 on 21 March 2010 on the Motion to Concur with the Senate Amendments on the bill entitled "Patient Protection and Affordable Care Act" is found here.  The Democrat Representative names are in regular font and the Republicans are in italic font.  The 219 Aye voters are confirmed socialists with no respect for the rights of the individual.  Every one of these members of Congress should be voted out of office in the next election.  Even those Democrats who voted against this bill at this time, have proven themselves willing voters with Nancy Pelosi and Obama too many times to be considered trustworthy guardians of our liberties.  Besides, many of them would surely not vote to repeal ObamaCare and we must therefore remove them from the House so that this socialist abomination can be repealed in 2013.

Racial Slander of the Tea Party Movement

Over the weekend, four members of the Black Caucus of the House of Representatives told a story of being called by the n-word 15 times as they walked through Tea Party demonstrators on Saturday.  These Representatives were John Lewis, Andre Carson, Emanuel Cleaver, and James Clyburn, the House Majority Whip.  This story was repeated by much of the media, including Bill O'Reilly on Fox News.  Emanuel Cleaver said he was spit upon.  They went on to say that a demonstrator was detained by the police, but then turned loose after consultation with Rep. Cleaver.  The story also said that men encountering this ill-behavior were stretched out as they walked through the crowd and all heard the same behavior.

This does not sound like the kind of behavior I have seen when I was at three different Tea Party protests in Washington, D.C.  There were black Tea Party demonstrators in each case and there were black speakers at at least two of them.  There were also black people selling the Gadsden "Don't Tread on Me" flags at each event.  At the 4th of July event a large banner opposing the Tea Party demonstrators and chanting "Health Care Now" was carried through the crowd and no one did anything more than chant back at them.  I saw nothing but normal human respect for the black people present.  In fact, it seemed clear to me that many there were very happy that some black Americans share our American values.

There are a lot of Tea Party people and a few are a bit odd, as a few of any large group of people are.  I have met many racial bigots who are Democrats and many who are radical left Democrats.  In fact, I have often noted that there is very little respect for blacks and Hispanics among other Democrats who believe blacks and Hispanics have less ability to manage their own lives than other Americans do and hence need special favors from the government.  This is clearly a very profound disrespect for black and Hispanic Americans, based on nothing but their race.  Therefore, it is racism.  May there be, or is it probable that there are, a few racists among the Tea Party people?  The answer is likely yes.  But, the essence of the Tea Party movement is that the vast majority of Americans are capable of managing their own lives in a responsible way and that they do not want government to take over the direction of their lives.  So, not surprisingly, and very much contrary to a common claim from the left, racism is not a common characteristic of Tea Party people.

There is a video of the four black Congressmen passing by the Tea Party demonstrators.  Rather than being strung out as in their testimony, they were clumped together.  They do not give any appearance of being threatened.  I have listened to the video over and over and I cannot make out any use of the n-word.  Many others have also listened for it and say they cannot make it out, though a couple of leftist have said they could.  There is no picture of a demonstrator approaching Rep. Cleaver and spitting on him.  There is no evidence of a policeman retaining anyone or approaching Rep. Cleaver with someone.  In fact, if the event that was said to have occurred had, I am sure that the nearby police would have gathered around the Congressmen and given them an escort and probably would have pushed back the crowd and arrested people.  None of this happened.  The police did have to arrest people in the pro-ObamaCare demonstrator crowd, but they say they did not have to arrest any anti-ObamaCare demonstrators.  Many cameras were in use by the demonstrators, but no one has come forth with any visual evidence that the racial ill-behavior occurred.  Various media reporters were also around.  What is more, if someone had shouted racial slurs, other Tea Party people would have shouted him down, based on what I have seen.  The video would have picked up the shout down!

Given that the four black Congressmen are all Democrats and all voted for the extremely socialist ObamaCare bill, it would not be surprising if they all subscribed to the very venerable socialist principle that the truth is whatever advances socialism.  This principle has been richly demonstrated in the socialist arguments for ObamaCare, which clearly have been otherworldly.  Denigrating the Tea Party protesters with a racist tag has clearly been a pattern with the left.  They have made many claims which had no substance.  I suspect they had become desperate enough to try to give substance to those slanderous claims that they made up this story.  That fits the Big Picture better than their story does.

Tom Minchin - Hope is Dead - Long Live Optimism

Tom Minchin in yesterday's TIA Daily discussed how we ought to go forward in the face of the coup scored by America's fascist socialists on ObamaCare.  Here are a couple of quotes from his post:

You need a way to maintain your morale—to counter the effects of dispiriting circumstances. In short you need a solid basis to expect a better future. 

What can provide it when the news headlines fill you with revulsion? 

The virtue of optimism.

The virtue of what? Optimism. But this is a very particular type of optimism. It is not wishful thinking, and it is not mere hopefulness or even assuredness based on favorable circumstances—an assuredness that vanishes with the first real adversity. It is confidence in one's own potency, and it has to be maintained and fought for like any virtue.....

Holding optimism as a virtue begins with understanding what it is and is not. Optimism in its most basic sense is "confidence in the future." And that kind of confidence is only possible to a rational man. As Ayn Rand wrote in "Epitaph for a Culture," the Apollo space program was the supreme demonstration, for it "has shown us the precondition of self-confidence, optimism, and progress, like skywriting left in the wake of those rockets: rationality." That bears repeating: the pre-condition of optimism is not faith, good fortune or wishful thinking. It is rationality. 

Of course, I can choose to be rational, but will other Americans make the same choice?  I can be certain that I will not waver in my own rationality and be confident that if it is up to me, America will not commit to this fascist socialist doom that Obama, Pelosi, Reid, and their many followers are trying to force upon us.  But, can I count on my fellow Americans to rally to the cause of the rights of the individual and to name their importance to us all as the central American value?  The Tea Party Movement, the many commentators who have realized that this is the central issue, and the 38 states either passing laws to prevent the federal government from forcing their citizens to purchase a government-dictated health insurance product or launching constitutional court challenges, have given me a sound basis for thinking enough Americans are up to the task, or coming up to the task, to turn back the bloodthirsty horde of cutthroats who are presumptuous enough to claim they control our lives, our fortunes, our bodies, and our health or death.  This will not happen, not in America!

If Government Does Not Own the Entire Health Care Industry, Is it Socialism?

Obama snorts and laughs when he talks of how some accuse him of being a socialist.  He does not say he is not a socialist.  He just acts dismissively.  Sometimes he says that he does not seek to have the government own everything.  Since WWII, American socialists have been keen to define socialism as the ownership of all of the means of production and all property.  A once well-known socialist said:

Let them own land or factories as much as they please. The decisive factor is that the State, through the Party, is supreme over them regardless of whether they are owners or workers. All that, you see, is unessential; our socialism goes far deeper. … It establishes a relationship of the individual to the State, the national community. …
It gives us also a special, secret pleasure to see how the people about us are unaware of what is really happening to them. They gaze fascinated at one or two familiar superficialities, such as possessions and income and rank and other outworn conceptions. As long as these are kept intact, they are quite satisfied. But in the meantime they have entered a new relation; a powerful social force has caught them up. They themselves are changed. What are ownership and income to that? Why need we trouble to socialize banks and factories? We socialize human beings.

 These are the words of a Nazi closely associated with Adolf Hitler.  The quote is from Hermann Rauschning (1940), The Voice Of Destruction, New York: G. P. Putnam's Sons.  As I have noted many times, socialism is control of the people for collectivist reasons and as you can see here, Rauschning makes it very clear why socialism does not need the outright ownership of all property.  In fact, he makes it very clear that his socialism is all the more cunning and actually all the more enslaving.  If naive people still think they own something, the state has a much greater means for extorting from them and they are more motivated to do as required.

Paul Cohen referred me to a post in Ron Pisaturo's Blog, which had this quote and an interesting discussion of Obama and socialism.

Americans Demand Smaller Government

While our socialist federal government is busy expanding the powers and the many intrusions of government, the American People are clearly saying they want smaller government.  The latest Fox News poll says that 65% of American voters think the government is too big and is restricting American freedoms.  30% say they are comfortable with the size and role of the federal government.  So, by more than a 2 to 1 margin, the American People want to be free to exercise more of their individual rights than the government now allows them to.  84% of Republicans think it is too big.  [Who on earth are the 16% of Republicans who do not think it is too big?  Why are they Republicans at all?  I suppose these are the people who just have to have the political party of their parents or of the majority of people who live around them.  These are the social metaphysicians, as Ayn Rand called them.]  Wonderfully, 74% of independents also think government is too big.  Woefully, 51% of Democrats believe the size of the government is OK, but this is, for the socialist party, a very weak level of conviction in favor of big and bigger government!

Overall, this is very good news, but it comes with some hints that many Americans who want smaller government and who say they want to be more free to live their own lives, may still hold some contradictory views.  Let me set up the argument that this is the case by noting a few more results of the poll.

78% of voters believe the government is "larger and more costly" than it has ever been before.  65% think the national debt is a bigger problem than terrorism (23%).  79% of voters believe it is possible the economy may collapse.  Republicans believe this the most at 84%, but independents are almost as inclined to worry about this at 80%.  Democrats lag the independents on this concern by 8%, but 72% is still a large majority of Democrats with major concern over the economy.  62% of voters believe Obama has no plan to deal with the severe weakness of the economy, while 35% think he does.  Republicans at 88% know he has no plan and 67% of independents know he has none.  Even 33% of Democrats have at least one eye out of the sand.

The people think Congress is even more clueless.  24% think the Democrats in Congress have clear plans to fix the economy.  These must be all Democrats who think this nonsense.  But, only 16% think the Republicans have such an economy fix-up plan.  Well, we cannot expect that any Democrats are likely to think the Republican Congressmen have a plan.  They do not even think their party in Congress has a plan!  So, the implication is that the mere 16% of the voters who think Republican Congressmen have a plan are probably all Republicans.  I would guess few, if any, independents are included in the 16%.

What should the Republican plan for the economy be?  It is simple to state.  The Republicans should seek to make government smaller and make it protect, rather than violate, the rights of the individual.  This is what 65% of the American voters want.  It is about time the Republicans actually make a concerted effort to do this.  This is not just a plan for the economy, but it certainly includes a plan for the economy, in the very limited way it is appropriate for government to play a role in the economy.  There is little the government should do for the economy other than to get out of the way and let a free and hardworking people do their thing.  Now even though this is exactly what most American voters want, most would probably say that this is no plan.  There is always that expectation that government must have a plan for every problem and every issue, even if the best plan is for the government to get out of the way.

So, the Republicans do need a plan.  Here are some components of my proposed plan:

• Republicans have cut taxes in the past, but start this time with cutting spending and follow that with some tax cuts.  Cut spending where it will remove as many obstacles for the private sector as possible.
• Repeal ObamaCare, which at once will restore our freedom, cut the deficit, and improve health care.
• Tell the EPA it cannot regulate CO2 emissions.  These emissions do more good as plant food than they do any harm in warming the Earth.  That bit of warming is probably good anyway.  Insist on rational benefit analyses to back up any EPA chemical tolerance claims.
• Open up most federal lands for oil and gas exploration and field development.  Open up most off-shore areas for similar development.  This will create jobs and tax revenues, while providing reliable energy.  Use any income to reduce the deficit.
• Sell much of the western lands held by the government and use the income to reduce the deficit.  The point of doing this is not actually so much to reduce the deficit now as it is to put the land to more productive uses in the private sector, which will further reduce deficits by generating more tax revenue in the future.  One benefit will be more energy production.
• End the wasteful biofuels and alternative energy development projects.  Some research funding may be retained, but if the use of these fuels makes sense, let the private sector develop them.  End the subsidies and the mandates for their use.  The end of the ethanol subsidy and mandate programs will save consumers a bundle.
• OHSA should be kept away from companies that do not have high accident rates.  Since companies are subject to liability lawsuits, there is really no need for OHSA anyway.
• Contract out more government services.
• Work up a comprehensive plan to end crop subsidies and restrictions.  These should be ended with a rational phase out plan.  Consumers will save a bundle.  Animal husbandry will save money also.  American exports will expand.
• End federal programs for financing exports, but work up agreements with as many other countries as possible to encourage free trade between our countries.
• Fold the Dept. of Labor into the Dept. of Commerce.  The class warfare between labor and management is only encouraged by this archaic separation of functions.  There is no reason to encourage labor unions as a special interest group anyway.  The resultant cabinet department should be much smaller than the two combined are today.
• Push the approval of Yucca Mountain through so we can finally get started on cleaning up and consolidating nuclear waste.  Nuclear power should not be discouraged with the many harassments it puts up with today.  The cost of nuclear power will come down with rational government policies.
• Reduce the excessive accounting and tax record-keeping requirements that put a very serious drain on the resources of business, especially small business.
• The highest individual income tax rate should be equal to the tax rate of the median income person.  Joint returns should have taxable income divided by 2 with the tax calculated on that amount and twice the individual tax then is to be paid.  I am willing to allow a somewhat progressive set of rates for those with less than the median income, but not too progressive.  Everyone should pay something because everyone is deriving the benefits of a properly limited government and should have an interest in its expenses.  There really should be no corporation income, but if there is, the rate should also be equal to that of the median income earner's rate.
• A near moratorium on new laws should be invoked, while Congress does a serious re-evaluation of the excessive number of laws already on the books.  Cutting back the irrational laws of the past will remove obstacles for the private sector and allow the paring of government watchdog agencies that are no longer needed to enforce those laws.  New mischief will be minimized, while old mischief is eliminated.
• The Dept. of Education should educate the American public on what the public schools really cost on a per student basis.  The vast majority of school systems say the cost is much less than it really is.  Then the Dept. of Education should point out that in most cases what is spent greatly exceeds the per student cost of private schools and push for vouchers for students allowing them to choose either a public school, a private school, or even home-schooling.  The vouchers should be for somewhat less than the cost of the local public schools per student, so the local government will save money for each student who opts for a private school education.  This would lighten the load greatly on many local and state government budgets.  Many of these local governments are in serious trouble now and this is a painless way to relieve that problem, while improving education and reducing the burden of local and state taxes on the private sector.  [It will also reduce the power of the teachers unions and ultimately shrink them.  This, and the shift to private education, will weaken the socialist indoctrination of our children.]
• Congress should stop writing tax laws with special taxes for special groups.  They love to penalize some groups and reward others.  Tax law should not be used this way.  It and other regulatory actions have clearly become tools of extortion.  The extortion must stop.  Tax laws should be reviewed to eliminate such provisions.  This will simplify the tax code and allow the reduction of IRS staff.
• The inheritance tax should be eliminated.  This tax now kills many businesses and anyone who has spent a lifetime of productive work and built up wealth, should have the right to give it to whomever he pleases.  The government will get more tax revenue in the long run anyway by eliminating the death tax, which is just an envy tax.
• The Commerce Clause of the Constitution should be used as it was intended:  to protect trade and commerce between people and companies in different states, not to inhibit it.  The elimination of federal government restrictions on interstate commercial activities would have a huge benefit for the private sector growth and health.
• Anti-trust laws should be revoked.  The only monopolies and cabals able to take advantage of the People for any significant time and to any significant extent, are those supported by governments.  That government support for such monopolies and cabals should be ended.  That support frequently hides under the umbrella of a regulatory agency.  The free market is especially dynamic now and the Internet makes it easy to gather information on products and services and to make sales across the country, with special advantage to small competitors, so that monopolies locally or nationally are harder than ever to support.

The Republican party should come up with such a plan and start promoting it early and frequently.  For once, there appear to be plenty of Americans interested enough in government and its shenanigans that we may be able to sell them on real reform of our overblown government.  Right now, we have a socialist government and that must be corrected so we Americans can regain our freedom to choose our own values and manage our own lives in accordance with our self-chosen values.  The Constitution, the Supreme Law of the Land, was intended to allow us just this individual freedom.