Saturday, October 31, 2009

The conservative CPA trumps the RINO

It seems that Dede Scozzafava, the RINO candidate whom for some reason the local GOP had chosen as their candidate in the special election in NY-23, has dropped out. Within a month, the grassroots support for the Conservative candidate, Doug Hoffman, has been steadily climbing while she's been falling like a stone. It was becoming a two-man race between Hoffman and the Democratic candidate, Bill Owens, with Scozzafava serving as a spoiler to the third-party candidate. She read the tea leaves in her sinking poll number and dropped out.

What was amazing was that the Republican county leaders, facing a GOP district, felt that they had to pick Scozzafava for their candidate. She isn't even a moderate, she's basically a Democrat. In fact, she was the most liberal candidate of the three. It's one thing to pick a RINO in a liberal-leaning area like Maine. But why pick one in a GOP district. There must be some sort of backstory there that does not augur well for those party leaders.

Besides Scozzafava, the big loser in all this is Newt Gingrich who had been going to the mattresses to defend his support for her. Meanwhile, Republicans have been following Sarah Palin's lead and endorsing Hoffman.

Besides the other ideological reasons, I like Hoffman because he's a CPA. Instead of having lawyers being the overwhelming profession of our congressmen, it's time that we have more people with accounting backgrounds in Washington looking over these budgets.

Friday, October 30, 2009

What Cash for Clunkers did

The Business Insider publishes this chart of car sales for the past 30 years and it gives us a dramatic image of the effect that the Cash for Clunkers program had on car sales.Sales like that had a dramatic impact on the 3rd Quarter's GNP figures released yesterday. More importantly, the shift in car purchases into that one quarter will have a sharp impact on future car sales.
According to the Bureau of Economic Analysis (BEA), motor vehicle output spiked a seasonally-adjusted 157.6% quarter on quarter. This is completely unprecedented. Vehicle output is clearly going off a cliff next quarter. The question will be how low can the blue line below go.

Next quarter, we won't just be returning to business as usual for auto output. Don't forget that Cash for Clunkers pulled future auto demand, ie. some of Q4 demand, into Q3. Thus Q4 is likely to be very weak since many people who planned to buy a car in Q4 probably took advantage of Clunkers and bought in Q3.

To put this into GDP terms, according to the BEA the spike you see below added 1.66% to the U.S. GDP growth figure reported. Thus without it, GDP growth would have been only 1.89% (3.5% - 1.66%) in Q3.

Now imagine if next quarter the blue line below goes down into negative territory as it did just two quarters ago. Next quarter, not only are we unlikely to get Q3's boost, but motor vehicle output data could subtract from GDP as well. So watch out for the cliff...

Is the pay czar position constitutional?

Former federal judge and Stanford Law professor Michael McConnell makes a pretty persuasive argument that the position of a pay czar who has the authority to determine salaries at private institutions receiving federal bailouts is not a constitutional position. What is lacking is having the position designated by Congress as a position that doesn't need Senate approval. Otherwise, his position, regardless of who occupies it, violates the constitutional provisions for the legislative branch's check over the executive branch.
The Founders understood that the president and heads of the executive departments could not single-handedly carry out the law, so they required Senate confirmation as what the Federalist Papers call "an excellent check" on abuse or favoritism by the president. Yes, there are some offices so inferior that this check may be eliminated—but it is for Congress to judge which ones these may be. Congress and Congress alone has power to dispense with the safeguard of the confirmation process.

The power to set compensation at large American businesses is especially subject to potential abuse, favoritism, arbitrariness, or political manipulation. It is no reflection on Kenneth Feinberg, who has a sterling reputation and who appears to have approached these sensitive duties with a spirit of commendable integrity, to say that the checks and balances of the Constitution should be scrupulously observed. They were not. Because he is not a properly appointed officer of the United States, Mr. Feinberg's executive compensation decisions were unconstitutional.
What happens if one of those executives challenges the pay cuts in court? Will the senators submit a brief in the case defending their constitutional prerogatives?

Is this what North Carolina really needs?

In the middle of a deep recession, does North Carolina State University (full disclosure: my husband is a professor there) really need a new library building that "re-imagines" the role of the library as a
"place of community?" Today, the university breaks ground on its brand new library. And it's going to have bells and whistles that old fuddy duddies such as myself never imagined in a university library.
Space will be dedicated to digital gaming. There will be a glass-walled classroom to work on teaching techniques, a room similar to an Apple store, with new gadgets to handle and even check out, and a "genius desk" for those who need help with their own gadgetry. A cafe is also planned.
Are the citizens of North Carolina aware that they're paying taxes so that NCSU students can play video games in the university library? Whose idea is that?

Another reason to rethink the closing of Guantanamo

One of the reasons why many have been opposed to the plans to close Guantanamo and bring some of those inmates here to be imprisoned in "Supermax" prisons within the United States. The fear is that such inmates would work to foster more radical Islamic groups within our prisons. As John McCormack points out, that is exactly what is already happening as the recent FBI report on the shootout with a Detroit Islamicist. There is a radical group already being run out of prison.
Abdullah was the leader of part of a group which calls themselves Ummah (“the brotherhood”), a group of mostly African-American converts to Islam, which seeks to establish a separate Sharia-law governed state within the United States. The Ummah is ruled by Jamil Abdullah Al-Amin, formerly known as H. Rapp Brown, who is serving a state sentence in USP Florence, CO, ADMAX, for the murder of two police officers in Georgia. As detailed in the affidavit in support of the criminal complaint that was unsealed today, Abdullah has espoused the use of violence against law enforcement, and has trained members of his group in use of firearms and martial arts in anticipation of some type of action against the government. Abdullah and other members of this group were known to carry firearms and other weapons.
McCormack adds,
The use of the phrase “is ruled” should raise an eyebrow or two for those following the debate over where to relocate the terrorists currently housed at Gitmo. Two of the most mentioned locations being considered by the Obama administration are the federal prison in Standish, Michigan and the federal Administrative Maximum (aka “Supermax”) prison in Florence, Colorado. One of the left’s core arguments in the debate rests on the belief that the security provided by such a facility would render Gitmo’s terrorists totally unable to organize and convert fellow prisoners eager to learn from the jihad-masters.

In this case, not only did a domestic Islamic terrorist organization arise from within the walls of our prison system, but the “Supermax” facility currently serves as the headquarters for this radical group.
Now imagine what will happen if we insert some Guantanamo detainees into a volatile mix. Is that really going to make the country safer?

Don't forget the other problems with the Democratic health plans

Kimberley Strassel warns us not to be so caught up in the battle over whether or not there is a public option in the bills making their ways through the Senate and House that we don't lose sight of the other problems in the bills.
Speaking of tax hikes, premium jumps and Medicare cuts, notice how nobody is today talking about them? Mr. Reid surely has. The public option might be controversial in D.C., but the majority leader knows most of the country doesn't understand it, or assumes it doesn't apply to them. Most Americans already have health care that they like, and polls show their real fear is that this experiment will leave them paying more for less. This, not the public option, is ObamaCare's exposed jugular.

The insurers get this, which is why (as they now try to bottle the genie they helped loose) they are issuing reports on how "reform" will double or triple premium prices. It is why America's Health Insurance Plans, the lobby group, has run ads in swing states warning about huge cuts to Medicare Advantage. Some of the grass roots get it, too, which is why Americans for Tax Reform is now live on TV in Nebraska noting Sen. Nelson has signed its taxpayer pledge and that he'd violate it by voting for the bill's nearly $500 billion in tax increases.

If Mr. Reid had pulled the plug on the public option, these highly unpopular policy issues would be front and center. As it is, the public-option sideshow is sucking up all the air, and will continue to. It even overshadowed liberal divisions, such as union pushback on Cadillac-plans taxes. Maybe, just maybe, Mr. Reid likes it that way.
Sadly, there is so much wrong with the thousands of pages in the House and Senate bill that it's hard to encompass all of it in the counter-arguments.

For a start on the House bill, you can turn to James C. Capretta's analysis to remind us of what is wrong with that bill.
To sum it up, the House bill is nothing but a massive, uncontrolled federal entitlement expansion — at a time when the central, looming threat to the nation’s long-term prosperity is the unaffordable health-care entitlements already on the federal books. To create the impression of fiscal responsibility, the bill is jury-rigged with budget gimmicks, implausible eligibility rules, and arbitrary, government-dictated price controls — that have been tried repeatedly without success — to make it look like it costs “only” $900 billion over a decade.
Read the rest of his post for the specifics.

The reductio ad absurdum of the nanny state

This story out of England should make all those governmental Mary Poppins happy. Government regulations have determined that parents can't come to government-run playgrounds with their children unless they've undergone a criminal background check. Once you sign the government up to run most of our lives, isn't it just logical that they'd move to supplant parents from playing and watching their children on the playground? It's a perfectly logical follow-up.
Parents are being banned from playing with their children in council recreation areas because they have not been vetted by police.

Mothers and fathers are being forced to watch their children from outside perimeter fences because of fears they could be paedophiles.

Watford Council was branded a 'disgrace' yesterday after excluding parents from two fenced-off adventure playgrounds unless they first undergo criminal record checks.

'A disgrace': Jenny Abbasi, with her children Aliyah (left), Tameena and Kareem, outside Harwoods Adventure Playground in Watford. The local council has told parents that they are no longer welcome at two play areas because they have not been vetted by police

Children as young as five will instead be supervised by council 'play rangers' who have been cleared by the Criminal Records Bureau.

Councillors insist they are merely following Government regulations and cannot allow adults to walk around playgrounds 'unchecked'.
Link via The Green Room.

Thursday, October 29, 2009

My school in the news

Here's a very nice TV report on my school, Raleigh Charter High School.

The dumb logic for the public option

Steve Chapman has a great column about how absolutely dumb the arguments behind the public option are.
If Medicare were a bank, federal regulators would be closing its doors, selling its operations and sacking its managers. Thanks to soaring costs, the program is fast running out of money -- even though it pays such low fees that many doctors refuse to take Medicare patients. Meanwhile, Medicare fraud costs taxpayers some $60 billion a year, according to a report by CBS's "60 Minutes," making it among the most profitable fields for felons.

That's our experience with government-run health insurance for the elderly. So what do congressional Democrats propose to do? Offer government-run health insurance to everyone else.

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Health care

Senate Majority Leader Harry Reid capitulated to his party's more liberal elements when he said he will insist that health care legislation include a "public option" -- a government insurance plan -- to bring "meaningful reform to our broken system." But deploying a version of Medicare to repair the status quo is like using a brick to improve a window.

President Obama says it would help consumers by giving private insurers some real competition. But the typical state has 27 companies competing in the small-group health insurance market. If there were insufficient competition, the health insurance sector wouldn't rank 86th among American industries in profitability.

Health care plans average profits of just 3.3 percent. In wireless communications, a vigorously contested market, profits are 11 percent. Does Obama think we need a government cell-phone company to compete with Verizon and AT&T?
Just wait. At this rate, such proposals are just around the corner. After all, aren't there some people out there who can't afford a cell-phone contract? Is that right in today's America? Shouldn't the government do something?

And just forget the logic about why this spanking new program will be more efficient and cost-saving than Medicare. We've been hearing that nonsense about how the politicians are going to tighten up Medicare spending for decades.
The proponents also believe that, like Medicare, a new government plan could be run far more efficiently than private firms. Don't make me laugh. Medicare, keep in mind, is going broke. And its alleged efficiencies are illusory or nontransferable.

Health economists Regina Herzlinger of Harvard and Robert Book of the Heritage Foundation note that on a per-person basis, Medicare has higher administrative costs than private firms. They look smaller only because the average Medicare patient uses more services than the average private insurance patient. "Expressing them as a percentage makes Medicare's administrative costs appear lower because they are spread over a larger base of health care costs," write Book and Herzlinger.

A "public option" might duplicate one of Medicare's means of saving money: limiting reimbursements to doctors and hospitals to far less than what private insurers pay. But 19 health-care organizations that support reform, including the Mayo Clinic, explained the flaw in that approach.

"Under the current Medicare system, a majority of doctors and hospitals that care for Medicare patients are paid substantially less than it costs to treat them," they said in an open letter to Congress. "Many providers are therefore already approaching a point where they can not afford to see Medicare patients." Last year, the government's Medicare Payment Advisory Commission reported that 29 percent of recipients who were looking for a primary care physician had trouble finding one.

Skimpy reimbursements lower Medicare's costs. But if a new government-run plan tries the same trick, it will have trouble attracting providers and therefore patients. If it pays the same rates as private insurers, on the other hand, it will lose that big competitive edge.
So don't buy the arguments about how the so-called public option is just going to compete with private programs. When the government competes, it's a tilted playing field.
Fortunately for disciples of government expansion, the "public option" insurance has other advantages. Obama insists it will have to cover all its costs. Oh, really? When Medicare Part B (which pays doctor bills) was set up in 1966, premiums paid by retirees were supposed to cover 50 percent of its outlays. Instead, Congress limited rate increases so that before long, premiums were covering just 25 percent of the bills, a practice later written into law.

If the Washington-run plan charges too little to pay its expenses, will it raise rates, thus antagonizing what could be a sizable group of voters? Or will Congress cough up the money to keep it going? You know the answer.

In the end, the key to the success of this program, writes Cato Institute analyst Michael Cannon, is that "government possesses both the power to hide its true costs (which keeps its premiums artificially low) and to impose costs on its competitors (which unnecessarily pushes private insurance premiums higher)." Private insurers will be "competing" against a team that gets to write the rules, run the draft and hire the referees.

With those artificial advantages, the public option could eventually become the only option. If that happens, a lot of Americans will be surprised. But I suspect Harry Reid and Barack Obama will not be among them.
These supposedly wise and caring legislators pushing a public option are going to extend a fraud-ridden program that is already going broke to the rest of us. Just the kind of logic that Washington politicians like to embrace.

This program made fraud so easy that Congress wants to extend it

A couple of days ago I blogged about the fraud that the tax credit for first-time home buyers has sparked. Even a four-year old has claimed the credit. There was no documentation required for those filing for the credit. Even employees of the IRS engaged in the fraud.

So what's the solution? Extend the dang thing, of course. The National Association of Realtors is on board. I guess that's a special interest that isn't villainous like the Chamber of Commerce. But this is an inefficient way of getting money to those we'd like to help as the blog, Calculated Risk demonstrates. The program was estimated to cost $15 million this year and NAR estimates that it reached 350,000 new homebuyers.
But this only resulted in 350,000 additional sales. Divide $15 billion by 350 thousand, and the program cost is about $43,000 per additional buyer. Very expensive.

Now the National Association of Home Builders estimates that expanding and extending the credit through 2010 would generate 500,000 additional sales at a cost of about $30 billion. So this is approximately $60,000 per additional house sold. And I think the cost will be much higher.

REMEMBER: Many homes will be sold to buyers who would have bought anyway without the credit. These buyers will still receive the credit. This year almost 2 million home buyers will claim the tax credit, but only 350,000 were additional buyers. That means this was a poorly targeted tax credit since so many people receive it who would have bought anyway. Targeting is the problem with any tax credit.
As Simon Johnson and James Kwak wrote in the Washington Post, the tax credit is helping to prop up the cost of home-buying.
But the tax credit stabilizes the housing market, people say. What does this mean? It means that the credit keeps housing prices artificially high. But housing is something that all people need. Why do we want it to be expensive? Would we want government policies that artificially push up the price of food? (Wait, we have some of those already . . . but that's a matter for another column.)

As of July, the real price of housing, according to the Case-Shiller Composite 10 Index (adjusted using the consumer price index), was still 20 percent higher than in January 2000 and more than 30 percent higher than its average for the entire 1990s. Now, there is a risk that a weak economy can cause housing prices to fall well below their long-run average. However, housing prices appear to have stabilized, at least for now, and at too high a level. That is in part due to the tax credit, in part due to the partial economic recovery we are witnessing.
So is this really how we want to throw money into the economy: for a fraud-ridden program that doesn't selectively target those we'd like to help and props up the cost of homes for those on the lower end?

As the WSJ writes today,
This is the point in the story when a taxpayer's sense of humor is bound to give way to a different emotion. The credit's cost is running at about $1 billion a month and $15 billion for the year. Also, even when employed by an honest buyer, it's another distortion that drives capital into housing and away from other more productive uses. For America's tens of millions of tax-paying renters, it's another subsidy they provide for their neighbors to be able to sell their houses at a higher price.

While the credit seems to have boosted home sales, many of those sales would have happened anyway and have merely been stolen from the future. Meanwhile, the credit continues to distort the housing market and postpone the day when home prices can find a floor that is a basis for a stable recovery.

More than two years into the housing bust, trillions of dollars in taxpayer losses or guarantees via Fannie Mae and Freddie Mac, and amid an ongoing plague of redefaults in federal programs to prevent foreclosures, politicians are still trying to manipulate housing prices. And leave it to Congress to design a program that even a four-year-old can scam.
But hey, it's only taxpayer money! Why not shovel it out there while mouthing pieties about how important home ownership is? The motivation is pure so why bother worrying about its execution and hidden consequences?

Wednesday, October 28, 2009

Sucking up to President Obama

There seems to be an unavoidable tendency for Obama fans to elevate him somewhere up above ordinary politicians with preternatural abilities in all fields. He's cool! He's brilliant! He's smooth! His family is awesome! He's hot!

Just as we're finding that he's a rather ordinary politician prone to all the mistakes of other politicians and presidents, we see this hyperbolic rhetoric from the new head of the National Endowment of the Arts, Rocco Landesman, who delivered this head-smacker:
“This is the first president that actually writes his own books since Teddy Roosevelt and arguably the first to write them really well since Lincoln. If you accept the premise, and I do, that the United States is the most powerful country in the world, then Barack Obama is the most powerful writer since Julius Caesar.”

Shouldn't the head of the NEA know just a bit of history?

Historian John Steele Gordon goes to town on that absurdly fatuous remark. Gordon reminds us of all the presidents from Woodrow Wilson through to Clinton of not having written their own books. Some of these books are quite well respected such as President Hoover's book on fly fishing. And in saying that Lincoln was the only one to write very well ignores President Grant's much admired memoirs of the Civil War, a book published by Mark Twain no less. And Teddy Roosevelt's 38 books are no slouches as far as their writing. And Lincoln is noted for his speeches, not any book that he wrote. After Gordon concludes his dissection of the five errors in the first part of that statement, he concludes,
What is it about Barack Obama that causes such cringe-inducing butt-kissing?

What Obama gets away with

Josh Gerstein makes some great points about how the media would have reacted if President Bush had done some of the things that President Obama has gotten away with. It's getting to be a long list.
A four-hour stop in New Orleans, on his way to a $3 million fundraiser.

Snubbing the Dalai Lama.

Signing off on a secret deal with drug makers.

Freezing out a TV network.

Doing more fundraisers than the last president. More golf, too.

President Barack Obama has done all of those things — and more.

What’s remarkable is what hasn’t happened. These episodes haven’t become metaphors for Obama’s personal and political character — or consuming controversies that sidetracked the rest of his agenda.

It’s a sign that the media’s echo chamber can be a funny thing, prone to the vagaries of news judgment, and an illustration that, in politics, context is everything....

Throughout the Bush administration, liberal critics warned that the hand of Bush political adviser Karl Rove was spreading politics into all corners of government. Reporters were on alert for any sign that politics was infecting the work of federal agencies. One top appointee got in hot water for allegedly asking agency officials to work to “help our candidates” across the country.

So some Bush aides went nearly apoplectic earlier this month when they spotted Gibbs and Obama’s political guru, David Axelrod, in photos of a Situation Room meeting on Afghanistan policy.

“Oh, the howling and screaming that would have happened if Karl Rove was sitting in on even a deputies-level meeting where strategy was being hammered out. People would have just gone ballistic,” said Peter Feaver, a former White House aide for both Bush and Bill Clinton.

Also, in about nine months, Obama has already attended more than two dozen fundraising events, while Bush did only six in his first year in office, according to a tally by CBS’s Mark Knoller....

During the campaign, Obama talked tough on China. While candidate Obama pushed Bush to take a hard line, President Obama hasn’t. Hoping to win China’s help on Iran and North Korea, Obama skipped a meeting with the Dalai Lama and said little when China undertook a violent crackdown in its largely Muslim Xinjiang region. The White House has pledged to meet with the Dalai Lama later.

And while candidate Obama warned Bush against a “reckless and cynical initiative [that] would reward a regime in Khartoum that has a record of failing to live up to its commitments,” President Obama’s envoy to Sudan, Scott Gration, seemed to lay out a similar incentive-driven approach.

“We’ve got to think about giving out cookies,” said Gration. “Kids, countries — they react to gold stars, smiley faces, handshakes, agreements, talk, engagement.”
The explanation for the media glossing over what they would have trumpeted disgustedly if Bush had done it is that the Obama stories just don't fit their template of who President Obama is.
But others say there’s a larger phenomenon at work — in the story line the media wrote about Obama’s presidency. For Bush, the theme was that of a Big Business Republican who rode the family name to the White House, so stories about secret energy meetings and a certain laziness, intellectual and otherwise, fit neatly into the theme, to be replayed over and over again.

Obama’s story line was more positive from the start: historic newcomer coming to shake up Washington. So the negatives that sprung up around Obama — like a sense that he was more flash than substance — track what negative coverage he’s received, captured in a recent “Saturday Night Live” skit that made fun of his lack of accomplishments in office.

“There may well be almost an unconscious effort on the part of the media to give Obama a bit more slack because he is more likable, because he is the first African-American president. That plays into it,” said Sherry Bebitch Jeffe, a political analyst at the University of Southern California.
You know, if your template doesn't match the facts, maybe it's time to get a new template.

Hopes dim for cramming through a D.C. vote bill

The Democrats had been hoping to cram in a bill to give the District of Columbia votes in the U.S House by attaching it as a nongermane amendment to the Defense Appropriations bill, but that plan seems to be falling of its own weight as Senator Inouye, the chair of the Senate Appropriations on Armed Services committee has said ixnay on that idea.
D.C. voting rights advocates ran into a major obstacle Tuesday, as the top Senate appropriator said he’d block any proposal to attach the District voting representation bill to a must-pass military spending measure.

“Forget it,” said Sen. Daniel Inouye (D-Hawaii).

House Democratic leaders have been trying to find a vehicle for the bill, which would give the District full voting rights in the House. They hoped adding it to the military spending bill might force Republicans to back away from efforts to repeal D.C. gun laws at the same time. The gun language, backed by the National Rifle Association, is unpalatable to many District residents and House Democrats.

But the NRA has given no indication that it plans to back down, and congressional aides say that adding the voting-rights measure without the gun repeal could imperil the overall defense bill....

But there’s little wonder why appropriators are reluctant to add it in: Between the “no” votes of the gun-rights backers in both parties and those of the liberal Democrats who don’t want to fund the wars in Iraq and Afghanistan, the bill could be in trouble if it’s bogged down with peripheral amendments.
There is something sneakily repugnant about adding such an important change onto an appropriations bill for our armed forces at a time of war. The Democrats want to grab more votes in the House without a full debate about what the Constitutional language regarding representation being for the "several states" of which the District is not one. As Jonathan Turley wrote a few months ago, the only legitimate way to accomplish this is with a constitutional amendment.
There is little debate that the voting status of Washington is obnoxious and should be corrected. Nonetheless, the great wrong done to District residents cannot be righted by violating the Constitution. In 1977, Congress proposed an amendment to give Washington full voting rights like a state. It failed. Now, unable to amend the Constitution, Congress seems resolved to simply ignore it.

Under Article I Section 2, the Framers mandated that "the House of Representatives shall be composed of members chosen every second year by the people of the several states." The term "several states" in this clause has been read by the Supreme Court and supporters of this bill as meaning actual states. The District was created with the express purpose of being a non-state entity.

That should end the debate, but advocates hope that Congress' plenary authority over the District might trump provisions like that Composition Clause — an absurd notion for many constitutional scholars. While the District Clause is part of a relatively minor provision dealing with forts, installations and territories, the Composition Clause is one of the cornerstones for the entire legislative branch. To trump the Composition Clause would be akin to a dingy sinking a battleship.
As Turley explained there were reasons at the time for this arrangement.
Although some might find their reasons incomprehensible today, the Founders had reasons for wanting a capital represented by Congress as a whole instead of a single representative. In 1783, Congress was forced to flee Philadelphia by an angry mob of Revolutionary War veterans demanding their long-overdue back pay. When Congress called on state officials to call out the militia, they refused. The Framers were intent on never relying again on any state for their protection. They also did not want any individual member to have the singular honor or the authority to represent the nation's capital. The control and representation of the capital would be shared by all the representatives.
One solution would be to retrocede the District back to Maryland. That would be a simpler method than passing an amendment, but it would have the added advantage of being constitutional. Adding the bill onto a Defense appropriations bill is not the way to go and cheers to Senator Inouye for rejecting that possibility.

Fleeing New York

New York has lost an astounding number of residents over the past decade.
Between 2000 and 2008, the Empire State had a net domestic outflow of more than 1.5 million, the biggest exodus of any state, with most hailing from New York City. The departures also have perilous budget consequences, since they tend to include residents who are better off than those arriving. Statewide, departing families have income levels 13% higher than those moving in, while in New York County (home of Manhattan) the differential was even more severe. Those moving elsewhere had an average income of $93,264, some 28% higher than the $72,726 earned by those coming in.

In 2006 alone, that swap meant the state lost $4.3 billion in taxpayer income. Add that up from 2001 through 2008, and it translates into annual net income losses somewhere near $30 billion. That trend is part of a larger march for New York: In 1950 the state accounted for 19% of all Americans, but by 2000 that number had fallen to 7%. The city's main saving grace has been its welcome mat for foreign immigrants, who have helped to replace some of those who flee.
There are many reasons for people leaving but New York's high tax rate is part of the problem.
As the study's authors, E.J. McMahon and Wendell Cox, suggest, no single reason can be fingered for a million migrants seeking their fortunes across state lines, but one place to start is New York's notorious state and local tax burden. According to the Tax Foundation, between 1977 and 2008, New York has ranked first or second in the country for its state-local tax burden compared to the U.S. average.

In the years considered by the Empire Center study, New York's state and local tax burden ranged between 11% and 12% of income. The peak year for taxes, 2004, was followed by the peak year for departures—as New York lost nearly 250,000 people to other states in 2005. And that's before another big tax hike this year.
Another problem is New York City's regulatory practices that are driving small businesses away from the city.
DOING business in Gotham has rarely been easy for the nearly 200,000 small firms that form the local economy's backbone. But in the last few years, small businesses' woes have worsened, say entrepreneurs and business groups. Taxes, fees and fines are higher than ever; city departments have stepped up inspections; and commissioners have promoted social policies that have added to their burdens.

In an election year, the costs of New York's tough-on-business regime have started to grab headlines. Mayor Bloomberg and the City Council have agreed to set up a commission to cut business regulations, and the administration is rolling out initiatives aimed at helping small businesses. But while this (rare) attention to their problems is welcome, the city really needs lower taxes, more manageable fines and a more responsive bureaucracy.

Government-imposed barriers to doing business raise prices, narrow choices and inhibit job growth for all New Yorkers, owners point out.

Bloomberg's tenure has been surprisingly tough on them. Owners got a glimpse of what was ahead right after Bloomberg took office, when the city began vigorously enforcing an obscure 1962 ordinance that limited the inscriptions on a store's awning. Aggressive inspectors smacked shops with $400 fines until media attention and a public outcry prompted the City Council to rewrite the outdated law.

Far harder for businesses to survive, however, are steep recent tax hikes, especially the mayor's 2003 $1.9 billion property-tax increase, which fell disproportionately on businesses. Along with aggressive reassessments of building values, the levies have almost doubled the city's real-estate tax bite, from $8.6 billion in 2002 to $16.1 billion this year, with business paying half the toll.

One result: Many more instances of businesses shuttering, owing tens of thousands of dollars in property taxes. Bills like these have helped push up retail vacancy rates, now projected to hit double digits in the city by the year's end.
There is no free lunch. Liberals, of which Mayor Bloomberg is one, seem to think that it is possible to keep adding taxes and regulations onto business without any reaction from those businesses.
The mayor defended his 2003 tax hike by calling the city a "luxury product" for which businesses were willing to pay a premium. While that might be true of the financial industry from which Bloomberg came, far more common are businesses like supermarkets that typically earn only 1 to 2 percent of sales.

Nelson Eusebio, who ran a supermarket in Brooklyn for 20 years and now represents other supermarket owners, estimates that 300 city supermarkets have gone bust since 2000. The Bloomberg administration, in its own study, acknowledges that New York is probably losing $1 billion a year in retail food sales to the suburbs because of a shortage of markets.

The city's fines, fees, overlapping regulations and licensing requirements provoke nearly as much ire as taxes do. This year, the city is projecting $900 million in fines and fees from residents and businesses, a whopping $100 million rise. One example: The Consumer Affairs Department requires licenses for 55 types of businesses and fines those that don't have them.
Until the politicians running the city and state start looking in the mirror at what they are doing, people and businesses will continue to flee New York for less hostile environments for businesses. It's time for those politicians to learn that for every action there is indeed a reaction.

Tuesday, October 27, 2009

A real nothingburger criticism of the President

There was a lot of talk this Sunday about how the Obama White House has become a boys' club after the New York Times ran a story about the President being a "First Guy's Guy." He seems to like guy-things like sports and likes playing basketball pick-up games and golf matches with other guys. He appears to get along better with his male staff than his female advisers even though, as the NYT acknowledges, he's appointed plenty of women to important positions.
He presides over a White House rife with fist-bumping young men who call each other “dude” and testosterone-brimming personalities like Rahm Emanuel, the often-profane chief of staff; Lawrence Summers, the brash economic adviser; and Robert Gibbs, the press secretary, who habitually speaks in sports metaphors.

The technical foul over the all-male game has become a nagging concern for a White House that has battled an impression dating to the presidential campaign that Mr. Obama’s closest advisers form a boys’ club and that he is too frequently in the company of only men — not just when playing sports, but also when making big decisions.

While the senior adviser Valerie Jarrett is undeniably one of the president’s closest White House confidantes, some women inside or close to the administration complain that Mr. Obama’s female advisers are not as visible as their male colleagues or, they suspect, as influential.

“Women are Obama’s base, and they don’t seem to have enough people who look like the base inside of their own inner circle,” said Dee Dee Myers, a former press secretary in the Clinton administration whose sister, Betsy, served as the Obama campaign’s chief operating officer.
Jake Tapper interviewed the president of NOW who is predictably upset that we aren't seeing affirmative action in the President's b-ball pickup games with aides and members of Congress.
Is this much ado about nothing?

O'Neill says no.

"Relationships get built in those more informal settings," O'Neill told ABC News, "and the relationships have a huge impact on the influence an individual has. We know what happens when we segregated whether it by race or whether it by gender -- you end up with 1st class citizens and you end up with 2nd class citizens."

O'Neill told ABC News' Mike Callahan, "we need to see the White House leading the way for desegregating the work places all around the country and it is troubling."
Oh, please. Let the guy do what he wants when he's relaxing without bean counting the gender make-up of the players. Perhaps he'll learn something about the value of looking beyond the politically-approved gender balance in other activities. But, alas, I doubt if the President's free-time with the guys would lead him to rethink Title VII quotas on scholarships for as many women in college sports as men.

It's become apparent that it's not enough to put women in top, responsible positions as Obama has done. Now the President is supposed to forget about that easy-going jocularity that guys might have when hanging out with other guys. This is a real nothing-burger of an issue. Clearly, the President is someone who cares about the issues that liberal feminists care about. So what if he likes a fast and sweaty game of basketball with other guys or picks other guys for his foursome on the golf links? If feminists are going to criticize a president who has a female top aide and female Secretaries of State and Homeland Security and HHS for whom he plays basketball with as well as supporting abortion rights, we can see that they will never be satisfied.

Harry Reid: playing politics with health care reform

Yesterday, Harry Reid astounded people by saying that the Senate bill would include a public option with an opt-out alternative for states. When people saw the headline that the Senate bill would include a public option, it seemed like set, game, and match. Surely, Harry Reid wouldn't announce such a big move without the votes of the Democratic caucus in the Senate? Not so fast. As Dana Milbank reports, Reid's announcement was more about Reid playing for liberal support for his reelection race next year in Nevada.
What Harry Reid did Monday afternoon gave new meaning to the phrase "public option."

The Senate majority leader, after haggling behind closed doors with members of his Democratic caucus, realized that he couldn't cobble together the 60 votes he needed to pass health-care legislation with a government-run health plan. So Reid chose another option: He shut down the private talks, booked the Senate TV studio and went public with his own proposal.

"I've concluded," he told the roomful of cameras and reporters, "that the best way to move forward is to include a public option."

For Reid, it was an admission of the formidable power of liberal interest groups. He had been the target of a petition drive and other forms of pressure to bring the public option to the floor, and Monday's move made him an instant hero on the left. Americans United for Change hailed him for refusing "to buckle in the face of withering pressure from the big insurance companies." admired his "leadership in standing up to the special interests."

Reid, facing a difficult reelection contest next year at home in Nevada, will need such groups to bring Democrats to the polls if he is to survive. But there were a few problems with the leader's solo move. He shifted the public pressure from himself to half a dozen moderates in his caucus. And he defied the Obama White House, which had hoped to keep a bipartisan patina on health-care reform by maintaining the support of Sen. Olympia Snowe (R-Maine).

Then there was the small matter of lacking the votes to pass the public option. "Do you feel 100 percent sure right now that you have the 60 votes?" CNN's Dana Bash inquired. Reid looked down at the lectern. He looked up at the ceiling. He chuckled. He put his palms together as if in prayer. Then he spoke. "My caucus believes strongly there should be health-care reform" was the non sequitur he offered.

Bash reminded the leader that she had asked him "particularly on this idea of a public option."

Instead of answering, Reid, with a Zen expression, looked to the back of the room to solicit a question from somebody else. But Bash piped up again. "Senator Reid, with all due respect, is it possible to answer the question on whether or not you have the votes?"

"I believe we clearly will have the support of my caucus to move to this bill and start legislating," he replied, which also didn't answer the question.

By this time, Reid's spokesman, Jim Manley, had one foot on the podium, as if he were ready to rush the stage and whisk his boss to safety.

Of course, everybody knew that Reid didn't have the votes. That's why he was standing there alone, a Gang of One. As Democratic aides described it, the moment had less to do with health-care policy than with Nevada politics -- and one vulnerable senator's justifiable fear of liberal anger. Now, if the public option unexpectedly survives in the Senate, Reid keeps his hero status on the left. If it fails, he at least gets credit for trying. By the Nobel committee's revised standards, his aspirations might even earn him the prizes in medicine and economics.
Reid got his announcement and one-day story in the media. The liberal bloggers are happy. But don't be so quick to assume that this was anything more than an appeasement of the left while Reid knows very well that he doesn't have the votes to pass what he's announcing that he'll introduce. In fact, if this plays out as expected, he'll introduce the public option and fail to get the votes and then he can tell the lefty bloggers that he tried, he really tried, but it was those darn moderates in his own caucus who blocked the public option. And he crosses his fingers that they don't realize how they've been played.

Government programs that breed waste and fraud

seem to be finding out about fraud against government programs all over the place. Here are three examples.

First, Kevin Hassett tells us what happened when Congress rushed through tax credits of up to $8,000 for first-time house buyers but neglected to put in any checks to see if the people receiving the money were actually first-time homebuyers. This was all part of that stimulus bill that had to be passed quick, quick, quick. In fact all people had to do was assert that they were first-time buyers and didn't need to provide any documentation.
That’s right: Congress passed a law that made it possible to have the IRS mail you a check for $8,000 if you claimed you were a first-time homebuyer. That’s all you had to do -- assert that you deserved the credit. The IRS didn’t require you to provide proof that your claim was genuine before your check was put in the mail. Sound like a recipe for fraud?

The tax fraud was so widespread and egregious that it almost makes you laugh.

Did you forget to buy a house before claiming the credit? Not a problem. “We identified more than 19,300 electronically filed 2008 tax returns on which taxpayers claimed the First-Time Homebuyer Credit for a home which had not yet been purchased,” reported J. Russell George, the U.S. Treasury inspector general for tax administration, who testified about his department’s investigation.

Prior Home Ownership

Did you claim the credit even though you owned a home previously? Not a problem. George said his office found almost 74,000 claims “by taxpayers who had indications of prior home ownership within the preceding three years.”

Were you unable to purchase a home because you haven’t finished preschool and don’t know how to read the forms? Not a problem. George cited the “more than 580 taxpayers younger than 18 years of age who claimed almost $4 million in First-Time Homebuyer Credits. The youngest taxpayers receiving the credit were 4-years-old.”

The shocking facts go on and on. About 3,200 claims were filed with individual taxpayer identification numbers, rather than Social Security numbers, suggesting that alien residents joined American citizens in partaking in this rip-off.
Ed Morrissey links to this story from the Las Vegas Review-Journal about how the economic stimulus package, once again rushed, rushed through Congress, included a tax credit of $4,700 to %5,500 for people purchasing road-worthy electric cars. But they didn't specify anything more about which electric cars would qualify. So guess what people are buying? Golf carts.

As part of the huge $878 trillion (Or was it $787 billion? Can anyone remember, anymore?) "economic stimulus" created in Washington last winter, Congress OK'd a tax credit of between $4,200 and $5,500 for Americans who purchase an electric vehicle.

Some controversy arose as to which vehicles, exactly, qualified. The IRS recently ruled any electric vehicle qualifies for the subsidy, so long as it is road-worthy.

That means the model in question needs to have side and rearview mirrors and three-point seat belts, and be capable of going at least 15 to 25 mph. Meet those requirements, combine the federal credit with similar incentive plans in many states, and many a creative subject of the realm has discovered the government will now pay virtually the entire cost of acquiring a new ... golf cart....

"This golf-cart fiasco perfectly illustrates tax policy in the age of Obama, when politicians dole out credits and loopholes for everything from plug-in cars to fuel efficient appliances, home insulation and vitamins," The Wall Street Journal concludes. "Democrats then insist that to pay for these absurdities they have no choice but to raise tax rates on other things -- like work and investment -- that aren't politically in vogue. If this keeps up, it'll soon make more sense to retire and play golf than work for a living."
Was that really what the stimulus was about - to help rich golfers buy their own personal golf carts? Is that the type of program we needed to put in place while we put our children into unimaginable debt?

It's not only the stimulus that rushed through all these opportunities to get undeserved money out of the government. Medicare has also provided lots of opportunities for outright fraud. Sixty Minutes reported on Sunday on how easy it has become for criminals to set up outfits to defraud the government out of Medicare funds.
BRIAN WATERMAN, FBI: There's a healthcare fraud industry where people do nothing but recruit patients, get patient lists, find doctors, look on the Internet, find different scams. There are entire groups and entire organizations of people that are dedicated to nothing but committing fraud, finding a better way to steal from Medicare

KROFT: Is the Medicare fraud business bigger than the drug business in Miami now?

KIRK OGROSKY, JUSTICE DEPARTMENT: I think it's way bigger.

KROFT: What changed?

OGROSKY: The criminals changed...

WATERMAN: Sophistication.

OGROSKY: They've figured out that rather than stealing $100,000 or $200,000, they can steal $100 million. We have seen cases in the last six, eight months that involve a couple of guys that if they weren't stealing from Medicare might be stealing your car.

WATERMAN: You know, we were the king of the drugs in the '80s. We're king of healthcare fraud in the '90s and the 2000's.
As Newsbusters summarizes, it appears to be quite easy to screw massive amounts of money out of the government.
Kroft then spoke to a man who claimed to have defrauded Medicare out of $20 million, after which Kroft said, "According to the FBI, all you have to do to get into this business is rent a cheap storefront office, find or create a front man to get an occupational license, bribe a doctor or forge a prescription pad, and obtain the names and ID numbers of legitimate Medicare patients you can bill the phony charges to."
WATERMAN: There's a whole industry of people out there that do nothing but provide patients.
Kroft narrated, "Once the crooked companies get hold of the patient lists, usually stolen from doctors' offices or hospitals, they begin running up all sorts of outlandish charges and submit them to Medicare for payment, knowing full well that the agency is required by law to pay the claims within 15 to 30 days, and that it has only enough auditors to check a tiny fraction of the charges to see if they are legitimate."

Later, Kroft asked Waterman, "There's something I don't understand. I mean, you're saying essentially people just fill out the phony paperwork, they send a bill to Medicare and they pay it."
WATERMAN: That's why you have companies that can run for 60, 90 days, and bill for ridiculous things. Because there are very few checks and balances to even determine whether these things a, were medically necessary, b, were ever given, or c, even physically possible for a patient with the kind of conditions they have.
And this is the model that liberals want to create for everyone's health care...

Perhaps, to show that the Democrats are more serious than all the previous presidents who have vowed to cut waste, fraud, and abuse in federal medical programs, they could demonstrate their efficacy by getting rid of this sort of fraud in Medicare. But Attorney General doesn't seem to have any special ideas of how to fix this problem.
ERIC HOLDER, ATTORNEY GENERAL: We have to understand this is a major fraud area. [...]

KROFT: Why do you think it's been so attractive for the criminals?

HOLDER: Because I think it's been pretty easy. I think that they have found a way in which they have been able to get pretty substantial amounts of money with not a huge amount of effort and at least until now, without the possibility of great detection.

KROFT: With much fewer risks.

HOLDER: Much fewer risks. You'll see some of these people and they'll say "You know there is not a chance that you are going to have some other drug dealer shooting at you." The chances of being incarcerated were lower, the amount of time that you would spend in jail was smaller. All of which is different now.
And, as Newsbusters points out, he doesn't even seem to understand human nature.
As the segment drew to a close, Holder told Kroft something that should scare the heck out of everyone who wants government run insurance for all Americans: "I think people I don't think necessarily thought that something as well intentioned as Medicare and Medicaid would necessarily attract fraudsters. But I think we have to understand that it certainly has."
That's a typical liberal assessment of how people think: we're providing all this money for a good cause and we just never thought that people might figure out a way to defraud the government out of hundreds and hundreds of millions of dollars. Duh! And they don't seem to have learned their lessons as they rushed through the stimulus without thinking through how people might take advantage of money provided by the government without many or even any controls.

Monday, October 26, 2009

The extreme danger of the "public option"

Now that the buzz in Washington is that the "public option" is back, resusciated from the coffin analysts thought it had been buried in earlier in the debate, it's time to tell the truth about how bogus the claims are about what the public option will and won't do. Fred Hiatt lays out in today's Washington Post how the so-called public option will do nothing to lower health care costs. Instead, all we'd get is a new, hugely expensive entitlement piled on to the Medicare costs that are fated to break the budget in a few years.
The "public option" is dangerous not for what it might do but for what it allows the politicians not to do.

From the start, the Obama administration has said that health-care reform has to make health care both more accessible and less costly . If Congress does the first without the second -- guarantees a new entitlement without controlling costs -- it will bankrupt us, because health-care costs are rising faster than the overall economy is growing.
Hiatt then goes through some of the possible reforms that might work to control costs. One that conservatives support would be removing the tax deduction that employers get for offering health care. We're stuck in a model that was created during World War Two when there were wage controls in place. Employers who were unable to offer wage increases in order to attract workers resorted to offering benefits instead. Thus arose employer-provided health insurance. The government liked the idea and offered tax benefits. However, this drives up the costs of health care because employers can offer so-called Cadillac plans and get the tax write off. The increased third-party payer participation means that people with health insurance have no real interest on being more cost effective in their use of medical care. Removing those tax breaks would be a win-win: the government would get more revenue and patients themselves would have incentives to be their own watchdogs on how much they're spending on health care rather than being indifferent because someone else was paying for it. But it's a political loser so our politicians will never support it.
What are those reforms? The most logical big thing Congress could do would be to tax, as income, the value of the health-care benefits Americans receive from their employers. By not doing so, the government forgoes $250 billion in revenue every year -- effectively, its second-biggest health expense after Medicare. It discriminates against people who have to buy insurance on their own. And it encourages overuse of health care, which drives up costs.

If employees had to pay taxes on their plan, they might opt for one that cost, say, $12,000 per year rather than $16,000, and push to receive the difference in wages. The government could use the revenue to subsidize health insurance for those who need help.

But many unions oppose this change, because they fear it would jeopardize their members' hard-won benefits, and so Democrats won't go for it. Sen. John McCain (R-Ariz.) embraced the idea as presidential nominee and was irresponsibly attacked for it by his opponent. Now Republicans oppose it so that, were President Obama to embrace it even in part, they could beat him up for retreating from his foolish campaign promise to reform health care without raising taxes on anyone but the rich.
Another change that might lower health care costs would be to decrease governmental regulations that drive up the price of insurance plans and health care. But politicians never like to cede power so that's a non-starter. So we're left with the myths of how a public option would lower costs and not alter anyone's existing health care. And that's a myth, a dangerous myth.
The claim merits skepticism. If, as advocates sometimes argue, a public plan operates without favoritism, it will be simply one more entrant in the marketplace. Like other companies, it will have marketing and administrative costs. In some markets served by few private plans, it could offer a useful alternative. But it won't radically reduce costs.

If, as advocates argue at other times, the point is to insure sick people whom private companies, despite all regulatory efforts, find ways to shun, the public plan could offer a valuable safety net. But that wouldn't save money.

And if, as seems likeliest -- and as House legislation mandates -- the plan uses government power to demand lower prices from hospitals and drug companies, those providers may lower quality or seek to make up the difference from private payers. Private companies would have to raise their rates, so more people would choose the public plan, so private rates would rise further -- and we could end up with only the public option and no competition at all.
We won't get lower costs and we will get humongous new public expenditures when we can't afford the entitlements we now have. Don't be fooled by all the gauzy promises of what a public option would and would not do. As Jennifer Rubin writes,
So it is this sort of reform — one that doesn’t do what it claims (control costs) and does do what it claims it doesn’t (create a government-run health-care system) that is supposed to attract a majority of votes in both houses of Congress.
We can hope it is not so, but don't bet on Congress's ability to pass fantasy legislation based on clicking their heels together and whispering "We think we can. We think we can." Unfortunately, we're the ones who will have to live with the real world consequences.

The CBO's word on the constitutionality of mandates

Via Verum Serum and Ed Morrissey comes a link to a report that the CBO wrote in 1994 when Hillary Clinton's health care plan was considering an individual mandate to force people to buy health insurance. Back in 1994, the CBO cast serious doubt on the constitutionality of such a mandate. Check out what the report says, starting on page 11.
A mandate requiring all individuals to purchase health insurance would be an unprecedented form of federal action. The government has never required people to buy any good or service as a condition of lawful residence in the United States. An individual mandate would have two features that, in combination, would make it unique. First, it would impose a duty on individuals as members of society. Second, it would require people to purchase a specific service that would be heavily regulated by the federal government.

Federal mandates typically apply to people as parties to economic transactions, rather than as members of society. For example, the section of the Americans with Disabilities Act that requires restaurants to make their facilities accessible to persons with disabilities applies to people who own restaurants. The Federal Labor Standards Act prohibits employers from paying less than the federal minimum wage. This prohibition pertains to individuals who employ others. Federal environmental statutes and regulations that require firms to meet pollution control standards and use specific technologies apply to companies that engage in specific lines of business or use particular production processes. Federal mandates that apply to individuals as members of society are extremely rare. One example is the requirement that draft-age men register with the Selective Service System. The Congressional Budget Office (CBO) is not aware of any others imposed by current federal law. (Emphasis added)
Constitutional scholars might disagree. Edwin Chemerinsky thinks it's clear that Congress has that power. But, as the CBO found out in its earlier report, it's something that has never been done before. And unprecedented congressional actions often find their way to the Supreme Court. We'll have to wait and see what five justices say. Somehow, I can't see them canceling out a major provision of a health care reform. However, we should be aware that if the individual mandate goes through, that will, if history is any guide, not be the end of the mandates that the federal government would be able to impose on individuals to force people to buy what the government has decided is good for us or what they need to do in order to pay for some future government plan.

Reassessing Agincourt

Historians are reassessing the Battle of Agincourt, which was indeed a great English victory, but a new analysis of historical records seems to drive some holes in the mythology of a tiny band of English soldiers defeating a French army that vastly outnumbered them. The disparity in the size of the armies was probably exaggerated by the English to add more glory to their victory.

The battle still served to demonstrate the victory of the English longbow over heavily armored knights on horseback and mark a change in medieval warfare. What is truly interesting is how another set of military historians have looked to Henry V's campaign in France as more evidence in how a victorious army should conduct a counterinsurgency and how allying with one side in a civil war brings in new fighters flock to the opponent's side.

But I'll still go with Henry V's stirring battle speeches as written by Shakespeare. After all, his speeches have been inspiring sports coaches at halftime ever since.

The fake promise of the public option

Robert Samuelson is exactly right when he points out that the so-called "public option" is a phony promise.
The promise of the public plan is a mirage. Its political brilliance is to use free-market rhetoric (more "choice" and "competition") to expand government power. But why would a plan tied to Medicare control health spending, when Medicare hasn't? From 1970 to 2007, Medicare spending per beneficiary rose 9.2 percent annually compared to the 10.4 percent of private insurers -- and the small difference partly reflects cost shifting. Congress periodically improves Medicare benefits, and there's a limit to how much squeezing reimbursement rates can check costs. Doctors and hospitals already complain that low payments limit services or discourage physicians from taking Medicare patients.

Even Hacker concedes that without reimbursement rates close to Medicare's, the public plan would founder. If it had to "negotiate rates directly with providers" -- do what private insurers do -- the public plan could have "a very hard time" making inroads, he writes. Hacker opposes such weakened versions of the public plan.

By contrast, a favored public plan would probably doom today's private insurance. Although some congressional proposals limit enrollment eligibility in the public plan, pressures to liberalize would be overwhelming. Why should only some under-65 Americans enjoy lower premiums? In one study that assumed widespread eligibility, the Lewin Group estimated that 103 million people -- half the number with private insurance -- would switch to the public plan. Private insurance might become a specialty product.

Many would say: Whoopee! Get rid of the sinister insurers. Bring on a single-payer system. But if that's the agenda, why not debate it directly? It's not insurers that cause high health costs; they're simply the middlemen. It's the fragmented delivery system and open-ended reimbursement. Would strict regulation of doctors, hospitals and patients under a single-payer system provide control? Or would genuine competition among health plans over price and quality work better?

That's the debate we need, but in truth, doctors, hospitals and patients don't want to be limited, whether by government or markets. Congress reflects public opinion. Fearing a real debate, we fake it.
"Public option" sounds like a nice focus-grouped phrasing to make it seem that the policy would just be competing with the private plans, but the logic would be to supplant private insurance. The end result would be more government control and higher health care costs. Read the rest of his column if you don't understand that connection. But the politicians know that they can't honestly say that that is what they're for, so they pretend that all they're for is a public choice but that nothing would change for those with private insurance. Then, when it's too late, we'll find out what the real result would be: more government control, driving out more doctors, and more government debt.

Obama in Berlin in 2008 vs. Obama staying home today

Michael Barone contrasts the speech that Obama gave when he made his campaign appearance in Berlin last summer with the sorts of things that Obama is saying today.
before that, he declared himself "a proud citizen of the United States," and of his 46 paragraphs only one was devoted to an apology for America's misdeeds ("our share of mistakes," "times when our actions around the world have not lived up to our best intentions"). Quite a contrast here with the more profuse apologies he has made abroad this year.

In addition, Obama in seven stirring paragraphs recounted America's airlift of food and fuel to Berlin when the Soviets cut off land access in 1948. True, at one point he suggested that the Berlin Wall came down because "there is no challenge too great for a world that stands as one." But if that sounds like fuzzy every-nation-has-the-same-dreams rhetoric, he also spoke of "the bullet holes in the buildings and the somber stones and pillars near the Brandenburg Gate," evidence of Soviet oppression.
That sounds like the perfect sort of thing to say at an anniversary celebration of the fall of the Berlin Wall. But it isn't the sort of rhetoric that President Obama uses today.
In the Tiergarten Obama spoke of "the terrorists who threaten our security in Afghanistan" and of the need "to defeat the Taliban and al Qaeda" there. That doesn't mesh very well with his recent reconsideration of the Afghanistan strategy he announced in March and reiterated in August, nor with the White House spin doctors' suggestions that the Taliban and al Qaeda are not necessarily allies any more.

In the Tiergarten, Obama asserted his "resolve to work with Russia when we can, to stand up for our values when we must and to seek a partnership that extends across this whole continent." That doesn't mesh very well with the "reset button" policy toward Russia that looks past its attacks on Georgia and Ukraine and propitiates the Putin regime with unilateral withdrawal of missile defense installations from Poland and the Czech Republic.

In the Tiergarten, Obama said the United States must "stand with Europe in sending a direct message to Iran that it must abandon its nuclear ambitions." But that message, if sent, has evidently not had the intended effect on the mullah regime, which is drawing out negotiations while presumably continuing its nuclear program apace.

"Will we stand for the human rights of the dissident in Burma, the blogger in Iran or the voter in Zimbabwe?" Obama asked in the Tiergarten. "Will we give meaning to the words 'never again' in Darfur?"

Well, the Obama administration has toughened up a bit on its negotiator's recommendation we give "cookies and gold stars" to the Sudanese regime that has terrorized Darfur, and our diplomats have tried to help out in Zimbabwe. But we haven't done much of anything for the dissident in Burma, and Obama, while truckling to the mullahs, showed stony indifference to the thousands protesting the stealing of the June 12 elections in Iran.

Last year, Obama told Berliners that we and they are "heirs to a struggle for freedom." This year his administration has been busy trying to appease dictatorial and authoritarian regimes. So maybe he was wise to skip a return appearance in Berlin. Let Hillary Clinton gloss over the embarrassing contrast between his rhetoric then and his policies now.
Now, it's common for the reality of actually governing to come into conflict with the gauzy rhetoric of a campaign, but it's getting rather difficult to find an aspect of Obama's campaign rhetoric that could honestly be used today to describe the way that he is actually governing.

Sunday, October 25, 2009

Being tough with all the wrong people

Mark Steyn is hilarious while making an important point. The Obama people are being famously tough with their American critics from Fox News to talk radio.
Benjamin Disraeli’s most famous advice to aspiring politicians was: “Never complain and never explain.” For the greatest orator of our time, a man who makes Churchill, Lincoln, and Henry V at Agincourt look like first-round rejects on Orating with the Stars, Barack Obama seems to have pretty much given up on the explaining side. He tried it with health care with speech after speech after exclusive interview for months on end and the more he explained the more unpopular the whole racket got. So he declared that the time for explaining is over, and it’s time to sign on or else.

Meanwhile, to take the other half of the Disraeli equation, Obama and his officials and their beleaguered band of surrogates never stop complaining. If you express concerns about government health care, they complain about all these “racists” and “domestic terrorists” obstructing his agenda. If you wonder why the president can’t seem to find time in his hectic schedule of international-awards acceptance speeches to make a decision about Afghanistan, they complain that it’s not his fault he “inherited” all these problems. And, if you wonder why his “green jobs” czar is a Communist 9/11 truther and his National Endowment for the Arts guy is leaning on grant recipients to produce Soviet-style propaganda extolling Obama policies, they complain about Fox News.
There's a permanent campaign going on to smite the President's opponents in whatever venue they might appear. It seems as if every commentator in the past week has reached back to the movie The Untouchables to demonstrate Obama's toughness and refusal to bring a knife to a gunfight.

But as Mark Steyn points out, just as Obama is being all tough on his critics at home, he's rolling over and waiting for his tummy to be scratched in the face of our opponents abroad.
The trouble is it isn’t tough, not where toughness counts. Who are the real “Untouchables” here? In Moscow, it’s Putin and his gang, contemptuously mocking U.S. officials even when (as with Secretary Clinton) they’re still on Russian soil. In Tehran, it’s Ahmadinejad and the mullahs openly nuclearizing as ever feebler warnings and woozier deadlines from the Great Powers come and go. Even Obama’s Nobel Peace Prize is an exquisite act of condescension from the Norwegians, a dog biscuit and a pat on the head to the American hyperpower for agreeing to spay itself into a hyperpoodle. We were told that Obama would use “soft power” and “smart diplomacy” to get his way. Russia and Iran are big players with global ambitions, but Obama’s soft power is so soft it doesn’t even work its magic on a client regime in Kabul whose leaders’ very lives are dependent on Western troops. If Obama’s “smart diplomacy” is so smart that even Hamid Karzai ignores it with impunity, why should anyone else pay attention?

The strange disparity between the heavy-handed community organization at home and the ever-cockier untouchables abroad risks making the commander-in-chief look like a weenie — like “President Pantywaist,” as Britain’s Daily Telegraph has taken to calling him.

The Chicago way? Don’t bring a knife to a gun fight? In Iran, this administration won’t bring a knife to a nuke fight. In Eastern Europe, it won’t bring missile defense to a nuke fight. In Sudan, it won’t bring a knife to a machete fight.

But, if you’re doing the overnight show on WZZZ-AM, Mister Tough Guy’s got your number.
Of course, in Obamaland, being tough on our opponents abroad is so very last administration. They'd prefer to be tough on our friends such as Poland, the Czech Republic, and Honduras. Celebrating the fall of the Berlin Wall and the end of the Soviet Union is so last century. Why waste a trip to Berlin when The One has a ticket to Oslo in December to receive his Peace Prize?

Friday, October 23, 2009

Even the media think that the Obama administration is going too far in the war on Fox

Yesterday, the Obama administration tried to get the media to go along with their boycott of Fox by barring the Fox reporter from a pool interview with Ken Feinberg, the pay czar. This is quite notable, as Allahpundit points out, because Robert Gibbs had pledged just a few days ago not to try to tinker with the White House press pool.

The Washington bureau chiefs of the five networks met and decided that they would not go along with banning Fox from the White House press pool. They realized that the executive branch shouldn't be able to dictate to the media what is and what isn't a qualified news organization. They know that, if the White House got away with this, the precedent would be set next time a Republican president didn't like what one of the networks broadcast.

As Charles Krauthammer writes today,
This was an important defeat because there's a principle at stake here. While government can and should debate and criticize opposition voices, the current White House goes beyond that. It wants to delegitimize any significant dissent. The objective is no secret. White House aides openly told Politico that they're engaged in a deliberate campaign to marginalize and ostracize recalcitrants, from Fox to health insurers to the U.S. Chamber of Commerce.

There's nothing illegal about such search-and-destroy tactics. Nor unconstitutional. But our politics are defined not just by limits of legality or constitutionality. We have norms, Madisonian norms.

Madison argued that the safety of a great republic, its defense against tyranny, requires the contest between factions or interests. His insight was to understand "the greater security afforded by a greater variety of parties." They would help guarantee liberty by checking and balancing and restraining each other -- and an otherwise imperious government.

Factions should compete, but also recognize the legitimacy of other factions and, indeed, their necessity for a vigorous self-regulating democracy. Seeking to deliberately undermine, delegitimize and destroy is not Madisonian. It is Nixonian.
Gee, who would think that in nine months, the term "Nixonian" would be applicable to the Obama White House?

Meanwhile, the President talks to the likes of Rachel Maddow, Keith Olbermann, and Maureen Dowd and spends time complaining about Fox News being opinionated and not a legitimate news organization. Oh, the sublime irony!

As the New York Times reports, what is really getting the administration all riled up is the thought that other White House approved news organizations might start paying more attention to stories that originate on Fox.
The spur: Executives at other news organizations, including The New York Times, had publicly said that their newsrooms had not been fast enough in following stories that Fox News, to the administration’s chagrin, had been heavily covering through the summer and early fall — namely, past statements and affiliations of the White House adviser Van Jones that ultimately led to his resignation and questions surrounding the community activist group Acorn.

At the same time, Fox News had continued a stream of reports rankling White House officials and liberal groups that monitor its programming for bias.

Those reports included a critical segment on the schools safety official Kevin Jennings, with the on-screen headline “School Czar’s Past May Be Too Radical”; urgent news coverage of a video showing schoolchildren “singing the praises, quite literally, of the president,” which the Fox News contributor Tucker Carlson later called “pure Khmer Rouge stuff”; and the daily anti-Obama salvos from Glenn Beck and Sean Hannity.(links in original)
How about not employing people who talk to high schoolers about their "favorite political philosopher" as Mao? If the White House is proud of the people it employs, they wouldn't worry so much about what Glenn Beck may say about them. But, as Krauthammer writes,
Defend Fox from the likes of Anita Dunn? She's been attacked for extolling Mao's political philosophy in a speech at a high school graduation. But the critics miss the surpassing stupidity of her larger point: She was invoking Mao as support and authority for her impassioned plea for individuality and trusting one's own choices. Mao as champion of individuality? Mao, the greatest imposer of mass uniformity in modern history, creator of a slave society of a near-billion worker bees wearing Mao suits and waving the Little Red Book?

The White House communications director cannot be trusted to address high schoolers without uttering inanities. She and her cohorts are now to instruct the country on truth and objectivity?
Apparently so. And Maddow and Olbermann are the allies in the White House's battle for approved opinions.

Kim Strassel revisits "the Chicago Way" from the movie, The Untouchables, and all the enemies that the White House has targeted in the nine months they've been in office from pharmaceutical companies, Chrysler bondholders, Humana, the Chamber of Commerce, and health insurance companies to any politician who hasn't been sufficiently supportive of the Obama agenda including moderate Democrats. And of course, Fox News.
What makes these efforts notable is that they are not the lashing out of a frustrated political operation. They are calculated campaigns, designed to create bogeymen, to divide the opposition, to frighten players into compliance. The White House sees a once-in-a-generation opportunity on health care and climate. It is obsessed with winning these near-term battles, and will take no prisoners. It knows that CEOs are easily intimidated and (Fox News ratings aside) it is getting some of its way. Besides, roughing up conservatives gives the liberal blogosphere something to write about besides Guantanamo.

The Oval Office might be more concerned with the long term. It is 10 months in; more than three long years to go. The strategy to play dirty now and triangulate later is risky. One day, say when immigration reform comes due, the Chamber might come in handy. That is if the Chamber isn't too far gone.

White House targets also aren't dopes. The corporate community is realizing that playing nice doesn't guarantee safety. The health executives signed up for reform, only to remain the president's political piƱatas. It surely grates that the unions—now running their own ads against ObamaCare—haven't been targeted. If the choice is cooperate and get nailed, or oppose and possibly win, some might take that bet.javascript:void(0)

There's also the little fact that many Americans voted for this president in thrall to his vow to bring the country together. It's hard to do that amid gunfire, and voters might just notice.

This war on Fox might be great for solidifying the liberal base, but it does nothing to help Obama maintain the approval of those in the middle whose support he needs for his agenda and reelection. All it does is make him look petty and unpresidential. And the target list is getting bigger and bigger.

Comparing Obama the candidate and Obama the president

Tom Bevan contrasts Obama with the president he promised to be.
During the campaign Barack Obama vowed he would be a different kind of leader who would move America beyond the "smallness of our politics." That inspired promise was not an insignificant part of why he was elected last November.

In his inaugural address Obama told us that "the time has come to set aside childish things." He promised to bring "an end to the petty grievances and false promises, the recriminations and worn out dogmas, that for far too long have strangled our politics."

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Tom Bevan RealClearPolitics
Barack Obama

Not only has President Obama failed to live up to those promises so far, it appears that on more than a number of occasions he’s made a conscious decision to break them.

In the first nine months in office President Obama and/or members of his administration have accused doctors of performing unnecessary medical procedures for profit; demonized bond holders as "speculators;" produced a report suggesting military veterans are prone to becoming right wing extremists; attacked insurance companies and threatened them with legislative retribution; ridiculed talk show hosts and political commentators by name from the White House podium; dismissed and demeaned protesters and town hall attendees as either unauthentic or fringe characters; maligned a white police officer for arresting a black man without knowing the facts of the case; launched an orchestrated campaign to marginalize the country's biggest pro-business group; and publicly declared war on a news organization.

Twice in the last week, perhaps carried away by the campaign atmosphere, President Obama ramped up the use of the kind of partisan rhetoric that will drive Americans further apart; once in San Francisco at a DNC fundraiser and once last night at a rally for Jon Corzine. (links in original)
Of course, Obama was already using divisive rhetoric in the campaign. Despite promising to be a post-partisan president who recognized no red and no blue, he still demonized Republicans and conservatives as he campaigned. He sneak previewed his approach to problems that he has today: blame everything on Bush.

How many independents and even Republicans voted for Obama because they thought we would have a new era with a president who could rise above partisanship and race and raise our standing in the world. Well, we've seen the end of the first two hopes and seen how raising our standing in the world doesn't seem to get us very much except an undeserved Nobel for Obama. Democrats are still fully behind Obama, but he's starting to lose those in the middle. And how many times will people support him just for the thrilling idea of voting for the first African American president?

We've seen the end of the mythical Obama of the campaign who would govern above party. That was always a dream. All that remains is a president who is still fully in campaign mode. Unfortunately, he needs to switch over to governing mode.

Thursday, October 22, 2009

The dishonesty of Rahm Emanuel

The White House Chief of Staff has been out there claiming that the Bush administration never asked the key questions about the situation in Afghanistan and so the Obama administration has had to start from scratch.
ne of President Obama's top advisers said Sunday the Bush administration failed to ask critical questions about the war in Afghanistan, leaving the Obama administration starting from scratch -- and leaving the war "adrift."
White House Chief of Staff Rahm Emanuel says President Obama is asking new questions about Afghanistan War.

"The president is asking the questions that have never been asked on the civilian side, the political side, the military side and the strategic side," White House Chief of Staff Rahm Emanuel told CNN's "State of the Union."
It makes a nice story to exculpate President Obama from the charge that he's been dithering about what to do in Afghanistan.

The only problem is that it's a total fabrication. As Vice President Cheney made clear in a speech last night, not only had the Bush administration researched the very questions Emanuel was talking about, they came up with a plan. However, the Obama people requested that the plan be kept a secret which the Bush people agreed to. Then Obama came in and, in March, proposed basically the exact same plan that he'd been given by the Bush administration.
In the fall of 2008, fully aware of the need to meet new challenges being posed by the Taliban, we dug into every aspect of Afghanistan policy, assembling a team that repeatedly went into the country, reviewing options and recommendations, and briefing President-elect Obama’s team. They asked us not to announce our findings publicly, and we agreed, giving them the benefit of our work and the benefit of the doubt. The new strategy they embraced in March, with a focus on counterinsurgency and an increase in the numbers of troops, bears a striking resemblance to the strategy we passed to them. They made a decision – a good one, I think – and sent a commander into the field to implement it.

Now they seem to be pulling back and blaming others for their failure to implement the strategy they embraced. It’s time for President Obama to do what it takes to win a war he has repeatedly and rightly called a war of necessity.
The dishonesty of having Emanuel claiming that the Obama administration had to start over from scratch on Afghanistan is simply breathtaking. For political cover, Emanuel resorted to the preferred Obama tactic of throwing all the blame on the Bush people and pretending that the world started anew when Obama took the oath of office. He didn't care if it was an outright lie.

If he'll lie about national security when our soldiers are dying in the field, what else will he lie about?

We'll see if the MSM calls Emanuel on his lie or if this is one of those stories that was reported out of Fox and the right wing blogosphere. I suspect that we all know the answer.

Pelosi's cost-shfiting will wreck health care

The House Democrats are all excited about their so-called "robust public option." Nancy Pelosi thinks that they have found a magic bullet to produce a health care bill that will peg government payouts to doctors and hospitals based on the Medicare price-control schedule of payments. The problem is (see below for the differences between price and costs) that the government set prices Medicare below the market costs of that health care. The WSJ explains why this is so very problematic.
Yet as the government pays less, the private sector pays more. Like Medicare today, hospitals will shift some of their losses into higher private insurance premiums. Meanwhile, the public option's premiums will be artificially lower, even before the heavy subsidies that Democrats plan to offer. As private insurance costs increase, private payers will lose market share, intensifying the cost-shift and precipitating an exodus to government from commercial carriers.

Democrats dismiss cost-shifting as a tall tale of the health industry. After all, if providers can increase their revenue by charging private payers more, why haven't they already exhausted this opportunity? Perhaps because, contrary to Washington's fantasy of robber baron doctors, very few hospitals behave like classical profit-maximizing firms. Most are nonprofit institutions with social missions.

The real problem is that government pays so much below costs. A 2006 study in the journal Health Affairs found that for each dollar of cost hospitals incurred, they received $1.22 from private payers and only 95 cents from Medicare. Analysts Allen Dobson and Joan DaVanzo argue that this puts hospitals "in the unenviable position of playing the role of private-sector tax collectors, to maintain their financial solvency."

It's true that cost-shifting isn't dollar for dollar. Providers can absorb some underfunding by cutting services, such as by reducing hospital stays, or investing less in research, teaching and state-of-the-art care. Yet as the Medicare Payment Advisory Commission recently noted, given decades of such Medicare-related losses, "a concern is whether hospitals can constrain costs and still deliver high-quality care." For that reason the Mayo Clinic announced this month that some of its campuses will no longer accept Medicare patients.
The Pelosi Democrats aren't going to give up on trying to leverage in some sort of public option. Their logic is that once they get a program in place, they can start piling on additional mandates and increase the size of the program just as has been done with other government health programs over the years. That is why they're so adamant to get a public option approved. They figure they can hammer out the expansion later. And the result will be to drive private insurers out of the market and throw more and more people into a government-provided insurance plan. That's why they're so excited about describing their plan as "Medicare for Everyone." They just are ignoring the fact that the reimbursement schedule for Medicare won't cover all a doctor or hospital's costs. Someone has to pay the difference. And if we start forcing people out of the private market into the government program, there won't be anyone left to pay the difference. And so the only solution will be to provide less health care. The trajectory of improvements in health care that we've seen in our lifetimes will start flattening out and maybe even trending down. That's the real curve that the Democrats are bending - not the cost curve.

Ahem. There's a difference in price and cost

Ed Morrissey does a sweet job of offering up some tutelage to Congressional Democrats about the fact that putting price controls on medical treatments does not lower the costs of those treatments. Apparently, that is a fundamental economic principle of which they seem ignorant.

Here is what the Democrats are claiming.
The $871 billion estimate -- well under the $900 billion limit set by President Obama -- is the latest of several versions scored by congressional budget analysts, according to a Democratic aide, speaking on condition of anonymity to discuss private talks. The measure would include a government-run insurance plan that pays providers at rates tied to Medicare, the aide added. That so-called "robust" public option is preferred by liberals because it would save the government money and could force private insurers to lower their own reimbursement rates, driving down the cost of health care overall. (emphasis added)
Here is Morrissey's tutorial.
Fixing prices does not lower costs. Let me repeat that: fixing prices does not lower costs. “Costs” are borne by providers, who get reimbursed by either consumers (in a rational market) or by third parties (American health care) for their goods and/or services. In a competitive market, providers have to set their prices at an attractive level in order to get business without missing out on profit opportunities, but their prices have to cover their costs — or they go out of business.

Not coincidentally, the latter is what happens when price-fixing is used. When government fixes the price of goods and services, it usually does so to mask costs, not reduce them. This is what Medicare has done for years, which is why doctors avoid Medicare patients now. When the fixed price becomes less than the actual cost to provide the service, the provider is forced out of business.
Is that where we're heading with many doctors - simply because our politicians don't understand Economics 101?