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Are we serious about health care REFORM or just the promotion of “more?”

27 Mar
Nancy-Ann DeParle, director of the White House...

Nancy-Ann DeParle, director of the White House Office for Health Reform, at a senior staff meeting in the Oval Office. (Photo credit: Wikipedia)

I have long maintained that health care is too emotional for any of us to look at costs and efficiency objectively. We see or hear that a person was fully covered by their insurance and it’s a good thing.  An insurer was made to pay for this or that and it’s a good thing.  The idea that we care about cost is questionable and when it comes to ourselves or a loved one, there is no question that we do not care about the cost of health care at all.  It’s human nature after all and the very reason external control of some type is necessary if we are to seriously manage costs.  That control may come in the form of managed care, following certain guidelines for care, etc.

 
That human nature factor in health care does not go unnoticed by our politicians who cannot resist playing up the individual benefits of health care reform without regard to the cost.  At the same time that the Secretary of HHS trumpets the Department declining “unreasonable” premium rate increases, the White House promotes all the aspects of the affordable Care Act that increase costs.  This is not to say helping individuals is a bad thing, but it is also a costly thing and that simply cannot be pushed under the rug as if it does not matter.
 
We all know certain individuals are benefiting from the Affordable Care Act. Any time you give people more stuff and “free” stuff somebody is going to benefit and somebody else is going to pay for it.
 
If we can’t look at the cost of our own health care objectively, we should expect our most senior policymakers to do so for us collectively.  Good luck with that as it appears their main objective is promotion of all the goodies.   That is a great disservice to us all.
 
Text of e-mail from the White House:

Good afternoon – 

Too often in Washington, politicians tell compelling stories about individuals when they are trying to make a point. But once the news cycle moves on, those people keep living their lives and confronting the same problems. 

Health reform is different. 

We met Nathan and his son, Thomas, in 2009. Thomas was born with hemophilia, and he hit lifetime limits on his health coverage with two different insurance companies before he turned seven years old. Two years ago, Nathan was hopeful about what the Affordable Care Act would mean. 

Last week we spoke with Thomas’s family again and they made it clear: Health reform has improved their quality of life. It means they can focus on making sure Thomas has the best possible care. It’s changing their lives for the better. 

It’s a powerful thing to watch. Go check it out. 

Thomas is not alone. He’s just one of the 105 million Americans who no longer have lifetime dollar limits on their coverage. 

The Affordable Care Act gives hardworking, middle class families the security they deserve. Because of health reform, 54 million Americans with private insurance have been able to access more preventive services. In the 2011 tax year, two million workers will benefit from the small business health insurance tax credit. And 2.5 million young people under age 26 have gained coverage on their parents’ plan. 

Behind each of those numbers is a person like Thomas. Two years after President Obama signed the Affordable Care Act, life is a little better for millions of Americans from all over the country. 

So take a moment to hear some of their stories and hear why this matters for Americans across the country: 

http://www.whitehouse.gov/health-care-story 

Thanks,

Nancy-Ann 

Nancy-Ann DeParle
Deputy Chief of Staff 

P.S. — Learn about more individuals who are benefiting from the Affordable Care Act with our map that shows the impact of reform, state by state.

 
 
 
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Politicians oppose Medco merger – for all the wrong reasons

21 Mar

The following is from a resolution of the NJ. Assembly urging the governor to oppose the merger of Medco, the pharmacy benefit manager, and Express Scripts:

“This market dominance will leave customers with limited bargaining power, allowing pharmacy benefit managers to charge more for their services. The increased cost will inevitably be transferred to the patient. The merged entity would also have greater power to steer plan participants to its own mail-order pharmacy by providing incentives such as lower co-payments, by limiting the pharmacies in the participant’s network or by requiring mandatory mail-order prescriptions, thereby preventing the patient from using the pharmacy of their choice and restricting their access to community pharmacists,” the resolution said. “Lastly, the merged entity would have a greater ability to drive down the reimbursement rates for community pharmacies, forcing pharmacies to raise prices and cut back on hours, services and employees, thereby threatening the existence of community pharmacies.”

Once again politicians miss the point and in the process don’t help the health care cost situation. Pharmacy benefit managers (PBMs) such as Medco work for insurance companies and large employers (the customers) who are the entities that determine the design of their benefits such as use of mail order, co-pays, penalties for not using generics, etc. Employers negotiate for these services and encourage use of mail order, formulary drugs and overall the least expensive prescription possible and appropriate. The big players in the PBM field must have a large number of participating pharmacies to make their plans work. True, small local pharmacies will struggle especially as there is a squeeze on the wholesale price of a drug and the dispensing fee paid by the PBM on behalf of the health plan to fill a script. Those who cannot survive with ever lower fees will not exist.

However, the same is true for hospitals and doctors as Medicare and others seek to reduce fee payments. This is exactly why you are seeing more and more consolidation and more doctors seeking employment in hospitals. Lower payments to all health care providers whether it be for each fee or by paying for fewer services is how you lower health insurance premiums … period.

So, what exactly are our priorities and goals in all this? Do we want the lowest possible price for drugs from whatever source, do we want lower health insurance premiums, do we want lower cost-sharing options for patients or do we want to preserve the existence of community pharmacies that may provide highly desirable personal service but cannot compete on cost just as your local market cannot compete with the Walmart’s of the world? Heck your local pharmacy cannot compete with a Walmart pharmacy.

All the political rhetoric in the world will not change the hard facts. The self-serving organizations trying to preserve the status quo (quite understandably of course) are working against the very kind of changes we need …. that is, if we really do care about health care costs.

The Affordable Care Act expanded coverage and increased benefits, but it did not change the fundamental system.

Here is the real question. Is America up to that challenge?

Spare me the campaign ads, it’s a done deal

10 Mar

It’s just started and I’m already fed up with the 2012 presidential election. We all know how it’s going to turn out anyway. Romney will be the Republican candidate and Obama will be the next President. The Democrats will keep the Senate and the Republicans will just barely keep the House leading to four more years of the nonsense we have been going through for the last four.

Instead of spending all this PAC and Super PAC money interrupting my TV shows for the next six months, let’s do some good with it. The Democrats can buy Chevy Volts and birth control pills, or voluntarily pay more income taxes.

The Republicans can use their money to find health care “consumers,” drill for oil, take lessons in human nature and they can also give a little to Rush Limbaugh for civility lessons.

Or, both groups can simply make a donation to reduce the deficit.

Frankly, I don’t care what any of them do with their millions as long as they don’t insult my intelligence with their barrage of lies and misleading information.

Where did I put that “I Like Ike” button? “Stevenson, Stevenson he’s our man, if he can’t do it no one can!” “In your heart, you know he’s right.”

See, cheap and memorable.

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What is the actual federal debt and who caused it?

6 Mar

I'm still not optimistic

We hear a lot these days about deficits, debt and even more about who is at fault, who added more and why.  What we don’t hear a lot about are the facts.

So let’s take a look;

On January 20, 2001 at the start of the Bush administration the federal debt was $5,727,776,738,304.64 (that’s trillion).  On January 20, 2009 at the end of the Bush administration the federal debt was $10,626,877,048,913.08 or an increase in eight years of $4,899,100,310.609 for an annual average increase of $612,387,538,826 (that’s billion).

On January 20, 2009 at the start of the Obama administration the federal debt was $10,626,877,048,913. As of January 20, 2012 the debt was $15,236,271,879,792.78 for an increase of $4,609,394,830,879 in three years or an annual increase of    $1,536,464,943,626 (that’s trillion).

So what caused all this debt; spending and tax reductions, but mostly not paid for spending.

In May 2001 Bush enacted tax cuts worth $1.3 trillion. On September 11, 2001 we began our war on terror followed by the Iraq war. In December 2003 Medicare Part D was approved (unfunded). In October 2008 we had the Emergency Economic Stabilization Act.

Remember, that from January 2007 forward both houses of Congress were controlled by Democrats.

Obama inherited a debt that had about doubled during an eight year period. During his first three years he increased the debt another 50%

During his administration we have had several major spending bills, including:

2009

February 17: American Recovery and Reinvestment Act

May 20: Helping Families Save Their Homes Act of 2009

August 6: Cash For Clunkers Extension Act

November 6: Worker, Homeownership, and Business Assistance Act of 2009

2010

March 18: Hiring Incentives to Restore Employment Act (HIRE Act)

March 23: Patient Protection and Affordable Care Act

March 30: Health Care and Education Reconciliation Act of 2010

July 22: Unemployment Compensation Extension Act of 2010

September 27: Small Business Jobs and Credit Act of 2010

December 17: Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010

And of course, in February 2012 extension of unemployment benefits and the Social Security tax holiday.

So whose fault is our current debt? It’s every member of Congress since January 20, 2001.  Does it matter who inherited what or on whose watch September 11 occurred or the economy collapsed, not if you are a taxpayer or creditor of the U.S. it doesn’t.

You promised me...

Keep in mind that no matter how you slice it, no matter what shenanigans occurred by the financial community, the root cause of the economic crisis was federal policies trying to push more and more people into home ownership they could not afford and that goes back several administrations and Congresses controlled by both parties. Of course, careless individual borrowing and debt accumulation by individuals added fuel to the fire as well.

Raising taxes alone is not going to get us out of this mess and not just because you can’t raise enough in taxes to do so without killing the economy, but more importantly because Congress keeps spending without regard to the consequences.  You can argue all you want that short-term spending is necessary to stimulate the economy as many liberal-minded economists do, but the reality is that Congress doesn’t know when to stop because spending means votes from this generation and the people most affected can’t vote yet, so who cares.

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What you should know about executive pay

5 Mar
President Barack Obama delivering remarks on n...

I'll never be overpaid (unless I can ge that rap thing going).

During the liberal left enlightenment we have become obsessed with executive pay, the wealthy, millionaires and billionaires, all 400 or so of them.  During the health care debate you were told the pay of health insurance executives was a cause of high premiums (utter nonsense by the way). Notably absent from the target wealthy were the  entertainment and sports elite and their multimillion dollars pay days, lavish life styles, private planes along with a few college presidents and football coaches who earn over a million dollars a year. Don’t get me wrong, if you can make millions dunking a ball into a net or singing garbage mouth “music” that demeans women and any other rational person, more power to you.  It’s not them who are dumb.

Before we continue let me say some executives are overpaid, some are greedy and most receive extra compensation in the form of bonuses for work that should be part of their job in the first place. In addition, in many cases the assessment for meeting incentivized goals is questionable at best. But if you think about it, that is true for most of us only on a smaller scale. Building up OT, extra long breaks, calling in sick or just goofing off on the job are all forms of over compensation.

However, whether or not an executive is overpaid is a problem for the organization’s board of directors and its shareholders. They must determine if they are getting value for their money, if performance is reflected in their investments and what it takes to attract and retain the executives they want to run the company. Relatively few executives receive the headline grabbing $100 million payouts and most of the reported compensation packages are misleading because they include far more than what most of us think of as pay, in other words all those big bucks are not in the paycheck. Regardless of an executive’s pay, it has an insignificant effect on the cost of products and services or health insurance premiums.

I know all this because I was a VP of Compensation and Benefits for a Fortune 500 company where I drafted and negotiated employment contracts and designed compensation plans for executives and below.

Where did it come from?

If you are going to be envious of or just disgusted with executive pay you should know what it is. Aside from the few hedge fund managers who make the occasional billion, most corporate compensation packages are made up of several components which may include all or several of the following: base pay, deferred compensation, stock options, restricted shares, supplemental pensions, bonuses, performance shares and the like.

When you look at all this stuff you see that the majority of compensation is not cash in the paycheck and most is deferred to a future payout which may or may not occur. In theory at least and if administered correctly the big payout will come with the growing success of the company which benefits shareholders and ultimately all employees.

Stock options give the executive the ability to convert options into stock in the future at a fixed price and benefit from the gain. Let’s say I give you 1,000 options to buy XYZ stock at $50 a share any time after three years have lapsed, but after ten years they expire and are worthless. How much did I give you? For you to receive any value the price of the stock must be above $50 when you exercise the shares during the period between three years after you receive the options and when they expire. For you to benefit you must help create value for all shareholders. So, what may appear to be $50,000 in compensation will only be that amount if the price of the stock doubles (benefiting all shareholders).

Other forms of stock compensation (restricted shares, performance shares) do provide immediate value, but the number of shares actually given to the executive depend on meeting both short and long-term performance goals typically tied to the company’s results such as earnings per share, return on investment, total shareholder return or something like that; often comparing results with other companies in an industry. In addition, there are vesting periods of several years before the executive has a right to the shares of stock.

Deferred compensation is often reported as part of the compensation package too, generally when an executive leaves a company, but deferred compensation is just what it says, it is money earned, but not taken by the employee. Instead it is deferred to some future date. Let’s say you earn $50,000 a year but tell your employer to defer $5,000 each year. Since the employer is using the money he would otherwise pay you, he is going to pay you interest.  At some point when you leave the employer, you will receive your money plus the interest.  During the period you are still employed, there is no guarantee you will ever be paid as the money now held by the employer is subject to creditor demands and if the employer gets into financial trouble all your deferred compensation is lost.  Sound like a good deal?  Most of the time it is and it defers paying income taxes, but given the likely trend in tax rates, money paid at some point in the future may pay a higher tax.

There is one other major element in executive pay and that is pensions.  Because of federal limits on the amount that can be paid from a qualified pension plan, most large corporations provide a supplemental reinstatement pension plan to allow an executive to receive a pension using the same formula used for other employees, some of which may be above IRS limits because of their pay.  Compensation above $250,000 per year cannot be counted when funding a qualified pension plan and no pension from a qualified plan can be above $200,000 a year.  When you hear about huge payouts upon an executive retiring that amount will include the present value of the pension earned by the executive even though it will most likely be paid over his or her lifetime. For example, let’s say you have a pension of $3,000 a month and you retire at age 62.  The lump sum value of that pension based on current annuity rates is about $546,000.  Of course if you were earning a million dollars a year and your pension was a million dollars a year the lump sum value would be about $15,000,000.  That is the amount you will hear about as part of their total compensation.  Keep in mind that if the retired executive dies within a short time of leaving the employer, he may never receive the total amount promised. Oh, about that fair share thing, in addition to normal income taxes on their pension, the person receiving one of these special pensions must pay Social Security and Medicare taxes in advance on the lump sum value of the pension even if they don’t live to receive the full value. In our example, that amount is $217,500.

That is a simple explanation of executive compensation.  The reality is the subject is immensely complicated and subject to rules and regulations from a variety of federal departments. Legions of consultants, tax advisors, and lawyers make a living from advising corporations about executive compensation matters.

Between base pay, cash bonuses, stock award and retirement benefits some executives receive a great deal of compensation, a great deal. One could argue that they are overpaid and in many cases they are, but does that mean their pay should be the business of the federal government beyond compliance with the scores of applicable laws?  Should executive pay be used by politicians to foster their own agendas and mislead Americans as to the implications of this compensation?

If a person in business earning a total of $10,000,000 a year is a problem, then we should also have a problem with movie stars, sports stars and anyone else who earns an amount that makes them stand out among us mortals.  It’s not easy to accept that any one person can be worth $10 million a year in compensation when the average family income is around $50,000.  These folks are an easy target, they make for good rhetoric and needless to say most of us would like to earn a tenth of what they do.

However, don’t be fooled by the class baiting we are seeing in politics today. It’s not what someone else has earned that matters, it is what opportunities you have to do the same that matters.  Most of the wealthy in this Country earned their wealth whether we agree with their value added or not. And most of the highest net worth Americans got that way through increasing stock value, and they brought along millions of average people with them.

Pelosi on contraception-the left and right coast really are the extremes

3 Mar

Here are some quotes and a press release from Rep. Nancy Pelosi regarding the flap over contraception. It always amazes me how an otherwise reasonable, normal person (I’m giving her the benefit of the doubt) can be so politically warped that distorting facts and ignoring reality becomes normal behavior.

Before the Obama administration decided to follow IOM advice that contraception was somehow a preventive health service essential to women’s health and in addition must be “free, there was no major issue with access or cost. Most (nearly 90%) of employer plans already provided the benefit under the same terms and conditions as other health services. Medicaid covers such services as well. The one gap in coverage may have been for individuals employed in some way by the Catholic church. However, the full cost of contraceptives is modest in the scheme of other life expenses in any case.

There is absolutely no logical reason for any of these services to be “free” any more than other health services. How can we make this case for younger women while older women on Medicare incur a $320 deductible and 25% co-insurance for their prescriptions? Where are our priorities and common sense? If we are all about “free” these days, shouldn’t the drugs or treatment for a serious life threatening illness be where we spend our and everyone else’s money? What will we do when there is an effective drug for weight loss, should that preventive health service be free as well?

“Instead of talking about jobs … we’ve moved on to the Blunt amendment — a blunt, sweeping overreach into women’s health,” Pelosi.

The amendment, she added, is “part of the Republican agenda of disrespecting women’s health issues [by] allowing employers to cut … basic health services for women, like contraception, mammograms, prenatal and cervical-cancer screenings and preventive health reform benefiting 20 million women.”

Find me one employer who has cut any of these services.

“This is a women’s health issue,” Pelosi said. “It’s a matter of conscience for each woman, her doctor, her husband, her family and her God to make her own decisions. And as a Catholic I support the right of a women to make that decision.”

What the heck does any if that have to do with any of this?

Pelosi Statement on Blunt Amendment
March 01, 2012

Washington, D.C. – Democratic Leader Nancy Pelosi released the following statement today after the U.S. Senate voted to table the Blunt Amendment by a vote of 51 to 48:

“Once again, Republicans have proposed a sweeping overreach into the lives, and health, of America’s women. Today, the Senate tabled an extreme amendment to a completely unrelated bill that would allow an employer or insurance company to claim a vague ‘moral conviction’ as an excuse to deny women health care coverage. Democrats have worked to expand coverage for basic health care; this amendment is about cutting coverage for basic health care services for women, including such preventive care as contraceptives, mammograms, prenatal screenings, cervical cancer screenings, and much more.

“It’s not ironic, but, rather, tragic, that on the day we kick off Women’s History Month, the Senate debates this devastating legislation to put at risk health care for millions of women, including the 20 million women already benefiting from preventive health services guaranteed under health reform. But it’s just the latest ploy in the Republican agenda of disrespecting the health of American women.

“I thank my colleagues in the Senate who are working to strengthen women’s health, rather than diminish it, by tabling this extreme legislation.”

“Extreme legislation” you say. Isn’t that the pot calling the kettle black? I don’t know how Republicans feel, but I doubt they disrespect women or their health. I won’t go into what others have said on this issue but you can read it for yourself here.

Never lose sight of the fact that the lack of insurance coverage for something never takes away the right to obtain that procedure or service. It simply means it will not be paid for by someone else. That is an especially relevant fact when you are talking about routine expenses, you know, like something that costs less than an admission to Disneyworld or your cell phone bill.

Underfunding state employee pensions … can you afford to do otherwise?

25 Feb

This from Bloomberg.com

Christie’s $29.7 billion budget for fiscal 2012 funds only 14 percent of the pension payment recommended by actuaries, even after his benefit changes enacted last year, Fitch said in a Jan. 31 report. Pension demands will rise if the state fails to achieve its 8.25 percent assumed return on investments, the company said.

And you thought public pensions were not a problem. From the union perspective here is another governor not funding the State’s promises. From the citizens perspective, well who cares about the citizen we all know there is no connection between income and property taxes and the pensions and benefits for state workers. And according to the Democratic party Republicans are out to destroy these unions in any case.

2012 Retirement Security Survey Ha! Ha! Ha! LOL

24 Feb
 
English: A member of the audience holds a &quo...

Thank you indeed, we will take all we can get, even from the millionaires and billionaires

I recently received the “2012 Retirement Security Survey” in the mail.  Great I thought; somebody is really looking at this important subject.  I will fill this one out for sure.  Oops, upon closer examination the document turns out to be propaganda from Democratic National Headquarters and a request for a donation.  There is no serious attempt to gain any valuable information.

Of course, Democrats are not alone with such nonsense, but some of the text of the “survey” really caught my eye because it is so outrageous in its claims and more than anything else it panders to people (mostly elderly) while ignoring the consequences for us all of staying a course of unlimited entitlements, irresponsible spending and long-term growing liabilities.

Here is an example:

“Republicans are working to turn back the clock on civil rights, destroy trade unions and the right to collective bargaining, deny women health care and vital family planning services, dismantle the Environmental Protection Agency, slash investments in education and medical research and to repeal President Obama’s historic health care reform.”

Another few examples:

“They (Republicans) abandoned seniors who fall into the prescription drug “donut hole” to give tax breaks to millionaires and billionaires. And they’ve developed plans to cut Social Security by slashing benefits and raising the retirement age.”

I’m still trying to figure out how much of this has to anything do with a retirement survey, but of course I know the real purpose of this mailing which is to scare the hell out of people, especially seniors.  This message and misleading information is not unlike that frequently issued by the AARP.

Then we have the objective questions contained in the actual survey:

  • Do you oppose the decision by House Republicans to end Medicare while protecting tens of millions of dollars in subsidies for Big Oil?
  • Do you oppose the Republican Party’s position of cutting Medicare for future retirees so they can extend the Bush tax cuts for millionaires and billionaires?
  • The health care reform law passed last year closes the Medicare prescription drug benefit donut hole.  Do you support this plan to help seniors pay for expensive prescription drugs?

How is all that for an objective set of survey questions?  Hey, doesn’t everyone love Big Oil, billionaires and donut holes? 

Within this blog I have addressed many of these issues over the last few years, especially why it is so important to future generations for this generation to fairly and prudently address the growing costs of Medicare and Social Security.  Any political party that panders to people creating the we can have it all expectation and the only thing that needs to change is to place higher taxes on millionaires and billionaires (defined as families earning $250,000 or more) is doing a great disservice to this Country and its citizens.

Extreme right Republicans who believe that the average American can do without many government programs is equally irresponsible.  The left underestimates Americans and sees them as totally dependent on government and the right over estimates the American ability or willingness for self-sufficiency.  Dare I say that puts us some place in the center?

I see no purpose in addressing the other side of some of these claims, but I can’t resist pointing out a few items.

A few Republican governors have taken on public employee unions and rightly so and in the best interests of all of a state’s citizens. 

Republicans are the ones who started Medicare drug coverage in the first place, albeit with no funding to pay for it.

Nobody is denying women health care or vital family planning services, not even a big bad insurance company denies anyone health care . . . think about it.

Nobody is proposing to slash Social Security benefits, but rather to slow the growth in future benefits, quite modestly as a matter of fact once you look at the numbers.

Nobody is going to destroy Medicare or Social Security, but to keep denying the need for meaningful reform will cause just as much harm.

You may want to review the Social Security, Health Care and Medicare categories on this blog for additional discussions on these topics.

How politicians “fix” a problem – you will ultimately pay for the Medicare “doc-fix”

22 Feb

A problem that has existed for many years is the automatic adjustment that triggers cuts in physician payments under Medicare. Each year Congress puts a band aid on the problem. This year is no exception. The recent deal on this is most interesting in how it works, basically taking from one hand to give to another and ultimately shifting more costs to individual Americans… and the fix is only for the next ten months.

Don't get me wrong the scheduled cuts in payments to physicians was not viable, but solving that problem by cutting payments to someone else is no answer either. The real issue now and always is the total affordability or lack thereof for Medicare as currently constituted.

This from Kaiser Health News:

The proposal would cut Medicare payments to hospitals and other providers for “bad debt,” Medicare payments to clinical laboratories and Medicaid “disproportionate share” payments to hospitals that serve many poor patients, and divert $5 billion from the health law’s $15 billion prevention fund.

In addition, Louisiana would not receive $2.5 billion in additional Medicaid funds included in the health law, according to a GOP aide…A summary circulating Wednesday notes that cuts to health law funding comprise a large portion of the savings funding the Medicare spending in the agreement. The package would cost about $50 billion over the next decade, with about $20 billion going towards the Medicare doc fix and Medicare extenders package.

The negotiators plan to take $9.6 billion from areas that include payment cuts for clinical laboratory services and Medicare “bad debt,” payments Medicare makes to hospitals and nursing homes when patients cannot pay for their medical care. The tentative deal would reduce Medicaid “disproportionate share” payments to hospitals by more than $4 billion.

So, when patients can't pay (like the deductible and co-pay days), where will the money come from? The hospital will simply eat the loss. Does that have any consequences and if not, why were the payments being made in the first place?

Here we have another example of short term thinking, ignoring the unintended consequences, passing the buck to the next generation and passing the real cost to every citizen in the US.

Congress does not need to raise taxes to get you to pay more. Our illustrious Congress has now pushed past the next election, the 2% payroll tax cut, the doc fix and dealing with the tax system. What a way to run … Just about anything.

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A new twist on paying ones “fair share”

21 Feb

Frankly I agree that every American should pay his or her fair share. That is the essence of our Republic , that is an obligation in a free society.

Paying ones fair share in a country like the United States is not limited to ones tax obligation. It includes things like voting and serving on jury duty. It includes not dropping out of school, not cheating on unemployment or welfare benefits, food stamps or taxes (cash payments are taxable), not doing drugs or having multiple children with no father in the home. In short, not doing things that place a drag or unnecessary expense on the society in which you live.

Paying ones fair share includes seeking out every opportunity, using ones skills to the maximum, setting your children’s needs above your own.

Paying your fair share means living within your means, managing personal debt and planning wisely for your financial future.

In the final analysis the people who do not behave responsibly have a far greater deleterious effect on the vast middle class than the few hundred thousand millionaires who may pay an effective tax rate lower than yours.

Our current political leaders want to lead a nation of victims, they want you to think your current state is someone else’s fault and that if more money comes from the few you will be better off. You won’t!

Do you really think you will be better off more dependent on more government programs and the political whims of future Congresses?

Are you paying your fair share?

Managing the deficit is not on anyone’s agenda

20 Feb
 Hundreds of millions in savings from winding down the Iraq and Afghanistan wars and we immediately find new ways to spend the money, not reduce the deficit or balance the budget.
President Barack Obama signs legislation in th...

And it's not even my money, cool huh?

A 2% payroll tax cut is about to expire (one that should not have occurred in the first place), the President appeals to the public to tell Congress what the loss of the $40 will mean to them and unthinking Americans respond in droves not caring where the money will come from, the inevitable consequences of our financial chicanery or the long-term impact on Social Security funding … Hey just get it from the “wealthy 1%.”

Congress extends the tax cut without funding it, adding more to the deficit.

Not a week goes by that another piece of legislation is not introduced adding more to federal spending.  There is more for everybody, just don’t pay for it or instead soak the top 5 percent of Americans.

There are several clear messages here. Americans want more, they know little and care less about Federal spending .  Obama is going to be re-elected because he is more than willing to buy the votes of the middle class.

It’s not all that complicated and Americans are going to get exactly what they deserve.

Wealthy in America-Inequality in America; where is the ROI? Higher taxes on the “wealthy” is a losing strategy

18 Feb

A favorite theme of today’s politicians is income inequality; not paying ones fair share, etc. However, inequality has been with all societies since time began. Inequality is not necessarily bad and can result simply from the high achievements of a relatively few in a society. This is not unfair as long as the successful have not intentionally prevented the mass of people from achieving success. For example, through unfair taxation or poor educational opportunity.

In a society such as in the U.S. opportunity abounds regardless of how difficult ones situation may be as the result of circumstances of birth. Some people rise above their circumstances to amazing heights, some rise modestly, some plod along and some do nothing positive, what’s new?

Economically - Challenged & illiterate .. CIA ...

Today we focus on the taxes paid by the rich; billionaires such as Warren Buffett claim they pay too little because most, if not all, of their income is taxed at capital gains or dividend rates. While true that those rates result in a low effective tax rate for the super wealthy, that argument seems to ignore the many government transfers and credits applicable to the majority of Americans. Various tax credits and deductions are unavailable or are limited for higher income (starting in some cases around $80,000 in annual income) Americans. If circumstances such as the number of children one decides to have can result in no income tax payable, how is it unfair that income invested (already taxed once) and at risk is taxed at a lower rate than ordinary income?

Higher income (far below millionaires and billionaires) Americans are limited in their tax advantages in many ways such as the taxation of Social Security benefits, higher Medicare premiums, limited IRA contributions, the alternative minimum tax, the estate tax (which the new Obama budget wants to raise to 45%), limited retirement benefits and 401(k) contributions, several new taxes under the Affordable Care Act including a new 3.8% tax on unearned income such as taxable profit from selling a home and more.

Virtually every tax advantaged program passed by Congress contains limitations or exclusions applicable to higher income individuals. In other words our tax system goes out of its way to benefit the non wealthy which is one of the reasons nearly 50% of Americans pay no income tax. Despite this, we are besieged with criticism of the 1% and far lower who, according to our President, don’t pay their fair share.

We struggle even defining wealthy. Is it income or is it assets and net worth? Is the senior citizen living on Social Security and a modest pension wealthy? What if he has accumulated $500,000 in savings and investments and has a fully paid home worth $400,000? Many government transfer programs ignore such assets when defining eligibility. One could easily have a half million dollars in net worth and still avoid taxation of Social Security and higher Medicare premiums. Is that fair?

Is it fair a man can be married three times, be divorced twice and each of those ex and current wives receive his Social Security benefit based on his earnings alone? Not only do higher income people (again, far from millionaires) pay Medicare payroll taxes on all of their wage income, they pay higher Medicare Premiums, while the taxes they pay on their Social Security benefits also pay for a portion of Medicare.

Should higher income people pay more to their government and get less, ok that’s a fair argument. But what is not fair is claiming the successful in America are not now paying their fair share.

If you are poor or low-income and have lived your life accordingly, you have received a disproportional amount of wealth transfer (not to mention access to hundreds of government programs designed to improve your education and lift you out of poverty) and will continue to do so in old age. If you are middle-income, you should remain middle-income in retirement and if you are higher income the same holds true. You lived your life, made your choices, reaped the rewards or suffered the consequences.

And who are these wealthy Americans? We all know about the Wall Street crowd, hedge fund managers, and CEOs, but what about the small business owners, the cop and teacher whose combined income puts them over the limit for many government transfers? Do we think of the prudent middle-income couple who have paid off their mortgage and accumulated a nice nest egg or the government worker with a generous pension and health benefits, plus 403b plan? Probably not.
Frankly it doesn’t bother me that Warren Buffet pays a lower tax rate than I do or that I pay a higher effective tax rate than the majority of Americans. What bothers me is that the politicians have framed the discussion so Americans believe that being fair means taxing the “wealthy” more so that mismanaged government programs and unrealistic promises made by politicians can be partially paid for. That is a losing strategy for all of us.  What we should be asking is what have we gotten for our investment in government programs since the War on Poverty in the 1960s. Why haven’t all the programs in the last fifty years closed the income gap from the bottom up?

How to increase the deficit lickety split

17 Feb

In case you were interested in what Congress just did to the deficit by extending the 2% cut in the Social Security payroll tax, read this from the Director of the Congressional Budget Office (CBO):

According to CBO’s and JCT’s estimates, enacting H.R. 3630 would change revenues and direct spending to produce increases in the deficit of $101.1 billion in fiscal year 2012 and $89.3 billion over the 2012-2022 period. The bill would reduce revenues by $77.6 billion over the 2012-2022 period and increase direct spending by $11.7 billion over that period, according to CBO’s and JCT’s estimates

A CEO gets fired when he fails to deliver results, an important lesson

4 Feb

It’s not spending, it’s lower than expected revenue. Spin baby spin. The last time I checked there were two parts to an equation and they were supposed to be equal. One goes up the other goes down.
Read this from the Center for American Progress (man, do I love that word progress):

The federal budget deficit will again exceed $1 trillion this fiscal year, the Congressional Budget Office reported today. That news is sure to trigger another round of condemnations from politicians and pundits who have a political or ideological interest in pinning these deficits on the domestic spending policies of President Barack Obama.

Unfortunately for them, today’s report—along with dozens of other similar CBO reports in recent years—actually proves the opposite—that the current deficit is overwhelmingly the result of two factors: events that occurred before President Obama took office and tax cuts.

In fact, higher spending under Obama accounts for less than 20 percent of this year’s deficit, and nearly half of that was additional defense spending—not domestic spending. Bottom line: The narrative that an “Obama spending spree” caused our deficit problem is utterly false.

Events that occurred before Obama took office and tax cuts, ummmm, so what?  Tax cuts you say? I think you mean the tax rates in effect for more than four years.

Let’s think about this; Mr Obama ran for President knowing full well the state of the economy, all about the Bush bailouts, and the tax rates in effect then and now. He still promised hope and change.

For the last two years of the Bush Administration and the first two years of the Obama Administration Mr Obama’s party controlled the Congress providing ample opportunity for both hope and change (the good kind).

Knowing the tax rates and the state of the economy, it is no magical leap to estimate federal revenue thereby allowing a prudent manager to adjust spending accordingly if there is any goal to reduce or at least not increase the deficit. Instead the President spent most of his time with failed attempts to stimulate the economy and seeking out scapegoats from successful Americans to insurance companies and even the Supreme Court.

Are we to believe that the President of the United States, a man who seeks and accepts the most difficult job in the world is not responsible for dealing with events that occurred before he took office?  Bush increased the deficit, we get it. Obama increased it even more, we get that too. I haven’t received a raise in three years, to cope I watch my spending closely, and do not increase my debt, most Americans get that.

The view that taxes being too low is the cause of the deficit has got to be a reflection of the ass backwards thinking of the generation now in charge of our country.  A generation that grew up thinking uncontrolled spending and little saving had no consequences.
If an executive seeks a potentially lucrative CEO position with a company heading for bankruptcy and fails to turn the company around claiming that events leading to the bankruptcy occurred before his tenure caused his failure, he gets fired.  The buck stops with the person in charge.  Need I say more.

Where is Harry Truman when you need him?

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