Archive | Politics

President Obama and his nation of lobsters

10 Dec
President Barack Obama and Warren Buffett in t...

Sure, I enjoy a good lobster now and then

The President seems to be on his tear down America tour again. Nothing works because big business, banks and Wall Street are too greedy and corrupt and the middle class has no chance to move up.

He says the idea that big business and the wealthy can raise the tide for all just doesn’t work and never has. If the American system of capitalism never worked how did America become the greatest, wealthiest most powerful nation in the world in just short of 250 years? Sure, there were bumps along the way, as a nation we did some terrible things to many people, everyone didn’t always play fair, there were winners and losers along the way, but every person in America did benefit from the rising tide, every person had (and still has) opportunity and even the least advantaged among us are better off than most of the people in the world.

You can find fault and justified criticism of all the great industrialists and robber barons in our history. Ford, Firestone, Vanderbilt, Carnegie and all the rest took advantage of our system, took advantage of labor, but would we have what we have today or be better off without the likes of these people or what they ultimately accomplished for America under our free market system?

This President delights in finding scapegoats in an ever ongoing effort to pit Americans against one another either to deflect the real cause of economic problems or advance a far left agenda.  Over the centuries Jews, Gypsies, American Indians, the Irish, African-Americans and many others have been the victims of scapegoating to further someone’s political agenda. This President focuses on the wealthy (defined in interesting ways), business, Wall Street, banks, insurance companies, and the supreme court as his targets, all the while avoiding a positive, work together, we can succeed message about America.  He sees success in tearing down rather than building up.

Mr Obama finds comfort in blaming someone else; his predecessor, Congress (mostly any part of Congress that doesn’t agreee with him) and the 1%.  I am looking for an example of a CEO who kept his job very long using the problems he inherited when he took the job as an excuse for not raising earnings, revenue or market share. To be fair Mr Obama doesn’t know how to act like a CEO, he is after all a career politician and nothing more.

Free lunch? Let me at it, I'm not afraid of no stinking boiling water

Populism sounds great in auditoriums, but the reality is it doesn’t work because promising more and more on the backs of others is a false promise. The lobster enters a trap for a free lunch and ends up being someone else’s not so free dinner. The lobster can’t figure out how to let go and back out the same way he came in.

When Americans hear the ongoing drone that taxing the “wealthy” will raise them up and give them more opportunity, they should ask exactly how that is going to happen.  How will Warren Buffett paying an effective tax rate of 35% rather than 17% create jobs, cause US manufacturing to grow and make American goods more competitive on the world market?  If you could assure that no American could make more than $250,000 a year, would that make you feel good or would you say, “”Hey, someday I would like to earn more than that.” or “I hope my kids do better than that.”

I send a donation each month to a school that gives a free education to inner city minority children and then gets them scholarships to the best private high schools in the state with most going on to college also on scholarships. If you believe in the Obama rhetoric, then you must also believe that my monthly donation would be put to better use paid as taxes to the federal government. That is the essence of the issue.

No, everyone cannot be left to simply fend for themselves, nothing is right-wing simple. We need some safety nets, some national strategy and some regulation to assure fairness, but we also need individual responsibility and accountability.

To play on the theme that my life is the result of someone else or some system being unfair to me is the biggest trap of all.  Little in life is not the result of our own actions or inactions.

President Obama should be ashamed trying to make us a nation of lobsters

When will it be a good time to raise the Social Security payroll tax?

8 Dec
Roosevelt Signs The : President Roosevelt sign...

It's insurance I said!

 This year’s 2% payroll tax cut was paid for by increased deficit spending. In other words we “temporarily” turned Social Security from a self-funded program into a Congressional budget allocation funded by more debt. That is exactly the opposite of the original design of the program.  On this path Social Security becomes another form of welfare subject to the political whim of each new Congress . . . but it’s only temporary. When you look on your paystub you will see “FICA” opposite the deduction for this tax.  Do you know what the I stands for?  It stands for Insurance, the Federal Insurance Contributions Act.  Messing with something that is supposed to be insurance funded by employer and employee contributions is nuts.  It undermines the very essence of the Social Security system for political expediency and places its funding not with the beneficiaries, but at the mercy of Congress.

Some ideas to pay for extending and enlarging this tax break, and I use the term loosely, include raising airport fees, gasoline taxes or taxes on other parts of the economy.  Even someone like me who got a C in Econ 101 can see the irony of this; raise the cost of gasoline… that should help the middle class. 

The many promises for this 2% tax break; new consumer spending, job growth, etc., we’re so successful politicians want to do it again also on a “temporary” basis. This time they want to raise the success level by cutting the tax rate to 3.1%, fully half the worker portion of 6.2% needed to fund Social Security (well, more is actually needed but that’s another story). This time they are actually going to pay for it by increasing taxes someplace or cutting spending someplace else thereby allowing some other federal money to be transferred to Social Security where it can be used to buy Treasury bonds to fund ongoing deficit spending, just like the payroll tax.

Social Security Poster: old man

Nothing to smile about now

Given this is all “temporary” (like the estate tax in 1918) what’s the big deal?  The big deal is what happens at the end of 2012?  Will the middle class be able to withstand a 3.1% tax “increase” then better than a 2% “increase” now?  Has the average beneficiary of this entire stimulus absorbed the 2% into their standard of living? Have they incurred new debt based on their new-found ability to repay?

To date we have sent stimulus checks to most Americans, we lowered their out-of-pocket health care costs, gave them tax credits to buy a car, a house, put in central air, new windows and I lost track of what else, now at the end of 2011 we are told diverting another $550 a year from Social Security to lower the average family tax bill will do the trick.

These tax games may be temporary, but it appears common sense is gone forever. 



Are your taxes going “up?”

6 Dec

From the AP:

The president has been seeking an extension and expansion to the payroll tax cut that will expire at the end of the year. The White House says taxes on the average family would increase by $1,000 if the cuts are not extended.

To make its point, the White House went so far as to put up a countdown clock during spokesman Jay Carney’s briefing to show when middle-class taxes would go up “if Congress doesn’t act.”

Fiddling with the isolated stream of Social Security revenue is a bad idea, we’ve talked about that before.  But it is also a bad idea to propagate false concepts and politically expedient rhetoric. If the scheduled expiration of a temporary reduction of the payroll tax on December 31 is a pending disaster, what will we call it on December 31, 2012?

According to the President, extending the tax reduction “Will spur spending. It will spur hiring and it’s the right thing to do.”  That’s a tall order for a tax reduction that has been in effect for a year with little or no such effect.  The latest version of paying for this is a lower temporary surtax on millionaires and new fees on lenders.

And then we have this from the White House:

Good afternoon,

It’s simple. If lawmakers don’t vote to extend the payroll tax cut, taxes for 160 million Americans will go up on January 1st.

President Obama just left the press briefing room at the White House where he called on Congress to extend the tax cut, pay for it responsibly, and expand it so middle class families get a $1,500 break next year.

He told Congress to put country before party and stop wasting time.

Every day, folks are fighting to make ends meet and businesses are working to keep their doors open. The longer Congress waits to extend the payroll tax cut, the more uncertainty it creates for ordinary Americans. So we’ve put a clock on every page of the White House website, counting down the days, hours, and minutes until taxes for the middle class increase. In the briefing room, where the President just spoke, that same clock is ticking down as well.

And to make sure you have the information you need to know exactly what this means for your family, we’ve put together a calculator to show how much of your money hangs in the balance.

This calculator illustrates for you what nearly every independent economist has said: letting this tax cut expire will be a blow to the economy. We can’t let that happen. Now is the time to make a real difference in the lives of the people who sent us here.
Check it out and pass it along:

David Plouff

Senior Advisor to the President

The clock is also ticking on a 27% reduction in  fees paid  to physicians treating Medicare patients. If that is fixed how  will it be paid for?  Perhaps a new temporary tax on health insurers, that won’t have any negative impact on anyone.    The estate tax was supposed to be temporary and the AMT was only to affect a handful of people who escaped paying any income tax.  Politicians have no common sense and economists find a way to validate that.

Get ready for your tax increase and pay cut in twenty-eight days…ho, ho ho!

3 Dec

While most of us are focused on the number of days until Christmas, politicians are focused on the number of days until Americans get a tax increase and doctors get a pay cut.

What the heck is he talking about?

Well, that 2% less you are paying for Social Security payroll taxes is set to expire at year end (which we all knew for the last twelve months), but that doesn’t stop some politicians from explaining the expiration of the tax holiday as a tax increase. Just imagine what they will say at the end of 2012 if the tax break is raised from 2% to 3.1% and extended to Jan 2013?

Just imagine what you will say when you look at your first pay stub in 2013. Oh what a tangled web we weave.  Better not use that extra cash for ongoing expenses because someday the expenses will still be going and the cash will be gone.

And about those doc’s pay, Congress has less than 27 days to figure out how to stop the 27% cut in Medicare’s physician payments scheduled to go into effect next year… again.

As I’ll conceived as this fee cut may be, and as obvious as it may be that temporary means temporary, these issues illustrate how politicians can’t deal with giving anyone less or taking away anything given even when Congress passed the laws that specify how the situations are to be handled.

And you really think all the parts of the Affordable Care Act will work as planned?

Barney Frank retires; another example of why we need term limits

28 Nov
Representative Barney Frank, co-architect of t...

Massachusetts Rep. Barney Frank, the ranking member of the House Financial Services Committee, will not seek reelection in 2012, his office has confirmed. Frank is a 16-term Democrat who last year helped pass the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Mr  Frank is 71 and was first elected in 1980; he made a career out of politics and it is hard to imagine that the people in multiple generations knew enough about his politics to affectively evaluate his sixteen terms in Congress. In most of his bids for reelection  he didn’t even have to campaign. Mr Frank is one of many such career politicians in both parties who overstay their welcome.

Mr Frank has a unique distinction however. While no one person can be blamed for the financial crisis and housing bubble, Mr Frank deserves a lot of the credit via pushing for sub prime mortgages, pressuring the federal mortgage agencies and most recently the ill conceived Dodd-Frank legislation.  One can only wonder if his constituents  even knew of these efforts or the unintended consequences.  He is not alone of course, politicians of both parties should be held accountable for similar social engineering disasters.

No matter, he is retiring with his federal pension and related benefits. His thirty-two year career as a “public servant” is over. However, it should have ended much sooner because we should be limiting the terms for members of Congress. Power corrupts and a long stay in Congress creates a lot of power and little accountability .

Sign the term limit petition by clicking on the link at the top of the page. 

Democrats Urge Obama to Protect Contraceptive Coverage in Health Plans

21 Nov
Diana DeGette

"Free" Free at last!

The title of this post is actually the headline from a Sunday New York Times article on November 20th.   I find it incredible that as Rome burns our politicians, in this case apparently Democratic politicians, find their cause celeb is the “free” coverage by insurance of birth control pills.  I am trying to restrain myself at the stupidity of all this. 

Why in the world do birth control pills have to be “free?”  One exception may be within Medicaid where it makes sense to make this investment for people who likely truly need the help, but for the general population, give me a break. 

According to the one quote below millions of working women need coverage.  Get it “working women” need someone else to pay for their pills.  Apparently it is alright for them to pay 20% of the cost for open heart surgery, or treatment for breast cancer, but not 20% of the cost of a $35 prescription.   Many health plans have for years provided coverage for contraceptives with either modest co-pays or coinsurance, but that is now insufficient, it has to be free.

And you thought there was hope for us managing health care costs; not while this mentality persists there isn’t.

Quotes from the NYT article:

When the administration announced the requirement for contraceptive coverage, it said the decision was “based on science.”

House members have sent a letter to Mr. Obama urging him not to widen the exemption. Such a change, they said, would keep contraception out of reach for millions of women.

Representative Diana DeGette, Democrat of Colorado, said the broad exemption was “an outrageous idea.”

“Millions of women work for colleges, hospitals and health care systems that are nominally religious, but these folks use birth control and need coverage,” said Ms. DeGette, a leader of the Congressional Pro-Choice Caucus.

Based on science? . . . exactly what science tells us that people can’t afford to pay the cost or some part of the cost of a low-cost, voluntarily prescription drug?  Why is something that costs $15 to $50 a month out of the reach of millions of women when millions of (working} women already have such coverage with nominal co-pays or coinsurance?

Exactly what can a working women afford to spend $15 to $50 per month on; perhaps a few lattes, a trip or two to get their nails done, makeup, an extra pair of shoes, their hair?  No I am not being condescending or simply a smart ass, I am trying to point out that $1 spent on some important health care item is the same $1 spent on something not so important but that is not paid for by someone else.  We would think it ludicrous to say a manicure is covered by insurance, yet we don’t expect a person to make the choice between the manicure and a birth control prescription because “insurance should pay for the later.”  The prescription should be “free!”   As I have already said, we are not talking about the poor who cannot afford either. 

When I Googled(r) to find the current cost of oral contraceptives I often found something like this:

The initial physical exam in your healthcare provider’s office could range from $20 to $200. The monthly fee for each supply of pills ranges from $5 to $30 or more, depending on your medical coverage


Costs for generic birth control prescriptions change from pharmacy to pharmacy and also depend on your insurance plan, if it covers birth control. Often, insurance co-pays will be less for generics than for brand names. For example, you might pay $10 instead of $20 or $30. Some insurance plans will only pay for generics.

Get it, they don’t understand what the cost of something is, it depends on your insurance.  Here is a clue; the co-payment you pay is not the cost.

According to the Planned Parenthood website oral contraceptives cost between $15 and $50 per month.  “One popular birth control pill costs $48.07 per month for the brand name, or $27.99 for the generic.”

What hope does America have for controlling health care costs? Very little as long as we think we can cover it all and that the real cost of health care is only the portion we are expected to pay, which apparently is shrinking by the day.

Threatening politicians if they cut Medicare, it’s not only the elite who influence for self interest at our collective peril. What would you do to rein in Medicare costs?

20 Nov
WI: Then-Senator Barack Obama and AFSCME membe...

Lobbying by any other name

Twenty-six year old history majors are protesting on Wall Street, the influence of the wealthy is decried, lobbyists are bedeviled and yet when a politician even thinks of trying to fix problems that were caused by the promises of past politicians and the actions of us all, they are targeted and threatened with unemployment.  

We are shocked at influence peddlers for one group and then do exactly the same thing in the name of seniors, or teachers or public employees.  The answer is not that one group of the other is bad or good, deserving or not, it is that we are unable to grasp the concept that everything we do is connected.  There are consequences, unintended or not, to the promises we make, the policies we establish, the money we borrow, the decisions we make.

In the quest to deal with the deficit, both Medicare and Social Security must be addressed.  They are the two largest components of federal spending and growing.  To ignore that is irresponsible and yet we have groups like the AARP and the unions listed below who choose to ignore the realities of our spending and inability to fulfill unrealistic promises.  You simply cannot look at one element of spending in isolation and expect to solve a spending problem as desirable as that spending may be.

Take a look at this report from Capsules the KHN Blog 

TV Spots Target Three Republicans On Medicare Cuts

By Karl Eisenhower

November 16th, 2011, 4:16 PM

The AFSCME and SEIU trade unions, along with the liberal advocacy group Americans United for Change, are warning Sen. Dean Heller, R-Nev., Sen. Scott Brown, R-Mass. and Rep. Denny Rehberg, R-Mont., that votes in favor of Medicare and Medicaid budget cuts will be unpopular with seniors.

The groups launched ads today featuring the voice of a woman who sounds as though she’s old enough to be eligible for Medicare.  The script of each version is the same, with only the name of the targeted member of Congress changing.  Heller and Brown are seeking reelection, and Rehberg is running for the Senate against Democratic incumbent Jon Tester.

The ad targeting Sen. Brown, embedded below, is running only in the Boston market, and only on cable television.  The Heller ad is running on broadcast stations in Reno, and the Rehberg ad is running on broadcast stations in Billings and Missoula.  All three spots will run through the end of this week.

A transcript follows:

If you vote to cut Medicare, Sen. Brown, I will remember it every time I visit my doctor. I’ll remember you cut Medicare and Medicaid every time I fill a prescription. I’ll remember you cut Medicare if I fall or get hurt. I’ll remember you chose protecting millionaires over protecting my health. My friends will remember it too –- all of them. Call Senator Heller. Tell him to protect Medicare and Medicaid.

Here is a quote from the Americans United for Change website:

For decades, seniors have relied on Medicare being a guaranteed benefit and those less fortunate have depended on Medicaid to provide long-term care and coverage for children. These programs need to be strengthened to ensure they remain available for future generations, which means not gutting and decimating benefits, leaving low-income children, seniors, and people with disabilities out in the cold. The key to making Medicare sustainable is reining in costs, not dumping more expenses onto seniors. We are working to set the right priorities for an economically secure future while continuing to protect health care coverage for those who can least afford it.

They are right, the key to making Medicare sustainable is reining in costs.  Ok, now just tell us how or more important, who will receive less when those costs are reined in?  Here is a check list of possibilities:

 [] doctors [] hospitals [] drug companies [] patients [] high-tech equipment manufacturers [] nursing homes 

The Affordable Care Act already claims to have saved over $400 billion in Medicare costs, plus raising an additional $100 billion plus from new taxes on the wealthy and employers.  The Act contains 160 programs and projects designed to lower costs over time and all this is still not enough.  Doctors are supposed to see their payments cut  27% in January 2012, but that will never happen. 

So, let’s have suggestions for “reining in costs!”

Public employee unions; Ohio voters shoot themselves in the foot; Mr. Spock, why didn’t you vote? Madam Secretary, have you read your job description?

18 Nov

Some public employees may have gained a victory, but the people of Ohio voted themselves a big loss.

I am not against unions or collective bargaining; I participated in both for many years. Unions serve a valuable and necessary purpose. In fact, I currently work with a union, but to have a fair collective bargaining process both parties must represent their respective interests trying to achieve mutually beneficial goals. That is rarely the case when unions bargain with politicians who are largely dependent on the unions for their jobs. Public employee unions are not the same as other unions.

Many states and cities have gotten themselves to the brink of bankruptcy as labor costs and pension liabilities consume their budgets. That didn’t happen as a result of effective bargaining by government officials. The fact is that collective bargaining in the traditional sense does not work with public employees and their unions and bureaucrats and politicians because no one looks out for the interests of the group with the most at stake; taxpayers. (apparently in Ohio taxpayers don’t even look out for their own interests.)

I am the only logical person around?

In Ohio the unions spent $30 million (of member dues) to defeat legislation limiting collective bargaining for state workers. Ohio unions were still able to negotiate for wages and working conditions. There is no victory for anyone. Where is Mr Spock when you need him? Voters in Ohio threw out all logic with their vote and rather were swayed by some misdirected emotional attachment to firefighters, police officers and teachers. Public employees deserve a fair compensation package, but regardless of the job they do or service they perform, that package must be affordable to the citizens who foot the bill today and into future. It was only the most costly and the most subject to abuse issues that were off the table, mainly pensions and other benefits.

The voter who holds the view that “teachers are underpaid or first responders risk their lives and deserve every penny they get” without regard to economic reality or the total concept of public employment, has no right to complain about taxes or loss of other government services. Attempting to manage public labor costs is not an effort to hold down the middle class; rather it protects the vast middle class dependent on government services.

Even while the OWS crowd blames their woes on the one percent, in many states and cities far more damage is being done by public employee union contracts and the politicians who supported them. Mr. Spock would support the logic of politicians trying to fix long-term problems not overturn their efforts or vote them out of office.

In the meantime our Secretary of Labor makes it clear where the sympathies of the Obama administration reside. How inappropriate is it for a cabinet member to be so one-sided. Read this statement carefully. It hits all the right emotional buttons and mixes the attributes of public and private collective bargaining as if they were the same. Such political pandering is reprehensible.Guess what, government entities are not businesses and don’t operate as if they are, that is the difference.

Official portrait of Secretary of Labor Hilda ...

Ah, sweet victory!

News Release
OPA News Release: [11/09/2011]
Contact Name: Carl Fillichio
Phone Number:
Release Number:

Statement by Secretary of Labor Hilda L. Solis on Ohio labor law vote
WASHINGTON — Secretary of Labor Hilda L. Solis today issued the following statement on the Nov. 8 Ohio labor referendum, in which a majority of voters rejected a state law limiting collective bargaining:

“Last night, Ohio voters delivered a bona fide victory for public sector workers everywhere.

“After months of advocacy and organizing, the people of Ohio have defeated a law that would have silenced the middle class and curtailed the collective bargaining rights of thousands of teachers, firefighters and police officers. Ohio has made it clear: these dedicated public servants still need a seat at the table to demand fairness, dignity and respect — especially in tough economic times. Through their unions, they have a voice in their workplace, in their future and, most importantly, in our future.

“In my time as labor secretary, I’ve seen firsthand time and time again how unions make remarkable contributions to the strength and prosperity of our nation. In workplaces across the country, collective bargaining is helping businesses improve their bottom line, providing tax payers with high-quality services, making workplaces safer and more productive, and ensuring that all Americans have the opportunity to make it into the middle class.

“I am proud to join everyone in Ohio and across the country in celebrating the voice of workers, which can only be guaranteed when they have the right to organize and bargain collectively. Congratulations to all who contributed their time, passion and dedication to achieve this incredible feat for working families.”

While Ohio voters were shooting themselves in the left foot on this issue they couldn’t resist taking aim at their right as well. They overwhelming approved a (meaningless) referendum rejecting the Obamacare mandate to carry health insurance. Hey folks, you may not like the Affordable Care Act or Obama, but the logic and reality is that you cannot have affordable health care if you allow people to game the system, jump in and out of coverage as they need it and dare I say it, not “pay their fair share” in premiums even if they don’t use health care. Everyone has to be in the pool.

Ohio voters, and I suspect many others, seem to think you can deal with selected issues in isolation without extended consequences, you can’t!

Why does Congress get a free pass on insider trading?

15 Nov
A sleeping bag. A corner of the black sleeping...

Where should I put this thing?

Every time I hear the words occupy Wall Street I chuckle to myself, not that there is anything really funny, just pathetic. Sure there are many problems to be addressed, but they are not on Wall Street or Oakland or Seattle.

I can tell you where to protest without even naming a location. Remember the flap over insider trading, some guy just went to jail for four years and Martha Stewart served a few months for the same thing, it’s not a good thing, it’s illegal, well almost.

Did you know that members of Congress and their staffs are not covered by insider trading laws? They can and do use information they learn about in closed-door meetings, in legislative discussions and other non public venues to enrich themselves.

Not only can they act on this information they can tell others like the person who may be managing their blind trust.

In addition, Congress has for years ignored legislative initiatives to correct this travesty. Hey it’s no secret, I heard about it in detail on NPR and the Wall Street Journal and other publications have raised the issue repeatedly. I guess we need tents and sleeping bags to make a point.

Do you think anyone occupying someplace reads this blog … Or the newspaper?

How does a public servant for decades accumulate multi-millions of dollars?

It’s not just about millionaires

13 Nov

If you would like to read an excellent article about the realities of our deficit and dealing with it, I highly recommend:

It’s Not Just Millionaires” in the New York Times (can’t believe I just wrote that).

Medicare reform and the Romney plan . . .utter nonsense

8 Nov

Like most, if not all, politicians, Romney has it all wrong.  His basic concept for reforming Medicare is to set the amount the government pays for each person’s coverage, turn seniors loose on the private insurance market with any difference in cost for the insurance selected a benefit or risk to the individual.  Brilliant!

Just like under PPACA the focus is not on managing health care costs, but on cutting government spending.  That solves very little for individuals.  In effect, Romney and other Republicans so adamant in opposing tax increases are doing far worse by placing Americans at additional risk for ever-increasing health care costs.

You can easily see Romney does not know what he is talking about by looking at one sentence from his website:

“These reforms will encourage insurers to lower costs and compete on the quality of their offerings”

Or how about this one:

“All insurance plans must offer coverage at least comparable to what Medicare provides today”

The politicians still control the coverage that must be offered while insurers are supposed to compete, but can’t do so by offering less costly benefit packages? 

What utter nonsense.  Exactly how does one expect insurers to lower health care costs…deny claims, tighten up on medical necessity rules so there are more patient complaints, cut the payments to providers so that they do not participate in the plans? If competition among insurers worked to control costs, if self-insured employer and union plans (covering over 70 million Americans) could control their costs, why do we still have a problem?

Keep this in mind, to control health care costs somebody has to be paid less.  That somebody is doctors, hospitals, drug and all medical device manufacturers, nurses, physical therapists, nursing homes, etc.  They must be paid less by not providing as many health care services and by not charging as much for the services they do provide.

That means you pay more and/or receive less health care…take your choice.

That is not an insurance problem, it is a system problem.

Spending on U.S. healthcare as a percentage of...

What we spend

In countries with national health care, they control costs (to some extent) by fixing budgets and accepting all the consequences and inconvenience of doing so. Doctors receive lower incomes, patients wait longer for services, and a cost benefit analysis is performed on health care procedures, they fix drug prices and more. Meanwhile in America we still think the cost of birth control pills is unaffordable and must be covered by insurance at 100%.  We are fools.

The Romney plan and others like it are nothing more than a giant cost shift to individuals with the false notion that insurance companies can somehow find a way to absorb those costs.  Don’t bet on it. 

If A – B = C where A is the cost of health care and B is what government pays and C is what you pay, if B is fixed while A increases what do you think happens to C? I failed algebra twice and even I can figure that out.

 From the Romney website:


Members of Congress receive their salary for life…More Internet nonsense

5 Nov

Here is the text of an e-mail circulating around the internet:

Subject: Wages

Salary of retired US Presidents …………..$180,000 FOR LIFE

Salary of House/Senate ………………………$174,000 FOR LIFE

Salary of Speaker of the House …………..$223,500 FOR LIFE

Salary of Majority/Minority Leaders …… $193,400 FOR LIFE

Average Salary of Soldier DEPLOYED IN AFGHANISTAN $38,000

Average income for SOCIAL SECURITY seniors $12,000 

 None of the salaries for members of Congress are for life.  However, they may earn a pension.

And they say I'm lower on the road to evolution

In fact, the retirement benefits received by former Presidents include a pension, Secret Service protection (for ten years), and reimbursements for staff, travel, mail, and office expenses. The Presidential pension is not a fixed amount, rather it matches the current salary of Cabinet members (or Executive Level I personnel), which is $191,300/year as of March, 2008.  That figure is 47.8% of the President’s salary, not overly generous by any means. You may not like or agree with any given President, but you have to agree that it is not an easy job and one that takes its toll on all who hold it.

The average workers Social Security benefit as of September 2011 is $14,196 (plus 50% more if married) and of course does not include other sources of income (or other assets) beyond Social Security.

Members of Congress do participate in the federal pension system, contribute into the system and are vested in the benefit after five years of service. Therefore, a member of the House of Representatives would have to be re-elected twice to become vested in a pension.  By law the pension cannot exceed 80% of pay (which would require a substantial period of congressional service).  Here are some facts about actual Congressional pensions from

According to the Congressional Research Service, 413 retired Members of Congress were receiving federal pensions based fully or in part on their congressional service as of Oct. 1, 2006. Of this number, 290 had retired under CSRS and were receiving an average annual pension of $60,972. A total of 123 Members had retired with service under both CSRS and FERS or with service under FERS only. Their average annual pension was $35,952 in 2006.

9+9+9, flat tax or what ever, why is it so hard to get it simple and right?

2 Nov

I suspect everyone wants a simple and fair tax system and one that is reasonably progressive and certainly not regressive. The tax code is loaded with deductions, credits, exclusions and all manner of complex accounting and record keeping. All that got there to benefit one constituency or another, or to promote some social goal.

To make the tax code simple you simply scrap it all, you pay taxes on your total income from all sources, no exceptions. Once you have the base income number you decide what overall percentage of that number is required to run the government and you convert the single aggregate percentage to a graduated income tax similar to what we have now, but of course with lower percentages.

Everyone pays something. It may only be 2%, but something. This would be the only federal personal tax, the estate tax is eliminated. States with an income tax would base income on the same rules and adjust their percentages accordingly.

This approach is simple but follows the existing structure. Individuals who had all their income reported on a W-2 would not be required to file a tax return. Projecting federal revenue (along with the cash available to spend) would be relatively easy, perhaps too easy for those who want to spend more.

You don’t need another new system that people can take shots at, no+no+no. You need people with guts to just do it!

Simple and transparent is good, except perhaps if you are among the accountants, tax lawyers and preparers who now must find other sources of income… not to mention TurboTax and the like.

Social Security payroll tax cut for 2012 is a risky bet and not all it appears to be

22 Oct

I am not an economist, I have no mathematical models or sophisticated programs to project anything. However, I do have a great deal of experience dealing with people and their perceptions about money, retirement, savings and health care. For this modest reason alone I must question the wisdom of another cut in the Social Security payroll tax. What gives me the first clue of concern? It’s the spin. Read the papers and you will see that for 2012 the Obama jobs proposal will cut the employes payroll tax in half. For example:

“The President asked for a $175 billion one-year extension and expansion of the employee payroll tax holiday now in place, halving the tax rate to 3.1 percent in 2012.”

Here’s the problem, the payroll tax is already cut from 6.2% to 4.2% in 2011 so a further reduction to 3.1 is not halving the tax but reducing it by 26%. In addition, the results of that “stimulus” are hard to see. Did you even notice the difference in your pay, what did you do with this windfall? A further cut to 3.1% will add about $10.50 a week (before taxes) to the average family’s income. Will this stimulate your spending? And, keep in mind this plan has no impact on the spending by one sixth of the population that is retired and collecting Social Security today. Despite the perception of all-encompassing poverty, this group has a great deal of spending potential.

In addition, the 2012 plan calls for a tax reduction for employers under several conditions.

This reduction in Social Security payroll tax will cost the Social Security trust fund $240 billion. Or, you can accept this estimate:

The tax cut would cause a $289 billion loss in Social Security revenues, which would be replaced by general tax revenue funds transferred from the Treasury.

Social Security is already short $49 billion a year because of higher benefits and lower payroll taxes. In the past the incoming taxes were more than enough to pay benefits. That is no longer the case.

Under the Obama jobs plan general revenue would replace the lost revenue to the Social Security Trust Fund by issuing more Treasury Bonds (debt) which would be offset by higher income taxes on the “wealthy” or under the Reid plan, just on real millionaires. You can be sure these additional taxes will not be temporary for the length of the payroll tax holiday, so now more taxes are in the mix to be spent in the future.

This plan would put an end to the myth that Social Security has no impact on the budget or deficit.

But the real unanswered question for me is what happens at the end of 2012? Once Americans have become accustomed to this extra cash in their pockets, how will they react to a 3.1% cut in pay when the tax is restored, a cut larger than most pay raises (if any) given in a year.  Have our policymakers thought of that?

Will people then reduce their spending, cut retirement savings, hide more of their income or simply Occupy Pennsylvania Avenue? Will employers retain the people they were encouraged to hire when their tax break ends? Even worse is the possibility that gutless politicians will not have the nerve to reinstate the tax thereby assuring that Social Security falls into the abyss of the federal budget. There are worse possibilities of course like politicians convincing people that the shortfall should be permanently shifted to Wall Street and all those millionaires and billionaires who don’t pay their fair share thus making certain Social Security become the largest of welfare systems.

Installation of a sidewalk in Middletown, Rhod...

The sign maker had employment stimulated

The bet is that by the end of 2012 the economy will improve, more workers will be on the job paying Social Security and other taxes, more spending will occur and all the rest that goes with a recovery. Given that the 2009 Economic Recovery and Reinvestment Act  and the current tax holiday seem to have had minimal positive outcome (I know, it saved jobs), this all seems like a risky bet to me.

Let’s hope it has been well thought out beyond November 2012.

Before you occupy Wall Street get the facts and try to understand what is really going on and who is doing what. I DARE YOU TO READ THIS!

14 Oct

What is the current state of America, how did we get this way, who is to blame? Look at the following random list, arrange it anyway you like, determine which item directly impacts other items. Do this carefully, think of the consequences of each item interacting with others and you have the answer to the current state of America. You may not like the answer and it may not agree with your preconceived ideas, but there it is for you to see.

Caution: some of these points are quite obvious, others more abstract requiring more thought and consideration. Have fun!

On the back of my iPhone is says “Designed in Cupertino California. Assembled in China”

The average unemployment rate between 1990 through 2008 was 5.2% so our current gap from the norm is about 4% unemployment.

Apple Inc. received more than one million pre-orders for the iPhone 4S in a single day, 67 percent more than for the previous version of the device.

Populist rhetoric mostly from our President has caused many people to believe that the cause of high health insurance premiums is outrageous CEO pay. The pay may be outrageous and not deserved in some cases, but is has virtually nothing to do with premiums, do the math.

Millionaires and billionaires don’t pay their fair share … or at least that sounds good except the top 1% of earners pay about 40% of all income taxes. “Hey, I can do better on the price if you pay in cash.”

Many people are convinced business can be given incentives to hire more workers, needed or not.

If you buy something made in China it costs less; conversely if the same product is made in the US it costs considerably more. Where do you want your TVs, iPhones, DVD players and clothes made?

Why aren’t you spending more? Consumer spending equals nearly 70% of our economy.

If you borrow from the future to live above your means today, what happens when the future is today?

How did Wall Street and the banks screw up the economy without the eager participation, greed, ignorance and complacency of the people taking unaffordable and risky mortgages?

Who set policy, cajoled and strong armed banks and other institutions to underwrite subprime mortgages? Members of Congress of both parties and Republican and Democratic administrations.

More than two-thirds of Americans, including a majority of Republicans, say wealthier people should pay more in taxes to bring down the budget deficit, and even larger numbers think Medicare and Social Security benefits should be left alone.

More than 8 out of 10 Americans say the middle class will have to make financial sacrifices to cut the federal deficit even as the public just as strongly opposes higher taxes on middle-income families, according to a Bloomberg-Washington Post national poll conducted Oct. 6-9.

“While Americans see sacrifice as inevitable for the middle-class, the only sacrifice to win majority support is a tax on those too wealthy to be considered middle-class,” says J. Ann Selzer, president of Des Moines, Iowa-based Selzer & Co., which consults with Bloomberg News on polls – Dont touch my marbles

According to a June 2010 report in the Christian Science Monitor, the high school graduation rate is 68.8% (2007 latest available). Racial and ethnic gaps persist, the report notes. Forty-six percent of black students, 44 percent of Latinos, and 49 percent of native Americans did not earn a diploma in four years.

36 percent: the percentage of women 15 to 50 with a birth in the past year (2009) who were not currently married.

Among Tea Party members many believe that foreign aid composes 20% of the federal budget – it’s actually less than 1%.

Do people understand where the money goes?  Mandatory Spending within the federal budget (sometimes called entitlements), is at $2.109 trillion in FY 2012.

The largest mandatory spending programs were Social Security and Medicare, as follows:

Social Security – $761 billion
Medicare – $468 billion
Medicaid – $269 billion
TARP – $13 billion

All other mandatory programs – $598 billion.

These programs include Food Stamps, Unemployment Compensation, Child Nutrition and Tax Credits, Supplemental Security for the Disabled and Student Loans.
(Source: OMB, Table S-3)

The vast majority of Americans receiving these mandatory benefits do not pay income taxes.

More than Half of the Federal Budget Goes Towards Mandatory Spending:

Mandatory spending is 57% of total Federal spending. It is almost three times as much as the military budget, and 1 1/2 times all discretionary spending. The mandatory budget is, as its name implies, mandated by Congress to be spent outside of the annual budgetary process. It cannot be changed without a change in the laws that set up the programs.(Source: OMB, Table S-4)

Section 162(m) of the Internal Revenue Code limits the tax deduction that a publicly held corporation may take with respect to annual compensation paid to its chief executive officer and the three other most highly compensated executive officers, other than the chief financial officer. If such employees fiscal year annual compensation (excluding “qualified performance-based” compensation) exceeds $1 million, then the employer may not take an income tax deduction with respect to any such compensation amounts that exceed $1 million.  Section 162(m) regulations provide certain exemptions from this annual $1 million deduction limit. “Qualified performance-based” compensation paid pursuant to a stockholder-approved compensation plan that sets forth certain maximum payment limits can be excluded from counting towards the $1 million limit. – Congress has the power and has limited the taxpayer supported compensation of executives.  Many CEOs are overpaid, that’s true.  However, most of their pay is in the form of stock in their companies and subject to the risks of the stock market.  It is also true that many of the performance-based compensation programs are a farce, but that is the problem of a company’s board of directors and shareholders who get to approve or reject such compensation.

The all time top contributors to political campaigns are unions, not corporations and among the top fifteen contributing organizations, virtually all the money has gone to democratic campaigns. Here is the list of contributions since 1989.   Here is the President’s reaction to the Supreme Court decision on political contributions:

President Obama said the high court had “given a green light to a new stampede of special interest money in our politics.” He called it a “major victory” for Wall Street, health insurance companies and other interests which would diminish the influence of Americans who give small donations. Obama pledged to “work immediately” with Congress to develop a “forceful response.” 

It would appear the President forgot to mention the largest group of influence peddlers, no doubt an oversight.


So, if you are frustrated and you want change and even a little hope, and you want to sleep in a tent for a few weeks, the Washington Mall (or your front lawn) is nice this time of the year.

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