Monthly Archives: December 2013

A PRC Invasion

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The government of The People’s Republic of China wants, in all seriousness, to build a city in the state of New York that is devoted to the purposes of that government.  This city is to be called China City of America, and it’s intended to include family housing, a college with student residences, and offices for representatives of every province in China, among other structures—and we taxpayers would foot the bill for 20% of this $300+ million dollar project (an early number that’s likely to grow, as all such project costs do).

What makes this project…unusual…is that it’s intended to be, permanently, a PRC enclave, a permanent “Little China,” populated, apparently, solely with PRC government and provincial officials and PRC students educated in a PRC-run school.

We’re a great nation because we assimilate immigrants into our nation, our communities, our culture.  The Little China, Little Italy, Little Etc communities in our cities, for all that they start out as separate enclaves, wind up also assimilated.  This “China City of America” is not intended to be a temporary enclave to ease the transition of Chinese immigrants into American culture.  It’s intended to be a province of The People’s Republic of China on American soil.

And it’s fueled in no small part—that remaining 80%, for all that half-million dollar visa fees are intended to be funneled into it—by all those US dollars the PRC controls as a result of all the lending to us it’s done.  If this works, what happens near other of our major cities/economic cities?

Another Failure of Modern Liberalism

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Illinois has a deeply bankrupt pension system—it’s in the hole by $100 billion: a state is in the hole by $100 billion, not a nation—a pension system that’s the worst off in the country.

Their solution?  A bill just passed that in total is claimed to save $160 billion over 30 years and fully fund the systems by 2044.  That’s a bit over $5 billion a year on that $100 billion arrearage.  And it naively, if not cynically, assumes that future state legislatures won’t change the thing for all of those 30 years.

Some specifics, with my comments: the bill

  • pushes back the retirement age for workers ages 45 and younger, on a sliding scale

Why a scale?  20 years to a nominal retirement at 65 is plenty of time for workers to adjust plans.

  • replaces annual 3% cost-of-living increases for retirees with a system that provides the increases on a portion of benefits, based on seniority

Why freeze the COL?  If there’s to be one, why not tie it to inflation?  Today’s inflation is in the neighborhood of 2%-2.5%. Larger COLs aren’t necessary.

  • gives some workers the option of freezing their pension and starting a 401(k)-style defined contribution plan

Why only some?  Why not move them all to 401(k) type plans?  The private sector recognized the usefulness of such plans decades ago, and they make the workers more responsible for their own futures, instead of having government usurp that responsibility.

  • has workers contributing 1% less to their own retirement

So workers will become even less responsible for their own futures than they were.  Oh, wait—those plans….

Don’t expect this to have any effect on Illinois’ failed system other than to allow it to get worse.

A Thought on some Taxes

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Romain Hatchuel, Square Advisors LLC Managing Partner, has an excellent op-ed in The Wall Street Journal, but I want to comment on one small part of it:

In his November investment commentary for bond giant Pimco, [billionaire investor Bill] Gross asks the “Scrooge McDucks of the world” to accept higher personal income taxes and to stop expecting capital to be taxed at lower rates than labor.

Gross is right, partly.  The use of tax code to effect social engineering does not achieve the goals of the “engineering” effort, but it does effect coarse distortions in a free market.  These distortions range from slanting business decisions toward (or away from) debt according to the differential ways in which debt interest and capital gains are taxed; they impact individual investment decisions according to the way debt interest, capital gains, or dividends are taxed; they even distort the price (and so availability) of housing according to the way in which mortgage debt interest is taxed.

Capital should not be taxed at a lower rate than labor.  Businesses should not be assessed tax at all—the ones who actually pay those business taxes, after all, are the final customers—us—as that tax bill-as-cost-center gets figured into the prices charged.  Nor should there be deductions, credits, etc on individual income, with or without variation according to the source or amount of income.

Contra Gross, though, a single, low flat rate that every individual pays on the total of that individual’s income would achieve a market neutral tax that would impose the minimum of distortion on the market even from the tax’s existence (a 10% rate that everyone with an income pays even would represent a significant increase in total revenue to the Federal government).

Government and Legislative “Intentions”

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Halbig v Sebelius is a case that opened last Tuesday in the DC District Court that challenges the legality of Obamacare subsidies, and through that the applicability of the Employer and Individual Mandates, in states that have ObamaMart—Federal health insurance exchanges—rather than state-run exchanges.

The case hinges on what the Obamacare law says vs what Government says it says and what Congress’ “intentions” were.  Leave aside for now then-Speaker Nancy Pelosi’s remark that it was necessary to pass the law to know what was in it along with the admissions of most Representatives and Senators that they had not even read the 900-page law before they voted on it; following is the argument:

Judge Paul Friedman asked how far, and where, he should go to look for more information about what Congress actually intended with Obamacare.  Plaintiffs—Halbig, et al. (et al. consists of three more private individuals and eight businesses scattered across six states that have ObamaMart running because those states declined to set up state-run exchanges)—said the place to go was the law itself: what does the law say, explicitly, in its text.

Government, on the other hand, says to see the text of the law, but also go further and divine Congress’ intentions when it passed the law.

Which brings me back to Pelosi’s remark and those admissions.  Congress didn’t know what was in the law when it passed it; that information didn’t become available until after it was passed.  Not knowing what was in the law when it was passed plainly means that Congress cannot have known its intentions for the law when it passed the law.  Government’s insistence on divining intentions in this case, then, demands a level of mind reading that’s beyond even the talents of a Federal District Judge.  Or those of appellate or Supreme Court judges, which is where this case will go, no matter Friedman’s ruling.

Yet the question matters a very great deal: are citizens in states that have ObamaMart rather than state-run exchanges eligible for premium subsidies, and from that do the Employer and Individual Mandates apply in those states?  The text of the law says that subsidies are available only for those who buy policies through the state exchanges.  Government argues that those phantom intentions were that the subsidies were to be available for policies purchased through ObamaMart, also.

This matters because subsidies in the 34 states where ObamaMart operates in lieu of state-run exchanges amount to hundreds of billions of dollars of Federal (deficit, debt-building) spending, and those Mandates represent hundreds of billions of dollars (albeit fewer hundreds than those subsidies) of individual and business spending by non-subsidized purchasers of Obamacare policies in order to defray somewhat the costs of those subsidies (and, a separate significance, to pay “insurance” sellers artificially inflated premiums in order to support those sellers’ artificially depressed premiums for subsidized and elderly buyers)

What I Can See Now With ObamaMart

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President Barack Obama’s ObamaMart—that HealthCare.gov contraption—is up and running, or so Obama and his chief shill, HHS Secretary Kathleen Sebelius, claim (even though some very serious—dangerous—warts remain).  I decided to try it out and see what the Obamacare law itself would offer me in terms of plans that are cheaper and better than the ones I have through my wife’s employer (which, knock wood, still are legal…so far).

Aside from the dental plans still being required to offer newborn and maternity care coverage (scroll the top window to the second image), here’s what I found without having to give up “my information,” from a not particularly random walk through the ObamaMart erected here in Texas.  I looked for plans available for my spouse and me, ages 62 and 60.  For a baseline, my existing health plan, available through my wife’s employer, charges a $1,700/year premium, has a $3,000 deductible, covers 80% of our medical costs after the deductible, and it’s so far still legal.  We have this High Deductible plan because it’s required in order to have an HSA.

The first plan in the list that comes up in ObamaMart is Blue Cross Blue Shield’s Bronze “Blue Advantage Bronze HMO 006” plan.  This plan comes with a $9,800/year premium and a $12,700 deductible.  Bronze plans only cover 60% of post-deductible costs, though, so we’d be paying $22,500/year just to get to the point of BCBS picking up the next 60% of our expenses.  For that year.  Next year would be a whole new $22,500 before coverage began.  The financially astute will note that those annual costs approach the annual limit on a 401(k) contribution for my age cohort.  Hmm….

And what coverage do I get for that princely sum—besides “free” contraceptives, prenatal, newborn, and maternity care for us empty-nesters, I mean?  The DETAILS button does not have the answer.  Or even any details.  I get no information on what’s actually covered.  The Summary of Benefits and Plan Brochure links on the popup that appears under the DETAILS button just take me to PDF files that assure me that if we go outside the BCBS network, our coverage is zilch.  In truth, before Obamacare we had to talk to an insurance salesman to see a policy.  But I thought Obamacare was supposed to be better, as well as…cheaper….

It takes a Gold Plan to give us the 80% post-deductible coverage that our present plan has, though, so that’s the next look.  The top of the list here is BCBS’ “Blue Advantage Gold HMO 001” plan.  This one wants a $17,000/year premium, but it only charges a $9,750 deductible to make up for it, for a total annual cost of $26,750/year before coverage actually kicks in.  If I thought I could afford any part of a 401(k) under the Bronze plan, this Gold cost disabuses me of that foolishness.  The Gold’s DETAILS button is just as vague and useless as the Bronze’s, too.

Yeah, I’m better off, now that ObamaMart has been “fixed.”