Tag Archives: economics

Good News

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There really is some coming out of the election last Tuesday.

Reelecting President Obama notwithstanding, voters validated central conservative tenets:

  • Exit polls demonstrate that by a 51%-43% margin, Americans believe that today’s government already does too much that more properly belongs to the private sector.
  • By a 63%-33% spread, Americans said not to raise taxes as a means of cutting the Federal budget deficit.
  • Concerning the economy, the national debt, and the budget deficit generally, the voters preferred the Republican over the Democrat.
  • Voters also reelected an overwhelmingly conservative and Republican House, thereby explicitly and materially validating the House’s expression of those conservative tenets over the last two years.

There’s more.

In California, Democrats won voter approval to raise the top income tax rate to 13.3%.  More importantly, they also won a legislative supermajority.  California has in its state constitution an amendment requiring a two-thirds majority of both houses of the state’s government in order to raise taxes.  The Democrats have won that two-thirds majority in both houses.

Now we’ll have an object lesson, fresh in our minds at the time of the 2016 elections, about the outcome of Progressive policies implemented wholesale.  California will be that demonstration.  Watch carefully.

Welcome to Obamacare

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Here are some handy facts that my insurance company sent me the other day.

  1. Limit on flexible spending account (FSA) contributions.  Today, employers set their own caps on how much employees can contribute to these plans that let them use pretax money to pay for health care expenses.  For 2013, the government will enforce a $2,500 limit per employee.  [Because government Knows Better than you or your employer.]
  2. A new Medicare surtax on investment income.  Until now, Medicare taxes have only applied to earned income. For 2013, taxpayers filing individually with wages and self-employment income above $200,000 ($250,000 for married couples filing jointly) will pay a 3.8% surtax on the lower of:
    • Their net investment income—which includes interest, dividends, capital gains and other amounts.
    • The amount of their modified adjusted gross income that is greater than $200,000 ($250,000 for married couples filing jointly)
  3. An additional Medicare tax on wages and self-employment income for some.  The existing Medicare payroll tax of 2.9% (of which 1.45% is paid by a taxpayer through payroll deductions) will be increased by 0.9% on wages or self-employment income that exceeds $200,000 for single and qualifying head of household and widow(er) filers ($250,000 for married couples filing jointly).
  4. Higher hurdle for deducting medical expenses.  Currently, out-of-pocket medical costs only are deductible to the extent they exceed 7.5% of your adjusted gross income.  For 2013, that hurdle will rise to 10%. But if you’re 65 or older, that threshold remains frozen at 7.5% through 2016.  [Then it rises—with 2013’s 65-year-old then 68.]

And what do we get for our money?

  • Reduced access to medical care for seniors from reduced payments to doctors and hospitals by Medicare.
  • Reduced access to medical care for the rest of us from a shrinking doctor population.
  • Elevated health insurance premiums to pay for the tens of millions of Americans now covered by fiat.
  • Elevated health insurance premiums to pay for those who still don’t buy insurance until they’re already at the ER.
  • Elevated health insurance premiums to pay for pre-existing conditions which companies are required to cover at “no additional cost.”
  • Elevated insurance premiums to pay for coverage for grown adults on their parents’ policies until these adults are 26.
  • An insurance board that will tell your doctor and hospital what illnesses, injuries, and procedures for which they will reimbursed for treating you.

It’s a brave new world.

What’s Next?

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Yesterday I wrote about compromise.  Today, from Marc Thiessen at AEIDeas, here’s what we can expect given that compromise, over the next four years.  This comes against the backdrop of our—as usual—conflicted view of what we want (resolution of which puts a premium on two things: an honest press establishment and the conservatives among us doing a better job of getting our message out.  The lack of the former is no excuse for our not doing the latter, however).

Exit polls show that by a margin of 52-43, Americans want less government, not more.  By a margin of 63-33 they do not want to raise taxes to balance the budget.   And by a margin of 49-45, they want Obamacare either partially or entirely repealed.

With those clearly expressed requirements, which we’ve been expressing for the last two years, we re-elected President Obama and a Democrat-controlled Senate—while reelecting a Republican-controlled House.

Now those expectations:

  1. Obamacare will now become a permanent feature of the American political landscape.  It will never be repealed.
  2. The unprecedented levels of spending in Obama’s first four years will become the new floor, as America sets new records for fiscal profligacy and debt.
  3. Job creators will face massive tax increases, and more Americans will come off the tax rolls—resulting in fewer citizens with a stake in keeping taxes low and more with a stake in protecting benefits.
  4. Government dependency, already at record levels, will continue to grow.
  5. Four lost years in dealing with the entitlement crisis will become eight—digging us into a hole from which we may not be able to emerge.
  6. Obama, unworried about the impact of gas and electricity prices on his reelection, will finally wage the regulatory war on fossil fuels the Left demands.
  7. He will unleash the Environmental Protection Agency to impose crushing new burdens on US business.
  8. His administration’s assault on religious freedom will go on and expand to new areas.
  9. The Defense Department will be gutted, with cuts so deep that America will no longer be a superpower.
  10. Obama will almost certainly have the opportunity to appoint more liberal Supreme Court justices, possibly replacing conservatives on the high court—ending the Roberts court in all but name for a generation.

Four More Years

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One of the measures being voted on last Tuesday was a two-part question put before the citizens of Puerto Rico:

The two-part referendum first asked voters if they wanted to change Puerto Rico’s 114-year relationship with the United States.  A second question gave voters three alternatives if they wanted a change: become a US state, gain independence, or have a “sovereign free association,” a designation that would give more autonomy for the territory of 4 million people.

61 percent of those expressing an opinion chose statehood.

Typical of those who wanted this change in status is this from 25-year-old Jerome Lefebre (see the Fox News exit poll for an age break out of voting):

Puerto Rico has to be a state. There is no other option.  We’re doing OK, but we could do better. We would receive more benefits, a lot more financial help.

“We’re doing OK, but we could do better.”  Not on our own, but because government would do more for us, instead.

Puerto Ricans aren’t alone among Americans.

Disaster Relief

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Government can’t do it.  This isn’t the fault of liberal government or conservative government—government can’t do it.  Only private enterprise and the community of individual volunteers can.

Look at the failures of government response to Katrina, including the failures of the governor of Louisiana and the mayor of New Orleans to do anything at all other than to cry out for Federal relief—and in the case of Governor Kathleen Blanco, a failure to do even that until it was too late for the Feds to be even a little useful.  Then there’s the failure of the Federal relief efforts.  There remain temporary homes in Louisiana depots unused because of bureaucratic failure to get them emplaced and allocated, just as one example.

Private enterprise—Wal*Mart (food, clothing donations, delivery truck capacity), Home Depot (support centers for providing reconstruction materials), Ford Motor (160 used trucks, vans and SUVs for use in the relief effort)—arrived promptly with its own relief effort in progress by the time the Feds arrived.

Private charity and NGO—The American Red Cross, Feeding America (then America’s Second Harvest), Southern Baptist Convention, Salvation Army, Oxfam, Common Ground Collective, Emergency Communities, Habitat for Humanity, Catholic Charities, Service International, “A River of Hope”, The Church of Jesus Christ of Latter-day Saints, and many others charitable organizations had major roles in the relief effort.

Individual volunteers with expertise—electrical power restoral, flood relief and water damage repair—flowed in from out of the disaster area.

Look at the manifest failures of the governor of New York, the mayor of New York City, and the Federal government with Sandy.  There are lots of photo ops, many tours of the disaster areas, an initial attempt to divert massive police, sanitation, etc resources from relief effort and residential neighborhood security to support a marathon race.  And millions of Americans in New York and New Jersey still are without power, heat, clear roads, fuel for their transportation, even homes.

On the other hand, Verizon, for instance, had 95% of its cell service back up and running within 24 hours of Sandy’s landfall in the affected areas.  AT&T, et al., weren’t far behind.  Home Depot (those guys again) has activated its Disaster Response Command Center and is coordinating merchandise movement and working with the Red Cross (those guys again) for relief effort.  Wal*Mart, by last weekend alone, had donated 60 pallets of dry food and beverages and nearly 6,000 cases of cleaning supplies.

Private charity and NGO—all those listed above—are active in their own roles.

Volunteer utility workers have flowed in to help with power restoral, marathon runners, with their contest cancelled, switched to doing their own resupply efforts to beleaguered neighborhoods, relying on shank’s mare to get supplies in where motorized delivery couldn’t go.

William McGurn, writing in Monday’s Wall Street Journal, argues that these failures demonstrate the failures of liberal government.  From this conservative’s perspective, McGurn makes some good points:

…the great vulnerability of 21st-century American liberalism: an inability to set the priorities necessary for good government.  As a result, government grows both bigger and less capable, especially for people who do not have the resources to fund other options.

He’s right as far as he goes, but as I opened this post, this isn’t a failure of liberal government alone—it’s a failure of government.  This isn’t because the wrong people have the wrong ideas, but because the idea is wrong.  Government cannot do disaster recovery.

Government has an important role to play in disaster recovery, but that role is coordination; assistance in allocation of effort and resources; short-term, stop-gap, hand up funding.  It is not the doing itself.  As I wrote here,

Government didn’t build anything; it just acted as middle man for a small part of all that private building.

Disaster relief is just a subset of that building.