Tag Archives: political economy

Debt Default

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One of President Barack Obama’s reasons for refusing to negotiate his demand to raise the debt ceiling centers on his premise that the debt ceiling is about existing debt obligations, not future ones.  He’s right, in a limited way.  What he chooses to elide in that, though, is that existing debt exists because of past spending exceeding past revenues: see, for instance, his Stimulus Bill in 2009; his trillion-dollar deficit budget offerings in each year of his administration; the Democrat-run Senate’s refusal even to consider a budget until this year, with that budget offer containing billions of dollars in deficit; and the government’s continued spending in excess of revenue, even in the absence of a budget.

Of course spending reductions need to be part of the present debt ceiling raise negotiations—that’s the only way to reduce/eliminate future borrowing (and on the side, to reduce/eliminate the need for future debt ceiling raises).

There’re plenty of Federal revenues coming in with which to pay the Federal government’s borrowings and to keep those debts current.  That was the case in 2011, when the Obama administration and Senate Democrats tried to mislead us about debt “default,” and it’s the case today, even though we’re two years further into Obama’s failed recovery.

The Democrats in this government threatening default if the Republicans and Conservatives don’t agree to lift it without spending limits are

a)    deliberately dishonest in their misleading claims about “default”
b)    breathtakingly ignorant about meaning of defaulting on borrowings
c)     holding our economy—and us Americans who exist within it—hostage against their getting their own way

Or all three.

But Obama, his Senate Majority Leader, and the latter’s seconds and deputies all refuse to negotiate.  Again.

Be More Like Europe?

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European railway companies must give partial refunds to passengers who are significantly delayed by bad weather, natural disasters, or strikes after a ruling by the European Court of Justice (ECJ).

Now, trains must pay for acts of Nature and of God.

It might be good business to do such things, but things that are good business do not, of necessity, make good law.  Look for the price of train tickets to spike.  And too many folks will wonder why.

This Is

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…what President Barack Obama and Senate Majority Leader Harry Reid (D, UT) and other Democrats want to shut down our government in order to protect:

California: 58,000 will lose their plans under Obamacare. …exodus from the…state’s Obamacare exchange: Aetna, UnitedHealth, Anthem Blue Cross (which left the Obamacare exchange for small businesses,t too)

54% of Californians expect to lose their coverage….

Missouri: Patients of the state’s largest hospital system—13 hospitals—will not be covered by the largest insurer on Obamacare exchanges, Anthem BlueCross BlueShield.  Anthem’s 79,000 Missouri patients may seek subsidies on Obamacare’s exchanges, but they won’t be able to see any doctors in the BJC HealthCare system.

Connecticut: Aetna…won’t offer insurance on the Obamacare exchange: “We believe the modification to the rates filed by Aetna will not allow us to collect enough premiums to cover the cost of the plans and meet the service expectations of our customers.”

Maryland: Aetna and (recently purchased)…canceled plans to offer insurance in the [Obamacare] exchange when state officials wouldn’t allow them to charge premiums high enough to cover costs.

South Carolina: Medical Mutual of Ohio left SC entirely in July due to Obamacare’s “vast and quite complex” new regulations.

New York: Aetna pulled out of New York’s exchange…to keep their plans “financially viable.”

New Jersey: Aetna won’t be a part of the [Obamacare] exchange.

Iowa: Wellmark Blue Cross and Blue Shield…decided not to offer plans in the Obamacare exchange.

Wisconsin: United Healthcare and Humana [will not offer] insurance on Obamacare exchanges.

Georgia: Medical Mutual of Ohio, Aetna, and Coventry left due to Obamacare regulations.

More than a million-and-a-quarter insurees and potential insurees are affected by this Democratic Party action.

Some More on Obamacare

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…which Democrats want to shut down the government rather than negotiate about.

“Do you have a large deductible?” asks [former Congressional Budget Office Director Doug] Holtz-Eakin.  “How much do you have to pay before the insurance starts picking up the cost?”

Analysts expect deductibles to be in the $5,000 to $6,000 range for the lowest level of [Obamacare] coverage, the Bronze Plan.

Dan Mendelson, CEO and founder at Avalere Health in Washington,says, “So, if you’re in a Bronze Plan, the premiums are going to be relatively low, you know, as HHS said, in some cases people won’t pay premiums at all.

“But there are going to be very high out of pocket costs and deductibles in some cases are going to be over $5,500.”

And that $5,500 is, amortized, an additional $460/mo in potential medical expenses that have to be paid by the “insurance” policy holder before the policy itself pays a dime.  Co-pays are on top of that.

Look again at that deductible.  In order to be eligible for an HSA, a man had to buy a “high-deductible” insurance policy.  A policy with an annual deductible of $3,000 or more.  Hmm….

Current policies, which rapidly are becoming unavailable, were not that expensive.

European Central Budget Authority?

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The IMF wants a central budget authority for the European Union: it wants the member nations of the EU to subordinate their sovereign budgetary duties to the demands of a “higher authority.”  However, it wants that without the federalism that must accompany such a subordination.

Worse, the IMF claims—they’re serious about this, mind you—that everything would be all right.  In answer to objections of nations like Germany, who wish to preserve their budgets and their sovereignty from the persistent demands of economically weaker nations, the IMF insists that such “risk sharing”

means that, at any point in time, countries experiencing better cyclical conditions support those at the other end of the spectrum; it does not mean the same country is always on the giving or receiving end[.]

Except, of course, that it means exactly that.  The nations rimming the Mediterranean, for instance, have entirely different concepts of the role of government in men’s lives and even of the purpose of money than have, for instance, the nations of central Europe—Germany, e.g., and Poland, whose concepts are different yet from those of England (not a member of the euro zone, to their benefit) or France (who is a member).  The risk transferors always will be the same, and those forced to accept the risk under the IMF’s scheme, also always will be the same.

The IMF says further:

A full-fledged budget at the euro-area level would allow for risk sharing both through revenues…and through spending.

Sound economies would be required, under the IMF’s scheme, to take on the risk the profligate economies are inflicting.

Unfortunately, the differences in fundamental principles make federalism across Europe a pipe dream.  The impossibility of federalism means a central budget authority can only be a disaster for the perennially stronger economies, while doing nothing at all to help the weaker.

It isn’t necessary to go any farther than that, except to note an example of the IMF’s breathtaking…naiveté.  They propose, for instance,

a “rainy day” fund that would distribute money to countries experiencing economic shocks.  The IMF says that annual contributions of 1.5%-2.5% of the euro zone’s gross national product would have been sufficient to provide…shock absorbers….

A built-in, automatic bailout fund.  No need for economic discipline by a government here.  There are other hare-brained schemes in the IMF’s…suggestions…but they’re all variations on this idea of automatic bailouts for the needy countries.