Tag Archives: political economy

Obamacare…Gifts

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Welcome to ObamaWorld.  Health insurance premiums—which President Barack Obama has been promising for the last three years will be going down, courtesy of his Obamacare—are about to jump up.  High.  The AP is reporting that we can look forward to 20%-100% premium jumps beginning in just nine months—next January.  Here’s what some of those increases will look like, with my editorial comments interspersed.

  • Changes to how insurers set premiums according to age and gender could cause some premiums to rise as much as 50 percent, according to America’s Health Insurance Plans.  NOTE: this is because Obamacare drives insurers steadily away from market-oriented, risk-based premiums.  Age and gender drive differing risks for a given insured malady.  As the AP went on:
  • The law will prohibit insurers from setting different rates based on gender—something they currently do because women generally use more health care.  That means premiums for some men could rise, while they fall for women.  NOTE: this is a redistribution, and a subsidy of one group (here, women) by another.
  • Young people who currently have low-cost coverage may see some of the biggest hikes.  NOTE: or they may start out with no coverage at all, because they don’t need it.
  • In many states, insurers charge a 60-year-old customer $5 in premiums for every $1 they collect from a 24-year-old.  The logic behind that is that older people use health care more and generate more expensive claims than younger customers, so insurers need to collect more to help pay their bills.  …  But the overhaul will narrow that ratio to 3-to-1.  That alone could cause the premium for a 24-year-old who pays $1,200 annually to jump to $1,800, according to AHIP. Meanwhile, the 60-year-old who currently pays $6,000 will see a 10 percent drop in price.  NOTE: This is naked wealth redistribution and a subsidy.  Only this time, the victim has no wealth to redistribute—the 24-year-old is only just starting out.
  • Prices also may change depending on a person’s current coverage.  Many policies on the individual market (coverage not sold through employers) exclude maternity coverage, but that will be considered an essential health benefit under the overhaul.  That could mean higher prices for some.
  • Vikki Swanson, 49, of Newport Beach, CA, resents that the added benefit may lead to higher costs for her.  “I had a hysterectomy, I have no need for maternity coverage, but I have to now pay for it.  I have to pay not only my own premium but I have to subsidize everybody else[.]”  NOTE: Yeah….
  • A new tax on premiums could raise prices as much as 2.3% in 2014 and more in subsequent years, according to a study commissioned by AHIP.  Policyholders with plans that end in 2014 probably have already seen an impact from this.  NOTE: this tax on the top-line revenues of medical equipment manufacturers will suppress development and/or production of items ranging from pacemakers to suits that let paraplegics walk again.
  • Requirements that insurance plans in many cases cover more health care or pay a greater share of a patient’s bill than they do now also could add to premiums, depending on the extent of a person’s current coverage, according AHIP.  NOTE: because insurance companieswelfare agencies aren’t allowed to charge for elective items like contraceptives, they’ll have to recoup these losses from other areas.

Once again, coverage under Obamacare isn’t health insurance, it’s privately funded, Federally mandated health welfare.

Never His Fault

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Once again, President Barack Obama is scuttling away from his responsibility.  This time, he’s throwing his Secret Service under the bus.

You’re all aware that Obama cancelled for the duration all White House tours by the public, and that he did it because of Evil Republicans and their Satanic Sequester.  After the hoo-raw over his cancellation and the sheer pettiness of it, he’s started crawfishing.

He now is insisting “that the Secret Service was behind the…suspension of White House tours.”  When he passed on this little tidbit to the Republican caucus with whom he was meeting, the response he got was a round of “ahaaaaas.”

Obama, in response, told the lawmakers: “Hold on guys, we just talked about respect.”

Sorry, Ace.  You get respect the same way any American does: through actual deeds.  You certainly don’t get it because you think you’re special.

The Secret Service works for Obama; he doesn’t work for them.  They may have made their recommendation, they may have told him their “decision.”  But it was his—overriding—decision to accept their position.  He could have overruled them; it was entirely his choice not to.

This is just cowardice.

Magical Thinking

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Well, that didn’t take long.  President Barack Obama already has failed his test.

The Progressives’ idea of a budget is out of the Senate Budget Committee, now, and on the Senate floor, where Senate Majority Leader Harry Reid (D, NV) will do his best to thrust it home with as little debate allowed as he can achieve.  Here’s the summary table (and scroll down a bit to this table; sorry you have to crane your neck); the whole thing can be viewed, in piecemeal form, on the Senate’s site:

Notice that.  Aside from continuing to gut Defense, overall spending continues apace, President Barack ObamaSenator Patty Murray (D, WA), the Budget Committee’s Chair, demands even more taxes from working Americans than he got in January, and our national debt explodes.

The Democrats want, with an absolutely straight face, to increase spending every year–$3.6 trillion in FY 2014, $4.05 trillion in FY 2016, and so on to $5.7 trillion in FY 2023, a 62% increase over the current level for FY 2013.

Reading the fine print in one of those piecemeal parts at the Senate site, we see that the Progressives want to create a(nother) $100 billion program aimed at generating new jobs, again by funding infrastructure work.  Of course, we know Obama already tried this, repeatedly, throughout his first term.  As he’s already confessed, “Shovel-ready was not as shovel-ready as we expected,” and as those earlier programs demonstrated, the jobs aren’t there at any time in his government programs.  This is magical thinking.

And it turns out Murray lied about those taxes, too, cynically understating them at “only” an additional $975 billion.  The Weekly Standard has this table, provided by a staffer for the Senate Budget Committee’s (Murray’s committee) minority membership:

Murray cynically understated Obama’s tax demands by fully one-third.  These $1.5 trillion in new taxes, combined with the $600 billion in new taxes Obama got at the start of the year, adds up to $2.1 trillion in new taxes being demanded in just these two and a half months.

Progressives just can’t stand to not raise taxes.  Their addiction to OPM is palpable.

And that debt.  The Progressives fully intend to explode it to $24 trillion by 2023, with annual interest payments running nearly to $800 billion.  This also assumes the market would be willing to buy such risky debt at those rates.  But then Obama denies, ostrich-like, that there’s any urgency to our debt fiasco.  This is more magical thinking.

All of this is predicated, too, on Obama’s/Murray’s pipedream of a GDP annual growth rate over the next 10 years of 4.2%-6.6% each year—rates we’ve never sustained in any 10 year period in our history.  With all of this taxing and spending taking money out of the private economy—the economy in which Americans actually live, work, and die—positing such rates is…wrong.

Matched with the $975 billion in claimed spending cuts, this isn’t even the balance about which he’s been yammering.  This is more…magical thinking.

This proposal is a disaster waiting to happen.

Federal Government’s Current Policies

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…and our future.  David Greenlaw, James D Hamilton, Peter Hooper, and Frederic Mishkin, in an op-ed in last Friday’s Wall Street Journal had some thoughts.

Research we have recently presented at the US Monetary Policy Forum leads us to conclude that, as debt grows relative to GDP, rising interest rates could bring the debt-to-GDP ratio up to 176% in 25 years, and even higher under less favorable assumptions about unemployment and the current-account deficit.

They explain:

[C]ountries with gross debt above 80% of GDP and persistent current-account deficits—as is currently the case in the United States—face sharply increasing risk of escalating interest payments on their debt.  This means even higher budget deficits and debt levels and could lead to a fiscal crunch—a point where government bond rates shoot up and a funding crisis ensues.

And

Given the Federal Reserve’s greatly expanded balance sheet…more than $3 trillion today, there is an additional factor that could exacerbate inflation expectations—Fed remittances to the US Treasury.  If interest rates climb higher over the next few years, this could lead to substantial losses on the Fed’s holdings of Treasurys and mortgage-backed securities, losses that could approach several times the size of Fed capital.

Never mind that this bust of capital would violate the Fed’s own rules imposed on non-government banks.  And it would violate Dodd-Frank rules.

But President Barack Obama wants to keep borrowing and to keep inflating private lending—the housing market “recovery,” you see.

Which brings up another risk that Greenlaw, et al., didn’t mention—all that pushed-for private/commercial lending at today’s artificially low rates.  That’s generally long-term lending (those mortgages, and business lending for construction and plant expansion). But when interest rates rise, as they must, those private/commercial lenders will be forced to borrow at tomorrow’s rising interest rates while still locked into today’s low rates on the loans they’ve let.  Can you say, “S&L collapse?”

We really need adult leadership in the White House.

Regulatory Reform

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The eyes of Texas are upon us….

Competitive Enterprise Institute‘s OpenMarket.org describes regulatory reform, Texas style.  In 1977, Texas enacted legislation that automatically kills state-level agencies after a named duration unless a subsequent legislature explicitly votes to extend that agency.  More, the question of extension isn’t even permitted to come up for a vote unless a Sunset Advisory Commission favorably recommends it first.

OpenMarket notes the results:

Through this process, the commission [10 legislators and 2 members of the public] has abolished 78 state agencies and saved $945.4 million in a 29-year period [through 2006].  Since the Sunset Commission’s expenditures over this time period were just $32.8 million, every dollar spent on this program has yielded about $29 in return.

We don’t have a bloated government here.  And surviving agencies exist because they actually do their jobs, and so they’re capable of justifying their existence to the commission—and to the Texas citizenry through those two public members.

Maybe the Federal government needs a similar Act—not addressing only the agencies, but the Cabinet Departments, as well.

Texas’ law can be read here.