Archive for March, 2010
Add Costs, Regulation, & Government…Subtract a Bright Future
Posted by Tom in Centrally Managed Economy, Democrats, Nationalized Health Care, Social Security, Welfare on March 21, 2010
Douglas Holtz-Eakin, former director of the CBO, penned an op-ed in the NYT yesterday, The Real Arithmetic of Health Care Reform, in which he points out that the CBO’s ten-year cost estimate of $950 billion and deficit reduction of $138 billion is an estimate of fantasy. The CBO can’t comment on the fictions in the bill before it. The current Obamacare bill will actually produce a deficit increase of $562 for the same reasons outlined by Paul Ryan. He uses words like, gimmicks, budgetary games, front loading costs without benefits, leaving costs out entirely, manipulates, slight of hand, unrealistic, and stolen.
“The stakes could not be higher. As documented in another recent budget office analysis, the federal deficit is already expected to exceed at least $700 billion every year over the next decade, doubling the national debt to more than $20 trillion. By 2020, the federal deficit — the amount the government must borrow to meet its expenses — is projected to be $1.2 trillion, $900 billion of which represents interest on previous debt……..The health care legislation would only increase this crushing debt. It is a clear indication that Congress does not realize the urgency of putting America’s fiscal house in order.”
Holtz-Eakkin’s piece largely confirms a post by Cato’s Michael Tanner in NRO this weekend, Predictions; Reno Hayek members will recall that Michael spoke to us last year about this time. He reasonably prognosticates: One, that the bill will cost more than advertised not only because of the gimmicks and deceit but because all major government programs do. In ’65 Medicare was projected to cost $9 billion by 1990; it came in seven times higher at $67 billion. Two, insurance premiums will increase. The bill will do nothing to lessen the 200% increase, by CBO estimate. Three, quality of care will be worse. The bill will accelerate doctor retirements at the same time it adds patients to the system.
Scarier yet, four, the leftist will keep pushing for more. To quote Pelosi, “once we kick through this door, there’ll be more legislation to follow,” in other words, this is the first step to single payer government healthcare. Five, Republicans won’t try to repeal it because they won’t be able to get the required veto proof majority in both houses or the presidency plus the filibuster proof Senate.
At a time when serious attention should be devoted to getting our fiscal house in order, by at a minimum avoiding the demographically certain failure of medicare, social security and medicaid, Obama has loaded the country’s future generation with a new middle class entitlement destine for the same future as those welfare programs. It will beget unsustainable debt, burdensome regulation, and big government growth and taxation which will detract from our future private economy. It is the greatest intergenerational immorality in modern times.
Odd Couple Plus One
Posted by Tom in Centrally Managed Economy, Congress, Deficit, Democrats, Government Regulation, Nationalized Health Care, Nevada, Politics, Statism on March 21, 2010
Today this May-December couple managed to pull off one of the largest scams ever foisted on the American public. It is the last critical step in government’s take over of the U.S. economy and perhaps the largest expansion of government ever, certainly in absolute terms. It creates a growing dependency which puts us on a clear path to European socialism.
It Should Be Easy
Let's Stay Close
The protracted process showed these masterful politicians’ lies, tricks, obfuscation and backroom dealmaking as some of the best or worst, depending on you point of view, in history.
But Harry's SLOW
That Puppet
Throughout the process the Pelosi-Obama relationship was key. It is truly amazing how close these two stayed. They called the shots and Reid did as he was told; in the process he took most of the credit for the one-off deals that mis-apportioned the taxpayers’ money.
Harry Dictating
We Won Together
It is hard to understate the damage done in terms of jobs lost, welfare recipients created, standards of living lowered, and national health damaged. With this statists victory the leftists ruling class has deeply damaged our nation and impoverished our grandchildren for generations to come.
A sad day for America.
Help Wanted: Auditor….Congressional employment, GS 18
EXIT INTERVIEW
CBO Personnel Director (PD): John, can you tell me why you’re leaving?
John: Well, I just couldn’t take it anymore…you know analyzing legislative costs sometimes just doesn’t make sense…take this health care legislation, do you know how many times I’ve looked at that damn thing?….the House, the Senate, the changes, then the Administration jumps in with the Louisiana Purchase and Cornhusker Kickback going out, but even this got reversed so now that’s back in…and don’t forget the Reconciliation changes……then there was the Medicare cuts, now how do you account for cuts you know are going to be non-cuts in other legislation………or how about them using Social Security taxes as offsets, ya’ know, like we’re not going to pay that out in benefits–give me a break.
PD: OK John, but in all fairness you have to admit that the ten year cost you put out, is the ten year costs?
John: Yeah but it’s a ten year cost for only six years of benefits…It’s these screwy rules, we only look at what’s in the bill even though my 8-year old knows that’s not what’s gonna happen…no way to run an analysis for my money…….I mean, take the $72 billion in long term care, they’re counting as savings, you think they’re not gonna give that care to those folks, no way, just another Ponzi scheme…I mean, I’ve had it!
PD: OK, OK John, now calm down. Now this is just standard stuff but I’ve got to ask you a few questions as part of the exit interview. Are you up to date on all your salary, sick leave, vacation, holiday and personal leave benefit payments? John: Yeah, everything on this sheet is fine. PD: Do you have any complaints against or information that we should know about your fellow employees at the department? John: No, no we all get along fine…everyone does the work OK. PD: Supervision John, same question, no complaints I trust? John: Naw, Doug’s a great guy…but you know, he’s under a lot of pressure…I mean, dealing with the Speaker’s office–you couldn’t pay me enough for that…..the Senate’s a piece of cake in comparison….I think they’re kinda slow out there in Nevada. PD: Whoa now…..John, you know the rules…..we can’t be getting into that political side, even in the exit interviews! John I need you to sign this here…OK…and here….good. Any questions for me, on COBRA, retirement benefits, future references, or future employment? John: No, everything looks fine.
PD: By the way John, do you have other employment lined up? John: Yeah, I’m heading back home, ya’ can’t beat the Midwest…got a good job lined as director of auditing for the Mayor’s office in Chicago.
Greek PM Papandreau Demands EU Handouts
Greece is one of the sorry, spendthrift PIIGS of Europe, part of the “Club Med” that unproductive group living way beyond its means, living essentially off the strength of productive European nations, mainly Germany. Germany’s newfound assertiveness demands that if the PIIGS can’t live by the EU rules they should get out. Ireland one of the PIIGS has taken on the hard medicine of deficit reduction without general strikes. Greece on the other hand, stopped by strikes, has essentially said look I’m entitled to your charity, I’m part of the entitlement generation, there’s no need for me to work hard, save, invest and pay back debts.
Papandreau has threatened going to the IMF according to today’s Bloomberg report, by Neuger and Stearns. Now going to the IMF is embarrassing to countries in the EU, particularly France, so Greece is relying on French pride (hubris perhaps) to turn Germany’s hard line soft! As the Bloomberg report points out, this is a “game of chicken!” Greece is negotiating from a position of weakness and I’m sure, given the fact that other PIIGS are close to the trough, that Germany is well aware of the risk of moral hazard. I would commend a re-read of my recent Stratfor post on subject.
If Greece is a prelude for us in the United States, also living beyond our means, who will bail us out?
Sig Rogich…Why Endorse Harry Reid?
Posted by Tom in Nationalized Health Care, Nevada, Politics, State Finances, Yucca Mountain on March 17, 2010
Sean Whaley of Nevada News Bureau reports extensively on Sig Rogich’s Nevada NewsMakers interview effusively touting Harry Reid for re-election. Rogich formerly the big Republican donor and Bush advisor is co-chairman of “Republicans for Reid.” Sig credits Harry for “building McCarran International Airport;” seems to me the marketplace for gaming may have had something to do with that! He then talks about water rights negotiations saying “who would you rather have at the table?” the answer is anyone other than Harry. He talks about what Harry has done for Nevada but can’t really come up with specifics; in reality Harry has done more for Nebraska with the “Cornhusker Kickback” than he has for Nevada. Finally and stupidly, he blasts Sue Lowden for her favorable position on Yucca noting that Reid opposes Yucca. Yeah Sig, Harry helps by keeping jobs and money out of the state and failing to exploit this opportunity for not only a repository, but also reprocessing, power generation and research all bringing high value jobs and money to Nevada. For reference, see NV4CFE.org.
Has Sig who once supported Reagan turned into a RINO? Possibly. Or has Sig simply lost his Icelandic guts and fears standing up to Reid perhaps because Harry, an early practitioner of Chicago politics, has threatened Sig’s clients and the threat carries? Maybe. Here’s another theory, has a deal been made? Sig endorsed Harry in early 2009, in June of that year Harry dropped his longtime support of the LA-Vegas maglev train and instead endorsed construction of a competing Victorville-Vegas rail project, Desert Xpress Enterprises. Surprise, Sig Rogich is a partner in, backer of and spokesman for Desert Xpress!
When you think of it, with the Cornhusker Kickback alone, Harry has taken Nevada taxpayers money and given it to Nebraska! He’s pushing job killer Obamacare through the Senate. Why would anyone want to support him. All toll, given the harm Harry’s done and is doing, we are better off without him. Only Sig Rogich can explain why he supports this embarrassment to Nevada.
Tom Motherway
Germany Reinforces It’s Line In The Sand
Posted by Tom in Europe, Financial Policy, Foreign Policy on March 17, 2010
Here’s a Stratfor video follow-up to my earlier post on subject:
Obama’s Playing Politics With Yucca……..What’s New?
Posted by Tom in Energy Facts & Policies, Environment, Politics, Yucca Mountain on March 17, 2010
Our ever disingenuous Hussein Obama said he’s in favor of nuclear power in his state of the union speech, yet he has his Secretary of Energy Steven Chu withdraw the Yucca Mountain license application. This was all of a sudden. Brian O’Connell of the Regulatory Utility Commissioners is calling foul: after over 8000 pages of data showing the suitability of Yucca as a repository filed by the Energy Department, “so the fact the same agency now says it’s not a workable option begs for more detail.” The withdrawal request “was very skimpy as to why.”
The Regulatory Utility Commissioners have filed a brief before the Atomic Safety and Licensing Board challenging the Obama action. Of course Obama thinks nothing of wasting the $10 billion already spent on Yucca or for that matter the $17 billion already paid by ratepayers into the federal waste fund. See Rebecca Smith’s WSJ report, Utility Regulators Want Yucca Open.
Methinks Harry Reid is having his way with Obama on this one; he’s hurting Nevada in the process; see the arguments at NV4CFE.org.
Net Neutrality, Empowerment Nevada, NV4CFE.org, and the Cato Summit
Posted by Tom in Constitution, Democrats, Economics, Energy Facts & Policies, Environment, Government Regulation, Military Policy, Politics, Statism, Yucca Mountain on March 17, 2010
What a great Reno Hayek Symposium Dinner last evening. I want to thank Susie Evans and Manny Martinez of Charter for the excellent discussion of net neutrality and its potential impact on our First Amendment freedoms and the free-market functioning of our economy. Broadband pipes are not free they require invested capital on which a return is expected. Demands for priority use of those pipes must be compensated. In essence, the “net neutrality” free loaders, with no investment at stake, are demanding priority use of those pipes without adequate compensation. Note that the pipe owners are not monopolies they are subject to free market competition; cable, phone, satellite all compete in a non-common carrier environment.
George Gilder points out in his recent WSJ article, Cap and Trade for the Internet, since 2001 the U.S. has led the world in internet deregulation with some $4 Trillion of investment increasing residential bandwidth 54 fold. But new attempts to promote regulation including net neutrality will turn this on its head. Economics-abundance or scarcity-in a free competitive market is regulation enough. Of course that’s not the tack the Obama statist are taking. FCC Chairman Julius Genachowski is moving to expand government control of the web. The WSJ editorial, Broadband Trojan Horse, discusses Obama’s “national broadband plan” including reclassification of the web as a “telecom service” subjecting it to “common carrier” status regulation and “open access” regulation. This solution in search of a problem is emblematic of Obama’s Soviet style control freaks. If implemented, it will destroy private investment. Thanks again to Susie Evans and Manny Martinez.
Ryan Costella and Dana Andrus gave a brief presentation on Empowerment Nevada a grass roots community action program they are initiating that basically promotes community problem solving without government involvement. Ryan hopes to enlist concerned citizens to re-ignite the spirit that founded this country and this state. He sees this as a springboard to other communities, other states and eventually the nation. “We want people who raise their hands to help, not hold their hand out.” His argument is that both left and right can agree on one thing: grass roots problem solving works. We wish Ryan luck in his efforts.
John Dunn gave us an update on Nevadans 4 Carbon Free Energy’s recent publicity campaign. The two Reno public meetings and attendant press reports have been well received. Politically the concept of a Yucca Energy Park including storage, reprocessing, power generation and research, seems to be a non-starter. The group has concluded that grassroots support is the key. This may, in fact, include a ballot initiative to let the voters decide. One thing for sure, jobs and money for Nevada and safe storage nationally are real necessities. I’ll keep updating as the occasion arises. Meantime check out: NV4CFE.org.
Finally, Jerry O’Driscoll briefed us on the recent Cato Summit in which he participated as a panelist. There were two presentations that particularly impressed him: Afghanistan-we need to win enough of the inter tribal wars to get the Taliban in charge so we can negotiate an exit. Climategate-the wounded scientific community caught in their phony research and conclusions appears to be as rough as Chicago politicians. My current issue of the Weekly Standard summarizes the reason on the cover!
Tom Motherway
Germany’s Upcoming Remake of the European Union
Posted by Tom in Economics, Foreign Policy, Foreign Trade on March 16, 2010
Stratfor’s Peter Zeihan pens a dynamite geopolitical intelligence report this week on Germany, the first of three key national reports. He starts out with the geographic and historic perspective: Germany lying between Russia and France wanted economic and military dominance. Its strategy in 1871, 1914, and 1939 was to avoid a two front war by pre-emptively attacking France. After WWII the allies sought to reshape the regional dynamic so that Germany’s military policy would be subordinated to NATO and its economic policy subordinated to the European Community, eventually the European Union. Germany got what it needed economically so it didn’t seek it militarily; Europe got German capital and economic dynamism.
Stratfor points out that this money-over-sovereignty paradigm was best represented by the euro. But Stratfor always doubted that the euro would last. “Having the same currency and monetary policy for rich, technocratic, capital-intensive economies like Germany as for poor, agrarian/manufacturing economies like Spain always seemed like asking for problems. Countries like Germany tend to favor high interest rates to attract investment capital. They don’t mind a strong currency, since what they produce is so high up on the value-added scale that they can compete regardless. Countries like Spain, however, need a cheap currency, since there isn’t anything particularly value-added about most of their exports.” Stratfor anticipated the high inflation in the poorer states that gained access to capital they could not qualify for on their own merits. That access would also generate massive debts.
Both the inflation and the massive debts have come about as have the budgetary accounting tricks to hide the debt. As we have seen the rich nations are unwilling to bail out the spendthrifts. Stratfor “became even more convinced that such inconsistencies would eventually doom the currency union, and that the euro’s eventual dissolution would take the European Union with it. Now, we’re not so sure.”
What if Germany used the current crisis to re-wire the European Union and Euro to its own purpose? On March 13th German Finance Minister Wolfgang Schauble said that if the weak spendthrift nations could not right their finances they should be ejected from the eurozone! Germany is willing to publicly talk about the re-engineering of Europe. Schauble is a recognized powerful figure; he doesn’t make such statements lightly.
Stratfor displays the inflation in terms of labor costs to show Germany’s dominance and corresponding reluctance to support the freeloaders. Note that in the past 10 years Germany has gained about a 25% cost advantage over the “Club Med” spendthrifts:
Stratfor concludes: “The paradigm that created the European Union — that Germany would be harnessed and contained — is shifting. Germany now has not only found its voice, it is beginning to express, and hold to, its own national interest. A political consensus has emerged in Germany against bailing out Greece. Moreover, a political consensus has emerged in Germany that the rules of the eurozone are Germany’s to refashion.” In short, Germany is calling the shots, AND HAS EARNED THE RIGHT TO CALL THE SHOTS!
This report is paraphrased in part and republished republished in part with permission of STRATFOR. I highly recommend becoming a member.
Tom Motherway
Our Creditors Are Nervous……..Do You Blame Them?
Posted by Tom in Centrally Managed Economy, Deficit, Financial Policy, Foreign Trade, Monetary Policy, National Debt, Nationalized Health Care, Social Security, Statism, Welfare on March 15, 2010
Bloomberg reports today that China and Japan reduced their holdings of U.S. Treasuries again in January. In fact, China has been a net seller for three straight months.
“Chinese Premier Wen Jiabao this week sought assurances that the U.S. will protect the value of China’s dollar assets. At a press conference in Beijing marking the end of China’s annual parliamentary meetings two days ago, Wen said dollar volatility is a “big” concern and “I’m still worried” about China’s U.S. currency holdings.”
“Wen urged U.S. officials to “take concrete steps to reassure investors” about the safety of dollar assets, repeating concerns that he expressed a year ago, sparked by a growing U.S. fiscal deficit.”
“China’s share of U.S. bills, notes and bonds in January amounted to 24 percent of the total $3.7 trillion in Treasuries owned by investors abroad, up from 19 percent three years ago, according to Treasury data.”
With record Obama deficits, unsustainable national debt, and gigantic unfunded liabilities from welfare programs like Medicare, Medicaid, and Social Security inflation is a real threat. Add to that the demographically certain bankruptcy of these programs, the worry becomes all the more acute. Instead of a sober attempt to remedy the situation we have a socialist president on a hell-bent-for-leather campaign to add to welfare with Obamacare’s takeover of 16% of the U.S. economy. So Obama’s answer to a non-economic, non-functioning welfare system is to add a gigantic new program to it. How, with gimmicks and double counting!
If your a creditor with long-dated U.S. paper it’s reasonable to think you will be paid back with devalued dollars. And given the uncertainty caused by Obama’s socialistic, statist push of the economy, it’s reasonable to think that American consumers will not be back to buy your exports anytime soon. How can they, they don’t have jobs!
In short, our creditors should worry. And we should worry all the more!
Tom Motherway