Archive for category Business
Even Libs Learn The Hidden Cost of Obamacare
Posted by Tom in Business, Democrats, Nationalized Health Care, Welfare on August 26, 2010
Surprise, surprise, colleges want a waiver from Obamacare. If asked to name a liberal bastion as left as the Fourth Estate it would be the universities. Obama is their product, their teacher, their community organizer and their ordained leader. So why are they chafing from his most progressive achievement, Obamacare? Well according to an editorial piece in today’s WSJ, the law “could make it impossible for colleges and universities to continue to offer student health plans.” That’s how the American Council on Education and a dozen other higher-ed lobbies put it in a recent letter to the Obama Administration, warning that the insurance coverage they offer may get junked by ObamaCare’s decrees.” Seems that the bureaucratic “one size fits all” plan will cost too much for the 4.5 to 5.5 million students annually enrolled in college plans. Logical indeed, when you consider the average age of the students.
Of course, we the unwashed masses who will be taxed to pay for this unaffordable welfare program know the truth. EVERYONE WILL PAY….THE POOR STUDENTS…AND THE EMPLOYEES. That’s right, you won’t need to earn over $250,000 to suffer under this monstrosity. The people who can least afford it will be penalized most.
This from my friend Joe Morabito to his U.S. employees: “Hello All: We just sat through a horrible presentation done by our insurance broker related to the impact of Obama’s HealthScare Plan on our medical and other benefits. Let me be clear, for any employee who believes this is a “scare tactic”, effective next January, 2011; all will be paying significantly more for medical and other benefits because Paragon cannot absorb the cost increases that are coming as a result of ObamaCare. Further, as we go into 2012 – 2014, other elements of the plan kick in that will impact our entire benefits program so big changes will be coming related to how and from whom you buy your health insurance. If ObamaCare is not repealed first, we may, or may not, have a company sponsored plan based on what is most advantageous to both Paragon and our employees. What I know for sure is that Paragon cannot afford the insurance premium increases and additional administrative costs that are coming as a result of Obama’s HealthScare Plan. We will have to consider all alternatives.”
“As you go to the polls next November, I suggest you vote for candidates that advocate REPEAL of Obama’s HealthScare Plan, which will be a disaster for Paragon and our employees. Clearly, it is impossible to insure 30 million uninsured, (plus potentially 12 million illegal aliens) without someone paying the bill. In this case, those who already have health insurance and senior citizens will be paying that bill. Elections have consequences. JM”
The hidden tax that is Obamacare is only starting to be unmasked. There will be more “surprises!” None of them will be good.
As Joe says, “elections have consequences!”
August Reno Hayek Meeting: Nevada Hurting
I am late in thanking Randy York for the excellent discussion of Nevada’s deficit difficulties. Randy as president of the NV Manufacturers Association well knows the gravity of the over spending over the last several years and the temptation to add new taxes so that it can continue. Those potential taxes whether corporate income, gross receipts or the so-called Texas franchise tax will further hobble Nevada businesses.
Randy got everyone’s attention with some recent economic headlines: gaming revenues down, A&E layoffs, land prices and real estate valuations plummet. The state leads the nation in unemployment; Lyon County’s rate is up at 18.5%. And predictions for job growth will be down for many years. With the $3.2 Billion deficit in mind the state’s budget director Andrew Clinger said you would have to cut everything but education (55% of the budget) to balance the budget.
The Democratic majority typically favors tax increases or new taxes to protect coveted programs and insure public sector jobs. Steven Horsford, the senate majority leader has proposed a 50-50 deal, $1.5 Billion in taxes and $1.5 Billion in cuts. Problem here is the lack of detail and the temporariness of cuts against the permanence of taxes. With over half the legislature being public employees, it is difficult to see how devastating tax increases will not come about. And, it is not as if those public employee salaries and benefits are cheap. Randy showed compensation charts that make NV look like Bell CA!
Simply put, more government, more spending and more taxes will drive businesses from NV and further tank the economy. The only way to guard against this is to elect conservative candidates who will block tax increases and insist on expense reductions and government efficiency.
Randy listed key Assembly and Senate races: Assembly: District and conservative candidate: 5th-Williams, 13th-Hammond, 21st-Sherwood, 22nd-Stewart, 23rd-Woodbury, 27th-Jurado, 29th-Hill, 31st-Thompson, and 40th-Livermore. Senate: 2nd-Gustavson, 5th-Roberson, and 8th-Cegavske.
There has been some sentiment in our membership for a more active role in addressing the issues we discuss. Indeed, our tag line for the Reno Hayek Symposium is: “Articulating conservative solutions to current issues & supporting their intelligent champions.” As Randy ably pointed out, now is the time to support conservative candidates. To that end, we will have special meet and greet candidate interviews between now and the November election. The object is to raise money and where feasible offer “boots on the ground” help to get these folks elected. We will have both email and web notices of upcoming opportunities.
I also want to thank John Dunn for his NV4CFE (Yucca) update, Tom Gurnee for his China business comments, and Jerry O’Driscoll for expanding his recent WSJ article on the balance sheet recession.
Finally Joe Morabito announced a key federal race fund-raiser for Dr. Joe Heck who is running against Dina Titus; this will be held at his home on September 24th. RSVP to Nicole at 702-614-5900 or nsarouphim@gmail.com.
Help Not Wanted
Posted by Tom in Business, Government Regulation, Statism on August 9, 2010
Michael Fleischer posted a hard hitting op-ed in today’s WSJ, “Why I’m Not Hiring.” In it he tells about a valued, long term, mid-level employee at his audio systems company in New Jersey. He details the pay and benefits and discusses the taxes, insurance and fees involved in her compensation. “When you add it all up, it const $74,000 to put $44,000 in Sally’s pocket and give her $12,000 in benefits.”
But that’s only part of the story. Hussein Obama’s statism has businesses guessing, wondering when the next shoe will drop in terms of tax, regulation or restriction. The uncertainty principal is paramount in business today. Why should I invest, why should I hire, when I don’t know what these tzars will do next? Obamacare is omnipresent, yet unknown in scope and effect. Financial re-regulation is all encompassing, yet unknown in scope and effect. Cap and Trade is a dormant threat of gigantic proportions. Obama and his Reid-Pelosi comrades have set up bureaucratic rule-making to an extent not seen in modern memory. Using the Tom Cargill analogy, when the chess umpire announces in the middle of the match that the rules are being reconsidered and that an announcement will be made in the near future, what is going to happen to the match? Will the contestants continue to play?
Likewise in business, whether the company is a rent seeker like GE or a small business like Michael Fleischer playing by the rules, growth stops, risks are avoided, in short, the game stops. No investment. No hiring. No growth!
I met this afternoon with the owner of a multinational small business who handles major relocations; his business is a barometer of future business activity. He has reduced staff significantly and has no incentive to ramp back up. Just a reaffirmation of Michael Fleischer’s “Why I’m Not Hiring.”
It is imperative that we rid ourselves of this scum come November.
Deflation, A Self Fulfilling Prophesy?
Posted by Tom in Business, Centrally Managed Economy, Deficit, Fed, Financial Policy, Monetary Policy, National Debt, Nationalized Health Care, Taxation on August 3, 2010
When Bill Gross, the bond guru manager of Pimco Total Return Fund, says “it’s happening,” he brings credibility to the deflation first scenario, that is deflation before inflation. According to yesterday’s WSJ article many fund managers are loading up on US Government bonds and hedging stocks. Others expect the Fed to come to the rescue. The Fed has limited options since it has interest rates near zero. According to another WSJ report these options are “unorthodox!” As the Fed mulls these, it may spook investors and highlight the weakness in the economy. So when the Fed is playing offense in trying to reflate the economy, savvy investors might conclude as Gross did that it’s time to play defense. Typically these “unorthodox” measures mean increasing the money supply by buying bank assets good and bad, bonds and mortgage backed securities. Problem is that there are not too many bullets left in the Fed’s arsenal.
To cap matters off, vis a vis the “self fulfilling prophesy,” today’s WSJ leads the front page with “Fed Mulls Symbolic Shift” that is using cash from maturities to buy additional assets instead of letting its portfolio shrink to a stable economy level. The Fed’s $2.3 Trillion portfolio has nearly tripled in size since 2007!
So, what to do? If prices are going to be lower tomorrow, why buy today? And this, ad infinitum! Couple this with Hussein Obama’s proposed tax increases, the pile on of entitlement deficits from Obamacare, and the great uncertainty posed by the regulatory bureaucracy, and you get a bleak picture.
Hope I’m wrong!
Steve Wynn on the Leftist Democrats Killing the Economy
Posted by Tom in Business, Centrally Managed Economy, Congress, Democrats, Economics, Government Regulation, National Debt, Statism on July 21, 2010
This CNBC interview with Steve Wynn is well worth your time:
Paul Ryan: Fork in Road
Posted by Tom in Business, Centrally Managed Economy, Economics, National Character, Statism on July 16, 2010
You can’t say it any better than Paul Ryan.
“Stimulus or Sedative?” Thomas Sowell Never Disappoints
Posted by Tom in Business, Centrally Managed Economy, Democrats, Economics, Financial Crisis, Government Regulation, Monetary Policy on March 9, 2010
Sowell opens his succinct RCP post with an Abe Lincoln story: President Lincoln asked an audience how many legs a dog has, if you call the tail a leg? Some shouted “Five” but Lincoln corrected them saying that the answer was four. “The fact that you call a tail a leg does not make it a leg!”
The professor uses that tale to drive home the truth about the “stimulus” and the “jobs bill.” The idea behind stimulus, for example, is to get investors to invest, lenders to lend, and employers to employ. Prime the pump, put a little bit of water in to get the well flowing. That little bit of water, the government money, was never meant to restore the economy by itself, but to get the private business sector going. What has happened?
- After the Bush-started stimulus in 2008–business spending fell by 28%.
- Durable goods spending fell by 22%.
- Four months after the TARP billions–large TARP banks made 23% fewer loans.
- The velocity of money fell faster than at any time in the last half century.
- The WSJ reports the “sharpest decline in lending since 1942.”
Why would banks lend when, “from the White House to Capitol Hill, politicians are coming up with all sorts of bright ideas for borrowers not to have to pay back what they borrowed…” Why would investors invest when a substantial number of the consumers are unemployed? Why would employers employ when faced with higher taxes and more Obamacare mandates? In short, the outlook is uncertain and certainly more big government than private sector oriented.
Sowell points out that none of this is new: during the Great Depression of the 1930s, money velocity, lending, investing and employment were all lower than they were in the 1920s. The anti-buisness rhetoric and anti-business policies did not inspire any more confidence then than they do now. “In an atmosphere where nobody knows what the federal government is going to come up with next, people tend to hang on to their money until they have some idea of what the rules of the game are going to be.”
Economists have estimated that Roosevelt’s New Deal prolonged the depression by several years, how long will Barack Hussein Obama, Reid and Pelosi prolong our current difficulties?
Tom Motherway
California Businesses Welcome in Nevada
Posted by Tom in Business, Economics, Government Regulation, Nevada, State Finances on February 26, 2010
One of the round table topics at our recent Reno Hayek Symposium dinner was state taxes and business environment. How did Nevada compare? Granted, Nevada has a deficit of some $880 Million, but that pales in significance to California’s, our immediate left coast neighbor has a current deficit of some $20 Billion. Remedies for each seem intractable but the pain index is surely greater the farther West you go.
Mark Bailey referred me to some testimony which highlighted a midyear 2009 comparison between the 50 states. The Tax Foundation presents an interesting comparison of data then available, “2009 Facts & Figures–How Does Your State Compare?’ I’ve shown below some selected categories (click image to enlarge):
Now this is just a thought, but I suspect that California taxes and fees and costs of doing business are going to increase. It’s a good bet they will increase at a more rapid rate than those in Nevada. Also, I would venture a guess that the total cost of living will proportionately increase and with the same dichotomy.
California businesses must compete internationally, particularly those in the tech world. And with the Obama deficit, debt, and unfunded liabilities about to create national pressure on all businesses, any advantage a business can gain at the margin will help it remain competitive worldwide.
So, all you frustrated California developers who have tech clients, come on over to Reno and take a look. We will be happy to introduce you to the people and the area. It’s really a friendly, help-your-neighbor place. Oh, and we’ll do our best to retire Harry Reid in November. Pity, but ol’ Nancy Pelosi will still be in office!
Tom Motherway
Obamanomics Will Lead To Our Demise
Posted by Tom in Business, Centrally Managed Economy, Democrats, Economics, Government Regulation, Taxation on February 24, 2010
I don’t know whether to laugh or cry to see the dynamic trio, Obama-Reid-Pelosi, ramming Obamacare down our throats at the small price tag of $950 Billion, oh yes and price controls on private insurers, expensive mandates on employers, and the government take over of 16% of the U.S. economy. Employers are not hiring, not investing, and not borrowing. At the very time jobs are needed businesses face health care uncertainty, higher taxes, falling consumer sentiment and high unemployment. Why invest if there aren’t going to be any consumers around to consume? Consumption is three quarters of the economy!
The only jobs the non-stimulus stimulus has created are government jobs–that would be the non-productive jobs that are a drag rather than a stimulus to the economy.
Speaking of economy, Robert Robb pens a dynamite article in Real Clear Politics today, The Chief Economic Worry About Democrats. With syllogistic logic he points out the elites lack of appreciation of investment capital and its function in the economy. Liberals assume a given level of economic output, a dangerously false assumption. Output doesn’t just happen it depends on investment capital. The government cannot supply that capital but can only redistribute what it takes by way of taxes. What it takes in taxes is withdrawn from private productive investment.
“Producers have to produce before consumers can consume. But producers cannot produce ex nihilo. Investment capital provides the financial bridge between production and consumption….In reality, however, the affluent provide most of the country’s investment capital. They are the ones with discretionary income. What the rich do with their money is very important economically.
“The Democrats want to raise taxes on the affluent and on corporations (which are repositories of investment capital). The numbers, and their effect on investment capital, are staggering..So, between Obama’s budget and the health care plan, that’s a shrinkage in the nation’s investment capital pool of up to $1.9 trillion over the next decade. But that’s only the beginning of the effects. Between Obama’s increased income tax rates, the income tax surcharge in the House health care plan, and state income taxes, the highest marginal income tax rate in most states will approach or exceed 50 percent. That will hugely discourage savings and investment by the affluent.”
“This tax-the-rich approach is justified as a matter of social justice. The government needs money, goes Democratic thinking, and it is fairer to get it from the rich than the middle class or the poor. Democrats also tend to believe that large disparities in income and large accumulations of wealth are evils to be ameliorated in their own right. The rich already pay a higher percentage of federal income taxes than they make in income. And the true social justice question shouldn’t be whether income or wealth disparities are increasing, but whether the lot of the poor is improving. Concentrating on the latter question leads to entirely different policy choices than concentrating on disparities.” (emphasis added)
Robb’s back to Adam Smith basics is brilliant, thus I’ve perhaps over quoted in this post. What I suggest is a read of the whole article and selected comments following the article which are displayed by clicking on “COMMENTS” at the end of the article.
Tom Motherway
While Complaining About Wall Street Bonuses…..Let’s Remember Some Other Abusive Compensation
Unionized public sector pay and pensions are out of control and increasingly contribute to our fiscal demise.![mime-attachment[1]](http://renohayek.com/wp-content/uploads/2009/12/mime-attachment1.jpeg "mime-attachment[1]")
According to the 2008 report from the Bureau of Labor Statistics while union members accounted for 12.4 percent of wage and salary workers, “the union membership rate for public sector workers (36.8 percent) was substantially higher than the rate for private industry workers (7.6 percent).”
And, USA Today reported in April, (a) public employees earned average benefits worth $13.38 per hour vs. $7.98 per hour for private sector workers, (b) overall average compensation for state and local workers was $39.25 an hour vs. $27.35 for private workers, and (c) a full-time government worker gets benefits worth and average of $27,830 per year, while a private workers average benefits are worth $16,598 per year.
Finally, we’ve all seen reports on the looming time-bomb of unfunded state and local retirement benefits. Greg D’Angelo of The Heritage Foundation reports that those governments have promised but not paid for “roughly $1.5 trillion” in retirement benefits. This coupled with early retirement ages, high percentages of last paid compensation and final year “promotions” exacerbate an already bad situation.
Perhaps, though, the most damnable aspect of public sector unionization is the unholy understanding that the unions campaign for the elected officials who in turn “take care of” the unions come payday. There is no check on this unholy alliance.
Tom Motherway