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Back in 2000 when I moved from Texas to Ohio I was given the opportunity to buy health insurance at what I thought was an exorbitant price of $350 per month. I declined. On Friday I commented on a post that about the insurance mandate that the insurance mandate is very expensive option for me for what I consider to be a hospital billing problem. Today I calculated about how much I saved by not having health insurance or having a low cost high deductable plan. Just for the health insurance premiums alone I would have spent $52,970. I used this slide from the Kaiser Family Foundation and its 131% increase to estimate my health insurance premium increases. This looks like a pretty conservative number since it assumes I can get a comparable low deductible policy today for $457 per month. From Quicken I can say that my medical and dental costs over this time period was about $37,900. Based on my ten year experience you can save a lot of money by being a savvy health care buyer.

Yesterday Ann Althouse and Les Jones both commented on an interview in the Wall  Street Journal with the Nobel economist, Gary Becker. They focused on his comment:

Here in the United States,” Mr. Becker says, “we spend about 17% of our GDP on health care, but out-of-pocket expenses make up only about 12% of total health-care spending. In Switzerland, where they spend only 11% of GDP on health care, their out-of-pocket expenses equal about 31% of total spending. The difference between 12% and 31% is huge. Once people begin spending substantial sums from their own pockets, they become willing to shop around. Ordinary market incentives begin to operate. A good bill would have encouraged that.

Although I agree with that statement I am most concerned about the following statement in the article since it links a bad health care policy with aggravating our current economic malaise. The next logical step for people frustrated with the current health care policy is to “game the system” and watch the legislators fumble around trying to explain how the policy is actually working quite well. Already we are seeing several unintended consequences such as, “AT&T Sees $1 Billion Charge Tied to Health”. There is definitely some passive-aggressive behavior going on here. You might call this scenario the sequel to “Jobs saved or created”.

Bad legislation, maintained by self-seeking interest groups. Back in 1982, I remind Mr. Becker, the economist Mancur Olson published a book, "The Rise and Decline of Nations," predicting just that trend. Over time, Olson argued, interest groups would form to press for policies that would almost invariably prove protectionist, redistributive or antitechnological. Policies, in a word, that would inhibit economic growth. Yet since the benefits of such policies would accrue directly to interest groups while the costs would be spread across the entire population, very little opposition to such self-seeking would ever develop. Interest groups—and bad policies—would proliferate, and the nation would stagnate.

Gary Becker: ‘Basically an Optimist’—Still
Sat, 27 Mar 2010 03:48:35 GMT

Despite the drama about the health care debate the country continues down its path to austerity. The only way we can get off the path is if the economy shows a robust, vigorous recovery of permanent employment and consumer spending. The states, counties, and cities desperately need more tax revenue. It is not surprising that this week Arizona’s governor signed a budget-balancing bill that cuts benefits immediately and threatens to cut even more benefits if a sale tax increase is not approved. Like most states Arizona has been trying to develop a budget to deal with the shortfall in tax revenue. It is ironic that one of the major spending cuts is a $385 million cut in the state’s Medicaid program. For many states the growth in Medicaid has become too large a burden for a weak economy. When it comes down to laying off teachers, police men, or cutting Medicaid, Medicaid is going to get cut. Many states view the Medicaid expansion as an unfunded mandate. So Congress votes to expand Medicaid coverage and Arizona cuts it.

Governor signs Arizona budget-balancing bills

In the old days the Federal Reserve could hint at lower interest rates and the stock market and economy would take off. Eventually inflation would rear its ugly head and the Federal Reserve would be forced to raise the interest rates to rein in inflation fears. That was the old days.

In this economy the Federal Reserve is lending money at extraordinary low rates and neither the economy or the inflation rate have taken off. The Federal Reserve’s favorite tool is not working very well with this economy. This brings up an even more ominous question. What if the Federal Reserve’s favorite tool continues to not work when the economy heats up?

Talk about unintended consequences!

 

According to The Hill, wind executives are engaging in a lobbying-flurry on Capitol Hill this week, going after the “Buy American” agenda that Senator Chuck Schumer is pushing with regard to renewable power projects funded with stimulus grants. Schumer has become somewhat agitated to learn that most (79%) of the US stimulus money spent on renewable energy has gone overseas creating manufacturing jobs abroad, but creating little but taxpayer debt here in the U.S.

The Hill quotes Donald Furman, senior vice president with Iberdrola Renewables as admitting that Schumer’s buy-American plan “will cause my company not to build the number of projects that it was going to build simply because we can’t get the equipment that would satisfy the requirement.”

This admission is only surprising because it was made in public. Anyone who knows that China’s labor rate is under $1.00 per hour, and that China holds 95% of the rare earth elements needed to produce most renewable energy systems could have told you that manufacturing of renewable equipment is going to happen mostly in China.

U.S. Wind Industry: Turbine Construction Won’t be Domestic
Kenneth P. Green
Fri, 12 Mar 2010 06:00:58 GMT

This week I found interesting relationships between seemingly unrelated events.

• As Senator Bunning tried  to make his case that now is the time to start cleaning up the debt crisis, he was pilloried by Republicans, Democrats, and the press for being heartless to the unemployed. It was during these discussions I came to the conclusion that unemployment insurance is more like triage rather than part of a larger solution for unemployment. The question of whether to extend unemployment insurance seems to be most closely related to the prevailing political winds at the time. At this time the political winds are to extend unemployment. Several people showed that the unemployment figures remain mostly unchanged at the beginning and at the end of the unemployment insurance extensions. So the plan is we spend a lot of money to kick the can down the road.
• Greece passed an austerity budget and there were strikes and rioting, Clashes in Athens as Greek PM seeks EU debt help (AP). By the end of the week it looked like the Greek population is finally coming to grips with the reality that budget cuts are inevitable.
• I ran across an intriguing slide presentation, “The Nightmare Scenario: How The U.S. Government Would Look Under An Austerity Budget”, on The Business Insider. This presentation uses the Irish austerity measures as the template.
• There was a referendum in Iceland to repay Britain and the Netherlands for a failed Icelandic bank, Icelanders balk at Icesave deal, 93.3% vote ‘no’ (AFP). It appears that Icelandic population do not feel obligated to pay for the mistakes of others.
• Barney frank threw a scare into the mortgage backed securities markets when he casually  “noted that debt issued by the two mortgage finance companies is different from bonds issued by the Treasury Department” . This evidently caused a panic among investors. On Friday the Treasury Department was forced to reiterate their financial support for Fannie Mae and Freddie Mac.
• Finally we see that Rick Perry Wins Heated Texas GOP Primary. Populism is alive and well in Texas as he said , "From Driftwood, Texas, to Washington, D.C. we are sending you a message tonight: Stop messing with Texas!".
• Although I doubt the Democrats will not agree, the Instapundit is wondering if our economy has gone beyond the triage stage, HAS OBAMA DONE IRREVERSIBLE DAMAGE YET? Neo-Neocon says “yes.” I’d say it depends….

Although I doubt the United States will install an austerity budget as severe as Ireland, I think it is inevitable that some states and cities will balance their budgets with “Irish”-like budget cuts. Extreme situations will require extreme solutions. Eventually a federal austerity budget will become inevitable because entitlement cuts are intractable political issues. As shown in California neither party was willing to cut the budget until they are forced to do something embarrassing like issuing IOUs. I think that the wise men and women in Washington will try and put a muzzle on Barney Frank to avoid an Icelandic-type public opinion blow up the mortgage market before it has a chance of recovering.

Up until Senator Bunning’s actions our legislators seemed to be acting more like the parents of an addicted child. Parents initially hope they can buy their way out of their child’s problem. Eventually they realize the compassionate solution  is tough love. I suspect that Senator Bunning’s actions reflect this thinking and that there is probably wide spread support for our legislators to stop the shell game style financing schemes. It is time for our legislators to embrace tough love.

By Alan Reynolds

Sen. Jim Bunning (R., Ky.) blocked “extended” unemployment benefits beyond their scheduled expiration on February 27. That thwarted bill would also have put off, again, a scheduled 21 percent cut in Medicare payments to physicians. Democrats were outraged. But why?

Bunning just wanted to use leftover “stimulus” money to pay for the benefits. Why not? Such transfer payments accounted for over 80 percent of stimulus spending last year.

Besides, as Federal Reserve policymakers noted, the evidence is overwhelming (see here and here) that extending unemployment benefits from six months to nearly two years has raised the unemployment rate by a percentage point or two. I’ve waited since 1991 for someone to prove I’m wrong about that. Nobody has, because nobody can.

If the maximum duration of jobless benefits were trimmed by 13 to 20 weeks (which is all that’s at stake), they would still be far more extended than ever before. But the unemployment rate by the time of this November’s elections would be much lower than otherwise. Would Democrats prefer to go into the elections with an unemployment rate near 10 percent or a rate below 9 percent?

As for Medicare, slashing payments to physicians is the Democrats’ favorite way of paying for expanding Medicaid enrollment and health-insurance subsidies for the non-poor. If they really think that will work, how can they possibly object to saving money sooner rather than later?

[Cross-posted at The Corner]

Senator Bunning’s Unappreciated Gifts
Alan Reynolds
Sat, 27 Feb 2010 22:39:00 GMT

A nicely written article that encourages me to continue running.

Bookmark this on Delicious – Saved by to running health exercise knees arthritis fitness nytimes aging nyt blog – More about this bookmark

Phys Ed: Can Running Actually Help Your Knees? – Well Blog – NYTimes.com
Sat, 27 Feb 2010 00:00:00 GMT

To the average person the mounting debt being accumulated by the Federal Government is a clear and present danger. According to nationwide polls this is the second most important issue confronting voters. One of the biggest spending areas that appears out of control is the subsidies for the mortgage market. At present most of these costs are being kept off of the Federal books despite the complaints of the CBO and Republican legislators. Ironically sometime before March 31^st the Federal Reserve needs to convince someone other than the Federal Reserve to buy the mortgage backed securities. I doubt Mr. Geithner reassured prospective investors with these explanations. It should be interesting to see how high an interest rate will be required to move these securities. Will they resort to selling these securities at speculative rates just to move the securities into private hands? How could a fund manager consider investing in these speculative mortgage backed securities when the Obama administration’s plan is to ignore critical mortgage problems until 2011?

AP – The Obama administration will wait until 2011 to propose an overhaul of mortgage giants Fannie Mae and Freddie Mac, Treasury Secretary Timothy Geithner said Wednesday, arguing that he wanted to put some distance between a new system and what he called "the worst housing crisis in generations."

Geithner: No change to Fannie, Freddie until 2011 (AP)
Wed, 24 Feb 2010 21:27:04 GMT

I agree with Ann Althouse that the admissions make the non-skeptics, scientists and media, look bad. By failing to effectively criticize their own arguments for global warming, these non-skeptics have done more harm to the global progress on environmental issues than anything the deniers could say or do. Now we are confronted with a large amount of global science research of questionable scientific quality and set of global priorities which may be unjustified. This is probably a good time to re-examine the priorities advocated in The Skeptical Environmentalist by Bjørn Lomborg and to re-read the article, The Case for Due Diligence in Policy Formation, by Bruce McCullough and Ross McKitrick. Bjørn Lomborg argues that we are spending too much time on th wrong environmental and social issues.  Bruce and Ross argue that faulty scientific research is consistently leading us to make poor government policies on major issues. As an example we may have a cleaner environment with more jobs if we can unlock the EPA from its view that carbon dioxide is a pollutant that they need to regulate. The article, Time to Repeal New Source Review? (Up to 30 GW of coal-plant upgrades hangs in the balance), makes the argument that the EPA is holding up a lot of jobs and a cleaner environment for the sake of regulating carbon dioxide.

Original link to Daily Mail article:

http://www.dailymail.co.uk/news/article-1250872/Climategate-U-turn-Astonishment-scientist-centre-global-warming-email-row-admits-data-organised.html

Similar article on Instapundit:

SHOCKER: Climategate U-turn as scientist at centre of row admits: There has been no global warming …

In the NYPost.com editorial, What a real gov does, I think we are likely seeing a break through in the process of constructing a balanced budget. If the polling confirms his position of “no new taxes”, we will likely see major cuts in those school districts, cities, and states across the country “who kicked the can down the road” for the next group of legislators to deal with. I would not be surprised if the polling reveals a preference by the voters to deal with these budget deficit problems now rather later. Although these budget cuts will be very painful the more interesting question is whether the legislators will cut deep enough to start offering modest tax breaks for new business startups and expansions that create jobs in the private sector.

New Jersey Gov. Chris Christie clearly is serious about doing what he was elected to do — getting the budget under control, without reflexively raising taxes.

Noting that Jersey’s current budget contains "the same worn-out tricks of the trade that have become commonplace in Trenton, that have driven our citizens to anger and frustration and our wonderful state to the edge of bankruptcy," Christie on Thursday declared a new day.

Facing a $2.2 billion deficit in the current budget, the governor imposed fiscal emergency measures: By executive order, he froze $1.6 billion in unused state funds and started chopping in the areas where the money is — education and health care.