Politics

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Review of The Total Money Makeover and The Original Argument

Last year my wife had a spat with our son and decided that I should be ferrying my son back to college from now on. Although it involves a lot of driving I prefer to complete the round trip in one day. With all of that time in the car I have taken advantage of the local library and their supply of audio books. For this trip I chose two audio books, The Total Money Makeover: A Proven Plan for Financial Fitness and The Original Argument: The Federalists’ Case for the Constitution, Adapted for the 21st Century.

As a fan of the Dave Ramsey show the audio books was an enjoyable review of much of the same stuff you hear over the radio.

The Original Argument audiobook is an interesting Glenn Beck project. Glenn Beck and others have translated many of the original Federalist Papers from the 18th century English into an easier to understand 21st century English. The objective was to make the Federalist Papers more accessible to the average person and I think he achieved that. In this book we find Alexander Hamilton and James Madison making persuasive arguments for a more powerful federal government primarily because they felt a federal effort would be more efficient and cost less than independent state efforts. From their viewpoint it was a win-win decision for the country. Although I agree with Alexander Hamilton and James Madison about the benefits of a strong federal government, I think they would be shocked to see how the balance of power has shifted from the states to the federal government. Most of the safeguards for the state that Alexander Hamilton and James Madison described have been dismantled over the years. Not only are senators directly elected by the people but the states are increasing dependent on the federal government for their revenue as shown below.  The culmination of this dismantling effort can be seen in the lawsuits over the constitutionality of the Affordable Care Act. This year lawyers will make many of same federal versus state rights arguments before the Supreme Court that was argued originally in the Federalist Papers. I doubt any of lawyers will attempt to make the argument that the Affordable Care Act is more efficient substitute or enhancement of existing state programs. The fact that the federal government can pay for the expansion via deficit spending is a bad reason to expand Medicaid. I would be more in favor of a practice that encourages responsible governing practices.

See this Cato essay on federal subsidies to the states for more on why it is critical to reverse this trend.

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A Quick Review of Presidential Politics

Yesterday was cold and the ground was covered with ice. It was treacherous outside so I stayed inside and watched television. We eventually wound up watching CNN where we listened to campaign speeches by Mr. Romney and Mr. Gingrich. I was impressed with how both men appeared dramatically better in their public appearances compared to how they typically portrayed on our news programs via sound bites. Both men did an excellent job of articulating their political views and how these views connect to the shared values of the American people. As Mr. Gingrich was quoted in the Washington Times ,

“it’s not that I am a great debater,” Mr. Gingrich said Saturday. “It’s that I articulate the deepest-held values of the American people.”

As was expected the crowd response was favorable since both men were “preaching to the choir”. Their connection with their audience is no different than President Obama’s connection with his audience. This is one of the most importance characteristics of successful politicians.

If these candidates continue to have successful public appearances the presidential race will probably be determined by how people view the successes and failures of our government under Presidential Obama. The biggest problems with President Obama’s signature health care act and stimulus plan is that they have not made a difference that the average person can see. Most people have seen their health care costs go up and the expansion of Medicaid is on hold since most of the states do not have the money. The continued high unemployment rate condemns the stimulus plan. With high disapproval ratings among independents President Obama has an almost impossible task in front of him. If he is to win re-election he needs a lot of help from the Republican candidates. If the Republican candidates do not screw up, he will be a one term president.

Another thing I noticed in the campaign speeches is the repetition of some new catch phrases. It should be interesting how the phrases, “Food Stamp President”, “Crony Capitalism”, and “Anti-Job President” play in a broader political audience. The “Anti-Job President” phrase was a new phrase for me. Based on the polling numbers the Keystone Pipeline decision looks like a bad political gamble for the President in an election year. Jobs is the number one political issue and the administration does not have a lot of job creation successes to talk about on the campaign trail. Considering the present economic climate does the President really think that environmental concerns with the pipeline are more important than job growth to independent voters? There is a difference between a “Do No Harm” President and a “Do Nothing” President and I think the polling shows that independent voters can tell the difference.

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A discussion about Occupy Wall Street

Here are two sources for those trying to understand the Occupy Wall Street movement. Representing the left side of the political spectrum is the show by Charlie Rose with with journalist Chris Hedges and Amy Goodman of Democracy Now!, Charlie Rose – A discussion about Occupy Wall Street. Representing the right side of the political spectrum is this blog post from Heritage Foundation, The Conservative’s Guide to the ”˜Occupy Wall Street’ Protests.

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California’s Secret Government by Steven Greenhut, City Journal Spring 2011

This is interesting. By law the California state government must use its general fund to compensate the schools for the money that the redevelopment agencies(RDA) have diverted. Although Ohio has redevelopment agencies it appears that tax increment financing districts are the preferred method of financing these “redevelopment” projects. I looked at Ohio’s Tax Increment Financing page and could not find any mention of Ohio school districts being compensated by the state for the diverted property tax revenues.

In Sacramento, Governor Jerry Brown is planning to close California’s $26.6 billion structural deficit through spending cuts and tax extensions. Opposition has been spirited but less contentious than expected, probably because of the size of the budget hole. But one item of Brown’s plan””something that would save about $1.7 billion annually””has generated heated debates between local officials and the new administration. The governor has proposed eliminating California’s approximately 400 redevelopment agencies (RDAs).

In theory, RDAs spearhead blight removal. In fact, they divert billions of dollars from traditional services, such as schools, parks, and firefighting; use eminent domain to seize property for favored developers; and run up California’s debt to pay those developers to construct projects of dubious public value, such as stadiums and big-box stores.

California’s Secret Government by Steven Greenhut, City Journal Spring 2011

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‘If States Could Speak’: The GOP’s ‘Third Front’ Against Obamacare

I was wondering when someone would do something like this. I think many states will opt to not expand state Medicaid programs due to lack of funds. When it comes to laying off police officers or cutting Medicaid, Medicaid loses. The Individual Mandate and the federal mandate to determine what qualifies as an ”˜acceptable’ health-insurance plan are tools for raising costs for healthy people. Basically it makes healthy living a sin tax.

Sens. Lindsey Graham (R., S.C.) and John Barrasso (R., Wyo.) introduced legislation Tuesday that would do considerable damage to the Democratic health-care law by allowing states to ”˜opt out’ of its key provisions.

The State Health Care Choice Act would let state governments choose whether or not to participate in various aspects of Obamacare, including: the individual mandate forcing citizens to purchase health insurance or pay a fine, the employer mandate forcing businesses to provide health insurance or pay a fine, the mandated expansion of state Medicaid programs and the federal mandate determining what qualifies as an ”˜acceptable’ health-insurance plan.

”˜If States Could Speak’: The GOP’s ”˜Third Front’ Against Obamacare – By Andrew Stiles – The Corner – National Review Online

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TRANSPARENCY: School District Puts Checkbook Online….

Recently I became concerned with our country budgeting process and its possible abuse by county commissioners. In this case the county was planning to buy a shopping mall and lease it at an aggressive rate to encourage a grocery store to move in. There were some obvious questions why was the county jumping into the commercial real estate market and how was this project going to be good for the county. It was obvious that some friends of the county commissioners were going to benefit. Most of the problems centered around Tax Increment Financing(TIF) and whether the only beneficiaries of the project will be the friends of county commissioners. Improved transparency is a possible solution.

TRANSPARENCY: School District Puts Checkbook Online.

TRANSPARENCY: School District Puts Checkbook Online….
Glenn Reynolds
Sat, 08 Jan 2011 15:25:45 GMT

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Obamacare: When Obama LIKES Imposing Higher Costs on ‘The Poor’

My biggest complaint with this new restriction on Health Savings Accounts is that it is a blatant attempt to make Health Savings Accounts less desirable by arbitrarily removing benefits. The combination of Health Savings Accounts with a high deductible health insurance represent a low cost competitor to ObamaCare. The primary political objective of ObamaCare was to limit health care alternatives and force everyone into one common but high cost comprehensive health care plan. The key to building support for the high cost health care plan is to hide the costs of the comprehensive plan and make the low cost plans less attractive. The government health plan had to be comprehensive to be acceptable to unions and large corporations. High health care costs have made some businesses uncompetitive and one solution is transfer their health care responsibilities to the government. Under this scenario control of the health care system is the primary objective. Controlling spiraling health care costs is a secondary consideration. Once control of the health care system is attained, then the government could force lower prices at will. It is hoped that the health care czars will be smart, benevolent dictators. The downside is that the proposed health care system could be an inefficient bureaucracy like Medicare or something much worse. Currently this particular scenario has such a dim political future that many large organizations have asked for exemptions from ObamaCare. With this deadly embrace of the status quo, the owners of these luxury health care plans having particularly dim future at controlling their spiraling health care costs and ultimately their product costs. If an individual believes that a low cost plan health plan is better for them, why should they be forced to bail out the high cost plans of unions and big businesses?

Health Savings Accounts and high deductible plans are nasty reminders to the people who wrote ObamaCare that if you have to pay for your health care, a lot of people will choose the basic health care plan over the high cost, comprehensive plans offered by large corporations and unions. Any one who has compared the COBRA health insurance offered  by your former employer with those offered by the major insurance companies would come to the conclusion that corporate health insurance is way overpriced and the first step to control your health costs is to take personal responsibility for your health care and cut out the unnecessary benefits. Under this system your good health results in money in your pocket. This issue exposes some core conflicts within ObamaCare. Who do we trust with our health care decisions, the individual or the government? Will the independent thinker ever be comfortable with the group think of ObamaCare? Can a country as ethnically, culturally diverse as the United States ever adopt the Swedish "homogeneous" view of health care or is this a fool’s errand in the process of creating a health care plan tailored for America?

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Occam’s Razor meets the Patient Protection and Affordable Act(ACA)

One of the more interesting gambits that played out in the health care debate was the ardent support for the Patient Protection and Affordable Care Act (ACA) by unions and large companies. Despite the fact that these organizations are particularly at risk from rising health care costs, the focus of the debate centered around the issue of expanding health care to the uninsured rather than reducing health care costs. Although the health care reform act is extraordinarily complex with many different cost containment ideas, the dominant idea is that we can lower health care costs by compelling all people to purchase health insurance. The crux of the argument is that by adding a few more health insurance customers the health care cost problem will magically go away.

I have a simple theory about controlling the rising health care costs. Although it is possible that a portion of the rising health care costs can be attributed to the uninsured, the majority of the health care costs for many years has been paid for by unions, large companies, and governments. Since these groups are the largest payers into the system, it follows that the actions and inactions by these organizations are the most likely causes of the increasing health care costs. Since they have the "gold" they are the group with most leverage to make rules to control costs. Although the health care reform act does attempt to reform this issue by taxing high cost plans and placing a cap on the tax benefit of employer-based health care insurance, these reforms have largely been offset by exemptions and delayed implementation.

The Patient Protection and Affordable Care Act (ACA) is a complex and controversial bill. There is no disagreement that this bill expands health care but the way we pay for the increased health care services is ambiguous. The polls in 2010 show that the average man and woman are skeptical that the cost containment ideas included in the bill will work. The elderly think the bill takes money away from them to expand services to the poor. The courts are skeptical that compelling an individual to purchase health insurance is constitutional. We are left with a bill that has a lot of ideas we may agree with in theory but not in practice. Maybe we need to heed to advice of  Occam’s razor and replace this complex bill with a set of smaller, simpler bills that will stand up to the scrutiny of a town hall meeting.

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Delicious Irony

While Congress and most of the nation was caught in the melodrama of whether or not to extend the tax cuts this week, another drama was playing out. Politifact chose to announce, PolitiFact’s Lie of the Year: ‘A government takeover of health care’, at the same time Judge Roger Vinson was hearing the case just down the road in Pensacola in which 20 states are challenging the constitutionality of ObamaCare’s mandate that individuals buy health insurance. I suspect that there were lawyers in that court arguing that the biggest lie of the year was the belief that the individual mandate was constitutional. To be fair to Politifact they chose to argue that the government take over of health care was the biggest lie. They are correct that Obamacare does not take over hospitals or provide a public option but once again their choice of this lie over some other whoppers is puzzling. I seem to remember that Social Security was sold to the American people as insurance. It did not take the American people too long to figure out that it was not insurance. Then it was described as a trust plan and that explanation didn’t work with the people either. It is interesting to note that the facts and lies about the Social Security plan really didn’t matter in the overall debate as long as we were wealthy enough to push the responsibility to pay for Social Security benefits to the next generation. In 2010  the American people panicked about the deficit and the likelihood that Obamacare would cost a lot more that advertised. Paul Krugman and others didn’t help the situation when they argued that  the solution to spiraling health costs was to go to a single payer system. According to him the key to Obamacare was to create the entitlement. Following the path blazed by Social Security the health care entitlement would evolve into a single payer government system when the original version of Obamacare threatened to bankrupt the country. Unfortunately for him the real risk as perceived by the American people is that both the original version of Obamacare and its replacement might be overcome with fraud and inefficiency. Why would anyone think that this new federal agency will be any more efficient an organization than Medicaid, the Post Office, or Amtrak? The likely scenario is that it will fail like TennCare did in Tennessee. When TennCare threatened to bankrupt the state, Tennessee chose to dramatically cut back on TennCare. For the American people this is a sorry plan to fix spiraling health care costs. They wanted a plan to control spiraling health care costs and the got a plan to dramatically expand free or heavily subsidized health care coverage. So although Politifact may have been technically correct about the government take over of health care, the American people saw a more important lie playing out in the health care debate. Considering how they voted last November it looks like they were far more concerned with the lies that Obamacare would keep their health insurance costs from rising and would not increase the budget deficit. Maybe the people are not as dumb as some journalists and former elected officials would like to believe.