I'm going to continue discussing Obamacare. It is such a MessAPolitico on so many different levels, in so many different ways, I could write about it forever. Let's think about the affect of the rule requiring employees that work 30+ hours per week to be provided with health insurance.
My father-in-law is retired and in his 70's. He receives Medicare and has a Medicare Supplement policy that gives him excellent coverage for him and his wife. He is healthy. Since he never earned a huge salary in his working career, they never saved a lot for retirement. He retired at age 65, but has continued to work at several part time jobs. I think he likes to stay busy, and they really need the extra income to maintain their comfortable life style. He has routinely worked 40 hours/week in his current "part time" job.
Along comes Obamacare. Now his employer must offer him health insurance or pay a big tax. So, can you guess what the employer did? That's right; his hours have been cut back to under 30/week. Now the family income has gone down by about 25%. He still must pay the cost of his Medicare supplement policy. None of his expenses - groceries, gasoline, clothing, dining out, electricity, water - have gone down 25%. Since the earnings have gone down, they do pay less in taxes, unless he goes through the hassle of finding another part time job to fill in the lost income. The government doesn't collect the tax penalty and they collect less from this particular household. Who exactly is this good for?
Let's say you own one or more fast food franchises. These restaurants typically employ a lot of high school and college kids. The kids generally are covered by their parents' health insurance plan. What does Obamacare do for these fast food workers? Well, they all get cut back to less than 30 hours/week. The college kids don't earn as much money to pay for that expensive college education. That puts the family finances in a strain or the kids end up with a big loan to pay back after graduation. It isn't unusual for a new college graduate to have $20,000 in debt at graduation, and to add insult to injury, there's a decent chance they won't be able to even find a job in their field of study. It's like having a big new car loan to pay off, but you don't have the new car. My life, and in fact, my entire family's lives would have been much different had I started in the hole when I graduated from college.
The Obama administration and the liberals in congress, look at all of this as a plus. If they have two people employed 20 hours/week instead of one employed 40 hours/week, the unemployment numbers improve. We definitely have the unintended consequence of under-employment, i.e. reduced household income. Just another facet of the massive MessAPolitico that is Obamacare. Thanks socialist democrats.
Sunday, March 31, 2013
Wednesday, March 27, 2013
The Law of Unintended Consequences III
I promised a continuation of the Obamacare discussion. Here it is. Let's talk more about the insurance choices that were offered to consumers prior to Obamacare.
As mentioned in the post on Monday, consumers used to have multiple choices in medical insurance. You could pick very comprehensive insurance with a higher premium or something less comprehensive that was less expensive. Large corporations generally subsidize your medical insurance premiums. Small corporations don't pay as much, or maybe they pay none. My employer pays 70% of the premium for my entire family, and I only pay the remaining 30%. I was trying to decide whether to take a job as a manufacturers sales representative several years ago. In that job, I would get paid a straight commission based on the sales in my region. The company I would work for expected me to pay my expenses and my insurance myself. He suggested buying a major medical type policy that provides good coverage for major illnesses and surgeries, but provides really no coverage for the small stuff. An HMO portion of the policy would give me negotiated prices for medical services, but I would pay the bill most of the time. The result would be a family plan premium of only about $450/month.
How does Obamacare affect this? Well it makes a big difference. Now that same potential employer, with only himself and three other employees, would be violating the law by not providing a comprehensive insurance plan to everyone. Without the insurance, he owes a fine or a tax (depending on whether you call it what the lawmakers or the supreme court called it). Also, whether I buy my own insurance policy or my employer does, the Affordable Care Act requires all insurance to include certain features, including wellness, birth control, pre-existing condition coverage, coverage for kids until they are 26 years old, etc. etc. That bare bones major medical plan is no longer an option. I would have to pay for all the premium insurance coverage and the cost would be well over $1,000/month. Thanks a lot for the help Democrats. Unless your spouse has good coverage in their job so that you don't need insurance, it would be difficult to take that job. Maybe the employer would have to pay his employees a bigger commission rate to make the job attractive, and that would be inflationary. Can he afford to have as many employees now? Maybe not.
You may have noticed that your 2012 W-2 form now shows an amount in box 12 with the code DD. That shows your health insurance cost in total for the year. Mine shows almost $14,000. That means that I paid over $4,000 and my employer pays almost $10,000. That's a bunch. In 2008, the total cost of health insurance paid for by me and my employer totaled less than $8,800. That's an increase of nearly 58% in four years. The compounded annual growth rate (CAGR) is 12.1%. Do you think we've had an inflation rate of 12.1% during this recession and the following years with bare minimum growth? Only the price of energy and medical insurance has had this kind of growth.
Why has medical insurance increased by such a substantial amount in the midst of a recession? (I know that the economists say that the recession ended a while ago, but I think that is a crock. If it wasn't for government meddling, we would have negative economic growth right now -- I think it is called recession/deflation. The government limits the supply of energy and manages to double the cost of gasoline for instance. Economic growth isn't coming from increased demand; it is caused by artificial supply limitations.) Government meddling in the health insurance business has driven up the cost by telling everyone that they want premium coverage. We all are paying for that premium coverage whether we need it or want it. Why should anyone pay for a "Cadillac" plan anymore? They can wait until they encounter a major illness or injury to buy that "Cadillac" plan. Obamacare says that the pre-existing condition must be covered by the new plan. Therefore, the price of the "Cadillac" plan must go up drastically.
So what was the intended consequence? That's not altogether clear is it? We heard things like "tens of millions of people in America don't have health coverage." The costs of paying for uninsured people to go to the emergency room is costing us too much, and the Affordable Care Act will actually save money. Obamacare was supposed to give you wellness coverage that would make you healthier. It was supposed to cover people that weren't covered before. It was even supposed to make our health insurance prices drop. Is that what has happened? No. Instead, we got all those unintended consequences mentioned above.
This is one massive MessAPolitico. How do we stop it? If it gets fully implemented and the insurance companies go out of business or employers quit offering us insurance, what then? If the price of insurance gets much better, how can we afford it? This has to be stopped before it goes too far. Stop this MessAPolitico! Now!
As mentioned in the post on Monday, consumers used to have multiple choices in medical insurance. You could pick very comprehensive insurance with a higher premium or something less comprehensive that was less expensive. Large corporations generally subsidize your medical insurance premiums. Small corporations don't pay as much, or maybe they pay none. My employer pays 70% of the premium for my entire family, and I only pay the remaining 30%. I was trying to decide whether to take a job as a manufacturers sales representative several years ago. In that job, I would get paid a straight commission based on the sales in my region. The company I would work for expected me to pay my expenses and my insurance myself. He suggested buying a major medical type policy that provides good coverage for major illnesses and surgeries, but provides really no coverage for the small stuff. An HMO portion of the policy would give me negotiated prices for medical services, but I would pay the bill most of the time. The result would be a family plan premium of only about $450/month.
How does Obamacare affect this? Well it makes a big difference. Now that same potential employer, with only himself and three other employees, would be violating the law by not providing a comprehensive insurance plan to everyone. Without the insurance, he owes a fine or a tax (depending on whether you call it what the lawmakers or the supreme court called it). Also, whether I buy my own insurance policy or my employer does, the Affordable Care Act requires all insurance to include certain features, including wellness, birth control, pre-existing condition coverage, coverage for kids until they are 26 years old, etc. etc. That bare bones major medical plan is no longer an option. I would have to pay for all the premium insurance coverage and the cost would be well over $1,000/month. Thanks a lot for the help Democrats. Unless your spouse has good coverage in their job so that you don't need insurance, it would be difficult to take that job. Maybe the employer would have to pay his employees a bigger commission rate to make the job attractive, and that would be inflationary. Can he afford to have as many employees now? Maybe not.
You may have noticed that your 2012 W-2 form now shows an amount in box 12 with the code DD. That shows your health insurance cost in total for the year. Mine shows almost $14,000. That means that I paid over $4,000 and my employer pays almost $10,000. That's a bunch. In 2008, the total cost of health insurance paid for by me and my employer totaled less than $8,800. That's an increase of nearly 58% in four years. The compounded annual growth rate (CAGR) is 12.1%. Do you think we've had an inflation rate of 12.1% during this recession and the following years with bare minimum growth? Only the price of energy and medical insurance has had this kind of growth.
Why has medical insurance increased by such a substantial amount in the midst of a recession? (I know that the economists say that the recession ended a while ago, but I think that is a crock. If it wasn't for government meddling, we would have negative economic growth right now -- I think it is called recession/deflation. The government limits the supply of energy and manages to double the cost of gasoline for instance. Economic growth isn't coming from increased demand; it is caused by artificial supply limitations.) Government meddling in the health insurance business has driven up the cost by telling everyone that they want premium coverage. We all are paying for that premium coverage whether we need it or want it. Why should anyone pay for a "Cadillac" plan anymore? They can wait until they encounter a major illness or injury to buy that "Cadillac" plan. Obamacare says that the pre-existing condition must be covered by the new plan. Therefore, the price of the "Cadillac" plan must go up drastically.
So what was the intended consequence? That's not altogether clear is it? We heard things like "tens of millions of people in America don't have health coverage." The costs of paying for uninsured people to go to the emergency room is costing us too much, and the Affordable Care Act will actually save money. Obamacare was supposed to give you wellness coverage that would make you healthier. It was supposed to cover people that weren't covered before. It was even supposed to make our health insurance prices drop. Is that what has happened? No. Instead, we got all those unintended consequences mentioned above.
This is one massive MessAPolitico. How do we stop it? If it gets fully implemented and the insurance companies go out of business or employers quit offering us insurance, what then? If the price of insurance gets much better, how can we afford it? This has to be stopped before it goes too far. Stop this MessAPolitico! Now!
Monday, March 25, 2013
The Law of Unintended Consequences II
Anyone that doesn't support Obamacare wants sick children to die. They don't care if cripple children ever walk. Rich people that own insurance companies only care about profits. The reason medical costs are sky high is because of the profits insurance, drug, medical device, and healthcare corporations "steal" from the "little guys" out there that are struggling to survive. Greed. That's the cause of every middle and lower class problem in the USA. Doctors make too much money, too. Do you believe all this stuff?
Unfortunately, a bunch of Americans have bought into this narrative. The Democrats are saying it over and over. The main stream media outlets are playing and printing the sound bites over and over. If you say anything enough times, it becomes truth in the minds of so many voters out there.
Does Obamacare solve all of these problems or cause new problems? Well let's talk about what is going on out there in the medical marketplace.
Consumers used to have multiple choices in medical insurance. If you buy health insurance through your employer and they subsidize the cost, you only have the choices they offer their employees. In the past, my employers have offered several options. One was a normal, standard plan that was offered at a medium price. Another was a so-called "Cadillac" plan that had essentially no deductible. My employer didn't offer it, but some others had health savings account plans that were less expensive and allowed you to save money in an account to pay for future deductibles or co-pays that were a little higher. Some employers offered "cafeteria style" plans where you could choose to spend your money for dental or vision or more comprehensive medical or how ever you deemed to be in your best interest. Of course, consumers also had the option to "roll the dice" and have no insurance. Many younger people believed that the odds were in their favor in terms of illness. They figured that they didn't need insurance until they were older and more likely to get sick.
How has government meddling "improved" this situation? Were the consumers really too stupid to decide for themselves what they need in terms of insurance or healthcare? What encouraged younger people to sail along with no insurance and live dangerously? Could it have been the government helping out that contributed to the problems? Why yes! Were these people that had no insurance by choice (as opposed to by economic necessity - i.e. they could afford the insurance by decided to buy a new car or something else instead of insurance) really rolling the dice? I think not. Didn't you hear our ruler (Obama) talking about these folks showing up at the emergency room to get care? He was complaining that the government had to pay the bill, and it was higher because they went to the emergency room instead of having managed care. Well, here's one of the unintended consequences we have. When you help out folks that choose to walk the tightrope without a net and you only do the helping at the expensive emergency room, then duh! What have you encouraged them to do? Maybe those folks need to be left in financial ruin for their bad decision making. That would help the smarter ones make better decisions. The stupid consumers would then fall victim to the Darwin natural selection process.
Or maybe, if you left a charity to decide whether to help out or not, they could decide if the person in need deserves help or not. You know, there was a time before Medicaid and Medicare when doctors helped out the poor. Why are hospitals so often named Baptist Hospital, Jewish Hospital, Methodist Hospital, Christ Hospital, St. somebody Hospital, etc.? These fine institutions were set up so that the various religious and charitable organizations could help out the poor and needy amongst us. The government has decided to take over the charity business just like it has taken over so many other things. And, of course, the government sucks at pretty much everything they do.
We have a MessAPolitico that was caused by the government helping folks. (Hey, there's the intended consequence.) Now folks feel entitled to free medical care (thus, the name: entitlements). When this was charity, a lot of people were too proud to accept it -- at least, they accepted it begrudgingly and then, only when it was a necessity and only for a short time. The charity could look at the situation and play it by ear. If a kid was the victim of an irresponsible action by a parent, then they would get free care. On the other hand, a young professional that chose to forgo the insurance for extra spending money might be left to fend for himself or herself. When the government passes a law, everything has to be "one size fits all." There can be no flexibility. There is no room for judgment. That leads to folks receiving charity that don't really deserve it and creates that entitlement mentality.
I will continue this discussion on Wednesday. Stay tuned sports fans. There is no end to the Obamacare MessAPolitico.
Unfortunately, a bunch of Americans have bought into this narrative. The Democrats are saying it over and over. The main stream media outlets are playing and printing the sound bites over and over. If you say anything enough times, it becomes truth in the minds of so many voters out there.
Does Obamacare solve all of these problems or cause new problems? Well let's talk about what is going on out there in the medical marketplace.
Consumers used to have multiple choices in medical insurance. If you buy health insurance through your employer and they subsidize the cost, you only have the choices they offer their employees. In the past, my employers have offered several options. One was a normal, standard plan that was offered at a medium price. Another was a so-called "Cadillac" plan that had essentially no deductible. My employer didn't offer it, but some others had health savings account plans that were less expensive and allowed you to save money in an account to pay for future deductibles or co-pays that were a little higher. Some employers offered "cafeteria style" plans where you could choose to spend your money for dental or vision or more comprehensive medical or how ever you deemed to be in your best interest. Of course, consumers also had the option to "roll the dice" and have no insurance. Many younger people believed that the odds were in their favor in terms of illness. They figured that they didn't need insurance until they were older and more likely to get sick.
How has government meddling "improved" this situation? Were the consumers really too stupid to decide for themselves what they need in terms of insurance or healthcare? What encouraged younger people to sail along with no insurance and live dangerously? Could it have been the government helping out that contributed to the problems? Why yes! Were these people that had no insurance by choice (as opposed to by economic necessity - i.e. they could afford the insurance by decided to buy a new car or something else instead of insurance) really rolling the dice? I think not. Didn't you hear our ruler (Obama) talking about these folks showing up at the emergency room to get care? He was complaining that the government had to pay the bill, and it was higher because they went to the emergency room instead of having managed care. Well, here's one of the unintended consequences we have. When you help out folks that choose to walk the tightrope without a net and you only do the helping at the expensive emergency room, then duh! What have you encouraged them to do? Maybe those folks need to be left in financial ruin for their bad decision making. That would help the smarter ones make better decisions. The stupid consumers would then fall victim to the Darwin natural selection process.
Or maybe, if you left a charity to decide whether to help out or not, they could decide if the person in need deserves help or not. You know, there was a time before Medicaid and Medicare when doctors helped out the poor. Why are hospitals so often named Baptist Hospital, Jewish Hospital, Methodist Hospital, Christ Hospital, St. somebody Hospital, etc.? These fine institutions were set up so that the various religious and charitable organizations could help out the poor and needy amongst us. The government has decided to take over the charity business just like it has taken over so many other things. And, of course, the government sucks at pretty much everything they do.
We have a MessAPolitico that was caused by the government helping folks. (Hey, there's the intended consequence.) Now folks feel entitled to free medical care (thus, the name: entitlements). When this was charity, a lot of people were too proud to accept it -- at least, they accepted it begrudgingly and then, only when it was a necessity and only for a short time. The charity could look at the situation and play it by ear. If a kid was the victim of an irresponsible action by a parent, then they would get free care. On the other hand, a young professional that chose to forgo the insurance for extra spending money might be left to fend for himself or herself. When the government passes a law, everything has to be "one size fits all." There can be no flexibility. There is no room for judgment. That leads to folks receiving charity that don't really deserve it and creates that entitlement mentality.
I will continue this discussion on Wednesday. Stay tuned sports fans. There is no end to the Obamacare MessAPolitico.
Friday, March 22, 2013
Why Not Defund Obamacare?
The news is saying that John Boehner and the House leadership are refusing to use the continuing resolution to defund Obamacare. Why? The purse strings are the only control the Republicans have.
I heard Congressman Thomas Massie in a radio interview this morning. He indicated that the Republicans are afraid they will lose the mid-term elections. The Republican leadership wants Obamacare to be implemented quickly; they believe the voters will hate it and vote Republican in the mid-terms. An article I saw online says Boehner is afraid to use the continuing resolution to get in a big fight that might shut down the government. They believe that fighting over Obamacare could result in a stalemate, and the media would blame them for the government shutdown. They're appealing to the middle and left in a misguided effort to gain some votes on the one hand. Then they think that Obamacare is unpopular and will be something to run against in the next election.
Don't they realize that the liberals and Obamacare lovers will never vote for them anyway? If you alienate the base, you will lose. In fact, if the base can't see the difference between the Republicans and the Democrats, why should they bother showing up at the polls? When it comes to running on the majority disliking Obamacare, where was that one in the presidential election and the Senate races last fall? If I had been running in 2012, I would have run ad after ad after ad saying vote for me and I will do anything and everything to stop Obamacare. Every ad would say that a vote for my opponent is a vote to keep Obamacare. The huge majority of voters have said that they don't want the government messing with the healthcare system. Why wasn't it the first, second, third, fourth, fifth and sixth issue to be discussed (and I would have only talked about five issues).
I've never understood that so many politicians don't understand marketing principles. Let's face it; politicians are marketing their views and themselves to the voters. Any good marketer knows that you can't be all things to all people. You select your target segments first. Then you figure out what product features and services are needed to appeal to each segment. You also must figure out what channel is used by the segments. How do you package the product, and where should you advertise to reach the target customer? What message should the advertising deliver to resonate with the customer and drive them to take action (i.e. buy the product)?
President Obama is very good at taking the various constituencies, and finding a message that resonates with that group. He picks off enough segments to win the election. You don't see Obama trying to appeal to conservatives or libertarians. Why bother? It would never work. The channel he has chosen (the Democrat party) appeals to certain groups and is abhorrent to others. Going after groups that will never vote for him is a total waste of time. It would be like selling Armani suits at Wal-Mart. The Wal-Mart shopper can't afford Armani, even with a discount price, and Armani buyers don't go to Wal-Mart for clothes. Can you imagine the CEO at the country club talking about the great deal he got on his suit at Wal-Mart?
Now let's get back to Obamacare. The majority of Americans don't want any part of Obamacare. We elected Republicans and gave them continued control of the House. They were hired by the American people to represent our views and interests in Washington. If they don't do the job, then they will get fired. Period. Wouldn't that be ironic? They could get fired because they did something that was done to get them re-elected.
The people we sent to Washington to fix this MessAPolitico need to "Git R Done." We are depending on it. If Obamacare gets fully implemented, the healthcare system will be permanently changed. I don't think we will ever get it back.
I heard Congressman Thomas Massie in a radio interview this morning. He indicated that the Republicans are afraid they will lose the mid-term elections. The Republican leadership wants Obamacare to be implemented quickly; they believe the voters will hate it and vote Republican in the mid-terms. An article I saw online says Boehner is afraid to use the continuing resolution to get in a big fight that might shut down the government. They believe that fighting over Obamacare could result in a stalemate, and the media would blame them for the government shutdown. They're appealing to the middle and left in a misguided effort to gain some votes on the one hand. Then they think that Obamacare is unpopular and will be something to run against in the next election.
Don't they realize that the liberals and Obamacare lovers will never vote for them anyway? If you alienate the base, you will lose. In fact, if the base can't see the difference between the Republicans and the Democrats, why should they bother showing up at the polls? When it comes to running on the majority disliking Obamacare, where was that one in the presidential election and the Senate races last fall? If I had been running in 2012, I would have run ad after ad after ad saying vote for me and I will do anything and everything to stop Obamacare. Every ad would say that a vote for my opponent is a vote to keep Obamacare. The huge majority of voters have said that they don't want the government messing with the healthcare system. Why wasn't it the first, second, third, fourth, fifth and sixth issue to be discussed (and I would have only talked about five issues).
I've never understood that so many politicians don't understand marketing principles. Let's face it; politicians are marketing their views and themselves to the voters. Any good marketer knows that you can't be all things to all people. You select your target segments first. Then you figure out what product features and services are needed to appeal to each segment. You also must figure out what channel is used by the segments. How do you package the product, and where should you advertise to reach the target customer? What message should the advertising deliver to resonate with the customer and drive them to take action (i.e. buy the product)?
President Obama is very good at taking the various constituencies, and finding a message that resonates with that group. He picks off enough segments to win the election. You don't see Obama trying to appeal to conservatives or libertarians. Why bother? It would never work. The channel he has chosen (the Democrat party) appeals to certain groups and is abhorrent to others. Going after groups that will never vote for him is a total waste of time. It would be like selling Armani suits at Wal-Mart. The Wal-Mart shopper can't afford Armani, even with a discount price, and Armani buyers don't go to Wal-Mart for clothes. Can you imagine the CEO at the country club talking about the great deal he got on his suit at Wal-Mart?
Now let's get back to Obamacare. The majority of Americans don't want any part of Obamacare. We elected Republicans and gave them continued control of the House. They were hired by the American people to represent our views and interests in Washington. If they don't do the job, then they will get fired. Period. Wouldn't that be ironic? They could get fired because they did something that was done to get them re-elected.
The people we sent to Washington to fix this MessAPolitico need to "Git R Done." We are depending on it. If Obamacare gets fully implemented, the healthcare system will be permanently changed. I don't think we will ever get it back.
Wednesday, March 20, 2013
The Law of Unintended Consequences
Anyone who opposes the minimum wage is anti-labor. That would be a greedy, money grubbing capitalist pig who would oppose the minimum wage. Is that right? Minimum wage laws have been instrumental in driving low skilled or unskilled labor jobs out of our country to Mexico, China, Vietnam, the Dominican Republic, India, or you name it -- any low cost country in the world. If having a minimum wage causes you to lose your job, is that a good thing? Whom would benefit from that law? Maybe you would if you prefer to lay in bed all day in your public housing project home.
Look at what that does for us as a society. It takes a person that was employed and paying some taxes and social security, medicare, etc. out of the workplace. They now pay no taxes. They do collect various benefits from the government now though. That could include unemployment for a while, and when that runs out, they get free housing, food stamps, welfare, earned income tax credits, aid to families with dependent children, medicaid now/Obamacare later, etc. etc. etc. Fewer and fewer people pay into the system every year. That means businesses and individuals need to pay more and more in taxes, yet we still borrow 40% of what the federal government spends. Taking this income from businesses reduces their capital for reinvestment. Taking it from individuals leaves them less money to spend on cars, houses, dinner at Applebees, furniture, movies, etc. etc. etc. More and more people lose their jobs.
If the politicians help us much more, nobody will have a job. I guess we can all go to work in a fast food restaurant.
I still remember when Dick Gephardt was running for president; do you remember his solution to stop job losses to low cost countries? He suggested that we should force countries around the world to pay their workers higher wages if they wanted to export to the USA. How might he force this rule upon another country? (Come to think of it, how did congress force this rule on us here at home?)
For a politician to say that minimum wage laws, unemployment insurance, and welfare are good for the workers, one of two things has to be true. Either they are totally ignorant of the basic laws of supply and demand, or they are disingenuous (i.e. they are liars). Neither is good, but I guess I'd prefer a dummy to a liar. These politicians do things that, I believe, they know are bad for the "little guy." Why? Because these things can be spun in such a way that the "little guy" believes it is good for him. An opposing politician is made out to be the devil incarnate. Pretty soon the "little guy" loses his job, and viola, the opposing politician somehow still gets blamed for it because he was supporting the evil large corporation that laid him off to avoid paying him a higher wage.
I guess the unintended consequences were on the part of the voter. He voted with the good intentions of giving himself a raise along with his fellow workers, but got the unintended consequence of unemployment. The politician, by contrast, didn't get any unintended consequences. You see, he didn't care whether the "little guy" made more money or was unemployed. His intended consequence was to get re-elected and to discredit his political opponent, and that happened.
I have to blame the "low information" voter that voted for the uncaring politician. That's the classic way to create a MessAPolitico.
Look at what that does for us as a society. It takes a person that was employed and paying some taxes and social security, medicare, etc. out of the workplace. They now pay no taxes. They do collect various benefits from the government now though. That could include unemployment for a while, and when that runs out, they get free housing, food stamps, welfare, earned income tax credits, aid to families with dependent children, medicaid now/Obamacare later, etc. etc. etc. Fewer and fewer people pay into the system every year. That means businesses and individuals need to pay more and more in taxes, yet we still borrow 40% of what the federal government spends. Taking this income from businesses reduces their capital for reinvestment. Taking it from individuals leaves them less money to spend on cars, houses, dinner at Applebees, furniture, movies, etc. etc. etc. More and more people lose their jobs.
If the politicians help us much more, nobody will have a job. I guess we can all go to work in a fast food restaurant.
I still remember when Dick Gephardt was running for president; do you remember his solution to stop job losses to low cost countries? He suggested that we should force countries around the world to pay their workers higher wages if they wanted to export to the USA. How might he force this rule upon another country? (Come to think of it, how did congress force this rule on us here at home?)
For a politician to say that minimum wage laws, unemployment insurance, and welfare are good for the workers, one of two things has to be true. Either they are totally ignorant of the basic laws of supply and demand, or they are disingenuous (i.e. they are liars). Neither is good, but I guess I'd prefer a dummy to a liar. These politicians do things that, I believe, they know are bad for the "little guy." Why? Because these things can be spun in such a way that the "little guy" believes it is good for him. An opposing politician is made out to be the devil incarnate. Pretty soon the "little guy" loses his job, and viola, the opposing politician somehow still gets blamed for it because he was supporting the evil large corporation that laid him off to avoid paying him a higher wage.
I guess the unintended consequences were on the part of the voter. He voted with the good intentions of giving himself a raise along with his fellow workers, but got the unintended consequence of unemployment. The politician, by contrast, didn't get any unintended consequences. You see, he didn't care whether the "little guy" made more money or was unemployed. His intended consequence was to get re-elected and to discredit his political opponent, and that happened.
I have to blame the "low information" voter that voted for the uncaring politician. That's the classic way to create a MessAPolitico.
Monday, March 18, 2013
How Can the Tea Party Accomplish its Goals?
Back before the elections in November, I was a regular attendee at the local Tea Party meetings twice monthly. My wife even went out campaigning for Mitt Romney door-to-door before the election day. I write my representatives regularly to let them know my opinions. We were both very engaged and working to make a difference.
There has been a lot of misinformation used to try and discredit the Tea Party as some right-wing bunch of kooks that are trying to wreak havoc or overthrow the government or something extreme like that. That, of course, has nothing to do with the Tea Party. To understand what they're all about, you have to go back to original Boston Tea Party that was an event that led up to the Revolutionary war. Of course, that event was done as a protest against the British government's oppressive tax policies that were strangling the colonists in America. A bunch of tea that was taxed to raise money for government spending (does that sound familiar) was thrown overboard into Boston harbor. The message was clearly that the people would rather go without the tea that they loved than pay the associated taxes.
The new Tea Party came out of a grass roots opposition to government spending that is out of control, and more specifically to government waste and entitlement spending. There is an undertone of protection of our freedoms and the constitution in the Tea Party message as well. Every Tea Party meeting I've attended includes an NRA representative in attendance, and second amendment freedoms are clearly supported at these meetings. The Tea Party seems to be more closely aligned with libertarian ideals than just straight conservative or Republican themes. The Tea Party is quite active in local and state political issues as well, and they encourage engagement with elected representatives at all levels of government.
Before the election day, every meeting had one or more candidates speaking to the group. That was very interesting, getting to hear them speak on their points of view. Unbelievably, there were multiple candidates that visited who had views that were diametrically opposed to Tea Party principles. Sometimes it seemed that the candidate at the meeting had no idea what the Tea Party is all about. The first time this happened in my presence, I was watching and wondering what was going to happen. Would anybody say anything? Then, attendees raised their hands and peppered the candidate with tough questions. (Wouldn't it be cool if a real journalist would do that?) In one case, a Tea Party member told the candidate "if that's your position on this issue, I won't just vote against you, but I will campaign against you." I thought that was great on both sides. #1, you had a candidate that was willing to state his true position rather than try to hide it. #2, he was challenged and the voters made clear what their position was.
I find this all very enlightening, but the presidential election still went for the radical, liberal, socialist Barack Hussein Obama. That didn't accomplish the goals of the Tea Party at all. What can the Tea Party do to accomplish something? Well, the Republicans do still have control of the House. That doesn't really give them the ability to pass anything on their own, and in fact, they can't even override a presidential veto, assuming they could get something through the Senate. Heck, it would be a major accomplishment to just get the Senate to vote on a bill, much less pass one. So that leaves the House to play defense. They can block any bill that they don't want to pass. They could limit spending to put a stranglehold on bills that were passed in Obama's first two years; that is the most powerful thing they have going for them. The House can pass legislation that will do the right thing -- cut spending meaningfully, clean up the tax code, pass bills to limit government over-reach, etc. Even if these bills aren't brought up in the Senate, the Republicans need to hammer the media every chance they get and mention that the Senate isn't doing the job they were elected to do.
The Republicans definitely don't have the same message control that the Democrats do. The Democrats apparently meet and go over the talking points and responses to every issue at hand. They all sound like they're reading from the same teleprompter when a microphone is in front of them. Why can't the Republicans do the same? Is this a problem with the Republican leadership? Or maybe the problem is that the press loves to never ask the Democrats a tough question and spin everything a Republican says to make them out to be rich, white, greedy, uncaring, ignorant, gun-loving, racist hicks.
I think the Tea Party needs to mount a campaign that hammers the elected politicians into creating the right, consistent message. They also can use their funds to raise awareness of the issues and the positions of the individual politicians on those issues, regardless of party. They should use twitter, Facebook, or any other form of media to reach the people at minimal cost--especially young and minority voters. The voters need to fully understand the ramifications of voting the wrong way or of just staying home on election day. The Tea Party needs to get out the vote just like Obama's team did as well.
The people that swung the election for Obama are the ones that historically didn't vote and probably weren't even registered to vote. Many folks today refer to them as the "low information" voters. They can be easily swayed to vote one way, because they don't understand the issue. They won't question a politician or political operative that says a candidate or the candidate's stance is good for them. Obama got that group to turn out and vote for Democrats, and that swayed the election his way. The Tea Party and Republican party must use these same techniques to get their message out. That will bypass the media that is unfriendly to the conservative or libertarian point of view.
What the Tea Party needs to stop doing is criticizing so many conservatives. The Republicans are working with their hands tied most of the time. Sometimes they are forced to make concessions in one area to get some of what they want in another area. I don't like to see them cave in even once, but that's the way of politics. The people have nothing to complain about; after all, they elected the bums and got us into the MessAPolitico in the first place. I wish the Tea Party would spend a lot more time criticizing Harry Reid, Nancy Pelosi, Diane Feinstein, Chuck Schumer, and Sherrod Brown. Going after Mitch McConnell or John Boehner won't accomplish anything. What if Mitch McConnell's mid-pack conservative voting record amongst Republicans raises the ire of the Tea Party, and he is beaten by Ashley Judd or some other left-wing Democrat in the next election? Wow, that will sure help make a point, won't it?
Right now the conservatives, the libertarians, and the Tea Party are three separate groups, while the Democrats are one single-minded organization. There is a whole lot of overlap between conservatism, libertarianism, and the Tea Party; they certainly have a lot more in common than they have differences. If we split up and either vote for a third party candidate or an independent or just stay home on election day, the Democrats will continue to rule the day. That stops all the Tea Party goals from being accomplished. It's time to learn how to play winning politics to get as much of what you want as possible.
Our next chance to put a stop to this serious MessAPolitico is in the mid-term elections. We must take control of the Senate in 2014. Then the Senate Democrats will be forced to step up and vote and reveal their true stripes. At that point, the president will be the only impediment to progress. The congressional power of the purse strings will be able to limit the effectiveness of Obama. It's got to be done.
There has been a lot of misinformation used to try and discredit the Tea Party as some right-wing bunch of kooks that are trying to wreak havoc or overthrow the government or something extreme like that. That, of course, has nothing to do with the Tea Party. To understand what they're all about, you have to go back to original Boston Tea Party that was an event that led up to the Revolutionary war. Of course, that event was done as a protest against the British government's oppressive tax policies that were strangling the colonists in America. A bunch of tea that was taxed to raise money for government spending (does that sound familiar) was thrown overboard into Boston harbor. The message was clearly that the people would rather go without the tea that they loved than pay the associated taxes.
The new Tea Party came out of a grass roots opposition to government spending that is out of control, and more specifically to government waste and entitlement spending. There is an undertone of protection of our freedoms and the constitution in the Tea Party message as well. Every Tea Party meeting I've attended includes an NRA representative in attendance, and second amendment freedoms are clearly supported at these meetings. The Tea Party seems to be more closely aligned with libertarian ideals than just straight conservative or Republican themes. The Tea Party is quite active in local and state political issues as well, and they encourage engagement with elected representatives at all levels of government.
Before the election day, every meeting had one or more candidates speaking to the group. That was very interesting, getting to hear them speak on their points of view. Unbelievably, there were multiple candidates that visited who had views that were diametrically opposed to Tea Party principles. Sometimes it seemed that the candidate at the meeting had no idea what the Tea Party is all about. The first time this happened in my presence, I was watching and wondering what was going to happen. Would anybody say anything? Then, attendees raised their hands and peppered the candidate with tough questions. (Wouldn't it be cool if a real journalist would do that?) In one case, a Tea Party member told the candidate "if that's your position on this issue, I won't just vote against you, but I will campaign against you." I thought that was great on both sides. #1, you had a candidate that was willing to state his true position rather than try to hide it. #2, he was challenged and the voters made clear what their position was.
I find this all very enlightening, but the presidential election still went for the radical, liberal, socialist Barack Hussein Obama. That didn't accomplish the goals of the Tea Party at all. What can the Tea Party do to accomplish something? Well, the Republicans do still have control of the House. That doesn't really give them the ability to pass anything on their own, and in fact, they can't even override a presidential veto, assuming they could get something through the Senate. Heck, it would be a major accomplishment to just get the Senate to vote on a bill, much less pass one. So that leaves the House to play defense. They can block any bill that they don't want to pass. They could limit spending to put a stranglehold on bills that were passed in Obama's first two years; that is the most powerful thing they have going for them. The House can pass legislation that will do the right thing -- cut spending meaningfully, clean up the tax code, pass bills to limit government over-reach, etc. Even if these bills aren't brought up in the Senate, the Republicans need to hammer the media every chance they get and mention that the Senate isn't doing the job they were elected to do.
The Republicans definitely don't have the same message control that the Democrats do. The Democrats apparently meet and go over the talking points and responses to every issue at hand. They all sound like they're reading from the same teleprompter when a microphone is in front of them. Why can't the Republicans do the same? Is this a problem with the Republican leadership? Or maybe the problem is that the press loves to never ask the Democrats a tough question and spin everything a Republican says to make them out to be rich, white, greedy, uncaring, ignorant, gun-loving, racist hicks.
I think the Tea Party needs to mount a campaign that hammers the elected politicians into creating the right, consistent message. They also can use their funds to raise awareness of the issues and the positions of the individual politicians on those issues, regardless of party. They should use twitter, Facebook, or any other form of media to reach the people at minimal cost--especially young and minority voters. The voters need to fully understand the ramifications of voting the wrong way or of just staying home on election day. The Tea Party needs to get out the vote just like Obama's team did as well.
The people that swung the election for Obama are the ones that historically didn't vote and probably weren't even registered to vote. Many folks today refer to them as the "low information" voters. They can be easily swayed to vote one way, because they don't understand the issue. They won't question a politician or political operative that says a candidate or the candidate's stance is good for them. Obama got that group to turn out and vote for Democrats, and that swayed the election his way. The Tea Party and Republican party must use these same techniques to get their message out. That will bypass the media that is unfriendly to the conservative or libertarian point of view.
What the Tea Party needs to stop doing is criticizing so many conservatives. The Republicans are working with their hands tied most of the time. Sometimes they are forced to make concessions in one area to get some of what they want in another area. I don't like to see them cave in even once, but that's the way of politics. The people have nothing to complain about; after all, they elected the bums and got us into the MessAPolitico in the first place. I wish the Tea Party would spend a lot more time criticizing Harry Reid, Nancy Pelosi, Diane Feinstein, Chuck Schumer, and Sherrod Brown. Going after Mitch McConnell or John Boehner won't accomplish anything. What if Mitch McConnell's mid-pack conservative voting record amongst Republicans raises the ire of the Tea Party, and he is beaten by Ashley Judd or some other left-wing Democrat in the next election? Wow, that will sure help make a point, won't it?
Right now the conservatives, the libertarians, and the Tea Party are three separate groups, while the Democrats are one single-minded organization. There is a whole lot of overlap between conservatism, libertarianism, and the Tea Party; they certainly have a lot more in common than they have differences. If we split up and either vote for a third party candidate or an independent or just stay home on election day, the Democrats will continue to rule the day. That stops all the Tea Party goals from being accomplished. It's time to learn how to play winning politics to get as much of what you want as possible.
Our next chance to put a stop to this serious MessAPolitico is in the mid-term elections. We must take control of the Senate in 2014. Then the Senate Democrats will be forced to step up and vote and reveal their true stripes. At that point, the president will be the only impediment to progress. The congressional power of the purse strings will be able to limit the effectiveness of Obama. It's got to be done.
Friday, March 15, 2013
How Can American Manufacturing Compete?
America has never been a low cost country in terms of wages. We were very successful in manufacturing though. How can this be? There were numerous reasons:
There have been a number of things that I attribute to the MessAPolitico that have led to this problem:
- Americans are very innovative. More innovations have originated in the USA than probably the rest of the world combined.
- Our free market economy has allowed many, many entrepreneurs to start companies and make excellent profits. This high return on investment attracted a lot of venture capital and provided significant incentive to the entrepreneurs to take the big risk of starting their businesses.
- There was a time when American products were considered to be of very high quality. That includes excellent, innovative design and superb manufacturing quality. In fact, the quality techniques that the Japanese are known for today came from an American, W. Edwards Deming.
- American workers had the highest productivity in the world. This was possible because of innovative manufacturing techniques. This included things like specialization, automation, and computers.
- The USA is flush with all types of natural resources. This includes various minerals and metals. There is also plenty of fertile land to produce plentiful, low cost foods, trees for paper or lumber, cotton, and more. Of course, we have plenty of energy -- oil, natural gas, coal, water power.
There have been a number of things that I attribute to the MessAPolitico that have led to this problem:
- People that don't work hard in school and don't go to technical school or college get rewarded with minimum wage levels or more likely welfare, earned income tax credits, aid to families with dependent children (AFDC), food stamps, government housing, medicaid, etc. Why become a productive member of society? Minimum wage levels dictated by the government essentially make anyone whose skills are worth less than that level unemployable. They then become permanent wards of the state. That creates a huge level of government entitlement spending that requires high taxation. These people are also unproductive.
- The entrepreneurs that brought all the innovations to the American marketplace are roundly vilified by the liberal politicians today. Even the conservative politicians are afraid to say anything good about these entrepreneurs. The successful used to be envied, but today they are ridden out of town on a rail. They're either greedy or don't pay their fair share of taxes or are guilty of some other horrible evil. They also don't bother to innovate or start businesses anymore.
- The boneheads in our government have decided unilaterally that we shouldn't use our natural resources. We can't drill for oil here or there or anywhere. We can't build any new refineries even if we did get the oil out of the ground. We don't want to use fracking to get natural gas or oil because, well, that might cause some sort of vague ecological problem to drinking water or something (even though fracking has been around for a long time and there has never been any evidence that it causes any such problems). All this stuff drives the price of energy through the roof, because the supply has been limited.
- The EPA acts like another legislative branch of the government. They just arbitrarily issue regulations that work like laws. They force the electric power utilities to shut down certain coal fired power plants based on some arbitrarily determined limits of kW-Hrs/ton of carbon dioxide. How was this limit determined? Well a certain number of power plants had to be shut down to drive the price of electricity high enough to make all that alternative energy profitable. Is this really necessary? No. Not unless you're trying to appease a bunch of "tree huggers." (Why doesn't the opposition take this to the supreme court? How can an agency like the EPA legally create regulations that amount to laws. This is unconstitutional!
Wednesday, March 13, 2013
What About Quantitative Easing?
The Federal Reserve has been taking actions in lieu of overtly printing money or issuing bonds. They have called it quantitative easing. The various rounds of quantitative easing have been labelled QE I, QE II, QE III . . . I'm not sure which QE number we're up to now. It sounds like a new luxury cruise liner to me. Of course, this cruise liner will eventually carry us all off the edge of the earth. When the explorers were sailing off into the unknown in the 1400's a lot of people thought they would eventually sail off the edge, but now the people are convinced that this will never happen. I believe the people are wrong. With the MessAPolitico that we have going on in Washington these days, we are steaming toward the edge, full speed ahead!
So what is quantitative easing? Well the fed issues bonds, but they aren't just sold to regular folks or investors. Instead the fed buys these bonds. So, how do they buy the bonds, you might ask? Where do they get the money? Of course, the money is printed for the purpose of buying those bonds. Wow. Is this one of those shell games like the street people try to get you to play on Times Square in New York? I think it is! This is nothing but a roundabout way of printing money and using it to pay the bills.
The stock market seems to think that we've turned the corner. Since last week it has been rising steadily. If the stock market is right, inflation is on the way. That is one of the evils that results from overspending by the government and paying for it by printing dollars. Eventually, the money supply is going to arrive in the economy. This will happen as orders begin to pick up as consumer confidence grows. Growing consumer confidence will lead to businesses investing in plants and equipment. Maybe business will even hire some workers. The growing demand will drive prices up.
I have no doubt that businesses will see higher costs as a driver for higher prices. However, when inflation starts to kick in, the fed will undoubtedly take actions to curb the inflation. One of those levers they will adjust will be increased interest rates. That will limit economic growth, especially for big ticket items. With all of this government spending and printing, inflation is likely to rise rapidly. I fear that this MessAPolitico will lead to stagflation. When Jimmy Carter was president, we had rapidly rising oil prices that led to high inflation. The fed responded with very high interest rates to curb the inflation. The thing that made the situation interesting was the fact that we had a high inflation rate while the economy was not growing--that is the economy was stagnant. According to economic theory, inflation should come from an economy that is growing too rapidly, but in this case we were in recession.
Does any of this sound familiar? You bet it does. We have rapidly rising energy costs because our government is limiting the supply of energy. They limit oil drilling, oil pipeline building, oil refinery capacity, use of coal to produce electricity, etc. etc. The energy costs are acting as a governor on the economy. Every time the economy tries to grow, the price of gasoline rises $1.00/gallon. That removes enough of the money supply that the economy shrinks back and here we go again.
America, please, please vote for politicians with more than half a brain. I just don't know how long our country can go on with a MessAPolitico this bad. We've got to stop overspending. Paul Ryan is proposing a budget that balances in 10 years. God love him for trying, but that just isn't soon enough. It needs to happen now. If the senate won't go along with a budget that cuts much today, then the house needs to go ahead and propose massive cuts. Make the senate shoot it down. Use every opportunity to point out that the democrats don't want to balance the budget or cut spending. Learn to play politics the way they do--with bare knuckles!
So what is quantitative easing? Well the fed issues bonds, but they aren't just sold to regular folks or investors. Instead the fed buys these bonds. So, how do they buy the bonds, you might ask? Where do they get the money? Of course, the money is printed for the purpose of buying those bonds. Wow. Is this one of those shell games like the street people try to get you to play on Times Square in New York? I think it is! This is nothing but a roundabout way of printing money and using it to pay the bills.
The stock market seems to think that we've turned the corner. Since last week it has been rising steadily. If the stock market is right, inflation is on the way. That is one of the evils that results from overspending by the government and paying for it by printing dollars. Eventually, the money supply is going to arrive in the economy. This will happen as orders begin to pick up as consumer confidence grows. Growing consumer confidence will lead to businesses investing in plants and equipment. Maybe business will even hire some workers. The growing demand will drive prices up.
I have no doubt that businesses will see higher costs as a driver for higher prices. However, when inflation starts to kick in, the fed will undoubtedly take actions to curb the inflation. One of those levers they will adjust will be increased interest rates. That will limit economic growth, especially for big ticket items. With all of this government spending and printing, inflation is likely to rise rapidly. I fear that this MessAPolitico will lead to stagflation. When Jimmy Carter was president, we had rapidly rising oil prices that led to high inflation. The fed responded with very high interest rates to curb the inflation. The thing that made the situation interesting was the fact that we had a high inflation rate while the economy was not growing--that is the economy was stagnant. According to economic theory, inflation should come from an economy that is growing too rapidly, but in this case we were in recession.
Does any of this sound familiar? You bet it does. We have rapidly rising energy costs because our government is limiting the supply of energy. They limit oil drilling, oil pipeline building, oil refinery capacity, use of coal to produce electricity, etc. etc. The energy costs are acting as a governor on the economy. Every time the economy tries to grow, the price of gasoline rises $1.00/gallon. That removes enough of the money supply that the economy shrinks back and here we go again.
America, please, please vote for politicians with more than half a brain. I just don't know how long our country can go on with a MessAPolitico this bad. We've got to stop overspending. Paul Ryan is proposing a budget that balances in 10 years. God love him for trying, but that just isn't soon enough. It needs to happen now. If the senate won't go along with a budget that cuts much today, then the house needs to go ahead and propose massive cuts. Make the senate shoot it down. Use every opportunity to point out that the democrats don't want to balance the budget or cut spending. Learn to play politics the way they do--with bare knuckles!
Monday, March 11, 2013
How do we Pull Out of a Death Spiral?
I promised an answer to this burning question with today's post. Here it is. We need to immediately do several things. (Immediately if not sooner.)
First, all limits on drilling for oil need to instantly be eliminated. The Keystone XL pipeline from Canada to the gulf coast needs to be started now. Fracking must freaking move ahead full bore. All of the "tree hugging" crapola must cease and desist and now. The closing of coal fired power plants is also imminent, and the EPA needs to be reined in to stop this before it happens.
All of this stuff limits the supply of energy. That drives up the cost and drives down the demand for energy artificially. The demand is driven down in several destructive ways. First, manufacturing leaves our country for greener (cheaper) pastures. Second, fewer workers are driving to work, thus using less fuel. Third, discretionary travel (a vacation) drops precipitously. (By the way, does driving manufacturing to Mexico or China make the environment cleaner? Hmmmmm???)
Getting the supply of energy up rather than down will definitely drive the price down. That will offset a lot of other higher costs of manufacturing in the USA. That will stem the tide of movement offshore, and I believe it will bring some manufacturing back. We just absolutely can't roll over and accept the loss of manufacturing jobs.
There are other costs of manufacturing that must be reduced as well. Get rid of all those new regulations that the Obama administration has put in place. Those tie the hands of business. The Dodd-Frank legislation limits the lending operations of banks, and that reduces the money supply that could bring real estate prices back and help generate demand for big ticket items like cars. It would be a huge oversight to not mention that our employers are paying a lot more today to provide insurance that meets the requirements of Obamacare. Of course, we also pay more for medical care ourselves for the same reason. Please, please, please, get this government out of the way. Get it out of our individual way and out of the way of business. Stop trying to protect us. Stop trying to help us. We wouldn't need any help if it wasn't for the government help.
The minimum wage must be eliminated immediately. All it does is make people whose work is worth less than the current minimum wage level unemployable. Let's start to phase out welfare and food stamps and other forms of government assistance. That will force the unemployed to go find a job, and with lower wage levels, unskilled jobs will be available for these people again.
Revive the old Cut, Cap, and Balance bill that was proposed a while ago. We need to instantly have a balanced budget, and it needs to be balanced by cutting spending only. Whole parts of the government need to be instantly eliminated. The growth in government revenues must come from economic growth, not tax rate increases. Tax rate increases don't generate new revenue. If you believe the tax rate increase on rich people or anyone will raise tax revenues, then you are believing a huge myth.
I believe that just balancing the budget is not enough. We may never even get to that point, but I don't think that our goal should limit us to this incomplete outcome. Our government must do what we do at home. We don't take out a mortgage on a home, but never even pay it down a bit. We pay it off. The government needs to take the growth that happens, whenever it finally happens, and use the revenue growth to rapidly pay down the debt. Let's cut the crapola, and there's a bunch of it in the government. If you cut half of the waste, fraud, and crapola in government, we will run a $750B annual surplus forever. Do it! Use it to pay off the debt! End this MessAPolitico today!
First, all limits on drilling for oil need to instantly be eliminated. The Keystone XL pipeline from Canada to the gulf coast needs to be started now. Fracking must freaking move ahead full bore. All of the "tree hugging" crapola must cease and desist and now. The closing of coal fired power plants is also imminent, and the EPA needs to be reined in to stop this before it happens.
All of this stuff limits the supply of energy. That drives up the cost and drives down the demand for energy artificially. The demand is driven down in several destructive ways. First, manufacturing leaves our country for greener (cheaper) pastures. Second, fewer workers are driving to work, thus using less fuel. Third, discretionary travel (a vacation) drops precipitously. (By the way, does driving manufacturing to Mexico or China make the environment cleaner? Hmmmmm???)
Getting the supply of energy up rather than down will definitely drive the price down. That will offset a lot of other higher costs of manufacturing in the USA. That will stem the tide of movement offshore, and I believe it will bring some manufacturing back. We just absolutely can't roll over and accept the loss of manufacturing jobs.
There are other costs of manufacturing that must be reduced as well. Get rid of all those new regulations that the Obama administration has put in place. Those tie the hands of business. The Dodd-Frank legislation limits the lending operations of banks, and that reduces the money supply that could bring real estate prices back and help generate demand for big ticket items like cars. It would be a huge oversight to not mention that our employers are paying a lot more today to provide insurance that meets the requirements of Obamacare. Of course, we also pay more for medical care ourselves for the same reason. Please, please, please, get this government out of the way. Get it out of our individual way and out of the way of business. Stop trying to protect us. Stop trying to help us. We wouldn't need any help if it wasn't for the government help.
The minimum wage must be eliminated immediately. All it does is make people whose work is worth less than the current minimum wage level unemployable. Let's start to phase out welfare and food stamps and other forms of government assistance. That will force the unemployed to go find a job, and with lower wage levels, unskilled jobs will be available for these people again.
Revive the old Cut, Cap, and Balance bill that was proposed a while ago. We need to instantly have a balanced budget, and it needs to be balanced by cutting spending only. Whole parts of the government need to be instantly eliminated. The growth in government revenues must come from economic growth, not tax rate increases. Tax rate increases don't generate new revenue. If you believe the tax rate increase on rich people or anyone will raise tax revenues, then you are believing a huge myth.
I believe that just balancing the budget is not enough. We may never even get to that point, but I don't think that our goal should limit us to this incomplete outcome. Our government must do what we do at home. We don't take out a mortgage on a home, but never even pay it down a bit. We pay it off. The government needs to take the growth that happens, whenever it finally happens, and use the revenue growth to rapidly pay down the debt. Let's cut the crapola, and there's a bunch of it in the government. If you cut half of the waste, fraud, and crapola in government, we will run a $750B annual surplus forever. Do it! Use it to pay off the debt! End this MessAPolitico today!
Friday, March 8, 2013
Growing Fears of a Great Depression
Will our economy go into a greater great depression than we had in the 1930's? I'm not sure. We've never been closer though. What does our future hold if we continue down the path set by the liberals running our government?
There are definitely several things pulling our economy in different directions. Generally those directions aren't good directions. This has left the economy stalled out, with no hiring and virtually no growth.
I've heard Bob Beckel on Fox News say that he doesn't see any problem with the big deficits. He is apparently a faithful follower of John Maynard Keynes. Liberals like Mr. Beckel believe that government spending not only leads to economic growth and jobs, but apparently it is the only source of these desirable outcomes. The problem is that they are woefully mistaken.
Excessive government spending in excess of revenues requires one of two things: either the government must borrow money by issuing bonds or they must print money in the treasury. It is widely believed that printing money will devalue the currency and lead to inflation. I personally believe that it does create inflation by increasing the money supply and thus increasing demand. Issuing more and more bonds consumes investment dollars that could be placed in banks or used to purchase stocks and other investments, including starting businesses.
The only way investors can be enticed into investing more and more in bonds is to offer better returns. If the stock market is flat or moving down, bonds might look pretty good with relatively low interest rates. The interest expense in the federal budget is consequently low with low interest rates. However, when the economy and the stock market do begin to take off, returns in investments that compete with government backed securities start to look pretty good. That forces new bonds to be issued at increasingly higher interest rates. Today, bond interest rates are historically low, around 1%. If the interest rates just rose to the normal range, the cost of bond interest would triple or more. In FY2012, the interest on the national debt was $360B. That's not chicken feed, but if the interest rates were to triple, we would be spending over $1 trillion here. If the interest rates rise to high levels to develop the needed demand for riskier bonds, then the annual cost of the debt could rise to $2 trillion or more.
If the interest rates for bonds rise up and successfully take money from other investment options, then those options don't have the capital needed to keep operating or to start new businesses. If the businesses are started, they must make more earnings to get a return on investment that is commensurate with the level of risk incurred. Yet the amount of profits is tougher to achieve because the cost of borrowing money is higher. When consumers go out to buy big ticket items like homes and cars and boats and motor homes, the cost of borrowing will drive the costs of those items up and reduce the demand. That tends to slow down the economy, put a lid on hiring, and hold the stock market back.
If the economy is slow, unemployment is high, profits are low, sales commissions are low, dividend are non-existent, capital gains are non-existent, etc., then the government collects fewer tax dollars. They also have to pay out more for unemployment, welfare, food stamps, etc. at the same time. This is the description of a death spiral. Another description might be a serious MessAPolitico. Why can't the American voter see this coming?
I believe that inflation will eventually happen. Eventually will arrive as soon as the economy finally, really gets out of this recession. No, I don't believe the recession ever ended. We haven't had much growth in the GDP, but by definition, a recession ends when any growth occurs for a certain number of consecutive quarters (I can't remember how many). The thing to remember is that oil prices have doubled over the past four years. Has the economy as a whole grown that much in four years? No, not even close. I believe that the energy sector has grown more than the economy as whole, therefore most, if not all, other sectors have contracted. The growth in energy has not been caused by growing demand either. That growth has been caused by the "bone heads" running our government limiting the supply of energy. With the limited supply, every time the economy tries to take off, the cost of energy rises, and that sucks the life out of the economy.
How will we ever get out of this MessAPolitico? It can be done. Come back for my next post on Monday to find some answers.
There are definitely several things pulling our economy in different directions. Generally those directions aren't good directions. This has left the economy stalled out, with no hiring and virtually no growth.
I've heard Bob Beckel on Fox News say that he doesn't see any problem with the big deficits. He is apparently a faithful follower of John Maynard Keynes. Liberals like Mr. Beckel believe that government spending not only leads to economic growth and jobs, but apparently it is the only source of these desirable outcomes. The problem is that they are woefully mistaken.
Excessive government spending in excess of revenues requires one of two things: either the government must borrow money by issuing bonds or they must print money in the treasury. It is widely believed that printing money will devalue the currency and lead to inflation. I personally believe that it does create inflation by increasing the money supply and thus increasing demand. Issuing more and more bonds consumes investment dollars that could be placed in banks or used to purchase stocks and other investments, including starting businesses.
The only way investors can be enticed into investing more and more in bonds is to offer better returns. If the stock market is flat or moving down, bonds might look pretty good with relatively low interest rates. The interest expense in the federal budget is consequently low with low interest rates. However, when the economy and the stock market do begin to take off, returns in investments that compete with government backed securities start to look pretty good. That forces new bonds to be issued at increasingly higher interest rates. Today, bond interest rates are historically low, around 1%. If the interest rates just rose to the normal range, the cost of bond interest would triple or more. In FY2012, the interest on the national debt was $360B. That's not chicken feed, but if the interest rates were to triple, we would be spending over $1 trillion here. If the interest rates rise to high levels to develop the needed demand for riskier bonds, then the annual cost of the debt could rise to $2 trillion or more.
If the interest rates for bonds rise up and successfully take money from other investment options, then those options don't have the capital needed to keep operating or to start new businesses. If the businesses are started, they must make more earnings to get a return on investment that is commensurate with the level of risk incurred. Yet the amount of profits is tougher to achieve because the cost of borrowing money is higher. When consumers go out to buy big ticket items like homes and cars and boats and motor homes, the cost of borrowing will drive the costs of those items up and reduce the demand. That tends to slow down the economy, put a lid on hiring, and hold the stock market back.
If the economy is slow, unemployment is high, profits are low, sales commissions are low, dividend are non-existent, capital gains are non-existent, etc., then the government collects fewer tax dollars. They also have to pay out more for unemployment, welfare, food stamps, etc. at the same time. This is the description of a death spiral. Another description might be a serious MessAPolitico. Why can't the American voter see this coming?
I believe that inflation will eventually happen. Eventually will arrive as soon as the economy finally, really gets out of this recession. No, I don't believe the recession ever ended. We haven't had much growth in the GDP, but by definition, a recession ends when any growth occurs for a certain number of consecutive quarters (I can't remember how many). The thing to remember is that oil prices have doubled over the past four years. Has the economy as a whole grown that much in four years? No, not even close. I believe that the energy sector has grown more than the economy as whole, therefore most, if not all, other sectors have contracted. The growth in energy has not been caused by growing demand either. That growth has been caused by the "bone heads" running our government limiting the supply of energy. With the limited supply, every time the economy tries to take off, the cost of energy rises, and that sucks the life out of the economy.
How will we ever get out of this MessAPolitico? It can be done. Come back for my next post on Monday to find some answers.
Thursday, March 7, 2013
President Obama's Biggest Fear
Over the past couple of weeks, President Obama and all of the Democrats have been telling us that the world would end because of the sequester. The Republicans in the House supposedly gave us this terrible thing that was forcing the government to shut down all of the things that make America work. The teachers were going to lose their jobs, and your kids would be left ignorant, even though teachers work for county and city schools. The criminals would run amuck, because all the police would be laid off. Your house would burn down with no firemen to put out the fire, and if you were hurt in the fire, there would be no ambulance service to take you to the hospital. Of course, police, fire, and public safety personnel are all employed by local governments. Janet Napolitano told everyone that the TSA lines at the airport would increase drastically, and after the sequester went into effect, she said that wait times in TSA lines in Atlanta, Chicago, and LA were 150% longer than normal. It turns out that officials at these three airports denied that anything had changed with the TSA lines this week; they said everything was flowing normally.
The Democrats had planned to use the media to scare America and blame the Republicans, hoping that John Boehner and the House would back down. The plan was to put the Republicans under mounting pressure until they caved and eliminated the cuts. Maybe they could even get another tax increase on the evil rich people. None of that worked, Boehner held his ground, and the media didn't totally fall in line perpetuating the lie.
The president's biggest fear is coming true. The American people woke up, and the sun came up just like always. The electricity is still on. In fact, they can't even see the difference. Wow! Maybe we can stand more cuts. In fact, we all need to balance our budgets at home, and the government needs to do the same.
This little tax cut wasn't enough to amount to a hill of beans. In fact, outside of Washington, DC this wouldn't have even been a cut at all. Government spending will actually rise this year with the "sequester cuts" in place. Now America has seen the man behind the curtain. The wizard is just a regular guy that has pulled the wool over so many eyes. Will the America that woke up stay awake? Will we demand meaningful cuts in the hundreds of billions of dollars? I hope so. Otherwise, the MessAPolitico will just continue to roll along until America will be just a bedtime story -- a fairy tale -- that we can tell our grandchildren about several years from now.
The Democrats had planned to use the media to scare America and blame the Republicans, hoping that John Boehner and the House would back down. The plan was to put the Republicans under mounting pressure until they caved and eliminated the cuts. Maybe they could even get another tax increase on the evil rich people. None of that worked, Boehner held his ground, and the media didn't totally fall in line perpetuating the lie.
The president's biggest fear is coming true. The American people woke up, and the sun came up just like always. The electricity is still on. In fact, they can't even see the difference. Wow! Maybe we can stand more cuts. In fact, we all need to balance our budgets at home, and the government needs to do the same.
This little tax cut wasn't enough to amount to a hill of beans. In fact, outside of Washington, DC this wouldn't have even been a cut at all. Government spending will actually rise this year with the "sequester cuts" in place. Now America has seen the man behind the curtain. The wizard is just a regular guy that has pulled the wool over so many eyes. Will the America that woke up stay awake? Will we demand meaningful cuts in the hundreds of billions of dollars? I hope so. Otherwise, the MessAPolitico will just continue to roll along until America will be just a bedtime story -- a fairy tale -- that we can tell our grandchildren about several years from now.
Tuesday, March 5, 2013
Where's the Integrity?
In the past year, I've had more correspondence with my Representatives and Senators and Speaker John Boehner than in the rest of my life combined. Americans need to complain to these elected officials instead of their friends and family. How else will these folks know what's on our minds? I also subscribe to their newsletters to keep abreast of what's happening in government. I don't want anyone to accuse me of being an uninformed voter.
Since the election this past November, I've gone from despair to frustration to fear. That's fear of losing our country. America has had the greatest system of government ever in the recorded history of the world. That all came from our constitution that was created by true government servants. They were rich, important people in this fledgling young nation, but they didn't write the constitution for personal gain. The first politicians did that job not as their chosen vocation, but as a side job. They did it as a service to all citizens of America -- young and old, rich and poor, workers and business owners, etc. These were men of integrity that wouldn't have thought of using public office to steal from the unfortunate and feather their own nest.
The politicians of today are a much different breed. They go to college and study political science and often go on to study law as well. The goal is to make a career out of politics. Success is measured by election results and by how far up the political ladder they can climb. Getting elected or re-elected is job one. They will support any bill or policy that can be made to play well in the press (and that's not an unbiased press). The good of the country or, more specifically, the general citizenry of America is not of prime importance. In fact, the actions I've seen indicate that many politicians would send America down the proverbial tubes if it would get them votes and a win.
There is a serious MessAPolitico in this country, and this is the root cause. Our politicians lack integrity. Career politicians need to go!
Since the election this past November, I've gone from despair to frustration to fear. That's fear of losing our country. America has had the greatest system of government ever in the recorded history of the world. That all came from our constitution that was created by true government servants. They were rich, important people in this fledgling young nation, but they didn't write the constitution for personal gain. The first politicians did that job not as their chosen vocation, but as a side job. They did it as a service to all citizens of America -- young and old, rich and poor, workers and business owners, etc. These were men of integrity that wouldn't have thought of using public office to steal from the unfortunate and feather their own nest.
The politicians of today are a much different breed. They go to college and study political science and often go on to study law as well. The goal is to make a career out of politics. Success is measured by election results and by how far up the political ladder they can climb. Getting elected or re-elected is job one. They will support any bill or policy that can be made to play well in the press (and that's not an unbiased press). The good of the country or, more specifically, the general citizenry of America is not of prime importance. In fact, the actions I've seen indicate that many politicians would send America down the proverbial tubes if it would get them votes and a win.
There is a serious MessAPolitico in this country, and this is the root cause. Our politicians lack integrity. Career politicians need to go!
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