If we manage to escape the economic catastrophe that is ObamaCare, we may breathe a little easier, but watch the horizon for a storm is brewing that makes the health care monstrosity look like pin money.

Unions have long been in decline in private industry, but recently for the first time union membership in the public sector surpassed that in the private sector, and it is still growing.  We all know the stories about municipal workers working for 20 or 30 years, then retiring at 50% to 90% of their last year’s pay which is often inflated with heavy overtime, and then they go out and get another job where they work until retirement and a cushy life of a public pension, a handsome private 401k, and Social Security.

It used to be that it was a trade off that government workers (teachers, cops, firefighters, sanitation workers, clerical) got great benefits because they were paid poorly when compared to the private sector.  However that is no longer the case as reported in USA Today:

 USA Today reported that nearly one in five federal government employees now earn over $100,000. The paper also reported the average federal salary rose to $71,260, almost $31,000 more than the comparative average private-sector wage. 

If that doesn’t get the hair on the back of your neck to stand up as, after all you are who pays for these salaries and benefits, then perhaps this will from National Review’s March 8, 2010 issue:

The highest-paid municipal employee in Madison, Wis., is bus driver John E. Nelson, whose salary last year totaled more than $159,000. Half a dozen of his fellow drivers also earned in six figures. How is this possible? The Wisconsin State Journal explains:“A high base salary and other benefits for drivers were largely setin the 1970s and 1980s, when the city took over the bus company.” Combine that with generous, federally mandated leave provisions that make for lots of overtime, and it’s not unusual for a bus driver to out-earn the mayor (and with much better job security). In the 1950s, Ralph Kramden of The Honeymooners was paid $62 a week by the skinflints at the Gotham Bus Company; he was constantly hatching schemes to strike it rich so he could quit. Today Kramden’s dreams of avarice would have been a lot simpler: get a government job and join a union. — The Week, “National Review,” March 8 , 2010

$159,000 for driving a bus.  Imagine.  I wonder what the private bus company was paying their drivers before the city took them over?  I am sure, like ObamaCare, the takeover was a cost savings measure.  After all, those greedy private companies are out to make a profit. 

Who was the most frequent visitor to the White House  at the time the White House released its visitor logs?  It was Andy Stern, president of the Service Employees International Union (government workers), which should tell you where this is going.  Remember, as well, that when the federal government took over GM and Chrysler they gave huge percentages of those companies to the unions.  So when it comes time to negotiate the next contracts the union will sit on both sides of the bargaining table, as management and labor.  How will that turn out?  It will be one of two ways, either the union will have an epiphany and realize that profits are important to staying employed, or the unions will pick the bones of GM and Chrysler clean, driving them out of business and leaving you and me, brother, holding the bag.

The Ticking Pension Bomb

The killer, however, is unfunded pension liabilities.  All those pensions that we will be paying for with retirees being retired for longer than they worked in many cases, will be like nothing we have imagined before from a fiscal crisis standpoint.  In private industry as businesses learned to appreciate the value of their human assets, they treated them accordingly and the unions withered.  However in the public sector we have elected officials writing laws, e.g., Davis Bacon, that heavily favor or require union labor.  Unions in turn, pour millions into making sure those same politicians get re-elected.  Who is looking out for you and me?  As the ultimate employers of government employees, how about a law that union contracts must be ratified by the public at the ballot box?  Too cumbersome?  Okay, how about a law that government employees cannot receive salaries and benefits that exceed what the average private employee (the public employees’ bosses) receives in that geographical area?

Tea Party Members, are you listening?

It is clear from the present administration that the statists believe that it is their destiny to rule, not govern, over the masses who they believe are their intellectual inferiors.  Keep piling it on, but don’t worry we can always tax the rich to pay for it.  But as you board that bus in Madison Wisconsin, ask yourself if Mr. Nelson behind the wheel, is the rich guy picking up the tab or is it you?  Watch out folks, if we don’t do something soon, the rich won’t be rich enough to pay for it even if we tax them at 100% and there is no law to stop them from taking their wealth and moving somewhere else where taxes are lower.  And at this rate there are a lot of places in the world where the taxes are lower.

Michigan Democrat Bart Stupak stood next to Greta Van Susteren on her program last night with several small stacks of paper.  Each one of those stacks represented an existing federal law that banned using public money for abortion.  He said anyone of them, pick one, is acceptable to him to get him to vote for the Senate version of the health care bill.  He said President Obama signed a law, just ten weeks ago that had similar language.  He was baffled as to why he could not get an answer from the President or his committee chairman, Henry Waxman, why they would not just continue existing federal law.  Let me put forth my hypothesis.

The Real Healthcare Objective

President Obama, Nancy Pelosi, Harry Reid and the rest of the statists have as their goal one, national health care provider, and that is the federal government.  I know that the “public option” has been in and out of the bill, and that the stated plan is for private insurers to continue to provide heath care insurance, but here is what I see as the real game plan:

1. Do whatever it takes to cajole health insurance companies to sign on or at least shut up.
2. Make sure that individuals do not take control over their health care purchasing decisions through high deductable plans and Health Savings Accounts.  Keep the 3rd party payer as the primary choice, which will allow health care costs to continue to rise.
3. Put in a federal oversight panel to make sure health insurance providers do not make “excessive” profits.  In other words, price controls.
4. With steps 2 and 3 in place health insurance providers will eventually leave the business or go bankrupt.  The federal government will have no choice but to step in so that all Americans continue to be covered.
5. Eventually, the federal government is the last man standing and the de facto public option, or should I say, public mandate is in place. Voila.

The Stupak Problem

If the scenario unfolds as I have described, then the only way to pay for an abortion is through your federal health care insurance provider.  If the language Mr. Stupak wants is in the bill, abortions will be near impossible and Roe v. Wade will be dead.  Do you think President Obama, Nancy Pelosi, Harry Reid, NOW, or other pro-abotion groups are going to stand for that?  Not a chance.

So the Democrats have to find a way to either hoodwink Stupak into voting for the bill without the language he wants or find a way to peel off the 29 or so other Democrats who agree with Stupak.  Watch closely what happens.

There’s a commercial that has been running recently that shows someone considering the purchase of a consumer item and they ask question after question about the product.  In the next scene they are in the doctor’s office and when the doctor asks if they have any questions they hesitate and then say, “No.”  The message is that you should ask as many questions of your doctor as you would of the salesman selling you a flat screen TV.

What if the flat screen TV were free?  Or what if it was limited to a $20 co-pay?  Would the consumer ask as many questions?  The consumer is probably asking the questions because he or she is about to lay out $1,000 of their own money.  If the TV costs you only $20 do you bother with the questions?  If the TV doesn’t work, you can go buy another for $20, no?

For most of our health care plans we have what is called 3^rd party payer.  We go see the doctor and except for a nominal co-pay, someone else picks up the tab. But what if the health care consumer was put front and center in the process? How would that look?

Insurance as Insurance

We call it health care insurance, but it doesn’t look like any other insurance we may own.  We buy insurance to protect ourselves from financial catastrophe, not to cover everyday expenses.  If our house needs a paint job, we don’t file a claim on our homeowner’s insurance.  If we need gas for our car, we don’t ring up the gecko at Geico.  When we need food we don’t submit the grocery receipt to our life insurance company.  So why is virtually every expenditure related to health submitted to our insurance company?

I was once covered by a health insurance plan, through my company, that cost around $10,000 per year.  I was healthy and didn’t often need a doctor, but that didn’t affect my insurance premium.  I found a plan that was a “high deductable” plan with a Health Spending Account.  It worked like this.  My insurance premium was cut from $10,000 to $5,000.  In addition I opened a Heath Spending Account (HSA) that I could fund with up to $5,000 per year, tax deductable.  So overall, if I fully funded HSA, the cost was still $10,000.  So why do this?

The plan came with a high deductable of $4,000 per year, in other words, the first $4,000 were paid by me, not the insurance company.  I could use the money in my HSA to cover that.  But the kicker is that the money in an HSA rolled over from year to year and if I never used it, I could roll it into an IRA later.  Do you think there is a strong incentive there for me to be involved in my medical care?  Do you think I would ask more questions, before going to the doctor and when I met with him?  You bet I would.

The Broken Health Care System

But how does our government screw this up?  Easy.  When I left that company and was out on my own and tried to buy the same type of policy I found that many plans were available until I told them where I lived.  “You live in New York?  Sorry, that plan is not available in New York for an individual.  It is only available through companies.”  I checked with my state insurance regulator and they said, “Sure, we have a plan like that for individuals.  Do you make over $27,000?  Oh, you do?  Then it’s not available.”

So a plan that involves the consumer in making informed health care choices, which is the only way market forces can truly come into play, was not available for me by government dictate.  But the federal government wants to take over health care and give it to everyone on the model of 3^rd party payer where the consumer doesn’t care a whit what it costs.

Informed Health Care in Action

Fortunately, my experience being involved in health care choices didn’t evaporate with my ability to get the insurance plan of my choice.  I was advised by my doctor that I was of the age to start screening for colon cancer.  The most effective way to do this is through a procedure known as a colonoscopy.  I will spare you the details of the procedure. 

As an informed consumer I looked up the risk factors for colon cancer:

1. A personal or family history of colorectal cancer or polyps.
2. A diet high in fat and low in fiber.
3. Inflammatory bowel disease (Crohn’s disease or ulcerative colitis).
4. Obesity.
5. Smoking

Okay, I have none of the above.  What is the chance of dying of colon cancer?  In the U.S. the chances are 0.017% and that is based on the whole population, regardless of whether or not you have any of the behaviors listed about, or about the same chance as being killed in a car crash.  I decide to have the procedure.

The procedure gives me a clean bill of health and the recommendation is to repeat the procedure every 5-10 years.  In processing my insurance claims, to be paid by a 3^rd party, I noticed that the procedure cost $3,000 about evenly divided between the doctor performing the procedure, the anesthesiologist, and the hospital.  So if I have the procedure as recommended, it would cost $10,000 – $20,000 to screen for an illness for which I had low risk, no history, none of the bad behaviors, a current clean bill of health.  No thanks.  If I had the plan that I wanted that could be $10,000 – $20,000 in my retirement plan.  How many other possible diseases should I screen for and pay similar sums?  As a consumer I am making a risk/reward judgment and in doing so, I have reduced health care expenses in the United States by $10,000 – $20,000. 

In the Obamacare plan, that money will be spent because the typical consumer doesn’t care if the procedure is done every year because it has no financial impact on them.  Do you think that is why health care costs continue to rise?  What doctor is going to take a chance that he did not recommend that procedure and find out that you and your trial lawyer are asking him why he didn’t because you contracted colon cancer?

The counter argument will be, “Well what if you get colon cancer and you could have prevented it if you had screened for it?  What is that going to cost and who is going to pay for it?”  Well, with my liberty still intact, I can make some further decisions.  I still have that money, and more of it, in my HSA that I can use.  If the cost of treatment exceeds $4,000 then my insurance company can use that premium money that I have been paying them for years without them having laid out one dime over that period due to my good health and good choices, to help with my treatment.  Or I can make the personal decision, if I am say 80 years old, that I had a pretty good run and I would rather leave my wealth to my family, if the government isn’t salivating to grab that, than to spend it all to eke out another few years.  I can choose to go quietly into that good night.

Liberty and Tyranny

I want to have the liberty to make those choices.  Everyone having the liberty to make those choices will bend the cost curve down.  The medical community, which is a business, will have the incentive to find a way to drive down the cost of a $3,000 procedure to say $300.  If they did so, I just might show up every 5 – 10 years at that price.  That’s how markets work.  If your flat screen TV set, or your medical procedure is too expense the demand drops.  If you find a way to keep lowering (get that?  lowering) the cost the demand will rise.  But if you don’t pay the bill, if you don’t see the bill, you don’t care about the bill.  If you don’t care about the bill and no one else does, then the government gets involved and the problem doesn’t get solved.  Your liberty gets taken away along with your money and the government tells all their stupid citizens what to do, because, after all, government knows best.  Right?

You hear a lot of talk these days about the Senate being broken because nothing can get passed with a majority vote.  Everything has to get sixty votes to pass and that’s just un-American.  Is it? 

The House of Representatives

The Founding Fathers were brilliant in designing the government that has survived longer than any other, and it wasn’t an accident.  The House of Representatives was designed to be the branch of government closest to the people.  The members come from districts that are sized based on population.  It is also in the House of Representatives that all revenue bills (i.e., tax increases) must originate.  The Senate cannot create legislation to raise taxes. 

The Senate

 The Senate was designed with a different purpose in mind.  In the form of federalism that they created, the Senate was supposed to represent the individual states.  Originally Senators were appointed by the state legislatures and this continued until the ratification of the Seventeenth Amendment in 1913, which provided for the direct election of Senators by the people.  The Senate was designed to be a check on the tyranny of the majority.  In the House, populous states like New York, California, Texas and Florida, have a lot of representation.  To prevent a handful of states from pushing around everyone else, representation in the Senate is the same for Rhode Island as it is for California, two each.  In the House, California trumps Rhode Island.  In the Senate they do not.  Are you picking up the theme?

 The Dreaded Filibuster

Being able to filibuster in the Senate is another way of allowing cooler heads to prevail.  If legislation before the Senate cannot win over some reasonable number of Senators, then it’s probably not a very good idea for the country.

 As proof that things are more partisan today, pundits point to how the number of filibusters has greatly increased over time. 

 In the entire 19th century, including the struggle against slavery, fewer than two dozen filibusters were mounted. 

 It is reported that things really took off during the Clinton administration.  Hmm, what else was going on then… Hillary Care?  We have also seen the out of control growth of the federal government’s involvement in almost every aspect of our lives, such as, how much we can be paid, how much a bushel of wheat should cost, how schools are funded; none of which is in the Constitution as powers the federal government should have.  Those are all things that, according to the 10^th Amendment, are the purview of the states or the people.

 The Filibuster Fix

So if you don’t like the way the Senate is bogged down, instead of taking the brakes off the car, how about dumping the junk in the trunk?  The less minutia the federal government gets involved in (let’s start with health care), the less reason, reasonable Senators will have to filibuster.

When will our President come to the realization that the government does not have any money save that which is provided by its citizens?  If he understood that, he wouldn’t have said this:

“Just as it would be a terrible mistake to borrow against our children’s future to pay our way today, it would be equally wrong to neglect their future by failing to invest in areas that will determine our economic success in this new century,” Mr. Obama said at the White House.

Let me posit a translation: we shouldn’t borrow against our children’s future, so we should borrow against our children’s future.  And let me add another pet peeve and that is how the statists have redefined the word “invest”.  What they really mean is spend, but invest sounds so much more grown up.  However, most intelligent people understand invest to mean when you put your money into something with the belief you will get all your money back plus a premium.  You don’t invest in the stock market with the idea you will never see your money again and will subsequently put more money into it next year.  You invest in a house with the idea that you will sell it later for more money.  You don’t invest in a house if you expect it to go down in value.  But our elected representatives would have you believe that pouring money down a rat hole is an investment.

Immature and Irresponsible

Like a child caught standing over his mother’s prized china lying shattered on the floor, President Obama wants us to believe it’s not his fault, no, we are going to have trillion dollar plus deficits for the next ten years because of Bush and the Republicans.  He is one year into his presidency.  This is his budget, not Bush’s.  If he can’t handle the job he should resign and turn it over to, er, Biden?  Check that.  Perhaps he can just go watch television in the White House for the next three years and leave the rest of us alone.  Doing nothing would cause less damage than what he has planned.  He jacked up spending 24% and then “courageously” instituted a freeze on that spending for three years.  Think about it.  If I gave you a 24% raise on Monday and then came back on Friday and said, “Gee, I’m really sorry to have to do this, but times are really tough.  I’m going to have to freeze your new salary for the next three years.  Can you ever forgive me?”  Could you not burst out laughing?

We’re Going to Make Some Tough Decisions…Next Year

We are in a fiscal crisis, but don’t think for a moment you are going to see any tough decisions in an election year, particularly when so many Democrats are in danger of having to find jobs in the real world.  So this year is tough talk.  Next year we get busy!

Democrats or Republicans or maybe the Tea Party movement is going to have to act, sooner rather than later.  Here is how the federal government breaks down:

• Medicare and Medicaid — 33%
• Social Security — 21%
• Interest on the Debt — 8%
• Defense — 20%
• Non-Defense Discretionary — 18%

The first three items continue to grow with no signs of slowing and interest will really take off when the Fed stops the easy money program.  Defense can shrink as Iraq and Afghanistan stabilize, but not a lot as this is still job number one for the federal government.  So do you see the problem?  You can thank Democratic President Lyndon Baines Johnson for the first ticking time bomb above.  You can thank Democratic President Franklin Delano Roosevelt for the second ticking time bomb.  You can now thank President Barack Obama for what is becoming the third ticking time bomb and that is without his Health Care, and Cap and Trade.

So how is President Obama going to “solve” this problem?  By tinkering with the last item, Non-Defense Discretionary spending.  But don’t worry, he will also tax those evil rich and make sure they pay their fair share.  But before he goes too far down that path I have a suggestion for him:

1. Listen closely to the Beatles song “Taxman“
2. Ask yourself why the members of the band moved to the United States?

High tax states like New York and California are finding that a significant number of their wealthy citizenry are moving to lower tax states, exacerbating those states’ fiscal problems.  If you look at the percentage of the population that pays the lion’s share of the taxes you will quickly see that if a relatively small percentage of the population, who can afford to live anywhere, actually decide to leave the United States of Tax the Rich, the resulting fiscal problem will be very, very severe. Obama can only poke his tax stick in that cage so long before he gets a nasty reaction.

We’re All Standing On the Third Rail

Social Security has been called the third rail of politics, but the reality is that we are all standing on the third rail trying to keep our balance and if anyone slips and touches the ground, we’re all fried.  We have to suck up the courage to address Social Security, Medicare, and Medicaid.  If we can’t slow the growth of these programs so that they take a smaller amount of the budget pie each year, we are toast.  None of those programs is in the Constitution, but the liberals/progressives created them with empty promises of benefits without costs.  This should have been the first clue:

“Ida May Fuller worked for three years under the Social Security program. The accumulated taxes on her salary during those three years was a total of $24.75. Her initial monthly check was $22.54. During her lifetime she collected a total of $22,888.92 in Social Security benefits.”

Ida May Fuller was the first recipient of monthly S.S. checks when she retired in 1940. She lived to be 100.

She almost got paid back in full with her first check. She got 926 times more than what she paid in. That’s a 92,600% return on “investment.” Not bad, huh?

She got back almost everything she paid in with her first check.  Instead of ringing alarm bells all over the country, politicians patted themselves on the back for the great system they created.  We sent Bernie Madoff to jail, why should Congress be exempt?  What Bernie Madoff did was child’s play in comparison.  Where he fell short was that he couldn’t force people to participate through payroll taxes, and he couldn’t print money.  So why is what he did criminal and what Congress is doing not?  He had to get his participants to voluntarily turn over their money.  He promised returns of 40% per year.  Ida may got 92,600% return on her investment.

Burn the Ships

There is the story of a general who landed on a beach to face an formidable enemy.  He ordered that the ships that brought them there be burned.  By doing so, he knew his men would fight ferociously because there was no escape, either they fought to win or they died.  Perhaps we should do the same with Congress and President Obama.  Fix Social Security and Medicare/Medicaid or you join Bernie Madoff in Cell Block “C”, for running a massive Ponzi scheme.  What has kept Congress from fixing this in the past is the fear of not getting reelected.  Let’s raise the stakes so that not getting reelected would pale in comparison to incarceration.  It’s time our elected officials started paying attention to the people and not their perks.  The disaster train is going downhill and picking up speed, headed for a cliff.  It’s time ALL politicians put the country first and fixed this problem that, after all, they created.  It’s fun to give out the goodies, but this is a crisis that cannot be shunned.  It must be dealt with head on.

“I do solemnly swear that I will faithfully execute the Office of President of the United States, and will to the best of my Ability, preserve, protect, and defend the Constitution of the United States.”  – Presidential Oath of Office,  Constitution of the United States of America, Article II, Section I

“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press, or the right of the people to peaceably assemble, and to petition the Government for a redress of grievances.” — Constitution of the United States of America, First Amendment.

“This ruling strikes at our democracy itself,” Mr. Obama said, adding: “I can’t think of anything more devastating to the public interest. The last thing we need to do is hand more influence to the lobbyists in Washington, or more power to the special interests to tip the outcome of elections.” — NY Times, January 25, 2010

Last week in Citizens United v. Federal Election Commission the Supreme Court struck down a provision in the McCain-Feingold campaign finance reform bill that prohibited “electioneering communication”, that is, broadcast ads that name a federal candidate within 30 days of a primary election or within 60 days of a general election.  It is what I and many others dub the “Incumbent Protection Act”, because it tips the scales heavily in favor of incumbents who have the name recognition, and the communication power of their office as an advantage in an election.  In addition, the 30 days or 60 days are when many voters really start paying attention.  Our elected representatives love to talk tough about reform, but that reform typically ends up making it harder to replace them.

Obama Weighs In

As the above quotes demonstrate, President Obama’s job is to uphold the Constitution.  The Constitution protects free speech.  So why is President Obama attacking a Supreme Court ruling that protects Free Speech?  Is that what he is supposed to be doing?  Instead he says it “strikes at democracy itself.”  He doesn’t mention that it also lifts restrictions on the speech of unions that typically favor the positions of his party.  Perhaps that is because with the Obama administration unions have extraordinary access to the White House. From January to July, White House logs show that Andy Stern, President of the Service Employees International Union (SEIU) visited the White House 22 times, more than anyone else in the visitor logs.

If President Obama is truly concerned about the influence of lobbyists, it does no good to drive them out of advertising on TV into personal visits to the White House.  Of course, the president would be selective in who has an audience with him.  If you really want to reduce the number of lobbyists, then reduce the reasons for them to lobby.  If, for example, you want to reduce the lobbying effort of the giant agricultural corporation Archer Daniels Midland, then get the government out of the business of ethanol subsidies, farm subsidies, and shut down the federal Department of Agriculture.   Lobbyists will call on Washington less, if they have less to call about.  Shrinking the federal government will reduce the number of lobbyists and their influence, reduce the deficit, help balance the budget, and make the government more manageable so that we can reduce or eliminate waste and fraud.

Supreme Court Justice John Paul Stevens blasted the Supreme Court’s 5-4 decision saying that the ruling is not grounded in the writings of the Founding Fathers.  His argument being that certain groups could have their speech curtailed and only individuals had their speech protected.  Justice Antonin Scalia wrote a separate concurring opinion to address Stevens argument.  In part:

“I write separately to address JUSTICE STEVENS’ discussion of “Original Understandings”… This section of [Stevens'] dissent purports to show that today’s decision is not supported by the original understanding of the First Amendment. The dissent attempts this demonstration, however, in splendid isolation from the text of the First Amendment. It never shows why “the freedom of speech” that was the right of Englishmen did not include the freedom to speak in association with other individuals, including association in the corporate form. To be sure, in 1791 (as now) corporations could pursue only the objectives set forth in their charters; but the dissent provides no evidence that their speech in the pursuit of those objectives could be censored….

The [First] Amendment is written in terms of “speech,” not speakers. Its text offers no foothold for excluding any category of speaker, from single individuals to partnerships of individuals, to unincorporated associations of individuals, to incorporated associations of individuals–and the dissent offers no evidence about the original meaning of the text to support any such exclusion. We are therefore simply left with the question whether the speech at issue in this case is “speech” covered by the First Amendment. No one says otherwise.” – Antonin Scalia, concurring opinion in “Citizens United v. Federal Election Commission

Newly seated Justice Sonia Sotomayor voted against free speech.  I always marvel when people who succeed against tough odds attack the very principles of this country that allowed them to succeed.  The Bill of Rights was designed to protect against the tyranny of the majority by defining certain rights of every individual that could not be infringed upon.  It is one reason why people around the world fight to come here for a chance to succeed.  Because they know that these principles will allow them to do so if they have the drive to succeed.

In the midst of the financial meltdown the government and financial pundits argued that they had to rescue the big banks because they were too big to fail.  If we don’t save them, they could bring down the entire U.S. economy and in  turn the economy of the entire world.  Ignoring the history and responsiblity for how they got there, that could be a true statement that the government had to do something to avoid a worldwide panic.

The panic averted, many banks paid the money back with interest, are in the process of paying out massive bonuses and the Obama administration is twisting itself in self-righteous knots to tax them into humility.  Good luck with that.  While they target the banks, they are hands off on Freddie Mac and Fannie Mae, GM and Chrysler because to tax those basket cases would just be taking money from the left taxpayer pocket and moving it to the right taxpayer pocket.  If you look to the root of the problems of the fiscal meltdown you will find the government’s hand in almost every corner, but don’t expect this administration to try to get to the bottom of it.

Back Up, Go Ahead

There was an old Abbot and Costello routine where Abbot was guiding Costello in parking a car.

Costello asked what he should do and Abbot said, “Back up.”

Costello confirmed, “Back Up?”

To which Abbot replied, “Yeah, go ahead.”

“Go ahead?”

“No. back up.”

“Back up?”

“Yeah, go ahead.”

I don’t know if the Obama administration is Abbot or Costello, but they are telling banks, “Lend more money.”  Then they tell the banks, we are going to raise taxes and take your money away.  Then they ask the bank, “Why aren’t you lending more money?”

Programs You Can Believe In

Medicare

It is estimated that Medicare loses about $60 Billion ANNUALLY in fraud.  That’s right about $60 billion of your tax dollars are stolen every year from this program.

“If you want to find Medicare fraud, the first place you should look is South Florida, where 60 Minutes and correspondent Steve Kroft were told it has pushed aside cocaine as the major criminal enterprise.” – 60 Minutes – Medicare Fraud: A $60 Billion Crime

While the Obama Administration pushes their health care program one of the ways of funding the program is through savings in Medicare fraud.  However, no one has been able to stop it.  Not Republicans.  Not Democrats.

First Time Home Buyer Credit

This wonderful new program was designed to help first time home buyers achieve the American Dream.  Unfortunately, it doesn’t take a genius to also achieve that criminal American Dream, fleecing the government.

It’s hard not to laugh when viewing the results of the federal first-time home-buyer tax credit. The credit, worth up to $8,000 for the purchase of a home, has only been available since April of last year. Yet news of the latest taxpayer-funded mortgage scam has traveled fast. The Treasury’s inspector general for tax administration, J. Russell George, recently told Congress that at least 19,000 filers hadn’t purchased a home when they claimed the credit. For another 74,000 filers, claiming a total of $500 million in credits, evidence suggests that they weren’t first-time buyers. – WSJ – First Time Fraudsters, 10/29/2009

The  IRS even had to admit that in an investigation they found 53 cases where IRS employees filed “illegal or inappropriate” claims for the credit.

Too Big To Govern

A new president is elected once every four years, but the vast government bureaucracy remains.  It is said that a president will only be able to address 3-4 top priorities in their term.  By the time they appoint executive department heads and the Senate approves them and they set about to figure out the departments they are in charge of, it is an enormous undertaking to try to make significant changes.  To try to curb fraud, to overcome the inertia of the entrenched bureaucrats who know they will outlast the appointee, and their friends in Congress who will probably be there as long, is just too tall an order to accomplish in a four year cycle.  Every time a new liberal takes over, their first order of business is to make the bureaucracy larger.  It does not work.  It will not work.

The Only Solution

The only solution is to make the federal government smaller.  It must be bold.  It must be dramatic.  Tweaking it at the margins will fail.  Entire departments must be shut down.  The Constitution should be the blueprint for this.  If the power is not explicit in the Constitution, shut it down and allow the states or local governments to take it up if they choose.  Then drastically cut taxes accordingly.  Let people keep their money and decide at the local level if they want that service or not.  Let every state try their own solution and each state can learn what works and what doesn’t from each other.  But this idea of pushing every solution up to the federal and let one size fits all be forced on everyone is, quite simply, madness.  We need less government and more liberty.

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.  – Tenth Amendment of the Constitution of the United States of America

 The Tenth Amendment

The Tenth Amendment of the Constitution is an interesting piece of work.  The way the Constitution is written is to explicitly state what the national government could do, and thereby exclude it from doing everything else.  When some of the Founding Fathers advocated a Bill of Rights the federalists strongly objected.  Why?  First, they thought it was redundant.  If, for example, the Constitution did not say the national government could regulate speech then having a First Amendment guaranteeing the Freedom of Speech made no sense.  The national government was only permitted to do precisely what the Constitution said it could do. 

 The second objection concerned having the opposite intent of the original writing of the Constitution.  You see, if the constitution has a provision that says what the national government cannot do (First Amendment barring free speech for example) it implies that the national government can do anything else that is not prohibited, which is exactly what the federalists did not want the Constitution to say.  It wanted to specifically enumerate the powers granted to the national government and no more.  So they compromised by adding the Tenth Amendment, which spelled out that distinction.  To quote Hamilton in Federalist 84:

 “Why, for instance should it be said that the liberty of the press should not be restrained, when no power is given by which restrictions may be imposed?”

The Federal Government’s Runaway Growth 

The federal government has expanded enormously particularly with FDR and the New Deal.  The Supreme Court has paid scant attention to the Tenth Amendment in curbing that expansion.  Perhaps it is time they gave it a closer look and more weight in their decisions.

 Below is what the Constitution says Congress has the Power to do.

 Article I. Section 8. The Congress shall have Power To:

• Lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States;
• To Borrow Money on the credit of the United States;
• To regulate Commerce with foreign Nations, and among the several states, and with the Indian tribes;
• To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;
• To coin Money, regulate the value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
• To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;
• To establish Post Offices and post Roads;
• To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;
• To constitute Tribunals inferior to the supreme Court;
• To define and punish Piracies and Felonies committed on the high seas, and Offenses against the Law of Nations;
• To declare War, grant Letters of Marque and reprisal, and make Rules concerning Captures on Land and Water;
• To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two years;
• To provide and maintain a Navy;
• To make Rules for the Government and Regulation of the land and naval Forces;
• To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrection and repel Invasions;
• To provide for organizing, arming, and disciplining, the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Apportionment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress;
• To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenels, dock-Yards and other needful Buildings; — And
• To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

 Does anybody see anything there about minimum wages?  miles per gallon?  housing subsidies?  urban development? education? energy?  James Madison summed it up thus in Federalist 45:

“The powers delegated by the proposed Constitution to the Federal Government are few and defined.  Those which are to remain in the State Governments are numerous and indefinite.  The former will be exercised principally on external objects, as war, peace negotiations, and foreign commerce;….The powers reserved to the several states will extend to all objects, which, in the ordinary course of affairs, concern the lives, liberties and properties of the people, and the internal order, improvement, and prosperity of the state.”

To see how far we have come from Madison’s and the other Founding Fathers views can be seen in the New Deal era court case Wickard v. Filburn(1942).  Roscoe Filburn was a farmer during the Great Depression who was growing wheat to feed his chickens.  The Federal Government had imposed limits on how much wheat a farmer could grow based on acreage in order to prop up wheat prices.  The amount of wheat that Filburn was growing exceeded this number, however, Filburn intended to use the wheat entirely on his own farm.  Not only was the wheat not going to leave his home state, it was not going to leave his farm!  But the Supreme Court ruled that by growing more wheat than allowed, Filburn would not have to buy additional feed in the open market and by not doing so the lack of his consumption of wheat on the market would adversely affect the price of wheat, therefore he was violating the Federally imposed limits.  Now if that doesn’t set off Tenth Amendment alarm bells, I don’t know what could.

Federal Government Sprawl

Here are the cabinet level departments of the Federal Government.  Those in bold seem, in my opinion, to be consistent with the enumerated powers above.  Those in italics seem, again in my opinion, to be a national government overstepping its Constitutional bounds.  It is not that each and any of these things should not be done at all, but according to the Tenth Amendment should be at the discretion of the states or local government.

•  Department of Agriculture
• Department of Commerce
• Department of Defense
• Department of Education
• Department of Energy
• Department of Health and Human Services
• Department of Homeland Security (Incorporate in Department of Defense) 
• Department of Housing and Urban Development
• Department of Justice
• Department of Labor
• Department of State
• Department of the Interior
• Department of the Treasury
• Department of Transportation
• Department of Veteran Affairs (Incorporate into Department of Defense)

 Federalism

 One of the brilliant ideas of federalism is the ability to vote in two ways.  One, is at the ballot box and the other is with your feet.  If my state puts forth a bad idea and the majority of the citizens of my state agree with the bad idea, I have the freedom to move to another state.  However, if we keep moving all these bad ideas up to the national level, my right to vote with my feet is taken away.  If states like California and New York choose to follow polices that lead to their bankruptcy, so be it, but let’s not force those policies on Texas and Florida or forced the citizens of those states to pay for the mistakes of Californians and New Yorkers.

Since George Washington, who had four cabinet positions, we have added thirteen new cabinet departments and eliminated two and the ones eliminated did not go away, they simply became part of other government entities (e.g., Navy into Defense; Post Office into Postal Service).  In other words our government is telling us that they have not solved a single problem for which one of these agencies were created since 1789, otherwise why wouldn’t that cabinet department be shut down, after ceremoniously giving all the key players well deserved gold watches?  But Government encroachment marches on with the Obama Administration poised to devour one-sixth of the U.S. Economy into the Department of Health and Human Services.  They tell us they know how to solve that problem.  With their track record do you believe them?  Perhaps it’s time to dust off the Tenth Amendment, and start putting a scalpel to the federal government rather than tying a bib around its bloated neck.

Let’s look to 2010 as the year we start taking back our government.  Polls show how far out of tourch our elected leaders are from the views of their constituents.  It’s time to retire them from office.  Let’s keep up the hard work and countdown to November 2010.

Who doesn’t love a freebie?  Who does not get a thrill of good fortune by finding money in the street, no matter how insignificant the amount?  We may not believe in the Tooth Fairy, but many of us believe we have a rich benevolent uncle, Uncle Sam, who is willing to lavish upon us his wealth if only we would ask.  The sad truth is that Uncle Sam is not rich, but penniless and is running a ponzi scheme that would make Bernie Madoff blush.

Health Care for $20

One of the major reasons that health care costs are rising out of control is that no one is minding the store.  While Washington twists itself in knots to rearrange deck chairs on the Titanic of health care, we have little to no say in how our health care dollars are spent.  Our health care “insurance” system is not really insurance.  Insurance is meant to protect us from a financial catastrophe.  Going to the doctor for a checkup is not a catastrophe.  Paying a $20 co-pay for that checkup is like finding money on the street.  There is no way anyone can get a physical exam, except by a hooker, for $20.  It is a good idea to get a physical checkup every year?  Yes, then pay the bill and ask what you are paying for and make sure you need it.  You take your car in for service don’t you?  Do you file an insurance claim when you do?  Can you get it done for $20.  Let’s get real.  What we have is called third party payer and when someone else is picking up the tab, do we care what it costs?  Really?  But someone is picking up the tab.  Look in your other pocket, because you are.  If you are generally healthy and you get your annual checkup, your insurance premium (here in New York at least) will probably run around $10,000 per year.  But, hey, you only paid $20 for that physical!  What if you paid the full amount for the physical, say, $500.  What if your insurance premium was cut to $5,000 because you would pay most routine medical costs out of your pocket and what if you could put the $4,500 left over ($10,000 original premium, minus $5,000 current premium, minus $500 cost of checkup), into a tax free account that can be used for future medical expenses or retirement if you don’t use it?  If you are a young person and stay healthy into your mid-40s, you would have accumulated over $90,000 in your medical savings account and you still have catastrophic insurance coverage and the government stays out of the picture.

Retirement for Free

Like many well intentioned Government programs, Social Security, enacted during the Great Depression, seemed like a good idea at the time.  When enacted there was about 15 workers paying in for each recipient drawing out.  Today there are about a little over 3 workers paying in for each beneficiary.  Bernie Madoff would blush at the audacity of it.  On top of that the money that is paid into Social Security can only be “invested” in Treasury Securities so the return is lousy, but safe.  People reacted to Social Security by saving less because the government safety net was there.  Had people been encouraged to save for their own retirement, they would not be leaving their children this legacy of a ticking time bomb.  So today, many young people feel the government’s hand in their pocket when they look at the FICA line on their pay stub, but don’t believe they will ever get a penny back.  Nice concept.

Bring Home the Bacon!

What’s the measure of a good Congressman or Senator?  Bringing home pork for the district, no?  If you are like me, you get flyers every year or several times per year, touting how Congresswoman Jones obtained federal funding for that pier at the amusement park.  With 435 Congressmen you can count on this, for each $1 that your Representative brings home $434 leaves the Treasury for each of the other Congressional districts and probably more, depending on the power and seniority of your Representative.  Guess who’s paying for that Turtle Crossing in Florida?  that bridge to nowhere in Alaska? that airport in Johnstown, PA that no one uses?  That’s right, you are.  What if we decided locally if we really needed a pier at the amusement park, and if we did, pay for it ourselves?  Then we could let the people of Florida decide if they want to build a turtle crossing, the people of Alaska decide if they wanted a bridge to nowhere and the people of Pennsylvania decide if they wanted an airport that no one used.  Then we could cut federal taxes by an equal amount to keep them out of mischief and help us pay for these projects if we really wanted them.

Let’s Get Organized

There was a time in our history where labor unions performed a valuable service.  In those times when many industrial jobs were unskilled or semi-skilled, employers could dismiss someone on a whim and replace them within the hour.  Unions gave those workers some counterbalancing power and fairer treatment.  Today, we have a much more sophisticated economy and workers have more skills and mobility.  Union membership has declined accordingly, in the private sector at least.  Why is union membership still growing in the public sector?  What is different about workers in the public sector that they still need unions?  Are we suggesting that all government workers are unskilled?  Why do teachers need a union?  Are they not skilled such that they could sell their services to the highest bidder?  Why do unions fight merit pay for teachers?  Why are school principals, the de facto CEO of the school and who in New York easily make six figures, unionized?  Do you get an idea why our K-12 public school system is trailing the world in performance?

In Michigan, privately owned small businesses that provided day-care services suddenly discovered that they were part of a union and union dues were being withheld from their government contractual payments.

Ms. Berry owns her own business—yet the Michigan Department of Human Services claims she is a government employee and union member. The agency thus withholds union dues from the child-care subsidies it sends to her on behalf of her low-income clients. Those dues are funneled to a public-employee union that claims to represent her. The situation is crazy—and it’s happening elsewhere in the country.

Ms. Berry, runs “The Berry Patch” a private day care center she operates from her home catering to low income clients.  The money that was once paid to her, now goes to a union that does little for her.  She is “self employed and wants nothing to do with the union.”  Don’t you think we need more of these tactics in America?  Card Check anyone?

Going Postal

And let’s not forget the Postal Service.  As postal rates are again scheduled to increase on January 4, let’s look at this paragon of efficiency, that is actually authorized by the Constitution.  In 2008, the Postal Service lost $3 billion, and the Postmaster General John Potter pulled down $800,000 in compensation including $135,000 in incentive bonuses.  What do we have to pay this guy if he actually breaks even?  Also, let us not forget this is also a very heavily unionized operation.

Don’t Worry, You Won’t Feel a Thing

During World War II, FDR needed to raise more revenue to pay for the war.  Fearing a backlash, his team hit upon the idea of payroll withholding.  Knowing the potential backlash that would result when taxpayers had to write that big check on April 15th, he rightly figured that if he took a little bit each week, he could take a lot more in total.  Statists in Washington have never looked back.  It’s like the tax that was imposed on telephone service to pay for the Spanish American War that is still in place today.  Instead of picking our pockets every week, what do you think most Americans would say about the size of the federal government if they had to write one big check on April 15th?  There would be no tax rebates, because there would be no tax withheld.  Do you think Americans would force Congress to sharpen their pencils and scale back the size of government?

Help is On the Way

Ronald Reagan said, “The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help!’”  But perhaps the best example of how far from our founding principles our government has strayed comes from Congresswoman Rosa DeLauro of Connecticut as she spoke during a House End of Year Wrap Up Session:

“This House–we understand, we’re there,” she said.  “You can count on us because we believe that it’s our moral responsibility to make sure that you and your family need our help.” 

I don’t know about you, but I don’t need the House of Representatives making sure I need their help.  I need as little interference as possible from them.  Their meddlesome intrusions in our lives is killing what made this country great.  It is a point we cannot make often enough.

We have had several bubbles before, but if the Obama administration has their way, “you ain’t seen nothin’ yet.”  Currently the budget for the federal government is $4 trillion dollars.  That’s right, your federal government will spend approximately (which means probably more) $4 trillion in one year.  Of that amount $202 billion is interest on the national debt.  In an article in the New York Times today by 2019, a mere ten years from now, the portion of the budget directed to interest payments will be over $700 billion, or three and a half times what it is today.  Many people have trouble grasping how much a trillion dollars are, and within ten years we will be paying three-quarters of a trillion dollars just to cover the interest without paying off any of the principle.

Family Budget Analogy

We all understand the dramatic effects of too much debt, as the point has been driven home every day throughout this financial crisis.  Bankruptcy filings, home foreclosures, bailouts, all resulting from more debt than we can pay the interest on, let alone pay back the principle.  You see commercials on television every day for companies that will help you renegotiate your credit card debt, your mortgage, intervene on your behalf with the IRS.  None of those programs are available to the federal government as a debtor. 

Obama’s Out of Control Spending

The Obama administration seems oblivious to the problem.  As bad as it is they just keep on spending or want to spend more:

• Stimulus package — $787 billion.  Despite evidence that it is not working and widespread opposition from the American people, the Obama administration is simply declaring that it is working and we need to do it again with a second stimulus
• Cap and Trade — this is a program that will drive energy costs through the roof for no real benefit.  After all if, as is becoming more and more apparent, global warming is not man made then it cannot be stopped by man either.  Higher costs will lead to businesses closing down, laying off people, and generating less tax revenue from both the businesses and the individuals it laid off.  Result — an increase in the deficit.
• Health Care — another $1 trillion of IOUs piled on our children’s back and if Medicare’s history is any guide, these numbers are well below what will really happen.

The Truth About Government

The truth is that government doesn’t create anything.  They don’t generate income.  Everything that government has to spend comes from you and me.  The government takes it from us (or throws us in jail for tax evasion) and then spends it.  If they can’t get enough from us, they borrow the difference.  But somewhere down the line, that money has to get paid back.  A news report today said we have the opportunity to just write a check to the Treasury if we are concerned about the deficit and want to help pay it down!  Let’s see how many of Obama’s wealthy supporters sign up for that program.

Runaway Train

Our federal government is a runaway train and if we don’t stop it very soon and pare it back to the functions enumerated in the Constitution, we will get hit with a bubble so big, that there is no Hollywood screenwriter that could even begin to conceive of how to portray it.  $700 billion folks, that’s $2,059 in INTEREST for every man, woman and child in America.  Ask yourself this, if you are a family of four are you prepared to write a check for $8,235 to the federal government for interest alone?  You don’t get anything for your money, it just keeps your government from defaulting on what they already borrowed. This will be on top of your regular tax bill. And the next year you will have to pay it again and probably more.  It’s time to stop the madness.  It’s time to stop the spending.  It’s time to stop the expansion of government and start shutting down departments.  It’s what you would do at home in a financial crisis, it’s what a small business would do in a crisis.  This is a crisis that we can still get under control, but if the debt continues to grow to the point where we can no longer afford to pay even the interest, America will be a footnote in history.

Do I have your attention now?