Thursday, May 28, 2009

What Is The Deal With 44 Million Uninsured Americans Anyway?

You know, it never ceases to amaze me that in politics and government, if you say something often enough and long enough, it becomes an integral part of the public debate.

Whether it is true or not.

It is truly amazing when you think about it that in a country as rich and as generous in spirit as America, there could even be one person who goes without having any health care insurance coverage in any given year. But our existing medical industrial complex structure coupled with various patchwork 'reforms" over the years have skewed the private health care insurance system to where it is barely recognizable anymore.

Here's the honest truth: There are probably, on average, 44 million Americans right now, this second, who are without health insurance coverage.

And tomorrow, there will be approximately 44 million people without health insurance. Except that it won't be exactly the same people.

The reason is that people go in and out of health care insurance coverage all the time. Students graduate from college and look for a job but might be without health care insurance coverage during the job search.

Many younger people think they are 'invincible' (who didn't at age 22?) and consequently, many of them opt out of health insurance coverage at work even if they have access to it to save a few hundred dollars per month in premiums.

Older people transition from job to job and, as this nasty recession has shown, sometimes their health insurance coverage expires before they find a new job.

The key question that we need to be asking as a nation is this: 'How many people lack health insurance and for how long?'

If we have 44 million of the same poor souls walking the streets every night without health insurance, that is one thing. But is that true and are the politicians in Washington telling you the whole truth and nothing but the truth, so help them God?

Nope, surprisingly enough, they are not. Once again.

The real figure we need to focus on is around 24 million. There are, on average, about 24 million people who go longer than a year without any sort of health insurance coverage whatsoever.

Is that good? No, it is not great. But it is close to being 50% less than the problem we have been led to believe is out there. Politicians use skewed numbers and little white lies and statistics mainly as a subterfuge to scare the public to "do something and do something about it this summer!"

44 Million Americans is 14% of the population. 24 million Americans is 7.7% of the population. 7.7% is a more manageable number to 'fix' than 14%, isn't it?

Ok, so if there are on average 24 million, not 44 million, poor souls wandering around this nation without health insurance for longer than a year, what are the other 20 million people doing? There is an excellent CBO study from May, 2003 by researcher Lyle Nelson called, oddly enough, "How Many People Lack Health Insurance and For How Long?" that you can reach by clicking on this link: CBO Health Insurance Study. It will take you right there so you can read it for yourself.

Roughly half of the non-elderly people who lose health insurance coverage find it again within 4 months. That is 10 million people right there.

Another 26% or 5.2 million people found health insurance coverage between 5-12 months. Close to 400,000 people who are making 4 times the level of poverty or over $87,000/year for a family of four opt not to have health insurance for some unknown reason. Senior citizens are all covered by Medicare so they are not included.

There is really no precise way to find out just how many people are not covered by health insurance at any particular point in time. For example, there is no website where people can go every day to log in their health coverage status so we can know exactly how many are uninsured.

These statistics are all based on self-reported surveys which in and of themselves raise the specter of accurate reporting or not. [1] These figures are all statistical analyses of data offered to the Census on a voluntary basis.

There is some question about whether or not to count Medicaid-eligible lower-income people as "covered" or not if they have not enrolled yet in a Medicaid program.

The point of this is not to debate the fact whether or not 44 million is the 'right' number or 24 million is more correct. Any time you or anyone loses their job or business and can't afford health care coverage is scary and we should do all we can to help those in transition.

It is also not to debate the point that we desperately need health care reform in America, for many of the reasons we have already pointed out in other postings.

The point of this article is to urge you to be diligent and skeptical anytime you hear Washington politicians throw around facts like this one without citing any sources or explanation of what it really means. We are now being asked to consider re-arranging the component parts of close to 16% of the national GDP this summer, mostly under the guise of "covering these 44 million people who do not have any access to any health care services".

People have access to health care through community health centers and local hospital emergency rooms, much of which goes unreimbursed each year to the hospitals. I have yet to find a physician who flat-out denies giving someone health care if their lives are in jeopardy. These Good Samaritans routinely do the work out of their own pockets and don't get enough credit for doing so many times.

We can fix the health care system in America in a way that will allow coverage of these short and long-term uninsured people each and every year by addressing some of the inherent conflicts and contradictions in the existing system. We don't need to give up and throw many more billions of your taxpayer dollars, and borrowed money from your children, again, at a broken and distorted system and hope it will all correct itself somehow.

Health care in America is too important not to do the right things to fix it. Stay tuned for more.

[1] Have any one of you ever been asked by the Census Bureau to fill out one of their routine annual health care-related forms, the Survey of Income and Program Participation (SIPP), the Medical Expenditure Panel Survey (MEPS), and the National Health Interview Survey (NHIS)?Just curious to see how far the reach of these surveys have been over the years. The SIPP and MEPS surveys appear to be more scientific and specific in nature.

Sunday, May 24, 2009

What Is Wrong With A Balanced Budget Amendment to the US Constitution Anyway?

Governor Arnold Schwarzenneger of California said something profound on May 22 and it wasn't a humorous takeoff from a line in one of his Terminator movies like "I'll be back!", "Hasta la vista, baby!" or "You are terminated!"

Although he could have used the last two, it seems.

California has a $24 billion deficit this year on a $110 billion total budget...a 22% shortfall. That is what happens when you over-commit in spending programs and the economy goes south and dries up 'projected' revenues. If the size of California state government spending was held at, just say, FY 2002 levels, 6 short years ago, their budget would be balanced. Have the absolutely critical needs of California increased by 35% in 6 short years?

You can usually control the amount of spending in any company or government but you can not control the incoming revenues.....always remember that whenever you hear anyone speak about why there is a deficit in either.

Anyway , the Governator made an uncharacteristic monumental statement based on conservative fiscal principles that should be chiseled into everyone's heads who want to serve in government: "Sacramento is not Washington — we cannot print our own money. We can only spend what we have."

'We can only spend what we have.' Who is this guy, Thomas Jefferson? How simple a concept; how complex to achieve.

Which brings me to this question: 'What is so wrong with having a balanced budget amendment to the US Constitution anyway?' During the 1980s and into the 90's, you could not walk down the halls of Congress without hearing someone, mostly Republicans but many conservative Southern Democrats as well, talk about the need for balanced budgets. Many saw it as a drop-dead, fail-safe measure to force such an outcome in the absence of responsible leadership on both sides and up and down Independence Avenue.

I was in DC last week and didn't hear a whisper about it from anyone. It is like both sides of the political spectrum have declared the words, 'balanced budget', to be some form of impolite speech that is verboten in public alongside of the usual four-letter words.

I mean, really, what the heck is wrong with talking about a balanced budget anyway?

First of all, the Governator of California has pinned the tail on both the donkey and the elephant. Every state in the Union has to balance their annual budgets through spending cuts and/or tax increases simply because they do not have the power to print their own currency. States did have the right to print their own currency in the formative years of the Republic but they were volatile in worth. Ultimately, multiple state currencies undermined the ability of the new nation to conduct meaningful commerce and have the ability to borrow from foreign sources.

It used to be an unspoken agreement amongst legislators in Congress that balanced budgets were 'a good thing'. Despite their differences, they strove to accomplish such a noble goal without messy entanglements like constitutional requirements to balance the budget in order to allow for spending during emergencies such as war or economic depressions.

Oddly enough, before the Budget Act of 1974 was passed, Congress did a pretty good job of balancing budgets every year from 1791-1974 or so. When debt was piled on to pay for national crises such as the Civil War and WWII, it was subsequently paid down in relatively short order. Sort of a gentleman's agreement, civic responsibility or noblesse oblige, I suppose.

But, conversely, from the moment the Budget Act of 1974 was passed, ostensibly to make the annual budgeting process more formal and predictable, we have embarked on a binge of deficit-spending over the past 35 years that would make former Congresses woozy if they could see it.

We just can not seem to balance the budget by ourselves anymore. Constitutional amendments force us to do the right thing when we collectively don't want to.

Here's why Congress has never passed a Balanced Budget Amendment to the U.S. Constitution:

1. The 'purists' or strict constructionists say that if the Founding Fathers wanted it in there, they would have put it in there.

Retort #1: They didn't want women or African-Americans to vote. They weren't right on those 2 scores either.

2. People on both sides say it would impede the ability of Congress to 'do the people's business'.

Retort #2: If balancing the budget and maintaining a sound currency and economy is not 'the people's business', then what is?

3. Conservatives say that having a Balanced Budget Amendment would mean that Congress might raise taxes to balance the budget.

Retort #3: It just might, which means it is your job as a conservative politician to find and make the spending cuts to protect the rest of us from those awful tax increases.

4. If we had a balanced budget amendment, we would not be able to borrow for economic or natural disaster emergencies.

Retort #4: Like well-run families, companies and states, we could accumulate a rainy-day fund to cover such unanticipated emergencies.

The point is that we have proven beyond a shadow of a doubt that we collectively, and indirectly through the people we have elected to represent us in Congress, can not manage our national budget or impulses to spend. Like the states, we need something concrete and chiseled into the U.S. Constitution to force us to make the tough decisions we have long avoided, just like they did in California.

Let the 28th Amendment to the Constitution be the 'Balanced Budget (Save Us From Ourselves, Please!) Amendment.'

Let's force Congress to pass it this summer, 2009. Contact your representatives and senators on the links on the right side of this column as always.

We need it, desperately.

Friday, May 22, 2009

'We Are Sending $50 Billion of US Taxpayer Money to China Every Year?'

This New York Times headline on May 21 got my attention: "China Grows More Picky About Debt" [1]

The article by Keith Bradsher goes on to say, "China now earns more than $50 billion a year in interest from the United States, Mr. (Brad W.) Setser at the Council on Foreign Relations calculated".

Excuse me? The amount of US federal taxpayer money and borrowed debt from others like our kids in the future that is being sent to the Chinese government is over $50 billion per year?

That is more than we spend each year on each of the following programs in FY 2007 numbers:

$43.5 billion - Administration of Justice
$33.1 billion - Natural Resources and Environment
$32.5 billion - Foreign Affairs
$27.0 billion - Agriculture
$26.8 billion - Community and Regional Development
$25.0 billion - Science and Technology
$20.5 billion - Energy
$20.1 billion - General Government

Because of the enormous amount of debt we now have outstanding, paying interest to the Chinese government takes a higher priority in terms of amounts spent each year than what we spend on putting criminals in jail; protecting our environment; diplomacy and foreign aid; supporting our food chain; helping small communities grow; scientific research; energy independence and running our own federal government.

No wonder we are so screwed up nowadays...our priorities are all topsy-turvy.

This spring we heard these not-so-comforting words about the state of the US dollar and economy from Wen Jiabao, Prime Minister of China: "We have lent a huge amount of money to the U.S. Of course, we are concerned about the safety of our assets. To be honest, I am definitely a little worried." (2)

Talk about losing control of the nation's future. Not only have we shipped off a tremendous number of manufacturing jobs to China, now the great United States of America is having to dance delicately around the safety and soundness of US federal debt to our largest investor, the Chinese government.

I am reading an excellent new book about the founding of our democratic republic by Richard Beeman that I whole-heartedly recommend, "Plain, Honest Men: The Making of the American Constitution".

'Plain, Honest Men' sounds like a dream nowadays but he goes on to say that in addition to the powerful intellects like Madison and the behind-the-scenes workers like Franklin, there were several miscreants who contributed mightily to the final product despite their frequently inebriated state of mind. Democracy has never been pretty, it seems.

Right off the bat, he explains that the Constitutional Convention was needed in the first place to address the collapse of the continental dollar since it was 'not worth a continental', a popular phrase at the time.(3)

Who was going to loan any money to the new independent country if there was no confidence or reassurance that it was ever going to be paid back? We didn't have a central point of power that could impose and enforce any tax laws on the 13 various states and the IRS was but a distant dream for future advocates of strong federal government control.

So our problems with national debt are nothing new...the United States has faced many other periods of distress concerning foreign debt, it seems.

But don't you think we would have learned our lesson over the past 220 years?

The shame here is that we could have simply avoided our current problem had we been more fiscally prudent and wise over the past 8 years. I would say that we spent too much money on expanding federal programs like drunken sailors except that would be such an insult to drunken sailors around the world.

And raising taxes won't fix the problem either. We have got to put a yoke on our spending before we are forced to hold another Constitutional Convention to deal with the ramifications of what we are doing right now to our dollar and economy, just like the 'Plain Honest Men' did in 1787.

(1) NY Times, 5/21/09
(2) same article by Keith Bradsher
(3) "Plain Honest Men" by Richard Beeman, page 9

Thursday, May 21, 2009

The Holy Grail of Budgeting: $2 Trillion in Savings From the Obama Health Care Plan?

The Obama Administration announced last week that they were going to expand health care coverage to every single person in the United States. We are going to "pay" for it by finding savings of $2 trillion over the next 10 years in technological advances and administrative processing savings.

If it were that easy to find $2 trillion in administrative savings in health care, don't you think we would have done that already with all the computers we have and the whizkids who can invent Google and Facebook in their sleep?

Do you really believe the promises made by the health industry last week about finding that $2 trillion in potential savings?

This reminds me of all of the legends and movies about the Holy Grail. It was believed to have been used by Christ at the Last Supper. No one in modern history has ever seen it or seems to know what happened to it. Not Indiana Jones, Tom Hanks or Monty Python even.

The same thing with finding $2 trillion in budget savings from health care reform: we 'know' it might be there but we just can't seem to get our hands on it anywhere for certain in the $1.7 trillion medical industrial complex.

To his credit, President Obama seems to be adhering to the so-called PAYGO (pay-as-you-go) principles that worked so well in the 1990s since he wants the new health care plan to be 'paid for' by savings or tax hikes elsewhere. Let's just hope and pray that the 'savings elsewhere' option is real and not just an empty promise.

I had the wonderful opportunity to work with a lot of health care professionals during my years in Congress until I first left public service in 1995. When I returned to Capitol Hill in 2003, 8 years later, many of these same professionals came into the Dole Senate office to discuss the state of health care in America and North Carolina.

The first thing I asked them was if any technological, medical, or management breakthrough had occurred during the interim that would save any appreciable money in the medical field. "Sure", one of them said. "The drug-eluting stent that is inserted into blood vessels to keep them open has significantly reduced the need for expensive open heart surgery!"

Out of thousands upon thousands of medical procedures and medical management techniques, there was only 1 significant development that actually reduced the cost of anything in the field of medicine in close to a decade! Everything else had gone up in cost, most of them by many multiples of cost.

So is it even realistic to think that the Obama Health Plan will wind up saving significant amounts of your taxpayer dollar in the future?

Doubtful, very doubtful unless the following provisions are part of the new legislation:

  1. Very expensive, somewhat elective procedures such as knee and hip replacements are not routinely covered by the new plan except in the case of true life-or-death situations.
  2. The plan is set up to cover only the true catastrophic health care insurance costs that occur when people are struck with life-threatening illnesses such as cancer, heart attack, stroke or brain and other injuries caused by accidents, not every single expense from $5 prescriptions on up.
  3. Eligibility for Medicare is raised to much higher ages and scaled according to qualifications by income and household wealth status.
  4. Significant amounts of money are dedicated to front-end costs such as wellness programs, smoking cessation and 'obesity abatement', also known as "healthy diets".
  5. Risk-based health insurance premiums are placed on all people who choose to engage in unhealthy behaviors.

Have we seen any of the fine print on the Obama Health Plan yet? No, his proposal was just the opening salvo in what will be a tortuous process. He was setting the plate and the parameters for the debate he would like to see this summer and hoping against hope that the health care providers he met with can actually one day deliver on the proposed $2 trillion in savings. I wonder if CBO will even score those promises as savings at all.

But you need to know that out of all the health care advancements that have taken place over the past 20 years or so, nothing has worked to drive down the overall costs of health care like the cost compression we have seen in most other industries such as computers or plasma TVs.

And unless some radically different structural changes are enacted in our nation's health care plans, the $2 trillion in savings will prove to be as elusive to find as the Holy Grail itself.

Saturday, May 16, 2009

Dr. Spendthrift or: How I Stopped Worrying About Budget Deficits and Learned to Love the National Debt

(with apologies to Stanley Kubrick and Peter Sellers)

One of the great satires of all time has got to be "Dr. Strangelove" starring Peter Sellers in 3 masterful roles and George C. Scott as the blood-thirsty, staunch anti-communist General 'Buck' Turgidson.

The scene that is always remembered from the movie, though, is the one near the end when Slim Pickens as Major T.J. Kong completes the misguided and mishandled public policy objective as he rides "the Bomb" down to its final appointed destiny.

Don't you get the same feeling nowadays as you are bombarded by the relentless news cycle of bailouts and more bailouts, stimulus plans, health care program expansion, and on and on and on? Are we on some sort of automatic pilot for federal overspending that has passed the fail-safe point of no return?

Isn't there something in our collective human brain that can act like some sort of regulator on our spending habits as a nation? Sort of like your stomach when it is full? After you have eaten so much that you feel like your stomach is going to pop, don't you just put the fork down and rest for awhile?

Here are some questions I have been asking anyone who does not think the exploding budget deficit is 'dangerous' to our future as a Republic. Has there ever been a nation in the history of mankind that has been able to out-spend its tax revenue base forever and survived? If so, name them with dates and leaders and location cause I have not ever heard of one yet.

If $10 trillion in debt does not bother you, and the prospect of having a $20 trillion national debt right around the corner doesn't terrify you, then why don't you go ahead and advocate unlimited spending and deficit-spend until the national debt gets to $100 trillion in 2015 or so? Why not? We could give everyone Rolls-Royces and Rolex watches on top of health care and all these bailouts for horrendous business decisions and make everyone happy in the short-run so why not let's just keep on going?

What makes you think we are any different than our parents, grandparents or great-grandparents and we are the first ones in history to not have to worry about balancing our federal budgets and national fisc? Is it because we are Boomers and nothing really bad has ever come our way, until this Really Bad Recession, that is?

We have had free love, free sex, freedom to use drugs, an amazing amount of wealth to spend on ourselves and do as we please (cue more freedom music from Bob Dylan, Joan Baez and Richie Havens, please!) so why shouldn't we be entitled to be 'free' to spend as much money on us as we want?

My point has always been to try to remind these well-meaning but, in my mind, misguided and sadly deluded individuals that we, as great as we are as a nation, have not repealed the basic fundamental laws of gravity, economics or finances. We couldn't even if we tried.

Now we are paying the piper for all of the excesses we have indulged ourselves with over the past 40 years and it is just going to take a while to work off the imbalances in almost every sector. Alan Greenspan, as surprised as he was by this economic conflagration, points out very clearly throughout his otherwise excellent book, "The Age of Turbulence" that everything reverts back to the mean over time.

We are just having a 'mean' time of it right now and we should not be raising our future debt and obligations by the exponential rates we are now doing. Call or write your elected representatives and senators in Washington and tell them how you feel about it.

If you don't mind building up this massive debt load, just remember the great scene of Major Kong you just saw. That is what the rest of us feel like we are doing.

Wednesday, May 13, 2009

Pennies From Heaven..Part 2?

Part of the problem is that no average citizen in their right mind has ever opened up an annual US Federal Budget replete with the accompanying Analytical Perspectives or Appendix to just take a glance at some of the programs you are supporting through your current tax dollars and your children’s future prosperity, hopefully. It is like owning stock in a company and never reading their annual reports. (I don’t read them all either)

All you ever hear from Congress is: “We must do this for our children’s sake!” or “If we don’t do that, we will perish under enemy attack!”

Just remember that the truth often lies far removed from the histrionics of the political debate. If it were not so important, many politicians could rightly be referred to as “entertainers”, performers with many doubling as ‘comedians’….you take your pick. You could go as far as to call them ‘actors who put a mask on to portray another character” but that would be calling them ‘hypocrites’ (which is what actors were originally called in ancient Greece) and that would be going just too far.

Easily, very easily any single citizen could find 50% or more of the federal budget with which to disagree. Congress is just such a messy, unwieldy sieve by which to sort through all of these priorities that ultimately each year, collectively they ‘punt’ on it and say: “We’ll deal with that later.”

Meaning: ‘Like after I am retired from Congress or long dead and gone!’

I am going to give you one other way to see for yourself where the craziness is in the federal budget. Use this link FY2010 Federal Budget to take a look at the entire federal budget, as long as you don’t mind waiting for the .PDF format to load for a minute or two..…it is ‘only’ a 1380-page document, minutely-spaced.

And just randomly type in a couple of pages between pages 40-1380 and see what you think. Are all of the programs you see on your screen absolutely necessary to the common defense of our country or promoting the general welfare as the Founders envisioned?

If you find that there are absolutely zero programs with which you disagree spending taxpayer dollars on or borrowing from your children’s piggybank of the future, then you should be in Congress today.

Tuesday, May 12, 2009

Pennies From Heaven?

One of the hardest things to do when facing any crisis is to fully comprehend the magnitude of the task at hand at the beginning.

After all, if you can’t grasp the implications of the problem in its entirety at the outset, how can you ever expect to solve the problem down the road?

Cancer patients need to know just how extensive the cancer has spread before undergoing treatment, military commanders need to know what the enemy strengths and positions are before attacking and investors need to know what the risks are before making an investment….supposedly…despite what you have seen in the news lately.

And then there is the problem of the federal budget deficit and the burgeoning national debt.....

Not two of the most exciting subjects in the world but two of the most critical to our long-term prosperity and economic future. Almost as important as the intellectual capital we instill in our kids from grade schools on through college and graduate school. Except that if we fail to manage our national fiscal matters properly, no amount of intellectual genius or creativity is going to just make all things alright with some sprinkling of pixie dust.

Take a look at an interesting way to look at the $100 million in savings the Obama Administration was going to find this year through administrative cuts in the various agencies. $100 million may sound like a lot in the abstract to us mortal human beings but when compared to the backdrop of a $3.6 trillion federal budget and now a $1.84 trillion annual deficit, it really doesn’t amount to even a penny, as you will see when you click on the following video:

Now that we have gotten your attention and rearranged more than a few synapses in your brain, think about what the Administration was really saying when they announced $17 billion in projected savings in the upcoming fiscal year, FY 2010 that starts September 1, 2010.

Those trumpeted significant budget cuts of $17 billion will account for just 42.5 of those pennies on that table you just saw in the video.

We gotta do better than that.

Monday, May 11, 2009

The Hierarchy of Political Honor and Disgrace

Don’t know if you followed the ‘big news’ on Monday but guess what? The budget deficit estimates for this year have been revised significantly upwards to over $1.84 trillion for 2009.

And then, not 2 hours later, President Obama announced his health care reform package that will provide health care coverage for the up to 44 million currently uninsured in this country (more on the veracity of that number in a future posting)

That ought to be a cheap new program.

He said it would help save $2 trillion down the road. Which road is that? The same ‘infrastructure superhighway’ that Al Gore invented? The ‘Bridge to the 21st Century’ that Bill Clinton spoke so fondly of, whatever that meant. The “Bridge to Nowhere” in Alaska?

Someone should hire an auctioneer because the next thing you will hear is: “Do I hear $2 trillion? Anybody? Anybody?” You know it's coming. I remember several years when the CBO revenue forecast was off by $100 billion or so, up and down. The current projection is that tax revenues will be only 15.1% of GDP or the lowest amount since the good old days of 1950.

For those of you out there who don’t want to cut spending, raise taxes or a little bit of both, then you must have concluded that deficit-spending is ok and dramatically increasing the national debt is ‘no problem’. So why not let’s go ahead and just raise the national debt to $100 trillion and party like it is 1999 all over again?

With apologies to ‘3 Dog Night’, “$20 trillion (in debt) is the most cowardly number that you’ll ever do.”

I have been thinking about this for some time and I think it is time to postulate a ‘Hierarchy of Political Courage’, especially when it comes to budget/tax and fiscal matters.

President Obama is catching a lot of grief from some quarters about his plans to spend more money and raise taxes on the wealthy to pay for it. Well, he is just doing what he said he was going to do during the campaign. Is there anything that he or the Democrat-controlled Congress is doing now that is radically different from what they promised during the campaign? Where were you last year?

I actually admire politicians who stick to their guns and do what they say they are going to do during a campaign. That doesn’t mean I have to agree with them or like what they are doing. I also can retain hope that they might “mature” in the job and do something transformational while in office. Nixon went to China; Lincoln signed the Emancipation Proclamation after being relatively non-committal on the issue of slavery and Clinton signed into law welfare reform and agreed to the ‘Grand Budget Compromise of 1997’ as it will be known in 100 years when historians write about the last time America ever balanced the federal budget.

Sad but true…remember you heard it here first.

So here goes…see if you agree or disagree and think about your elected representatives with this in mind the next time you vote:

1. Reducing Spending Only (true belief in limited, smaller government)

2. Raising Taxes Only (true belief in funding large government on a current basis)

3. 50/50 compromise split between Raising Taxes and Cutting Spending

4. Cutting Taxes and Raising Spending (where is the shared sacrifice in any of that combination?)

5. Raise the Debt Ceiling and Bill the Kids for Everything!

‘1’ does mean the most courageous and ‘5’ denotes cowardice amongst the ethically-challenged, by the way.

Check out your elected representatives and senators using this scale the next time you read about them or get a mass mailing from their offices. If they don’t score a 1, 2 or a 3, then throw them out of office because they really do not care about anything other than getting re-elected. 1, 2 and 3’s at least are leaders and brave enough to vote their convictions with an eye to helping future generations.

Sunday, May 10, 2009

Warren Buffett Thinks Everyone Should Pay Higher Taxes...But Won't Say It

Ok, when one of the richest men in the world talks, I am willing to listen. After all, he must know something about financial matters to become richer than King Croesus of Lydia ever hoped to be.

Mr. Buffett is Chairman of Berkshire Hathaway, one of the most successful investment holding companies the world has ever known. He was an avid supporter of then-presidential candidate Senator Obama and has spoken out candidly about the need for higher taxes on individuals and

Here is my problem when wealthy individuals call for ‘higher taxes’ on anyone anytime anywhere. They can afford it! Increasing income taxes on an individual such as Mr. Buffett by even a measly $1 million per year, while a huge amount to most Americans, is relative peanuts to a person of such enormous wealth as Mr. Buffett.

He probably can let that much fall out of his pocket in change during the year, get lost under the sofa cushions in his house and not notice any difference.

Here’s what honesty demands of anyone who talks in specious terms about the need to “raise taxes” to cover our current federal over-spending pattern: Tell us specifically which taxes you want to raise, how much and on which people.

Spouting off about “raising taxes on the wealthy” is the easy way out. To make a real difference, why don’t you hear people such as Mr. Buffett say we need to raise taxes by, let’s say, $1000 on every one of the 50 million people who do not currently pay income taxes? Because they don’t want to inflict additional pain on already-strapped households and they know that such a proposal would mean immediate defeat for the incumbent party in the next biennial election…by a landslide.

And unless any politician or financial expert such as Mr. Buffett can enunciate such specific increases very clearly, they have absolutely no credibility when talking about reducing the budget deficits by raising the aged battle cry of ‘higher taxes’.

I am sure he is a very nice man and he has the respect of many people in the business world. But he fails to account for the fact that wealthy individuals already have 2 avenues to pay higher taxes today voluntarily if they want to right now. They do not need any additional legislation
passed to do either:

1. They can decline to accept any tax refund issued to them during the year or just tear up the check and not deposit it into their account.

2. There is an obscure program at the U.S. Treasury whereby any individual can send them a check marked “National Debt Reduction”, over and above their annual federal tax payments, and it will go directly to retire some part of the burgeoning national debt now over $11 trillion and still soaring in an upward trajectory.

There is one other flaw in the argument that the wealthy can and should pay more of their income and wealth in federal tax payments in some form or another to Washington: There are not enough of them to make a decisive difference in the war on national debt!

Suppose 3 super-wealthy gentleman such as Warren Buffett, Bill Gates and Alex Rodriquez of the Yankees, all whom could ‘afford to do it’, wrote checks for $1 billion apiece to pay down the federal debt today. As noble of an effort as that would appear to be on the surface, would that make any difference?

Not really…we are currently overspending revenues in the federal budget to the tune of $3.79 billion…per day! That is the proverbial “spitting into the wind”, to clean up the analogy a little bit. They would not even cover the amount of debt we are adding over and above what we are spending in one day, today, May 10, 2009!

We could empty the pockets of all the billionaires in America today (there are 449 of them) in a similar manner and it would not make a significant difference in the accumulation of federal debt at the staggering rate we are building it nowadays. It won’t either until we stop spending so much money at such high rates of federal expenditures to cover everything from the banks to Wall Street to health care for everyone to saving the snail-darter or the spotted owl from extinction.

So if you are really concerned about the future debt picture of the federal government, you will contact your elected leaders in DC and implore them to: 1) stop spending so much money; 2) stop borrowing so much money; 3) stop wasting so much time talking about raising or lowering taxes and 4) focus on reducing the rate of increase in federal spending across the board.

In about 5 years, we will see a huge difference in our budget outlook if you will do this. Today.

Thursday, May 7, 2009

The Growing Federal National Debt: ‘Carbon Monoxide’ For Democratic Republics Over History

A nice person asked me other day: “What are the tangible consequences of having too much national debt on the average person today?”

“Not much….today”, I replied. “But building up excessive national federal debt loads is like sitting in a car too long with the engine running in a closed garage….the carbon monoxide will slowly put you to sleep and then you will die.”

That might sound a bit extreme and alarmist, but hear me out on this one.

Here is the Wikipedia definition of carbon monoxide: ‘Carbon monoxide is colorless and odorless, but very toxic. Carbon monoxide combines with hemoglobin in the blood converting it to carboxy-hemoglobin which is ineffective for delivering oxygen, a condition known as anoxemia.’

If your blood can’t deliver oxygen to your body, you can’t process anything in your body to stay alive. It is just a law of chemistry and biological processes in the human body.

How is too much debt like carbon monoxide? Just look at the wreckage we have just witnessed on a colossal scale on Wall Street, in Detroit, at AIG. What was the one common denominator? Excessive loads of debt compounded by reckless risk-taking without adequate reserves, due diligence or collateral to back those investments.

Excessive federal debt doesn’t immediately ‘hurt’ living voters like paying taxes does or having your favorite federal spending program reduced. But federal debt insidiously pervades through the economy much like the carbon monoxide molecule invades the human body; at some tipping point in time, it becomes near impossible to pay the interest costs of the debt and currencies are inflated to try to pay off all of the old mountain of debt.

We are paying over $500 billion in gross interest costs in this year alone! [1] That is way bigger than any tax cut we have ever even wildly dreamed off in the good old ’supply-side’ economics days. What sort of new, exciting technologies could we invest in if the private sector had their hands on 500 billion more dollars every year?

What makes anyone think the U.S. federal government is immune somehow to the immutable laws of finance or economics? Just because we say so?

What happened to the German Republic after WWI? They were hamstrung by excessive terms under the Treaty of Versailles but the ultimate destruction was caused by the hyperinflation that occurred when all that money was printed to help pay off the excessive debt and reparations they incurred. Does ‘printing too much’ money sound too much like “expanding the Federal Reserve balance sheet’ to you today? It should.

One of the most inane things I heard repeatedly in testimony after testimony in Washington was the following statement: “The level of national debt does not matter because ‘we owe it to ourselves.’”

Really? Is that a true statement? The Chinese government, which now holds close to $1 trillion of our American debt, and are questioning whether to buy more, might disagree with that notion.

Do you own any debt that you have extended to the federal government in terms of bonds? Do you feel like ‘you owe that to yourself”? I seriously doubt it.

I would postulate that the more exact wording of that old bromide should be: “The level of national debt does not matter (to us) because our children will be forced to pay for everything we consumed after we are dead and gone”. They are not going to be very happy about paying for it, I can promise you that.

And that is the second reason why excessive debt loads today are dangerous. Do we really want to see what happens if those future generations decide that the Americans who managed the nation (as voters or officials) from 1980-2009 were the most selfish, self-consumed, least self-sacrificing generation in history?

They might suffer lower standards of living than we want them to...after all, they are our kids and our ‘legacies’.

Or they might deface all of our tombstones…and you don’t want that to happen either, now do you?

[1] see

Wednesday, May 6, 2009

Do You Own ‘Gutter-Cleaning’ Insurance As Part Of Your Home Insurance?

When you buy a house, you are forced to buy home insurance to cover you and/or a mortgage holder in the event of a ‘catastrophic’ event such as a fire, wind damage or a tree falling on it. You might even buy flood insurance but odds are high you will not go out and buy gutter cleaning insurance.

On the other hand, though, if someone else was paying for your home insurance and offered to include gutter-cleaning services on a monthly basis, would you accept it?

If your employer, or the federal government, is paying for all or part of your health insurance, why are so many pre-paid maintenance services included? You don’t buy ‘pre-paid’ gutter-cleaning services, or painting services for that matter, through your home insurance plan. When the gutters clog up or your house needs painting, you pay someone to do it, or you do it yourself. Are there similar preventive health steps that individuals should be responsible for taking or is it logical to include all such things as part of our current health care “insurance” system?

The point is that in the case of home insurance, you buy insurance for what it is truly intended: coverage for unexpected, but possibly large costs caused by unusual, uncontrollable occurrences.

Not so in most health care plans in force in America today, including Medicare and Medicaid. Most health plans are really a pre-payment system designed to pay ahead of time for all of the potential health care consumed during the year. It is more correctly defined as a ‘pre-paid health care plan’ by you, your company or the general taxpayer. There are not many health insurance plans in existence today that are actual “insurance” plans, in the true actuarial and financial sense of the word.

And that means that your health insurance, as well as everyone else’s, is more expensive than it should be.

Do you know how and when the concept of “employer-paid’ health care plans came into existence in American business in the first place? During World War II, wage and price controls were instituted to help the war effort. To get around those regulations, employers increased compensation by adding health insurance as an inducement to recruit workers. Employer-provided health care plans later became a standard part of the recruiting and retention process for workers after WW II and became engrained in the general fabric of American life and business.

What would happen to the costs of all health care premiums, including the government healthcare plans, if the plans only covered the truly expensive unexpected costs of health care in case of accident, cancer treatment or other chronic or terminal illness? Premiums would plummet, you and your company should save a lot of money, health insurance companies would have to scramble to cover their overhead and keep current customers, and the whole dynamic of the health care industry in America might be turned on a dime, finally.

Why is this pertinent to the federal budget deficit crisis? Because anything, and everything, that drives up the cost of health care in America is also driving up the costs of American federal health care: Medicare and Medicaid.

You don’t have “gutter-cleaning’ insurance in your home insurance policy and we, as a nation, can’t afford to have a pre-paid, dollar-one health ‘payment’ system for everyone in the country at the private or public sector. What we really need and want is a pure “insurance” system, preferably administered by the private sector, that will pay for the extraordinary costs that we can’t cover normally on our own such as for accidents, cancer treatment, heart attack, stroke victims or other life-threatening situations.

Isn’t that something that the Obama White House, the Democrat-controlled Congress, the loyal opposition Republicans and the vast number of Independents can all agree upon?

Well, isn’t it?

And since America is still a generous, compassionate place in which to live, we can help the less fortunate or lowest-income people cover their basic, routine health needs if necessary. As long as they commit to living a more healthy lifestyle, like the rest of us are going to do from now on, presumably.

Fortunately for most of us, the vast majority of Americans stay healthy (meaning staying out of the hospital each year) when compared to the relatively few, by comparison, who fall critically ill. And staying healthy, eating right, exercising and smoking and drinking far less is what is going to really drive down health care costs in the long-run anyway.

In short, what we really should be debating about is how to establish a true health “insurance” plan similar to the house insurance you buy to cover catastrophic loss to your house.

Not one that pre-pays for every health care expense during the year, regardless of the lifestyle you lead. That is a recipe for further fiscal disaster and meltdown in anyone’s book.

Tuesday, May 5, 2009

Why Is The US Health Insurance System So Screwed Up Anyway?

Another fundamental problem (there are about 100 of them, it seems) with our current health care insurance system in America is that is violates basically every actuarial and financial principle known to the insurance industry.

Back in 1965, we took all the seniors out of the general insurance pool and placed them under Medicare. We took all of the lower-income wage-earners in the nation and placed them under the joint federal/state/local program, Medicaid. So, we selected the more vulnerable and higher-risk patients and took them out of the general insurance pool and violated the basic principle of balancing higher risk patients against the lower-risk patients who don't have a need for a lot of health care services in a given year.

Any kind of insurance only works when the premiums of the lower-risk patients exceeds the costs of all of the higher-risk patients in a given year. And, fortunately, since the number of people who remain healthy in any given year far exceeds the number who need a lot of health care, the actuaries can precisely identify risks and the managers can invest the money, cover costs and make a profit to stay in business for the next year.

Unless the insurance company acts in an unprofessional manner such as AIG, for example.

The upshot of all of this was that in 1965, (LBJ or President Lyndon Baines Johnson for all of you youngsters out there) and Congress was able to take all of the higher-risk patients in the nation and put them in two taxpayer-supported health care plans, Medicare and Medicaid, to be paid for by taxpayers for generations to come and not by the generally-accepted fundamentals of private health insurance in America.

And ever since 1965, Congress has generously expanded both programs for political purposes with scant, if any, regard for the taxpayers of the future.

Meaning most of you out there reading this.

For a nation that put the first man on the moon, defeated the Nazis in WWII and then communism in Russia and Eastern Europe in the 1990's, and invented virtually important technology known to mankind over the past 50 years, don't you think we could 'invent' a health insurance plan that covers everyone for the services they need?

Can't Congress and President Obama just step up and fix it?

No, they can't and they won't unless a majority of the American voting population learns about these issues and forces them to make the proper changes we need to reform healthcare insurance.

Unfortunately, the next steps towards national health insurance look to be another layer of added cost on top of an already broken and distorted system. Fixing the American health care system in a piecemeal fashion over the years has been compared to putting bandaids on a cancer patient and hoping that it will make the patient get well again.

Every hearing I ever went to in Washington confirmed the need for a radical overhaul of both the Medicare and Medicaid programs, especially as it pertained to the long-term viability of the federal budget and general economy health in this country. But politicians are too scared to even bring the topic up for fear of triggering some Doomsday Machine at the AARP headquarters in Washington that will doom them in their next election.

How can you change that? You, your family and colleagues can change it by: 1) understanding the issues and 2) contacting your elected representatives and senators in Washington on a daily basis.

So what is holding you back? You can use the links on the right side of this column to contact them in about 30 seconds. Just look for the "US House" or "US Senate" link, click on it and it will take you to your elected representatives websites. After you are done, bookmark this link and hit it every morning to express your concerns about health insurance in America after you have had your morning coffee. You'll feel better knowing that you have done something good for your children and grandchildren.

We'll be addressing other fundamental problems and options for health care in the coming weeks. But to start with, tell your legislators that you want a true health insurance system that is will not interfere with your right to choice your own doctors and which is not distorted by further government actions or interventions.

If you don't, you might be sorry later this year.

Sunday, May 3, 2009

Do We Really Have a Health Care ‘Insurance’ System in America or Not?

Since you are about to get deluged by the golden promises of the Obama guaranteed health insurance coverage, we think it is important to lay out some of the basics about health care in America before it gets further disfigured by the new legislation.

You always get the political spin on ‘health care this’ or ‘health care that’ but hardly ever do you get a global perspective on 1) why is the American health care system so screwed up in the first place and 2) what can reasonably be done about it so that my family and I can continue to use the doctors we want to use and not have some bureaucrat in Washington tell me what I can or can not do to keep my body healthy?

We have already laid out the absolute best way, no questions asked or debates made, to drive out about $1 trillion in health care costs in America. All of us citizens would: 1) eat better; 2) exercise more; 3) stop smoking and 4) stop drinking so much alcohol (and sweetened soft drinks and power waters to boot).[ 1]

That is the basis of having a democratic republic in the first place: each individual citizen has some sense of personal responsibility, duty and honor to take care of themselves and the families first and have the civic-mindedness to help one another in time of need.

If President Obama really wants to move the needle on true health care reform, he would issue a challenge to all of American people to live healthier lives first and foremost as part of a great national challenge.

Consider this our generation’s “Make America Beautiful” campaign (I can almost hear President Lyndon Baines Johnson's wife, Lady Bird Johnson saying: “Plant a bush, a tree or a shhhrrrruuuuuub!”in about 4 syllables)

Here is one of the primary reasons why we have the current health care crisis in America: If your premiums are paid for, mostly or in part, by someone else such as a company or Medicare, you will tend to use more of the health care plan’s services.

In truth of fact, one of the main reasons why the Detroit automakers are all filing for bankruptcy is because of the overly expensive and extensive health care plans that were guaranteed to all past, present and future employees and retirees. I saw a couple of their health plans in Washington during hearings that were 100% paid for by GM or Ford; no co-pays or deductibles for the employees, no limits on covered services(elective plastic surgery, for example, was totally covered, unlike most other private plans)…and guaranteed for life.

If I had my health care plan 100% covered by GM or Ford, and I did not ever have to pay any co-pays or deductibles, I’d go to visit the doctor every time I had a sniffle or a hangnail! It would be like getting a season’s pass at Kings Dominion or Walt Disney World, all paid for by someone else!

No wonder they are filing for bankruptcy right and left! There is more health care cost built into every US automobile made in America today than steel nowadays…you can look that up yourself.

We are all humans, after all, and self-preservation is at the top of our survival DNA instincts. And ‘getting something for nothing’ is always better than having to pay for it, don’t you agree?

In America today, we have more of an “employer-paid” (and therefore, 'tax-deductible’) ‘pre-paid’ healthcare plan system than a true ‘health insurance’ system in the traditional sense of the words.

And all of that pre-paid health care mindset flows through to the federal health care programs, Medicare and Medicaid as well. With overall health care cost inflation going up 15% per year, Medicare and Medicaid follow suit and consume more and more of the overall federal government pie each and every year. Rampant health care inflation is also crowding out the defense budget as well.

Consider this the first step towards 'health care comprehension independence' for you and your household. At least you won’t be hornswoggled or taken as a dope by the politicians next time you hear them promise “universal coverage at no extra cost to you…..unless you are a millionaire” or something absurd like that.

There ain’t no thing as a free lunch…or free universal health care, you can bet on that.