Wednesday, September 30, 2009

The Late, Great Social Security Plan

We recently pointed out how the cash inflow from your payroll taxes to support the Social Security system will fall about $11 billion short of the outflow needed in 2010 to pay for the benefits currently paid out to senior recipients.

It brought to mind the intransigence of many politicians in Congress over the past 30 years to even consider any sort of improvements to the basic structure of the program that would have insured higher returns to everyone who will become eligible for Social Security in the future.

We are talking about the so-called ‘privatization’ efforts that were anything but 'privatization' and supported by President George W. Bush and debated fiercely in 2005. President Bush did not favor “privatizing” anything, but rather only advocated that Social Security begin to incorporate true contributory accounts to pre-fund tomorrow’s benefits for the Boomers and generations to follow. Similar recommendations were made by members of President Bill Clinton’s Entitlement and Tax Reform Commission of 1994 as well as a majority of President Clinton’s Social Security Advisory Council of 1994-96. And by numerous other far-sighted leaders ever since the last Social Security ‘crisis’ in 1983.

And contrary to anything the AARP or any other group will put out there to "scare' senior citizens: None of these plans would have affected any senior who was currently receiving Social Security benefits. None. They would have been duly 'grandfathered' and 'grandmothered'-in and left alone from any future changes.

Here is the problem: Everyone in Washington knows that the underlying structure of the Social Security plan is out-dated (it started in 1935!) and unsustainable. But instead of trying to ‘fix it’, most of our elected politicians would rather hide behind such facades and bromides as ‘trust funds’ and ’75-year time horizon projections’.

One of the largest objections to the 2005 reform efforts was the fact that it would cost such a humongous amount to transition to a new structure, even if this only represented the cost of paying for current existing liabilities. Releasing future generations from having to pay all of their payroll taxes for current retirees would then allow future generations to start paying into ‘true’ fiduciary investment vehicles that would earn interest and grow over time. Real interest, like as in ‘money generated from investments’, not ‘fake’ imputed interest.

Government actuaries estimated the 10-year transition cost of President Bush’s personal account proposal at $675 billion and opponents of any change acted like the roof would fall in.

Guess what? The roof fell in anyway last year and shortened the predicted surpluses of the current outdated Social (In)Security system down to only 1 year instead of the multi-decade time horizon trumpeted by the head-in-the-sand crowd.

And on top of that, we have added obligations through the stimulus package, TARP and Detroit bailouts of close to $4 trillion and are thinking about doing so again on health care to the tune of another $1 trillion or so. (we think $3 trillion will be the final tab for health care)

We could have funded the ten-year transition cost to a more 'Secure Social Security System' (SSSS) close to 6 times with the same amount.

Let’s face it. The stock market crash and economic recession have taught everyone a sound lesson. Investments go up and investments go down. In stocks, bonds, real estate and businesses.

But over time, the current SS system provides less than a 1% rate of return to anyone who will retire in the next 20 years and steadily declines to next to zero unless dramatically changed.  Is that really such a 'good deal' for everyone?

A new SSSS system would have a chance to return a normalized rate of return over time of at least 1% over the rate of inflation.

“What about the amount of losses senior citizens would have suffered last year from the precipitous stock and bond losses, you nincompoop?”

‘What about the roughly 30% rate of return those same people would have experienced over the past 9 months as the stock market recovered in 2009?”, I would retort.

There will always be a desire in Congress to protect senior citizens from poverty, as well it should. In a year like last year, don’t you think Congress would take extraordinary steps to make current retirees whole if their SS portfolios were socked? They did it for Detroit and Wall Street…don’t you think they would do it for Ma and Pa Kettle?

It is almost nonsensical that in 2009, we are living with essentially the same functional formula established by FDR and Congress in 1935 to give people some “supplemental security income” to feed themselves during the darkest days of the Greatest Depression which puts the most recent recession to shame.

We will put a man on Mars, we will cure cancer in the near future and Duke University will win the college football Bowl Championship Series before we all die. (well, two out of three ain’t bad)

Can’t we ‘improve’ the Social Security system to the SSSS so that all of the Boomers and beyond will be able to earn their own retirement income and not be a complete millstone around the necks of our children?

Sunday, September 27, 2009

Just How Many Federal Programs Are There Anyway?

In our never-ending quest to bring facts and truth to you, the American taxpayer, so you can make decisions about running for office yourself or who to vote for to represent you in Washington, we thought we would try to find out just how many federal programs there actually are.

No one knows.

No one knows for sure how many federal programs we now have in existence in the US federal government budget. No one at CBO, OMB, GAO, on the Congressional Budget Committees or in the US Senate.

Are you kidding me?

Can you believe that? Here we are in the 21st century with computers that can spit out trillions of complex calculations in a nanosecond and we have no one in the US federal government who can tell the average citizen how many federal programs we are paying for?

We tried and tried and tried over the past week or so to get answers from these various sources in Washington and no one even ventured a guess at how many programs are now in existence. Our feeble guess of “10,000” was met with varying degrees of “Sounds about right!” or “Who knows? It could be 10,000 times 10,000!”

And we wonder why we can’t seem to get a handle on federal spending?

Our thought was to find such a list and rank them from 1 to 10,000 in order of magnitude based on current fiscal year outlays, meaning ‘real cash spent”. (There is also an “authorization’ amount passed each year by each congressional committee that says a certain amount ‘can be spent’ but it is the appropriations committees that determines the final amounts actually spent for each agency)

There are also the problematic ‘entitlement’ programs that seemingly run-on-their-own each year. In truth, these mammoth programs are subject to changes that can be made by the House Ways and Means and Senate Finance Committees, mostly, during ‘budget reconciliation’ bills that you might start hearing a lot about with this health care bill moving along.

And when you hear the words “budget reconciliation’, ladies and gentlemen, hold onto your hats and wallets because that is where massive mischief can be inserted and moved through Congress virtually undetected until the entire bill is signed into law by the President.

But once we got that list of federal programs ready, we were going to send them out to you and the general public and ask each of you to check off the ones that just don’t seem to be necessary anymore, have out-lived their usefulness or don’t deal with anything in the broader national interest.

It has been accomplished before. My favorite “What in the world are we still doing that for?” program was the Federal Helium Reserve that was started in 1925! to provide helium for dirigibles and airships more commonly known as blimps. Just after World War I, mind you.

In 1996, amendments were finally passed to phase the program out and turn it over to private investors and operations. We guess the need for using blimps for surveillance operations had expired after only a mere 71 years of deliberations in Congress.

There are thousands of programs costing billions of dollars in total per year that need to be eliminated, reduced or phased-out. Doing so would first reduce the explosive annual deficits; reduce the need to put our children further in debt and hock and third, ultimately lead to less demand to raise taxes to cover all this wasteful spending in the first place.

If you want to be a true “tax-cutter’, you have got to be a true fiscal spending conservative in the first place. Lower spending needs begets lower taxation needs. Remember that the next time you hear anyone call for lower taxes.

One modern American common-sense budget tool that would work is to force Congress to institute ‘zero-based budgeting’. Each year, every federal program would have to justify its very existence to Congress. If the results were not there or there was more waste than progress, the program would be ‘zeroed-out’ or ended for the next fiscal year.

Our contention has always been that perhaps close to 25% of the U.S. federal budget of $2.6 trillion could be eliminated through such a mature, rational examination of each and every federal program. Take a look for yourself at CBO1 and CBO2.

Even though no one seems to any earthly idea about how many programs are out there in the first place.

That is reason enough to start zero-based budgeting tomorrow morning at 6:00 am sharp, we contend.

Friday, September 25, 2009

Don't Want to Alarm You....But Social Security Will Be Out of Cash in 2010

Not 2075 as some of the pointy-heads, budget policy wonks and program apologists have claimed.

Not 2032 as previously hoped. Not even 2017 when the so-called 'Social Security surplus' lines were supposed to have started to cross with actual cash payments to recipients, according to numerous past reports and estimates. (the dates have been moving around like cockroaches when you turn on the lights)

Next year. 2010. You can count on it.

This does not mean that the Social Security program will end tomorrow. What is does mean is that the payroll tax part of the funding equation no longer covers the entire cost of the program. And that means, you, as the American taxpayer, will start to pay for Social Security benefits from your general tax payments next year in 2010.

Or we will just load that up on your children's tab again, just like we always seem to have been doing lately. They are going to feel like Atlas holding up the world pretty soon.

We refer you to two other blogs that have sent out the Paul Revere-alarm bells this week on this subject for those of you patriots who want to be truly informed, and not ‘influenced’ by the talking heads you see on cable, hear on the radio or the politicians who want to tell you “their” version of the story. To learn more in detail, click on the aptly-named ‘HotAir’ and then the excellent posting of a true Social Security expert, Andrew Biggs

The bottom-line is this: There will be more cash going out the door to Social Security recipients than is coming in from payroll tax revenue next year in 2010. Remember, the ‘interest’ on the so-called “Social Security trust fund’ is bogus. It is ‘imputed’ interest meaning ‘assumed’ interest….as if the underlying ‘trust fund’ (which also is not in existence) were a true trust fund earning interest. (see Social Security)

These numbers are just accounting entries made up by some accountant in the federal government, most likely at OMB or the Treasury.

But these numbers are hard and real: 2009- Revenues into Social Security = $688 billion. Out-go = $670 Billion. $18 billion in the black, or good, side of the ledger.

2010- Revenues to SS = $692 billion. Out-go = $703 billion in cash payments that have to be made to current Social Security recipients.

$11 billion in the hole on a cash basis. Next year. 2010. In Social Security.

Why have you not heard more about this crisis? Well, because we have already spent $4 trillion of your children’s money in the last year or so to fix the banks; the US auto industry; AIG; build bridges in a stimulus plan that doesn’t seem to be too ‘stimulating’ right about now and possibly another $1 trillion or so on health care expansion.

The ‘day of reckoning’ or the proverbial ‘chickens coming home to roost’ is now upon us to fix and deal with, not on some unborn future generation but on living breathing Americans like your children and grandchildren.

The question for us today is really this: “Will the Boomer generation stand up to their promise as a ‘great, creative, altruistic’ Age of Aquarius generation of Americans and make the bold political decisions necessary to fix this alarming situation?”

We now have a government ‘of the persuaders and partial truth-tellers’; ‘by the fabrications of the politicians and political consultants’; ‘for the gullible and compliant populace’. And it won’t change until you help your friends and neighbors understand the facts and the truth about what is going on right now.

And then you can run for office or help others win next year to help fix these gigantic problems now facing us as a nation.

Monday, September 21, 2009

‘Politicians say more taxes will solve everything…And the band played on…...’

In 1970, the quintessential Motown group, The Temptations, sang these prophetic words in an effort to stay current as the music scene changed in their song, “Ball of Confusion’.

Apparently raising taxes has not ‘solved everything’ since 1970, has it? If it had, we would have everyone covered with real health care 'insurance', no poverty, balanced budgets and we would have landed spacemen on Neptune by now. We have had 30 years of higher taxes on everything and we still can't say we have solved many (any?) of the enormous problems that still scare us to death.

Let’s take a closer look at the the so–called “Baucus Bill’, the most recent lurch the left to ‘solve’ health care by raising taxes.

Long-time readers will know that we are not partial to either the notion that raising or lowering taxes will solve everything from balancing our budgets to abortion. (several elected representatives have made the assertion on both sides, believe it or not, over the years). Changes in tax policy usually work best at the end of a recession cycle to spur incremental growth into the next economic recovery cycle but have nominal effect in the middle of expansions. The best thing to do is just leave the tax debate to the side and have Congress focus on the fiscal (spending) side of the budget, which is about all they can or should deal with anyway as a practical matter.

Somehow there must have been a little imp in the Senate Finance Committee meeting room whispering into the ear of the Chairman that it was a ‘good idea’ to force people who don’t buy health insurance to pay a 13% ‘penalty tax” instead. Let’s see…a person with a family of four and an income of $50,000 per year who can’t afford to pay for health insurance of close to $1000/month as it is today…will then be forced to pay an additional tax over and above their payroll taxes (they are probably not paying any federal income tax right now) of, oh, let’s say….$6500.

And this is from an Administration that said “No one making under $250,000 in income would ever be taxed under my Presidency!”

Talk about a “Ball of Confusion’!

Or how about the provision that would tax insurance companies for offering to sell high-end “Cadillac’ health insurance plans that cover every medical procedure under the sun? Is that not going to drive everyone's health care premiums even higher which is a "tax" under another name? Why not address the real issue and limit the deductibility of all corporate health plans to the standard BCBS plan available around the nation and save probably close to $500 billion over the next 10 years that way?

Or deal with the core issues of raising the age-eligibility for Medicare (trillions in savings going forward); comprehensive tort reform nationwide (trillions saved again) or trying to figure out just how many super-billionaires should remain on the rolls of federal assistance programs like Medicare Part B?

Any and all of these core fundamental issues will help pop the balloon of skyrocketing federal health care costs which is what we really want and need in the first place.

Poets and writers are always the harbingers of cultural, political or social change, so the experts say. 'The Temptations' knew we couldn't solve all our problems by raising taxes way back in 1970.

Where were our current elected leaders in Congress back then anyway? Weren't they listening to any Motown on vinyl records like the rest of us?

“Eve of destruction, tax deduction
City inspectors, bill collectors
Mod clothes in demand,
Population out of hand
Suicide, too many bills, hippies movin'
To the hills
People all over the world, are shoutin'
End the war
And the band played on.”

Copyright 1970 Jobete Music Company, Inc.

Friday, September 18, 2009

Taxes on the Left/Spending on the Right

Anyone remember the great novel, “1984” by George Orwell? Written in 1949, he talks about the dangers of ‘newspeak’ and “Big Brother” with almost chilling relevance to today’s America, don’t you think?

One word that has its roots in ‘1984’ should be ‘groupspeak”. ‘Groupspeak’ should be defined as the condition of a society when everyone has been so conditioned to think and say the same thing that no substantive dissent ever comes out of anyone’s mouth.

“How dare you even bring that subject up? Stop being such an (expletive-deleted!) Don’t you know we just don’t talk about that anymore around here?” (True story explained later below so keep reading)

So is the case with modern America’s handling of the federal budget and taxes. We have income taxes, payroll taxes, user fees, excise taxes, general discretionary programs, mandatory entitlement programs, trust funds and bailout recovery funds. All designed to confuse you, the voting American public, beyond comprehension. And every elected politician on both sides of the political party spectrum is absolutely terrified of irritating the AARP by even whispering the words "entitlement reform". (oops! it just slipped out!)

Enough already.

Hit the reset button in your head and clear your memory cache of everything you have ever heard, learned or believed about taxes and spending and reset with this following equation:

“Taxes on the Left/Spending on the Right”

And no, that is not a bumper sticker waiting to be printed up…unless you want to share the profits with us.

Luca Pacioli, a monk who was a friend and collaborator of Leonard da Vinci (of course) established the modern rules for double-entry accounting in 1494. It is a very simple concept: Whatever amount of money that goes in the column on the left must be balanced by the entries somehow on the right.

That is the way we need to think about anything regarding the federal budget from here on out. No more ‘entitlement’ programs; no more ‘trust funds’; no more discretionary jargon…just line up the programs we want to spend taxpayer dollars on, rank them 1-10,000 and pay for them on an annual basis without borrowing any more money from the Chinese or robbing our children’s piggybanks.

We have had some interesting discussions recently with very thoughtful readers about entitlements, taxes and other things and have come to the conclusion that we are, in effect, living in the ‘1984’ world after all.

For example, there is widespread intuitive acceptance of the notion that Medicare is somehow a true ‘health insurance plan’ and Social Security is some sort of retirement income plan with a ‘contract’, implied or not.

Neither is true. There are no funds lying around in some ‘trust fund’ anywhere in the universe for Medicare and Social Security. Those funds, and then some, have been long spent by the time you even start to think about receiving anything from both programs. We have no ‘contract’ signed, sealed and delivered from one generation to the other.

If we did have a 'signed contract', do you think the younger generation would have agreed to pick up all of this incredible debt we are loading up on them at the moment? We think not.

We have a total ‘cash-in’/’cash-out’ form of government financing.

Remember one of the basic principles of our representative democracy: “No Congress can bind the hands of a future Congress”. Thank God! If they could, we would still be operating under the terms and conditions laid out by the very first Congress in 1789, 110 different Congresses ago.

A new Congress could come in during the election of 2010 and repeal every single law on the books with sufficient majorities. That is the way a true representative democracy works. Or we can re-elect everyone who seems to be doing such a great job lately and just let everything stay the same as it has been for the past 10 years. It is your choice.

Anyway, start to re-arrange your brain synapses to think of our government taking in cash on one side of the ledger and spending it on the other on a daily basis, to the tune of over $7 billion…per day! The only real obligation we have is to be responsible in how we allocate those resources and, like the Good Monk Pacioli, balance our income with our spending each and every year. We can spend it all on Medicare or all on defense...but we can not continue to keep spending it on everything and borrowing from our children to do it. That is the cowards’ way out.

Now to the ‘rest of the story’: When I went to work as chief of staff to US Senator Elizabeth Dole in January, 2003, I went to the first 3 weekly Republican chiefs of staff meetings to discuss upcoming legislation. At each one, I somewhat innocently asked the following question: “When are we going to present any deficit/spending reduction bills?”

Stony, awkward silence after each question.

Remember: This was a meeting of Republican chiefs of staff in the majority in the U.S. Senate in 2003, not in some distant ancient Roman or Greek history!

After the 3rd incident, a good friend of mine from our House days together took me aside and said: “You gotta stop asking those questions about spending reductions! You are beginning to look like a dumb (expletive-deleted)!”

Since my feelings were not bruised too badly, I asked why that was so, and he calmly replied: “We don’t talk about spending reductions on the Republican side anymore up here.”

That was apparently the beginning of the end for any fiscal responsibility coming out of the Republican Party in the 21st century.

And since neither of the two major parties has shown any indication of taking up the banner of fiscal responsibility and balanced budgets, it looks like the 30% of the voters in this great land who are now registered as Independent/Libertarian or Whig are taking this issue into their own hands and protesting loudly and often.

Good for them.

Just please remember when you are in the majority in both the House and the Senate that spending on the right side of the ledger must be balanced with income on the left side with no more debt allowed. And lots of our problems will be solved.

(picture courtesy of

Monday, September 14, 2009

Should Billionaires Such As Bill Gates and Warren Buffett Even ‘Qualify’ For Medicare?

The time has come for Boomers and succeeding generations beyond to poke a hole in one of the most preposterous ‘entitlement’ programs the world has ever known. It is so preposterous that King Midas, King Croesus and the opulent rulers of ancient Rome would beg to know how modern day American billionaires can pull this scam off. For the past 44 years no less.

We are talking about the $12,000 in annual subsidy the average American taxpayer is throwing at the likes of multi-billionaires Bill Gates and Warren Buffett in a little thing called “Medicare”.

Each and every Medicare enrollee gets about a $12,000 per person subsidy from the general tax fund each year. Meaning money you have withheld and sent to Washington each month or pay on the dreaded 15th of April each year.

Medicare is a government-run program, contrary to what you might have seen or heard during the summer town hall meetings, that pours billions of your general tax dollars into it each year. Over and above what you pay in dedicated payroll taxes each paycheck.

Most senior enrollees pay $96/month for their Part B premium. Total. Up to $85,000 of retirement income; $170,000 if they are married. Seriously.

The cap on what a wealthy senior pays for Medicare Part B is $306/month. All of these individual premiums offsets only about 25% of the entire cost of the Medicare Part B, leaving about $12,000/year/senior to be paid for by you, the unsuspecting American taxpayer. The Part B premium does not take into account disparities in health status, lifestyle or regional factors either.

A senior who smokes 10 packs of cigarettes each day pays the same premium as the one who jogs 3 miles a day and eats organic health food in a comparable income bracket. Go figure that one out while we are at it.

There are about 75 million households that now pay income tax which is then poured into the Medicare subsidy just described. (Remember: close to 50% of all taxpayers now pay $0 in federal income taxes)

That means you paid about $0.00032 last year to help pay for the Medicare coverage of a super-billionaire like Mr. Gates or Mr. Buffett and their wives.

That doesn’t sound like a lot…but it does beg the question: “What in the name of Sam Houston Hill are we doing as a nation paying anything to help super-billionaires get Medicare health coverage?”

They probably have given millions to hospitals that now bear their names; they could walk into any of them and command the attention of the most talented doctors in the world and fly the entire operating unit to their homes on their own private jet if need be!

Here’s the troubling math behind this all. (see Statistical Abstract): There are 359 super-billionaires now living in the U.S. of A. There are also 2.6 million millionaires, many of them seniors since it still takes awhile to accumulate the critical mass of wealth and capital to be considered a millionaire in America.

We are paying roughly $12,000 in subsidy costs for each of them, senior billionaires and millionaires alike, if they are enrolled in Medicare Part B. (We are assuming some might not be but bear with us for illustrative purposes).

Assume half of the 359 billionaires have wives and there you have about 540 super-wealthy people basically on the public dole.

540 people times $12,000 in subsidy costs is $6.48 million in costs. This year. And every year. And growing.

That is a colossal waste of your, the taxpayers’, money. Colossally wrong.

“Are you kidding me?” you might be smacking your head with your hand right now?

Nope, we are certainly not kidding you.

How can this possibly be so? It is because when the entitlement programs were put into place, first in 1935 for Social Security and in 1965 for Medicare, congressional leaders and FDR and LBJ thought that the wealthy had to get the ‘benefits’ of the entitlements or else they would not ‘support them’ somehow, even though they would be forced to pay the payroll taxes regardless.

“Universal coverage’ meant ‘universal support’ back then and then that was conveniently wrapped up inside of the so-called “Social Contract’ that no one has been able to show us in document form like the Constitution or Declaration of Independence anywhere in the Archives. (best tour in Washington; go see it sometime)

The AARP has been fighting against changing this enormous subsidy for high-end seniors tooth-and-nail for some unknown reason for decades. Apparently, they don’t have any problem with you helping some poor old super-billionaire get their Medicare health coverage. (Any of you out there ever lost your health coverage or are now on COBRA paying for it all by your lonesome as a small business person? Doesn’t it
warm your heart to know that you are helping these poor rich people get health coverage for only $368/month when you are probably paying over $1000/month?)

So here is a proposal for you to support and tell your elected people that you support:

-Start paying down the national debt next year by $6.48 million by eliminating the eligibility for super-billionaires to participate in Medicare Part B. Make it illegal for anyone with a net worth of over $1 billion to participate in any government-sponsored federal aid program. Ever. On any account.

They do not need it. And I bet they would not even notice they were not getting it anymore.

It doesn’t make any sense to have super-billionaires on the public dole. Does it?

Picture of King Croesus courtesy of

Thursday, September 10, 2009

Things in The President's Health Care Speech That Make Your Head Explode

Longtime readers of Telemachus know that we have been even-handed and fair when it comes to ‘calling out’ (as the President says) politicians from both sides of the aisle when it comes to not stating the facts clearly and in a truthful manner.

We don’t think anything positive is going to be done on the fiscal front until the American public can get their hands and heads around the enormous facts and figures coming out of Washington in the federal budget.

As I was watching the speech Wednesday night, I found myself absorbing falsehood after falsehood until my head exploded like the “Butterfly” supernova as captured by the Hubble Telescope some 4 trillion years after the fact. (left)

So, Mr. President, please excuse this one deviation from being a polite observer on the sidelines….but you got it all wrong on the following accounts:

  • “This health care bill will not add one dime to the budget deficit over the next ten years!”

Wrong. CBO has already scored it as increasing the deficit by at least $239 billion more over the next decade under the most optimistic circumstances. The Lewin Group and other reputable health care forecasting firms calculate the new deficits from anything like this Obama health care bill to cost over $1 trillion in new deficit-spending.

We think it will be closer to $3 trillion. Why? Because every single health care bill that has ever been passed by Congress has wound up costing at least 3 times what it was originally “scored’ to cost by CBO and OMB. That is just the law of the federal budget jungle.

  • “Medicare is a great health care program”. Next breath: “We are going to pay for this health care bill with $500 billion in savings from getting rid of waste, fraud and abuse (WFA) in the Medicare program.”

Intellectual jujitsu here. ‘You can not be serious!’ as tennis star John McEnroe would shout, and say ‘Medicare is great’ in one sentence but “it is so terrible that we have to wring $500 billion out of it in WFA” in the next sentence.

‘The Search for WFA’ has been going on in Medicare, Medicaid and the entire federal budget for centuries now and no one has found it yet…although we all know it is in there somewhere. It is as elusive to find and nail down as WMDs were in Iraq before we went to war over there.

  • “No one will lose their insurance because of this bill!”

Not true. There have been public and private estimates that if the public option is included, anywhere between 1 million and 100 million people will lose their private employer-sponsored health care insurance plans. How can anyone predict that not one single person will lose their health care coverage as a result of any change in federal law?

For one thing, paying the 8% penalty might wind up being far cheaper to a company than paying 15% of payroll costs for expensive ‘Cadillac’ plans as exist in the Detroit automakers plans. A corporate executive would have to be an idiot not to dump all of his workers into the ‘public option’ if passed. And leave the American taxpayer left holding the tab again.

  • “Tort reform might be necessary”.

We clap for the President with one hand on this one. After perhaps half a century of complaining from the physician/hospital community about how they are forced to practice expensive, wasteful ‘defensive medical practices’ to protect themselves from excessive litigation, huge awards and expensive settlements, it was nice of the President to offer a tiny little nod of the head acknowledging this basic underlying truth behind much of the health care cost escalation.

But why cast it off as maybe a ‘pilot project’ which you know will be centered around some small town in rural Idaho or Salinas, Kansas, for example, where lawyers in Gucci loafers don’t typically roam the countryside looking for lawsuits? Such a ‘project’ you know will take 5 years or more to collect all the sundry information and data and then a commission will be formed to further evaluate it. What a waste of time.

After this, my head actually did explode. I am just now putting it back together or else I would have listed perhaps 6 other ‘whoppers’ from last night’s speech.

Compare the tone of ‘calling you out’ with Abraham Lincoln’s almost biblical extension of the olive branch to the defeated Southern people near the end of the Civil War in his unforgettable Second Inaugural Address:

With malice toward none; with charity for all; with firmness in the right, as God gives us to see the right, let us strive on to finish the work we are in; to bind up the nation's wounds; to care for him who shall have borne the battle, and for his widow, and his orphan--to do all which may achieve and cherish a just and lasting peace, among ourselves, and with all nations.”

That is the way to lead a nation towards solutions and consensus, Mr. President.

(picture used courtesy of

Wednesday, September 9, 2009

The ‘Public Option’ Will Lead to A Single-Payer National Government-Run Health Care System

Now that the dog days of summer have finally passed, along with the contentious town hall meetings, the nation awaits with bated breath to see if the Obama health care reform package will actually become law or not of this great land of ours.

We have been searching and asking and researching for an answer to one of the most vexing questions of the whole debate and we think we might have now finally found it: “How would the so-called 8% ‘penalty’ be applied to businesses that don’t provide health insurance coverage to their workers?”

And as always, the answer will probably have the unintended (or perhaps fully intended?) consequences that every piece of federal legislation always produces.

The question is typically posed as a ‘glass half-empty’ proposition meaning that those ‘terrible’ companies that don’t provide health coverage will be ‘penalized’ for not doing so. No discussion about whether that business owner is struggling to make ends meet just so those people might have a job. So far, so good in the eyes of the eyes of the reformers who support the ‘public option’. (Don’t be fooled by the ‘co-op’ name some are trying to ‘compromise’ down to….the co-op is nothing more than a ‘public option’ with a different name)

But what happens when the companies that are now paying for the health care coverage for their workers get wind of the fact that they can pay the 8% ‘penalty’ and save millions of dollars per year if they drop their entire health plans? Then what?

Think about it seriously: You own a company and employ hundreds, thousands or hundreds of thousands of workers. You might be incurring current health care fringe benefit costs of anywhere from 10%-17% of payroll costs over and above what you pay out in salaries each year.

Some of the reason is because that is what American business has done since WWII when wage-and-price controls on wartime salaries forced businesspeople to figure out other ways to attract quality workers to work in their factories.

Some of the reason is to provide a competitive package today to keep workers and attract new good ones. That is just the way it is nowadays, it seems.

But what happens when these executives start seeing marginal competitors drop their existing health care plans and tell their workers that they will have to go to the ‘public option’ plans because they want to cut down on expenses, like in the current nasty recession, (or ‘recent unpleasantness’ as some refined Southerners might say). These companies might be able to lop off 15% of payroll costs by dropping their employer-paid health care plans and replace it with ‘only’ the 8% of payroll ‘penalty.’

There is no federal requirement that you have to ‘continue’ offering the same health care plans as you have in the past. Some people are just happy to have a job, much less a job with extravagant “Cadillac’ health care benefits like the ones enjoyed by the Detroit automakers that every taxpayer just got through propping up with $35 billion in ‘bailout’ money before they filed for bankruptcy.

You do the math. You don’t have to be a graduate of an Ivy League MBA program to realize that paying a ‘penalty’ of 8% of payroll is a darn-sight better than paying 15% of payroll for a current health care plan. In many American corporations, that might be the difference between turning a profit and incurring a loss for the year. And it most certainly would mean millions of dollars of savings for American business across-the-board.

We don’t mind American business making a profit. If business owners stop making profits, they fold up shop, shut down all the jobs for you and me and retire to the Caribbean.

But what happens if this 'public option' passes and American business drops health coverage like a hot potato? The American taxpayer and your children and grandchildren will be left holding the bag once again to pay for all of this new ‘public option’ health care.

Is that really what we want to do to them…again?

Saturday, September 5, 2009

‘Waddya Want for Nothing?’ Why Elwood Blues Makes More Sense Than Anyone in Washington Nowadays

Whenever we hear anyone from the White House to the ‘talking heads’ on the cable newsfests yammering about almost anything in this health care debate, we can’t help but think that the esteemed Dr. Elwood Blues, (Dan Ackroyd) got it right when he sings the following endline in "Rubber Biscuit”: "Waddya want for nothing?..."

(If you have never seen or heard this song, or haven’t heard it in awhile, click below to see what we mean:

Elwood nails our national schizophrenia cause he knows we all 'want something for nothing', i.e. universal health insurance and not pay anything more for it. We want to advance the social order...but we don't want higher taxes or, God forbid, any reduction on current services to pay for it.

We think Elwood Blues makes more sense than anyone we have heard talking about this whole health care mess in Washington, D.C. At least he is honest and he speaks more clearly, even when it is all gibberish. (Just compare Elwood to the next speech you hear on CSPAN or in a press conference and see if you don't think Elwood 'wins')

Here is one of the most important books you will ever read this year on health care reform, and no, it is not the Bible or even the U.S. Constitution or the Declaration of Independence, both of which have gotten a lot of run lately in the tea parties and town hall meetings (read them both this Labor Day weekend, why doncha?)

Read with great interest: “Budget Options, Volume 1, Health Care”, published by the Congressional Budget Office (CBO), December, 2008. (click on "Health Care Options")

There are enough spending reduction options in this one book to basically eliminate the entire federal budget, (not just the deficit) in about 5 years!

If you ever wondered why Jefferson and Madison were so adamant about establishing a ‘representative democracy” rather than just a plain old democracy as Jefferson shuddered to watch in France during their ‘glorious’ Jacobinic revolution, this CBO book explains why.

There is no way on God’s green earth that every literate citizen of the United States of America can go through such a document and understand every nuance of the law or funding of every single federal program and then vote in a nationwide plebiscite each time something has to be decided. That is why we elect leaders to go to Washington: to ‘represent’ us as a people, learn about these issues and then vote in what is supposed to be ‘our national best interest’.

Sounds simple…but it is most definitely not.

Jefferson and Madison also, perhaps mistakenly, presumed that every citizen would be so civic-minded that they would take the time to: 1) register to vote; 2) actually vote in each election; 3) consider running for public office when they thought things were going ‘off-track’ and 4) take the time to learn as much as they could about the issues so they could tell their representatives what they want in clear, succinct language. All within reasoned, peaceful and if needed, passionate discourse...that is what is supposed to separate the US from any other nation on earth. No need for armed insurrections every time someone does something while in office we don’t like; that is why we have the next election cycle to correct the balance of power in government.

Regarding the choices before us on health care, let’s just take one look at one page in this CBO document cited above as one way to 'pay for it' without incurring any more debt for our children to pay. Option 9, page 24, would reduce the tax deduction allowed for the cost of health insurance premiums, down to the amount allowed for a standard BCBS plan. No longer would anyone be able to get the “Cadillac’ version of any health insurance plan and deduct the full cost of them against their taxes. We saw plans from the auto industry while in Congress that we swear must have covered every incidence of hangnail removal...with no copays, no deductibles and no participation in the payment of any premium by the worker whatsoever.

Those 'Rolls Royce' health care plans could still be purchased by the employer for their workers…they just would not be able to deduct the amount associated with the purchase of excess insurance over the standard plan.

Sounds reasonably ‘fair’ to most Americans, doesn’t it?

It would save close to $500 billion, or ½ of a trillion dollars, over the next 10 years. 500 billion smackers of your taxes or loans from your kids.

That one provision alone would easily pay for catastrophic insurance coverage for every long-term uninsured American and then some. Like maybe pay down some of this enormous debt we already have incurred.

So take a look at this great CBO book over the Labor Day weekend and check off all of the options you could support to pay for health care reform and then to pay down the debt. And then send them to your Congressperson in Washington and tell them you know what can be done right now.

And tell them to stop spewing out any more nonsense like Dr. Elwood Blues….we have had enough lately from both sides of the political divide.

Thursday, September 3, 2009

Will President Obama Do The Tough "Ask Not..." Speech Before Congress Next Week?

Here is something that has long been a staple of American democratic republicanism: If the national challenge is ‘great enough’ to undertake, everyone should be asked to help pay for it.

In times of national catastrophe such as the Civil War or World War II, the populace was called upon to ‘sacrifice’ for the common good. President Abraham Lincoln asked for and helped pass the first-ever income tax in the U.S. in 1862 to pay for the Union war effort, subsequently repealed by his former victorious general, Ulysses S. Grant, during his Administration in 1872, oddly enough. (Remember the ‘S’ in U.S. Grant was a pure fabrication for campaign political purposes; his given name was ‘Hiram Ulysses’)

During WWII, taxes were raised, bonds were issued and everyone was given food ration coupons to use each week to buy the bare essentials for survival such as bread, milk, and butter. (Truth be told, as much as we hate the idea of issuing any more debt for our children to pay back, if some aliens come attack us like in Will Smith’s movie, ‘Independence Day’, we would support selling bonds to raise debt to 10 million times the level of our GDP if that is what it took to win.)

Here is what the President and Congress should say if they feel so strongly that their health care plan is absolutely crucial to the nation’s future security and welfare: “Everyone is going to be asked to pay something for this legislation. Everyone.”

And if they can get agreement on that, then God bless them. But they probably won't be back in 2011 after the congressional elections next year.

Remember that close to 50% of the American taxpaying population (there has to be hundreds of thousands of cash-based or ‘black market’ non-taxpayers out there each year) do not pay anything in federal income taxes nowadays. They are obligated to pay the payroll tax, especially if they are employed by a corporation.

Why would the President and his supporters in Congress not be proud to ask each citizen to pay at least $1 per year for this new health care plan if it is so important? That would be $320 million per year if everyone paid the extra $1 in taxes above what they currently pay or don’t pay. $3.2 billion per year if it is an extra $10 per head. If the President is bold enough to ask for $100/person (or $8/month), that would generate $32 billion more in revenue annually to help cover the cost of this new program.

Over the next decade, that would represent at least $320 billion in more, new, shared-sacrifice-by-the-entire-population revenues that would help put a dent in the nearly $1 trillion (we think it will be $3 trillion) in projected expenses for the Obama plan.

Will we see that kind of brave “Ask not what your country can do for you; ask what you can do for your country!” rhetoric from President Obama next week when he addresses the joint session of Congress?

Probably not. It is evidently more politically expedient for him, as encouraged by his political advisors, to pound on the rich, the insurance companies, (but not the trial lawyers for some odd reason), the doctors and the hospitals in some sort of outdated, populist class warfare to advance his health care ‘reform’ (sic?) ‘vision thing’.

The big political problem for him and the tax-raisers in Congress is that no one likes to pay additional taxes for anything anymore. There is not a single person in America who doesn't think there is some significant amount of wasteful spending going on in our national budget each and every year. Every politician is afraid of being thrown out of office if they even whisper such a broad-based tax proposal to support all the new spending they want to initiate.

And there most certainly is a surfeit of wasteful spending going on in every single program across-the-board.

We stand by the premise that there are hundreds of billions of dollars that can be saved every year in the federal budget on almost every single one of the 2259 pages that it takes to print it each year. We saw it in that document every day as we read it backwards and forwards several times during our tenure on the House Budget Committee.

When every single dollar of non-essential spending is finally culled from the federal budget, we will rest knowing everything has been done on the fiscal restraint side of the ledger. We will continue to help you understand ways federal spending can be reduced or at least arrested somewhat here on Telemachus.

But that should not prevent the President or his supporters from having the political courage to introduce higher taxes on everyone to pay for the ‘Change We (ALL) Can Believe In!’ if raising taxes is, in fact, what they truly believe in doing. In fact, we salute it: It takes more guts to support higher taxes than it takes to slough off more debt on unsuspecting, and unborn, future generations of American taxpayers. Like your kids. Or grandkids.

‘Debt is for political cowards’; we have said it before and will say it again. We do not want anymore of it. Let your elected representatives and senators know you feel the same way.