Tuesday, October 29, 2013

''Don't Wait For A Fried Chicken To Fly Into Your Mouth!'

'Here I stand. I can do no other'
'If God did not bless, not one hair, not a solitary wisp of straw, would grow; but there would be an end of everything. 
At the same time God wants me to take this stance: I would have nothing whatever if I did not plow and sow. 
God does not want to have success come without work, and yet I am not to achieve it by my work. 
He does not want me to sit at hometo loafto commit matters to Godand to wait till a fried chicken flies into my mouth. 
That would be tempting God.'
The great German theologian Martin Luther wrote this sometime between 1517 and his death in 1546 and probably used it multitudinous times in sermons and letters.

During the same time he was helping to upheave the entire world Catholic structure with his doctrine of salvation by faith, not by works; his posting of the 95 Theses on the front door of All Saint's Church at Wittenberg on All Hallow's Eve, 1517, (Halloween, no less) and the Reformation of the Church which became the Protestant Movement that we know today as the Baptists, Methodists, Presbyterians and every other denomination you know.

Martin Luther...did a lot in his lifetime, wouldn't you agree?

Who knew the Germans liked fried chicken as much as Americans do today? Doubt it was as calorie-laden as the modern-day KFC or Bojangles chicken we scarf up each day. Still, the image of a 'fried chicken' flying into our mouth without any work on our own to get it there is as far-fetched today as it was in Luther's time apparently.

As simple as this concept is, it is full of application to many things in our lives today. Namely the importance of 'work' to achieve anything in this life; career, avocation, church evangelism and yes, even the sordid world of American politics.

Just take a look at what it takes to get a 'fried chicken' into your mouth either in Luther's day or today in a fast-food drive-through joint. Someone has to breed the chickens so the very best eggs are fertilized and then hatched. Young poults have to be nurtured, fed and raised and then taken to be processed for human consumption by plucking, washing and quartering. Then they have to be cooked the right way or else we might die of e-coli poisoning.

In no way will any young poult just grow up on its own; dress itself to be cooked in hot frying oil and then fly right into your mouth sitting on the couch so you can say: 'The Lord is good. He provided a fried chicken right into my mouth so I can sit here and do nothing about anything all day long!'

It has often been said of modernity: 'We don't know the value of work anymore!'; 'We are so impatient!' and 'Getting up to turn the channel on the TV like we did in the '60's is considered so incredibly ancient nowadays!'

It is true. We are a 'want it/got to have it now' society. Hard to see how that is going to change with every new invention making our lives more comfortable and easy, not harder and more difficult.

Let's take the 'hard work' of American politics and apply Luther's measure of 'faith versus work' to it and see how we stand up today:

Much of the exasperation over the recent shutdown of the government came because Obamacare seemed to be such a disaster coming down the road. Based on the fact that we are part of the 16 million people now expected to lose their health insurance, even though President Obama 'promised' we 'could keep it if we wanted to' (his words, not ours), we agree that Obamacare is not going to work and needs to be replaced.

But how would theologian Martin Luther counsel us if we were to enter his monastery for consultation on what to do next?

We think he would be pretty direct and to the point. After all, he was a red-headed, tempestuous, hard-headed and dynamic thinker, speaker and leader so he probably would not pull any punches in our short time with him:
'Listen. Just because you think you are right on Obamacare doesn't mean you are going to win every time you say something about it. It takes time to overturn the existing hierarchy and monolithic powers-that-be.
Heckfire! Not only did the Vatican disagree with me when I posted the 95 Theses, they tried me and tried to burn me at the stake for heresy! Have you been similarly threatened lately with bodily harm or death on a burning pyre? Call me when you have been so threatened so we can feel sorry for each other.  Then you will know what it is like to be truly aggrieved and persecuted for your beliefs.
I have been studying up on the American democratic republican form of government and all I can tell you is this: 'I wish I lived in the United States of America where dissent is not only free but encouraged! That sure would have made my life a lot simpler, I can tell you that!
My very strong suggestion to you is this: do what I did and go talk to people in every corner of the nation. Use reason and diplomacy to persuade people to join you in your fight against tyranny and oppression. Put forth a very clear set of principles and goals that detail how you would fundamentally change America if they would vote you and your friends into elective office from local to state to federal office.
And then, go out and work your butts off organizing, advocating, proselytizing and getting people to the polls in 2014, 2016, 2018 and 2020 and every other year beyond to make sure you win and don't lose ever again.
Democracy is hard work. Get used to it.
It took me close to 30 years to challenge the Catholic Church. When I died, we had only started to see the very tip of the iceberg of the Catholic monopoly being melted. Are you willing to put in at least 30 years of dawn-to-dusk hard work every single day to achieve your purposes or are you going to sit on the couch with a remote in your hand waiting for a fried chicken to fly into your mouth?'
It is going to take your daily involved time, effort and money if you ever want to change the direction of this country, he might also add. Obamacare is just the tip of the iceberg for us and the next generation; we have already saddled them with the simply impossible task of paying for the enormous entitlements we in the Baby Boom Generation are going to consume through Social Security and Medicare alone in the next 25 years.

Martin Luther was a brave soul, no doubt about it. Here's his closing argument to the Bishops who were interrogating him and subsequently sentenced him to death which he somehow avoided, no doubt with the help of God.
'Unless I am convinced by the testimony of the Scriptures or by clear reason (for I do not trust either in the pope or in councils alone, since it is well known that they have often erred and contradicted themselves), I am bound by the Scriptures I have quoted and my conscience is captive to the Word of God. I cannot and will not recant anything, since it is neither safe nor right to go against conscience. May God help me. Amen.'
Martin Luther didn't take things sitting down in case you haven't noticed yet. Nor did he ever quit and shut up and sit down in a corner and sulk. He used his amazing theological mind and reason with his forceful writing and oratorical skills to not only change a nation (Germany) but the entire world in many ways.

Thomas Jefferson, James Madison, George Mason...those were the kind of guys who didn't wait around for a fried chicken to fly into their mouths either. Which are you: a 'fried-chicken-fly-into-my-mouth' sort of person or a person willing to do the work to get the fried chicken to the plate in the first place for the rest of us down the road?

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Sunday, October 20, 2013

'Victory Has Many Fathers. Defeat Is An Orphan'--John F. Kennedy

'I ordered it. I did it. I accept the blame for the
bad outcome.'
In the aftermath of the disastrous Bay of Pigs invasion in early 1961, newly-elected President John F. Kennedy went to a press conference and uttered these memorable words:

'Victory has many fathers. Defeat is an orphan'.

Not many politicians have the guts to admit when they are wrong. Much less in public. Such as at a national press conference at the White House.

JFK took full blame for the botched invasion designed to overthrow Fidel Castro from his communist rule in Cuba. JFK lived only another 2 1/2 years. Fidel Castro is somehow still hanging onto life by a thread in Cuba, 90 miles off the coast of Florida 52 years later.

Few other American leaders have stood up and taken the full blame for events that went the wrong way. Robert E. Lee went on horseback to console the defeated and bedraggled Rebel troops under the command of General Pickett after the disastrous frontal attack across open field into the heart of the Union troops at Gettysburg in 1863.

General Lee asked Pickett to reassemble his division for further attack. 'Sir! I have no division left!' was all Pickett could say at the time.

General Lee assumed all responsibility for the failed attack. Some blamed it on the General's dysentery and diarrhea caused by his eating of green apples along the way to Gettysburg.

General Pickett said later about his ignominious defeat at Gettysburg, even though he never forgave Lee for this blunder: 'I always thought the Yankees had something to do with it'.

We have yet to see anyone who supported the shutdown of the government come out and say that 'It was my fault!' or "I am sorry it happened' or 'We learned a lot from it such as to never do something so utterly stupid like that again'.

Real leaders do that. Summer soldiers and sunshine patriots do not accept the blame that comes with defeat.

But guess what? We really do not care if anyone takes the blame for this disaster.

There are other things on the horizon that may yet still prove to be the Achilles Heel of President Obama and the Democrats who supported Obamacare.

Namely, the cost and the accessibility to 'affordable healthcare' for millions of Americans. Obamacare should be more accurately called the 'Unaffordable Healthcare Act' (UCA) for millions of Americans when all is said and done.

It seems as if the promise of President Obama in 2010 that 'you can keep your current health care plan if you want to' is just not proving to be true to tens of millions of Americans. (see this article from The Foundry and this one from Health Care Policy and Marketplace Review)

We are one of them. We have a high deductible HSA plan that is not very generous but at least protects us from the catastrophic illness events and costs that we think everyone should be protected against. Less than 5% of the people treated for any health care concern during any year account for the vast majority of annual costs, usually due to cancer, stroke, heart attack or diabetes, all of which can be curtailed or prevented by better control of our diet, booze consumption, tobacco inhalation and exercise routines.

We will not have this plan on January 1, 2014. BCBSNC has just informed us that this plan will no longer be offered by them after the first of the year and we are not grandfathered because we changed from a basic plan to the HSA to save some money in 2011 when the economy was not doing all that great.

Lie #1 to us and millions of other individuals in the health market: 'You Can Keep Your Health Insurance If You Want To' is not true.

Lie #2 is to the millions of hard-working salaried and hourly wage-earners who are now covered by their company health plans. We know there are thousands of enlightened, generous corporate execs who want to keep providing health care coverage to retain their workers and not have them change jobs due to lack of benefits.

But honestly, do you really think a CEO is going to look at his 2000 employees, many of whom have a spouse and several children on their company health plan and say this to themselves in coming weeks:
'It costs us between $7000 to $12,000 per employee to provide family health coverage at a cost of at least $14 million per year. I could dump all of them into the public exchanges and pay the annual fine of $2000/employee and save at least $5000/employee or $10 million per year which goes right smack dab to my bottom line'.
What would you do if you owned or ran that business? You'd dump everyone into the public exchanges as fast as you can say 'I am so sorry but I had to do it to save my business!' (and maximize profits for me and my stockholders)

This is the core mission of American free enterprise. To make good products and provide good services and make a healthy profit after all is said and done. Not to be a conduit for health care delivery for every person in the nation.

Lie #2 is to the employees who like the health care plans of the companies they work for. You are not going to be able to keep that health care coverage if your company decides not to provide it any longer no matter how much President Obama and Secretary Sebellius huff and pull and threaten to blow your house down.

Lie #3 is just the out-and-out lie that President Obama said when he promised this would not add anything to the budget deficit or national debt. Last time we checked, Obamacare is now expected to cost way over $3 trillion more than what the budget baselines predicted in 2008 before he was elected.

That is at least $3 trillion more in debt we are going to be layering on ourselves and our children to pay back one day in one form or another. Could be higher taxes, could be lower benefits. Most likely it will be higher inflation and depreciated currency like every other debt-ridden nation or kingdom in history has experienced, most excruciating and painful.

Maybe it won't happen to us, you say. Maybe you are right and we will be the only civilized nation in the last 800 years to avoid the Scylla and Charybdis of hyper-inflation and sky-high interest rates.

And maybe you are not correct in your economic prognostications. What then, Einstein?

The implementation of Obamacare is where the real political fight can be made going forward, not in shutting down the government. The mandatory entitlement 1988 Catastrophic Health Insurance plan was repealed completely in 1989 because seniors were asked to pay a few more dollars per month.

Millions of Americans are now being asked to pay not only a few more dollars per month for their health care insurance but hundreds of dollars more per month to be covered. Think they might be a tad bit angry at anyone who foisted this upon them when they were perfectly happy with their previous coverage?

Organize them and harness that anger and you might make a difference in 2014 and 2016. Don't try to recreate the Bay of Pigs invasion or order Pickett's Charge again and again and get nothing out of it.

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Monday, October 14, 2013

"Snatching Defeat Away From The Jaws Of Victory'

'There are no Indians over that ridge! Trust me, boys!'
We love to hear people talk about 'constitution this' or 'constitution that'.

Inevitably, we usually find out they have not even ever read the US Constitution all the way through. Maybe the Cliff Notes version or perhaps the one where all the things they disagree with are redacted or blacked out.

Both sides do it. It has been that way since time immemorial.

This 'government shutdown to defund Obamacare' is just one more incident in US history where one faction loses several elections and then tries to hold a 'last stand' in the legislative process. Which turns out to be about as productive as the one gallant and dashing George Armstrong Custer led his army into at Little Big Horn.

'There are no Indians over that ridge!' goes the old saw about Custer's last words. Meaning 'there's no consequences' to making a futile last-ditch effort when the odds are stacked against you.

There are consequences to 'last stands' and elections come to think about it. Right? President Barack Obama famously spit these words into the face of the Republican minority in 2009/10 when they wanted to play at least a small part in the reformation of 16% of our nation's GDP when he pushed Obamacare through Congress and then signed it in March of 2010.

Ronald Reagan was able to work with recalcitrant Democrats in the House under Tip O'Neill in the early 1980s for 2 reasons: 1) he had a GOP Senate majority to work with for the first time in 30 years and 2) 91 Southern Democrats were in the House who were culturally and politically more conservative than national liberal Democrats.

Reagan also liked people. He disagreed with Tip O'Neill in public but would drink scotch and play gin rummy with him in the evenings after battling it out all day. They were sort of like that old wily coyote Sam and the sheep-herding dog Ralph in the Merrie Melodies cartoons who punched the clock every day after 'work': combatants during the day; friends after work:

We have had people on Capitol Hill tell us that President Obama really does not like to be around Republicans, or Representatives or Senators of any political persuasion at all. He would much prefer to just be Ralph the coyote doing whatever he wants whenever he wants to and avoid the messy business of compromise, negotiation and intellectual combat altogether.

He could offer a symbolic bone to the Republicans in the House in a small gesture and this shutdown would be over in 10 seconds. But he will never do it because he is just as ideological on the left as the Tea Party is on the right.

We do not support the government shutdown to defund Obamacare simply because there is no correlation or connection between the two.

We prefer the constitutional way which is to win elections and then send massive numbers of House Members and Senators to Capitol Hill to unwind Obamacare through normal process: reduced funding through appropriations bills every year and budget reconciliation bills where the real work of unwinding and/or reforming entitlements such as Obamacare has to be done anyway.

The 'way' to victory is to win elections, plain and simple. Did you know that we have 46 GOP Senators today in the US Senate?  Care to guess how many we would have had had the Tea Party not killed incumbent GOP Senators and then lost with less-than-stellar candidates in 2010 and 2012?

That is right. 51 GOP Senators.  The GOP nominated the following Tea Party-backed Senate candidates in the last 2 elections who then went on to ignominious defeat in the general election:

  1. Christine ('I am not a witch!) O'Donnell in DE in 2010 who lost to Chris Coons; 
  2. Sharon Angle in NV vs Harry Reid who was on his political deathbed in 2010; 
  3. Richard ('Rape is the will of God!') Mourdock Indiana, 2012, 
  4. Todd ('Legitimate Rape') Akin in Missouri 2012 and 
  5. Ken Buck in Colorado who lost to Senator Bennet. 
Opponents of Obamacare could have done a heckuva lot more with Republican Senate and House control to 'defund Obamacare' through the normal appropriation and budget reconciliation process than this self-defeating strategy today.

Guess how many GOP Senators are almost a lock to pick up Democratic seats in 2014?

That's right. 4. West Virginia, Alaska, Montana and South Dakota are virtually certain converts to the GOP, unless, of course, one of the nominees chooses to expound extemporaneously on the subject of rape. (Note to male candidates at any level: When asked about rape, the only answer you should give is this: 'Rape is a terrible offense against women and should be prosecuted to the fullest extent of the law. Next question')

Should Senator Kay Hagan lose in NC, Republicans can pick up 5 seats in the US Senate and regain control of that body for 2015. Republicans could and should win in Arkansas and Louisiana for a total pickup of 7 in 2014.

Had the Republicans not run such self-destructive candidates in 2010 and 2012, they would be talking about ending or defunding Obamacare in 2015 with House control and 58 GOP Senators. That is darn near the 60 votes needed to get anything through the Senate. Anything.

If you are a Democrat reading this today, you have to be chortling at the disarray on the Republican side of things. For one thing, it means you are still in control of 2 out of the 3 levers of the legislative process: the US Senate and the White House.

For another, this current shutdown gives at least passing hope you can retake the House in 2014 and reinstall Nancy Pelosi as the Speaker with perhaps a 219-216 majority.

And finally, you have to be marveling at how the Republicans seem to be able to make it a curious habit of theirs to repeatedly 'snatch defeat from the jaws of victory' instead of working together to defeat the 'common enemy' which is you in the Democrat Party.

So, Republicans, Independents and conservatives in the audience, please tell us:
'Would you rather be peeing in the wind with all this BS now....or have 58 GOP Senators and House control where things can actually get done in the true constitutional way our Founders laid out for us?
It is a very simple calculus to us. Because we can count.. Unlike many it seems now in the Republican Party.

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Friday, October 11, 2013

'The Proposed 28th Amendment' ...from Planet Pluto

Patrick Henry

Warren Buffett
We don't know how many times we have been sent the email that has gone around the globe at least 10,000 times by now, the infamous 'Congressional Reform Act of 2013' supposedly written by Warren Buffett himself.

Don't get sucked in by this. We seriously doubt Warren Buffett even knows how to turn on a computer or a laptop. He probably puts the mouse directly on the screen to try to navigate his way around the internet.

The premise of this email is that Warren Buffett wrote it and started it on its way around the cyberworld of Planet Earth awhile back. Snopes.com (which we think is a bit fishy truth to be told in the first place) says that he did not start this email chain.

Apparently, on October 11, 2011 on CNBC, Mr. Buffett said the following, and we quote:
'I could end the deficit in 5 minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election'. 
This single solitary comment somehow has found its way to the top of this '28th Amendment' email chain known the world over. Somehow someway it has been morphed into some sort of Warren Buffetesque endorsement of the following 'law' or proposed 28th Amendment to the US Constitution.

The man may have made himself and lot of his investors a lot of money over the course of his lifetime. However, he must have flunked 6th-grade civics since he fails to tell anyone how a sitting Congress would pass a law restricting their own ability to run for re-election. In short, this is just not a serious proposal to consider.

We don't live in a dictatorship, you know, thank God. Not even Mr. Buffett or President Obama can, in the end, really tell any of us what to do. We have a difficult, tortuous democratic gauntlet to run through each and every time someone wants a new law passed.

We should be grateful for that.

For some reason, we have received this Buffett email today from 5 different people. Perhaps it is the anger at the government shutdown. Perhaps it is the anger at the President and Congress never getting anything of any substance done on the problems that face us as a nation.

We 'get it' when it comes to understanding that people are angry.

But this is not the way to go. In fact, this email is so off-base and wrong that we hope you will start an email chain of your own to send around to all of your friends and neighbors and post it on your favorite social network. Hopefully, enough people will read it and come to their senses and realize they have been duped by someone in somebody's else's basement, perhaps from Estonia or Latvia or maybe just California, who take special pleasure at seeing hard-working Americans waste their time reading such drivel.

Sorry to be so harsh but we have answered this specific email hundreds and hundreds of times now over the past several years. This will be the last time we ever address it again.

Here goes:
'This would be a 'good idea'....except it ain't.

(see answers below in red....or go to the great Congressional Institute website under the 'Mythbusters' link and see it all for yourself. It is a Republican website but, surprise of all surprise, this section is not at all 'partisan'...just the facts, ma'am!)

(text of mass email):

'The 26th amendment (granting the right to vote for 18 year-olds) took only 3 months & 8 days to be ratified! Why? Simple! The people  demanded it. That was in 1971 before computers, before e-mail, before cell phones, etc.

Of the 27 amendments to the Constitution, seven (7) took 1 year or  less to become the law of the land...all because of public pressure.

I'm asking each addressee to forward this email to a minimum of  twenty people on their address list; in turn ask each of those to do likewise. (as if it is directly from Warren Buffett himself)

In three days, most people in The United States of America will  have the message. This is one idea that really should be passed around.

Congressional Reform Act of 2010 (or 2011 or 2012 or 2013 or 2014...whatever year is next up)

 1. Term Limits.  12 years only, one of the possible options below..
 A. Two Six-year Senate terms
 B. Six Two-year House terms
 C. One Six-year Senate term and three Two-Year House terms

(We have 'term limits' already...they are called bi-ennial congressional elections (are we really smarter than the Founders like James Madison who set it up this way for a reason?)

2. No Tenure / No Pension.  A Congressman collects a salary while in office and receives no pay when they are out of office.

(Who in the heck in their right mind would leave their place of work and do this? No building of retirement assets during their term in Congress? We would truly get only the brain-addled simpletons who can't comprehend the complexity and scope of the national problems that face us. If not them, then we would get the similarly-addled sons and daughters of wealthy icons running for office.....no middle-class person; teacher, engineer, architect or small business owner ever run for the People's House ever again)

3. Congress (past, present & future) participates in Social Security. All funds in the Congressional retirement fund move to the Social Security system immediately.

This is really off-base. Congressman and staff ALREADY PARTICIPATE FULLY IN THE SS SYSTEM AND HAVE DONE SO SINCE JAN 1, 1985! Tell the person who started this email to check his/her facts before sending this around the cybersphere.

All future funds flow into the Social Security system, and Congress participates with the American people. SS is broke today, and so is Medicare....so is this really a good idea for all of us?

4. Congress can purchase their own retirement plan, just as all Americans do.


5. Congress will no longer vote themselves a pay raise.   Congressional pay will rise by the lower of CPI or 3%.

Congress stopped giving themselves a pay raise after the Great Salary Grab under Henry Clay in 1814 where 75% of all incumbents in the next election!  (hey!  Why not let the current Congress double their salary and then we can replace 75% of the current sitting members on both sides of the aisle?)

6. Congress loses their current health care system and participates in the same health care system as the American people.

BCBS of the DC area was the standard health insurance plan of choice for most employees in the House and on the Senate side. Standard plan, $30 copay; $500 deductible just like everyone else on this email, again

Now that Obamacare is the law of the land, Members and staff are part of that plan as well. They receive a similar match to what they received before. If they didn't, then we would not have the 23-year olds who now make up the majority of staff on the House side; the 24-25 year olds on the Senate side.

Get rid of any benefits, 401k plans and cut their salaries from $25,000 to $12,000 and all we would get would be the local 16-year old civics/political science high school students from local area high schools to work on Capitol Hill. Is that really a good idea?

7. Congress must equally abide by all laws they impose on the American people.  Congress is covered by many of the laws they pass but they can't pass laws that may discriminate against other members, say, of the minority party in Congress and put them at a disadvantage in some way. That is why they are exempt in some of these laws they pass in the first place. We don't want them to write laws that impact their decision-making such as it is.

8. All contracts with past and present Congressmen are void  effective 1/1/12.

The American people did not make this contract with Congressmen. Congressmen made all these contracts for themselves. Serving in Congress is an honor, not a career. The Founding Fathers envisioned citizen legislators, so ours should serve their term(s), then go home and back to work.

(don't know what this means exactly. The only 'contract' a Congressman has with the American people is the oath they make at the beginning of each Congress to 'uphold the Constitution' and to 'defend us against all foreign attack'.  That is it, plain and simple.  Do the best you can; get 50%+1 of the vote and you win.  Case closed.)

THIS IS HOW YOU FIX CONGRESS!!!!! If you agree with the above, pass   it on. If not, just delete.'

Please do NOT delete this but send it back through your email chain backwards until it gets to the numbskull who wrote it and maybe he/she will learn something today.
'Give me Liberty...but if I have to keep representing people such as the person who started this idiotic email in the first place, PLEASE GIVE ME DEATH!'  
That is what Patrick Henry would write today if he was still around and was subject to such nonsense.....and so should we.

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Wednesday, October 9, 2013

The Encyclopedia Brittanica of Obamacare Financing

Chuck Blahous
Sometimes we reprint with permission and admiration other well-written pieces designed to illumine and issue and not bog it down with extraneous spin and slam.

Chuck Blahous is one of those writer/observers. He has the benefit of experience of working for years on Capitol Hill with former Senator Alan Simpson (now of Simpson-Bowles fame, or Bowles-Simpson, whatever you want to call it) and in the Bush 43 White House as senior director of policy as it pertained to reforming and strengthening Social Security. In addition, he is now a trustee on the SS/Medicare Board.

He knows a lot. There are more links to the original documents and analysis than you can shake a stick at in this one article. It is like the Encyclopedia Brittanica of Obamacare.

You may never have to read another summary of Obamacare if you bookmark this article and refer to it whenever you hear some bloviating nut case on cable spout off on the pro- or con- of Obamacare.

Whenever you see something written by Chuck, you need to read it. You will come away smarter for it. Unlike a lot of the drivel you are hearing today about the shutdown and defunding Obamacare etc. from all sides.

October 9, 2013

Obamacare's Financial Unraveling: Predictable, and Predicted
By Charles Blahous

Advocates marketed the Affordable Care Act (ACA), known colloquially as "Obamacare," to the American public as a way to "bend the cost curve" of soaring health care costs downward. But despite its supporters' hopes, the 2010 legislation was fiscally reckless, markedly increasing the government's already-unsustainable health spending commitments at a time of record deficits. Three years later, the fiscal harm stemming from the ACA is as bad as-and even worse than-many experts predicted. The problem lies with the nature of the law itself, promising trillions in new government benefits while relying on dubious financing mechanisms. These problems were not only foreseeable, they were indeed widely foreseen.

Even before the president signed the ACA into law, non-partisan analysts demonstrated that the belief it would reduce federal deficits was based on a misunderstanding of government accounting. The ACA's projected savings from Medicare payment reductions were in effect being doubly committed: once to extend Medicare solvency and a second time to fund a massive coverage expansion. Both the Congressional Budget Office (CBO) and the Medicare Chief Actuary alerted Congress to the problem at the time. By counting projected savings only once, my own subsequent study demonstrated that the ACA would add roughly $340 billion to federal deficits in its first decade.

The reality was always likely to be worse than that estimate. The positive case for the ACA's financial integrity hung on two improbable outcomes: that all of its cost-savings provisions would work exactly as hoped, while none of its spending provisions would cost more than envisioned. Yet CBO warned at the time that many of the law's cost-saving provisions "might be difficult to sustain," while the Medicare Chief Actuary also warned that projected savings "may be unrealistic." My own conclusion after the law's passage was that, "the proceeds of such cost-savings cannot safely be spent until they have verifiably accrued."

No sooner was the ink dry on the ACA before these warnings began to prove correct. Many of the law's financing mechanisms started to unravel, while pressure mounted to expand its new spending programs. One of the first provisions to bite the dust was the CLASS long-term care program, suspended in 2011 due to its financial unsoundness. This wiped out a revenue source counted on to produce $70 billion during the first decade to help finance the ACA's coverage expansion.

The 2012 U.S. Supreme Court decision further complicated the law's financing. The original idea under the ACA was that states would expand Medicaid while more generous federal subsidies provide for others to buy health coverage from newly established exchanges. But the Court rendered Medicaid expansion optional for states, thus giving them an incentive to let the federal government shoulder the entire cost of subsidizing more generous insurance coverage for those above the poverty line. Many states are now taking advantage of this latitude, likely increasing federal costs for the exchanges.

Another of the ACA's important financing sources-supposedly delivering $140 billion in revenues over 10 years-was the requirement that employers offer affordable coverage to workers or pay a penalty. But earlier this year the Obama Administration announced it would not enforce this requirement during its statutory implementation year of 2014.

Labor leaders' recent appeal to expand ACA health exchange subsidies to multi-employer plans is but one example of a cost-escalating dynamic that many of us predicted. As I observed last year, "The ACA creates a horizontal inequity between two hypothetical low-income individuals; one who purchases insurance via an exchange receives a substantial direct federal subsidy, whereas one who receives employer-provided insurance (ESI) does not. This differential treatment could well lead either to the second individual's moving into the health exchanges (thus increasing participation rates) or to the federal government expanding low-income subsidies to those with ESI (increasing costs)."

The Obama White House correctly informed labor leaders that it lacked authority to provide them with these subsidies, but the political pressure to change the law will not end there. Indeed, we have already seen some subsidies expanding beyond the ACA's original construction, for members of Congress and their personal staffs.

The ACA's finances further depend on a new tax on medical device manufacturers, estimated to raise $29 billion from 2013-'22. Pressure is building against this tax, and the Senate already cast a nonbinding vote of 79-20 in favor of repeal. This issue was just resurrected during recent congressional debate over the continuing resolution (CR).

Also of uncertain fate is the ACA's "Independent Payment Advisory Board" (IPAB)-the unelected board charged with implementing policies to hold down Medicare costs with minimal congressional interference. Strong bipartisan opposition to IPAB persists, and as of this writing there is no sign of anyone even being nominated to serve on the board.

Finally, there are the ACA's most dubious financing sources. These include a new 3.8 percent "unearned income Medicare contribution" (UIMC) and a new tax on "Cadillac" health insurance plans. The income thresholds for the UIMC are not indexed for inflation, so under law most workers would eventually be subject to the tax-over 80 percent of workers within 75 years, according to the Medicare trustees. Past experience with legislation overriding other non-indexed taxes like the Alternative Minimum Tax (AMT) demonstrate why projections of escalating UIMC revenues should be taken with a hefty grain of salt. So, too, with the so-called "Cadillac plan tax," designed to hit more and more health insurance plans over time, an outcome that organized labor is determined to prevent.

The problematic nature of the ACA's finances is such that CBO's latest "long-term budget outlook" singled out its implementation as one of the biggest sources of future fiscal strains. Through 2038, CBO attributes 35 percent of the cost growth in federal health programs to population aging, 40 percent to general health inflation, and another 26 percent to the implementation of this single law. CBO now projects that merely delaying ACA implementation for one year would save $36 billion.

Partisans point fingers over the reasons for the ACA's financial unraveling, but the actors in this drama are too diverse to blame any one person or group. The task now facing both supporters and opponents is to take the steps necessary to prevent further fiscal damage, by scaling back the ACA's spending commitments before millions become dependent on benefits that the government is not in a position to pay.

Charles Blahous is a senior research fellow at the Mercatus Center at George Mason University, a public trustee for the Social Security and Medicare Programs, and formerly the deputy director of President George W. Bush's National Economic Council, serving as executive director of the bipartisan President's Commission to Strengthen Social Security.  

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Friday, October 4, 2013

From The 'Let's Shed A Little Light On This' Department.....

'Survive and Advance, Baby! Survive and Advance!'
A couple of things have struck our fancy during this government shutdown effort to defund Obamacare, which, so far as any reasonable person will admit, doesn't seem to be working very well at the moment:

  1. There have been a lot of shrill comments about Congresspeople, Senators and their staff receiving 'unfair special subsidies' from the federal government under the new law. '72%' as Sean Hannity is fond of saying on his show.

    The truth of the matter is that this may be a little less than what Congresspeople, Senators and their staff received in terms of 'federal subsidy' prior to Obamacare being passed!

    'Why? What is that you say, you moron!' we can already hear our detractors say.

    Because the US federal government is supported and paid for (mostly) by US taxpayer dollars paid in various forms of taxes each year. Always has been. Always will be. That is how people fund governments throughout recorded human history.

    Prior to Obamacare, Congresspeople, Senators and their staff all participated in the FEHB plan that provided an 'exchange' (sound familiar?) of sorts where health insurance companies offered their services and the 35,000 people working on Capitol Hill got to choose which plans and at what level during the open enrollment period each year, usually after October 1.

    They paid roughly 25-30% of their premiums out of each monthly paycheck. The rest of it? Where did it come from, class?

    Correct. The US federal treasury. Your tax dollars paid for the balance of every Congressman, Senator and staff's health care premium for as long as they had health care plans on Capitol Hill to begin with. Just like a company pays for the majority of every employee's health care premiums in the private sector.

    The only difference is that the government pays this balance with taxpayer money whereas private companies pay it with customer money. Think about it. You as the taxpayer and consumer are paying the vast majority of all health care now being delivered in the country!

    Congratulations! And now it is about to get even larger as Obamacare gets set up and established across the nation as we speak.
Which brings us to point #2:

Our singular problem with this shutdown is that we don't think the people who thought it was such a great idea have thought completely through the endgame, as in: 'How will this end so we can WIN!!!?'

We hated playing sports with losers who didn't know how to win. Worse yet is playing for any coach who doesn't know what the game plan is or how to develop the team so it gets better over the course of a season to be able to contend for the championship this year or next.

We don't mind standing and fighting for principle. We don't mind being in the minority and fighting for what we believed in. From 1985-1995, the Republican House Member for whom I worked was in the minority of at least 75 votes every single year!

Talk about the Alamo and Pickett's Charge all you want. We got to live, that is for sure, but being in the minority takes a lot of character, gumption and fortitude just to survive, much less keep fighting.

We want smaller government and more freedom principles to 'survive and advance' as Jim Valvano used to say about the Wolfpack when they won the NCAA basketball title in 1983.

Unless you know the rules of the game, as Coach Valvano used surgically to milk the clock by fouling the other team's bad free throw shooters and make maximum use of the new (at the time) 3-point line, you are just hoisting up prayer shots blindly all over the court and hoping somehow someway you are going to win the game at the buzzer with a 90-foot hook shot.

Here's some other 'principled' stands throughout history that didn't have a well thought out endgame towards victory:

1. Buddhist monks using self-immolation to protest the war (Vietnam, but any war). Didn't work.

2. Sioux Indian 'Ghost Dance' at Wounded Knee. Danced themselves into exhaustion to become invisible to bullets, as they believed. The tactic failed to keep the white man out of the West.

3. Kamikaze pilots in WWII. Thought they could sink enough ships to win the war. They were proven dead wrong.

4.  Anyone in Clint Eastwood's way: 'Dyin' Ain't Much of A Livin', Boy!'

Let's try to follow the maxim of Jim Valvano: 'Survive and Advance!'

He also said something else very important: 'Don't give up. Never give up!'

Let's just be smart about it.

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