There is something I had meant to mention in my last post plus some new information which I thought I should add. First, the old. It was the collapse of Lehman Brothers that was the immediate cause of our current economic crisis. Something that has come out relatively recently is that Lehman Bros. had engaged in what is called a Repo 105 maneuver (I hadn't heard of it before either). What that means is that they underwent an audit by one of the big accounting firms and prior to that audit they sold $50 billion in bad assets to another company and then repurchased them after the audit. In short, they made a paper or phony sale in order to hide their weakness. A former Lehman V.P. has testified that in May, 2008 he sent a letter to top executives warning them of concerns he had about their accounting practices and he was fired immediately thereafter. The company went under September 15, 2008. Think this doesn't affect you? A California representative has said that 40 municipalities across the nation lost $1.7 billion in total with the collapse of Lehman. All this is found in the LA Times, 4/21/10.
In today's LA Times is the report that the former CEO of KB Homes, one of the west's largest homebuilders, was just found guilty of four felonies related to backdating stock options. According to LA Times business columnist Tom Petruno, illegal backdating has been found at hundreds of companies (and who knows how many instances haven't been found).
Although I haven't read the books yet, I have seen the authors interviewed and I would recommend books by Michael Lewis (the title escapes me, but it is #1 on non-fiction best seller lists) and 13 Bankers by Simon Johnson and another fellow, I think his name is Kwak. They had an extensive interview on Bill Moyers Journal on PBS that was aired April 16, 2010 and I would recommend it for anyone who is interested. Also, although it is older and covers corporate misdeeds prior to the 2008 meltdown, a good read is Pigs At the Trough by Arianna Huffington.
Thursday, April 22, 2010
Wednesday, April 21, 2010
OBSERVATIONS, MUSINGS, AND RANTS
Tea Party Foolishness
Since August the Tea Party Movement seems to have dominated much of the national political discussion, despite the fact that their main premise is incorrect and their positions are often illogical and sometimes even inconsistent. Additionally, we have started to see such nonsense as people claiming that extending unemployment benefits creates dependency and that these "lazy" people are bankrupting our country. This is all part of the old Reagan trick of blaming the poor for societal problems and saying that government policies to help the poor do not help, but hurt our economy.
I have discussed the whole issue of income inequality previously, but it is probably useful to return again to some main points, especially since more information is available since I wrote last year. Regarding the charge that we are taxed too much already, I urge anyone who is interested to google income tax rates and check out the taxfoundation.org website. It gives all the tax tables since the inception of the income tax in 1917. Income taxes right now are at their lowest in about 75 years. From 1964 to 1981, the top (or marginal) rate was 70%. It was lowered to 50% in 1986, and then to 38.5% in 1987. It is now 35%. So, all during Reagan's presidency, the tax rate was higher than it is now. When the Bush tax cuts expire, the top rate will go up to 39.5%, or one percentage point higher than the last two years of Reagan. Likewise, capital gains are only 15%, down from 20% and, earlier, 25%. Also, the capital gains rate was extended to cover dividends under Bush, a new feature. This is one reason why in 2009 the top 400 income earners paid an average of only 17% on their income. Thus, as it should be clear, our income tax rates right now are at almost historic lows and the tea party movement's main complaint is, to put a simply, a giant load of crap. Recent reports are that either 47% or 49% (I have seen both figures) will not have to pay any taxes this year. As an added point, you should be aware that Reagan sponsored what was called then the largest tax increase in history (in dollar terms, not percentage) by increasing payroll taxes to keep Social Security afloat. Payroll taxes are not as progressive as income taxes, so that this tax increase hit the poor and middle classes more than the rich, just as Bush's tax cuts give much greater benefit to the rich than the middle class or poor.
A major result of these tax policies has been an incredible increase in inequality. When adjusted for inflation, average wages are actually down by about 12% when compared to 1973 (this is the date usually used) while the top 10%, 1% and one tenth of one percent has increased tremendously. The smaller the group, the larger their increase. While CEO's used to get about 35 times the income of the average wage earners in their companies, they now get about 350 times as much (again, there are differing figures here, but this is representative). Income inequality in the US is now the worst it has been since about 1920 (pardon the bold, but this word processor on this site has started defaulting to it even though I keep trying to change it back). Depending on whether you consider Russia a developed country, we have the worst income inequality of any developed country in the world, about on par with Mexico. According to a recent study (The Spirit Level by Wilkinson and Pickett), greater inequality means higher rates of teen pregnancy, infant mortality, obesity, mental illness, drug use, imprisonment, and homicide. It also means less economic growth and more economic instability. Here are the reasons why.
It is a well known economic fact that the middle class and the poor spend a greater portion of their income than does the rich; after all there is only so much you can spend. Let's look at one of my favorite examples--hedge fund managers. First, they make fabulous amounts of money and yet pay at the capital gains rate of only 15%. A recent NY Times article found that the top 25 hedge fund managers made $25 + billion in 2009, or an average of a little more than one billion each. FYI, the low was $350 million and the high was $4 billion. These 25 individuals made as much as 500,000 people who made $50,000 each. 25=500,000. Imagine if you made $1 billion in one year. Could you spend it all? The fact is that they can't and they don't. So what do they do? They speculate. It is the super rich who drive the speculative markets, whether it be real estate, futures trading, stocks, or derivatives. Remember that in 1987 Reagan lowered the top tax rate to 38.5%? What happened two years later? The S&L debacle due to a bubble in real estate collapsing. If those hedge fund managers had to pay the old tax rate of 70%, those poor dears would have to get by on an averate of $300 million a year. Oh, the horror! Government revenue just from this one small group of 25 would increase by $14 billion per year.
Now, let's look at some obscene pay in other areas. First, you should know that the financial sector of our economy has gone from about 12% of our economy to 21% and, even more telling, the financial sector accounts for 45% of the profits in the economy. Wall St., just from 2003 to 2006, paid $121 billion to its executives (Dylan Ratigan Show, 4/7/10) Just since January of this year, Goldman Sachs has awarded $21 billion in bonuses to its top executives (Manchester Guardian, 4/19/10). I think it is safe to say that in the last decade, Wall St. executives have made over $200 billion. What do they get that money for? Making loans to businesses, investing in new technologies, helping our economy? No, they get that money mostly for gambling and conning other people out of their money. A Goldman Sachs executive testified recently that while they were selling derivatives to investors and assuring them they were safe, they knew they were risky and purchased credit default swaps, betting that they would go down in value. And this isn't even what they were indicted for. Of the $181 billion that went to AIG in TARP funds, at least $40 billion was pass through money to pay off Goldman Sachs for the credit default swaps they bought. If you think this is an isolated case, you haven't been paying attention to the news. Did you know, for example, that two different people were indicted recently for Ponzi schemes that took $1 and $3 billion respectively from investors? It was minor news because while that would have been a mjaor event in the past, now it has been dwarfed by Bernie Madoff, and Wall St. scams.
Here's another example. A former head of United Health Care made $1.2 billion, mostly in stock options, in about 7 years. Because it was discovered that many of these options were illegally backdated, he had to pay a fine of $400 million, leaving him with only $800 million. Since these were stock options, they would be covered by the capital gains rate and taxed at only 15%. That fine, by the way, went to the government, not to stock holders or, heaven forbid, those buying premiums from United Health care. The $1.2 billion he collected would have paid for the premiums of almost 30,000 people a year for 7 years, assuming a premium of $500 per month.
Now, let's take a look at those awful, lazy people getting unemployment benefits. The average unemployment check is $335 per week, or $17,420 per year. A recent story said that 44% of those getting unemployment had been on unemployment for 6 months, and 30% for at least a year. Since there are about 11 million unemployed, that means about 3.3 million were on unemployment for at least one year during 2009. Going back to the hedge fund managers, those 25 people made as much as between 1.4 and 1.5 million people on unemployment, or almost half of those who had been unemployed for at least a year. If those hedge fund managers paid at the old 70% rate, their income tax alone would have paid for about 1 million of the long term unemployed. I hope this gives you some idea of the extent of the income inequality in this country and how our system is set up to reward the super rich, many of whom contribute very little to our ec0onomy.
Now, let's looks at the charge that all these people on unemployment would become addicted to the "free money." This is such nonsense that one hardly knows where to begin. Let's look at the Depression. President Hoover reportedly said something to the effect that all the men selling apples on the street was a sign that more people were going into business for themselves. He also was adamantly opposed to any governmental relief such as unemployment payments. This, as much as almost anything, was responsible for plunging the nation deeper into depression. With no income, they couldn't buy anything, so more businesses went out of business, leading to more unemployment and so on. It also led to more foreclosures which led to a tremendous drop in property values which led to more bank failures, which led to more unemployment whilch led to , you get the idea. Unemployment payments help stop a deflationary spiral. They keep the recession from getting much worse. During the 90's, when Clinton was president, the unemployment rate at one point dropped to below 4%, which as economists tell us, is full employment since there are always people moving, changing jobs, businesses going out of business, etc. so that there will always be some unemployment. Why would the population gladly embrace employment then, but spurn it now for $335 per week? Secondly, psychologists will tell you that for many people, their job defines their worth and losing their job greatly reduces their self-esteem. It is considered a major stressor in life comparable to death of a loved one or a messy divorce. Thirdly, it completely ignores today's present economic situation. There are over 5 applicants for every job opening, on average. It's not a lack of people trying, but a lack of jobs available.
Another tea party mantra is smaller government and reduce the deficit. It's obvious that most of these people have never bothered to learn anything about the government. It's astounding to me that any information you want is just a few clicks away on the internet, but these people and many others never bother to find out the facts. Defense and homeland security cost about $715 billion, or about 20% of the budget, and half of the so-called discretionary budget. Other major expenditures (by percentage) social security 20%, Medicare/Medicaid 21%, interest on the debt, 6%, safety net programs (food stamps, unemployment, e.g.) 14%, and federal pensions and veterans benefits 7%. These programs take up 92% of the total budget. If you really want to reduce government you need to cut defense spending, medicare/medicaid, and social security. Yet these same people don't want to cut these things. Revenues plunged to 15% of GDP, the lowest it has been in decades. The solution is simple, get people back to work, increase taxes on the rich ($1 million per year) and super rich ($10 million per year) and we will probably have to make some adjustments to Medicare and Social Security. Remember this, Herbert Hoover passionately believed in small government and balanced budgets and those policies produced the worst depression in US history. Had we followed the same policies this time, we probably would have had an even worse depression now than in the 30's.
Since August the Tea Party Movement seems to have dominated much of the national political discussion, despite the fact that their main premise is incorrect and their positions are often illogical and sometimes even inconsistent. Additionally, we have started to see such nonsense as people claiming that extending unemployment benefits creates dependency and that these "lazy" people are bankrupting our country. This is all part of the old Reagan trick of blaming the poor for societal problems and saying that government policies to help the poor do not help, but hurt our economy.
I have discussed the whole issue of income inequality previously, but it is probably useful to return again to some main points, especially since more information is available since I wrote last year. Regarding the charge that we are taxed too much already, I urge anyone who is interested to google income tax rates and check out the taxfoundation.org website. It gives all the tax tables since the inception of the income tax in 1917. Income taxes right now are at their lowest in about 75 years. From 1964 to 1981, the top (or marginal) rate was 70%. It was lowered to 50% in 1986, and then to 38.5% in 1987. It is now 35%. So, all during Reagan's presidency, the tax rate was higher than it is now. When the Bush tax cuts expire, the top rate will go up to 39.5%, or one percentage point higher than the last two years of Reagan. Likewise, capital gains are only 15%, down from 20% and, earlier, 25%. Also, the capital gains rate was extended to cover dividends under Bush, a new feature. This is one reason why in 2009 the top 400 income earners paid an average of only 17% on their income. Thus, as it should be clear, our income tax rates right now are at almost historic lows and the tea party movement's main complaint is, to put a simply, a giant load of crap. Recent reports are that either 47% or 49% (I have seen both figures) will not have to pay any taxes this year. As an added point, you should be aware that Reagan sponsored what was called then the largest tax increase in history (in dollar terms, not percentage) by increasing payroll taxes to keep Social Security afloat. Payroll taxes are not as progressive as income taxes, so that this tax increase hit the poor and middle classes more than the rich, just as Bush's tax cuts give much greater benefit to the rich than the middle class or poor.
A major result of these tax policies has been an incredible increase in inequality. When adjusted for inflation, average wages are actually down by about 12% when compared to 1973 (this is the date usually used) while the top 10%, 1% and one tenth of one percent has increased tremendously. The smaller the group, the larger their increase. While CEO's used to get about 35 times the income of the average wage earners in their companies, they now get about 350 times as much (again, there are differing figures here, but this is representative). Income inequality in the US is now the worst it has been since about 1920 (pardon the bold, but this word processor on this site has started defaulting to it even though I keep trying to change it back). Depending on whether you consider Russia a developed country, we have the worst income inequality of any developed country in the world, about on par with Mexico. According to a recent study (The Spirit Level by Wilkinson and Pickett), greater inequality means higher rates of teen pregnancy, infant mortality, obesity, mental illness, drug use, imprisonment, and homicide. It also means less economic growth and more economic instability. Here are the reasons why.
It is a well known economic fact that the middle class and the poor spend a greater portion of their income than does the rich; after all there is only so much you can spend. Let's look at one of my favorite examples--hedge fund managers. First, they make fabulous amounts of money and yet pay at the capital gains rate of only 15%. A recent NY Times article found that the top 25 hedge fund managers made $25 + billion in 2009, or an average of a little more than one billion each. FYI, the low was $350 million and the high was $4 billion. These 25 individuals made as much as 500,000 people who made $50,000 each. 25=500,000. Imagine if you made $1 billion in one year. Could you spend it all? The fact is that they can't and they don't. So what do they do? They speculate. It is the super rich who drive the speculative markets, whether it be real estate, futures trading, stocks, or derivatives. Remember that in 1987 Reagan lowered the top tax rate to 38.5%? What happened two years later? The S&L debacle due to a bubble in real estate collapsing. If those hedge fund managers had to pay the old tax rate of 70%, those poor dears would have to get by on an averate of $300 million a year. Oh, the horror! Government revenue just from this one small group of 25 would increase by $14 billion per year.
Now, let's look at some obscene pay in other areas. First, you should know that the financial sector of our economy has gone from about 12% of our economy to 21% and, even more telling, the financial sector accounts for 45% of the profits in the economy. Wall St., just from 2003 to 2006, paid $121 billion to its executives (Dylan Ratigan Show, 4/7/10) Just since January of this year, Goldman Sachs has awarded $21 billion in bonuses to its top executives (Manchester Guardian, 4/19/10). I think it is safe to say that in the last decade, Wall St. executives have made over $200 billion. What do they get that money for? Making loans to businesses, investing in new technologies, helping our economy? No, they get that money mostly for gambling and conning other people out of their money. A Goldman Sachs executive testified recently that while they were selling derivatives to investors and assuring them they were safe, they knew they were risky and purchased credit default swaps, betting that they would go down in value. And this isn't even what they were indicted for. Of the $181 billion that went to AIG in TARP funds, at least $40 billion was pass through money to pay off Goldman Sachs for the credit default swaps they bought. If you think this is an isolated case, you haven't been paying attention to the news. Did you know, for example, that two different people were indicted recently for Ponzi schemes that took $1 and $3 billion respectively from investors? It was minor news because while that would have been a mjaor event in the past, now it has been dwarfed by Bernie Madoff, and Wall St. scams.
Here's another example. A former head of United Health Care made $1.2 billion, mostly in stock options, in about 7 years. Because it was discovered that many of these options were illegally backdated, he had to pay a fine of $400 million, leaving him with only $800 million. Since these were stock options, they would be covered by the capital gains rate and taxed at only 15%. That fine, by the way, went to the government, not to stock holders or, heaven forbid, those buying premiums from United Health care. The $1.2 billion he collected would have paid for the premiums of almost 30,000 people a year for 7 years, assuming a premium of $500 per month.
Now, let's take a look at those awful, lazy people getting unemployment benefits. The average unemployment check is $335 per week, or $17,420 per year. A recent story said that 44% of those getting unemployment had been on unemployment for 6 months, and 30% for at least a year. Since there are about 11 million unemployed, that means about 3.3 million were on unemployment for at least one year during 2009. Going back to the hedge fund managers, those 25 people made as much as between 1.4 and 1.5 million people on unemployment, or almost half of those who had been unemployed for at least a year. If those hedge fund managers paid at the old 70% rate, their income tax alone would have paid for about 1 million of the long term unemployed. I hope this gives you some idea of the extent of the income inequality in this country and how our system is set up to reward the super rich, many of whom contribute very little to our ec0onomy.
Now, let's looks at the charge that all these people on unemployment would become addicted to the "free money." This is such nonsense that one hardly knows where to begin. Let's look at the Depression. President Hoover reportedly said something to the effect that all the men selling apples on the street was a sign that more people were going into business for themselves. He also was adamantly opposed to any governmental relief such as unemployment payments. This, as much as almost anything, was responsible for plunging the nation deeper into depression. With no income, they couldn't buy anything, so more businesses went out of business, leading to more unemployment and so on. It also led to more foreclosures which led to a tremendous drop in property values which led to more bank failures, which led to more unemployment whilch led to , you get the idea. Unemployment payments help stop a deflationary spiral. They keep the recession from getting much worse. During the 90's, when Clinton was president, the unemployment rate at one point dropped to below 4%, which as economists tell us, is full employment since there are always people moving, changing jobs, businesses going out of business, etc. so that there will always be some unemployment. Why would the population gladly embrace employment then, but spurn it now for $335 per week? Secondly, psychologists will tell you that for many people, their job defines their worth and losing their job greatly reduces their self-esteem. It is considered a major stressor in life comparable to death of a loved one or a messy divorce. Thirdly, it completely ignores today's present economic situation. There are over 5 applicants for every job opening, on average. It's not a lack of people trying, but a lack of jobs available.
Another tea party mantra is smaller government and reduce the deficit. It's obvious that most of these people have never bothered to learn anything about the government. It's astounding to me that any information you want is just a few clicks away on the internet, but these people and many others never bother to find out the facts. Defense and homeland security cost about $715 billion, or about 20% of the budget, and half of the so-called discretionary budget. Other major expenditures (by percentage) social security 20%, Medicare/Medicaid 21%, interest on the debt, 6%, safety net programs (food stamps, unemployment, e.g.) 14%, and federal pensions and veterans benefits 7%. These programs take up 92% of the total budget. If you really want to reduce government you need to cut defense spending, medicare/medicaid, and social security. Yet these same people don't want to cut these things. Revenues plunged to 15% of GDP, the lowest it has been in decades. The solution is simple, get people back to work, increase taxes on the rich ($1 million per year) and super rich ($10 million per year) and we will probably have to make some adjustments to Medicare and Social Security. Remember this, Herbert Hoover passionately believed in small government and balanced budgets and those policies produced the worst depression in US history. Had we followed the same policies this time, we probably would have had an even worse depression now than in the 30's.
Friday, April 16, 2010
OBSERVATIONS, MUSINGS AND RANTS
Since my last post I have been spending most of my time commenting on politics on various web sites, with the idea that I could reach more people. There are some things, however, which require this forum. A lot has happened since my last post and an even larger amount of misinformation has polluted the media in the meantime. I have been gathering a lot of information which I hope will help counter the misinformation and I am providing it here for your consideration. One thing I would also like to add is that nothing I have written previously has proven incorrect or required revision.
Health Care
When someone brings up the health care bill for criticism, you might want to point out the following facts. In 1974 President Nixon proposed to Congress that they create a health care bill which would require all employers, no exceptions, to provide their employees with health care. The government would then provide health care for those who were not employed. The current health care bill exempts small businesses with less than 50 employees from having to provide health care and provides tax breaks for those small businesses that do provide it. The Nixon proposal was more radical, more anti-business than the current bill. In 1993 a conservative economist came up with the idea of mandating people to buy health care insurance as an alternative to the Clinton health care bill. This was incorporated into a proposed bill introduced by 21 Republican senators and one Republican congressman. The idea of an insurance exchange was first devised by an analyst at the Heritage Foundation in 2006 and then incorporated into the health care plan of Republican Governor Mitt Romney of Massachusetts. The Heritage Foundation is a very right wing think tank. Thus, all the major provisions of the health care bill are Republican ideas. So, when Newt Gingrich calls it a radical social experiment, he is lying. Because he has a Phd. in history, he can't claim ignorance. When people call it socialism or taking over health care, they are just plain wrong. FYI, Germany first adopted a national health care system in the 1880's under those radical reformers, Otto von Bismark and Kaiser Wilhelm II. Even with the new bill, we will have the most unregulated system and the least coverage of our citizens of any industrialized country in the world. Remember when Rush Limbaugh said he was moving to Costa Rica if the bill passed? They have a much more socialized system than we do; it is very similar to a medicare for all option.
Amazing as all the past lying about the bill was, it continues even after passage. The St. Petersburg Times called the charge of death panels the biggest lie of 2009. At one tea party rally a speaker compared the health care bill to genocide. Does anyone remember what Congressman Joe Wilson (R-S. Carolina) was talking about when he yelled out "You lie!" to President Obama? President Obama had just said that any bill he signed would not cover illegal aliens. So, who lied, Wilson or Obama? All these lies get thrown out there and the lies and liars get overlooked or forgotten because they are followed by more and more lies that grab the headlines. The latest big lie is that the bill will have the IRS hire 16,000 agents to enforce the requirement to have health insurance. First, the bill specifically states that if someone does not buy insurance and does not pay the fine that is assessed for that, there are no criminal penalties nor can the IRS put a lien against any property of the taxpayer. Thus, there is no real enforcement of the mandate. Secondly, the IRS currently has about 17,000 auditors/enforcement agents for all the taxpayers in the US. There are currently 47 million uninsured, and 32 million are covered by the bill (illegal immigrants make up most of the rest). Previous studies have found that 80% of the uninsured are working poor, and they will get subsidies or Medicaid coverage under the bill. Thus, if everybody else defies the mandate, you will have, at most, 7 million taxpayers who will be fined. So, according to the big lie, we will double the number of IRS agents for a maximum subset of 7 million people who can't be really punished anyway.
Obama/Democratic Mistakes
One of the biggest mistakes that I think that Obama has made so far in his presidency, is the failure to have nationwide prime time addresses to the people and too few press conferences. Instead the White House has decided to substitute town hall meetings throughout the country.
I don't think these have been nearly as effective, plus there is no reason you could not combine the two approaches. I am a big believer in visual aids and the president has failed miserably to use them to his advantage. His first major mistake was with the Recovery Act. He should have gone on television right next to a big pie chart showing where all the money in the bill would go. How many people know/knew that one-third of the bill went for tax cuts? Instead, for months we heard charges that Obama was raising taxes. How many people knew that a similar sized chunk of the act was for extending unemployment benefits and reducing COBRA payments? Instead all we heard was how the bill was filled with pork projects. Similarly, the President should have had a speech to the nation where he laid out the major provisions of a health care bill and how it would affect people. Time and time again, the Republicans have seized the message, put it in their own terms and dominated the media, often with lies, and the Democrats have done little. When The Democrats have reacted it has been defensively. Here's some examples of how the Democrats could have fought back: Every year 15 times as many people will die because of lack of health care insurance as died on 9/11. Why don't you value the lives of uninsured Americans? When the Republicans were filibustering the health care bill, the Democrats should have been challenging them, "Why don't you believe in majority rule and democracy?"
Another major mistake by the Democrats was to give up on major issues in order to try and achieve bi-partisan support. By the summer of 2009 it was clear that there was almost no chance of getting Republican cooperation. A single payer system was never presented by the Democratic leadership as an option for health care. You always negotiate down and by starting lower, they guaranteed that the final bill would be very watered down. Also, it turned out to be a mish-mash of complicated provisions. Even tea party goers favor Medicare 2 to 1. The easy and simple approach should have been to say that Medicare will be extended, as an option, to anyone who chooses to join, with the understanding that the Medicare program will charge enrollees under 65 a premium rate that will recover costs. The system is in place, it's simple, you don't need an insurance exchange, government regulations on private insurance, or anything else. If a private insurance company messes with you, you can just go and join Medicare. This would be the best check on private insurance rates/premiums and unfair practices. Just because of its lower administrative costs, Medicare plans should be able to undercut private insurance by about 20%. Private insurance can compete by reducing executive perks and offering plans that provide extra or special coverage.
Next, the tea party and a lot of fo0lishness about the economy and government.
Health Care
When someone brings up the health care bill for criticism, you might want to point out the following facts. In 1974 President Nixon proposed to Congress that they create a health care bill which would require all employers, no exceptions, to provide their employees with health care. The government would then provide health care for those who were not employed. The current health care bill exempts small businesses with less than 50 employees from having to provide health care and provides tax breaks for those small businesses that do provide it. The Nixon proposal was more radical, more anti-business than the current bill. In 1993 a conservative economist came up with the idea of mandating people to buy health care insurance as an alternative to the Clinton health care bill. This was incorporated into a proposed bill introduced by 21 Republican senators and one Republican congressman. The idea of an insurance exchange was first devised by an analyst at the Heritage Foundation in 2006 and then incorporated into the health care plan of Republican Governor Mitt Romney of Massachusetts. The Heritage Foundation is a very right wing think tank. Thus, all the major provisions of the health care bill are Republican ideas. So, when Newt Gingrich calls it a radical social experiment, he is lying. Because he has a Phd. in history, he can't claim ignorance. When people call it socialism or taking over health care, they are just plain wrong. FYI, Germany first adopted a national health care system in the 1880's under those radical reformers, Otto von Bismark and Kaiser Wilhelm II. Even with the new bill, we will have the most unregulated system and the least coverage of our citizens of any industrialized country in the world. Remember when Rush Limbaugh said he was moving to Costa Rica if the bill passed? They have a much more socialized system than we do; it is very similar to a medicare for all option.
Amazing as all the past lying about the bill was, it continues even after passage. The St. Petersburg Times called the charge of death panels the biggest lie of 2009. At one tea party rally a speaker compared the health care bill to genocide. Does anyone remember what Congressman Joe Wilson (R-S. Carolina) was talking about when he yelled out "You lie!" to President Obama? President Obama had just said that any bill he signed would not cover illegal aliens. So, who lied, Wilson or Obama? All these lies get thrown out there and the lies and liars get overlooked or forgotten because they are followed by more and more lies that grab the headlines. The latest big lie is that the bill will have the IRS hire 16,000 agents to enforce the requirement to have health insurance. First, the bill specifically states that if someone does not buy insurance and does not pay the fine that is assessed for that, there are no criminal penalties nor can the IRS put a lien against any property of the taxpayer. Thus, there is no real enforcement of the mandate. Secondly, the IRS currently has about 17,000 auditors/enforcement agents for all the taxpayers in the US. There are currently 47 million uninsured, and 32 million are covered by the bill (illegal immigrants make up most of the rest). Previous studies have found that 80% of the uninsured are working poor, and they will get subsidies or Medicaid coverage under the bill. Thus, if everybody else defies the mandate, you will have, at most, 7 million taxpayers who will be fined. So, according to the big lie, we will double the number of IRS agents for a maximum subset of 7 million people who can't be really punished anyway.
Obama/Democratic Mistakes
One of the biggest mistakes that I think that Obama has made so far in his presidency, is the failure to have nationwide prime time addresses to the people and too few press conferences. Instead the White House has decided to substitute town hall meetings throughout the country.
I don't think these have been nearly as effective, plus there is no reason you could not combine the two approaches. I am a big believer in visual aids and the president has failed miserably to use them to his advantage. His first major mistake was with the Recovery Act. He should have gone on television right next to a big pie chart showing where all the money in the bill would go. How many people know/knew that one-third of the bill went for tax cuts? Instead, for months we heard charges that Obama was raising taxes. How many people knew that a similar sized chunk of the act was for extending unemployment benefits and reducing COBRA payments? Instead all we heard was how the bill was filled with pork projects. Similarly, the President should have had a speech to the nation where he laid out the major provisions of a health care bill and how it would affect people. Time and time again, the Republicans have seized the message, put it in their own terms and dominated the media, often with lies, and the Democrats have done little. When The Democrats have reacted it has been defensively. Here's some examples of how the Democrats could have fought back: Every year 15 times as many people will die because of lack of health care insurance as died on 9/11. Why don't you value the lives of uninsured Americans? When the Republicans were filibustering the health care bill, the Democrats should have been challenging them, "Why don't you believe in majority rule and democracy?"
Another major mistake by the Democrats was to give up on major issues in order to try and achieve bi-partisan support. By the summer of 2009 it was clear that there was almost no chance of getting Republican cooperation. A single payer system was never presented by the Democratic leadership as an option for health care. You always negotiate down and by starting lower, they guaranteed that the final bill would be very watered down. Also, it turned out to be a mish-mash of complicated provisions. Even tea party goers favor Medicare 2 to 1. The easy and simple approach should have been to say that Medicare will be extended, as an option, to anyone who chooses to join, with the understanding that the Medicare program will charge enrollees under 65 a premium rate that will recover costs. The system is in place, it's simple, you don't need an insurance exchange, government regulations on private insurance, or anything else. If a private insurance company messes with you, you can just go and join Medicare. This would be the best check on private insurance rates/premiums and unfair practices. Just because of its lower administrative costs, Medicare plans should be able to undercut private insurance by about 20%. Private insurance can compete by reducing executive perks and offering plans that provide extra or special coverage.
Next, the tea party and a lot of fo0lishness about the economy and government.
Subscribe to:
Posts (Atom)