Blog Archives

Does Obama Care?

It is a legitimate question. Now that Obamacare is three years old we can take some time to reflect on how it has unfolded. Obamacare was initially a derogatory term used by Republicans to insult the program, but during the Presidential campaign the president accepted the term as his own. He was proud of it and pleased with it, saying “I have no problem with people saying Obama cares. I do care”. But does he?

Someone who cares would clearly want what is most beneficial for those they were elected to serve. Someone who cares would make public welfare a higher priority than personal merit. The failures of Obamacare are in plain sight. So many promises have been broken, and so little benefit has come from the law, that it is time to really ask: does Obama care?Obamacare-tax

President Obama promised he would fight for the middle class; he promised he would not raise taxes on the middle class; he promised he would take care of the middle class. Obamacare does the opposite of these. In fighting for Obamacare President Obama raised taxes on the middle class by $1 trillion. Many of these taxes directly pass on the cost to patients, increasing the cost of healthcare.

President Obama promised that if you like your healthcare plan you will be able to keep it.

“If you like your doctor, you will be able to keep your doctor, period. If you like your health care plan, you’ll be able to keep your health care plan, period. No one will take it away, no matter what. My view is that health care reform should be guided by a simple principle: Fix what’s broken and build on what works. And that’s what we intend to do.”

                Sound familiar? Instead, the Department of Health and Human Services tells us that may not be the case; in fact, estimates are as high as seven million for people who will have to find new healthcare plans. The cost of providing insurance to an employee is much higher than the fine levied for not providing it. Many employers are also laying workers off, or reducing them to part time hours in order to avoid the penalty at all. This will push many more people on to the expanding Medicaid system, which, in some states is so crowded already that it is difficult to find quality or timely healthcare.

Employers who can afford to offer the care for their employees may be in shock before too long. We are already learning that there will be a 32% increase in the cost of claims for employers. This is going to have a significant impact on business revenue. Consider this: the cut off for employer mandates under Obamacare is 50 employees. There are now two and a half times as many businesses with 49 employees than there are with 50. If this were not enough the government tried to remedy these problems and only made matters worse.

The Obamacare law states that “affordable” healthcare coverage from an employer must not exceed 9.5% of the annual household income of the worker; however, it has been decided that 9.5% will apply only to the employee, and not to their spouse or dependents. This means Obamacare still classifies a family spending 30% or more on healthcare as affordable, as long as the primary policy holder does not spend more than 9.5%. The Obamacare system places the burden of the costs on the shoulders of the employers and families: costs that keep increasing.

We were promised that Obamacare would not add a penny to the national debt. Earlier this year the Government Accountability Office released their estimate that Obamacare would add $6.2 trillion to the long term

The pinnacle of promises may have crested on the fib that health care premiums would decrease $2,500 per year if Obamacare passed. In the two year period from 2010 to 2012 the average healthcare premium increased $3,000 per year; a difference of $5,500 in extra costs to you and me from the promise made by President Obama. The worst part is that experts expect costs to continue to rise.

The only solution offered by Obamacare to any of these broken promises is the expansion of Medicaid. Millions of Americans will take the risk of waiting too long for insufficient care. Many states’ Medicaid systems function very well, but if you cannot afford healthcare, or your employer is cutting you to part time hours hopefully your state is one of these. To the Americans not so fortunate Obamacare offers the following sympathy: “good luck”.

Remember when President Obama promised this would insure 50 million Americans currently without insurance? All these broken promises result in only 20 million more insured Americans–many of whom qualified for insurance before Obamacare but chose not to have it.

So again, I ask the question: does Obama really care? Maybe he does, just not about you and me. To keep this law in place with so many broken promises and so much lack of fulfillment shows that he cares more about his crowning legislative achievement than he does about those who elected him. If this is not the case I call on him to prove he does care, admit he was wrong, and repeal this law. Doing so would be the mark of a great President.


–Matt Young

2 April, 2013

Executive Activism Will Erode Democracy

Political Parties are robbing us of democracy.

Political Parties are robbing us of democracy.

Political parties suck. They are private institutions that have collectively gained control over our government. The sole goal of political parties is to obtain and maintain power. When Rep. Nancy Pelosi (D-CA) became Speaker of the House she stated that her most important job was not to be the third in line to succeed the President in a national crisis; not to lead the largest body of directly elected representatives in our nation; not to safeguard the rights of the people; and not to work for her constituents that elected her. No, her most important job was to get more Democrats elected. Similarly, of all the important tasks one could emphasize for a Senate minority leader, Sen. Mitch McConnell (R-KY) stated that his number one priority was to make Barack Obama a one term President. A Senator’s top priority was not even in the Senate, it was in the White House. Clearly these leaders of their parties were working against the will and good of the people.

It is not that being liberal, libertarian, or conservative is a problem; the problem is that these parties serve themselves, not the United States. Perhaps the most dangerous symptom of this the fact that party loyalists quite literally become convinced that the other party is evil–not just bad, but knowingly, deceitfully, intentionally evil. (If you don’t believe that go to one of the wingnut radical blogs like redstate or dailykos, or even Rachel Maddow or CNS news and read the comments) If you literally believe someone or something is evil it becomes not just easy, but necessary to oppose them, even if you are breaking a law to do so. This, I really fear, is going to become regular occurrence if we allow the party beasts to continue to feed themselves. Elected officials swear to uphold and defend the Constitution; however, because we have created an incentive system that rewards radicalism, more often than not politicians are more concerned with upholding and defending their political party. And why shouldn’t they be? We have allowed losing the next election to become the worst punishment a politician can face.

Breaking a law to oppose another party, or to uphold one’s own ideology is deplorable for a citizen, but detestable for a politician. The problem is the citizen is punished by our legal system, but who is to punish the politician? This week Gov. Hickenlooper of Colorado signed into law a set of gun control measures, including a magazine capacity limit. Weld County Sheriff, John Cooke, went out of his way to let everyone he could reach know that he will not be enforcing this law, and he knows many other Sheriffs that also will not. Sheriff Cooke even made an appearance on Fox Propaganda to tell us this.

I have opposed gun control because research shows it does nothing to reduce crime, but a sheriff deliberately ignoring a law, even if to oppose gun control, does more to eliminate freedom than any gun control measure. If Sheriff Cooke wants to make laws he can run for the legislature. Unfortunately, Sheriff Cooke is not alone in his refusal to accept the laws. He is only following in the footsteps of one Barack Obama.

The constitution clearly points out that it is the duty of the Executive Branch to enforce the laws made by the Legislative Branch. Congress passed an immigration bill, and since his inauguration, President Obama has decided to use it as toilet paper. Not only has he deliberately decided not to enforce immigration laws, he sent the justice department to the Supreme Court to argue against an Arizona immigration law that mirrored the Federal law; a law Arizona felt they had to pass because President Obama refused to enforce the existing one. On top of that he implemented the Dream Act without a Congressional approval.

I am very much in favor of immigration reform, and a path to citizenship or something close to it, but the law is the law. If President Obama wanted to make laws, he should have stayed in the Senate. A President must uphold the office. Part of this means having enough integrity to enforce a law Congress has passed even if the president disagrees with it–no matter the law, no matter the President. Instead, President Obama refuses to send his administration before the Supreme Court to defend the Defense of Marriage Act. I understand that he supports gay marriage, and I respect that, but nowhere in the Constitution does it allow a President to choose which laws hold merit because of his personal beliefs.

John Roberts said it best. Though I have been an opponent of Obamacare from the beginning I have to agree with Chief Justice Roberts. It is up to Congress to make the laws; the Supreme Court does not determine which laws are good laws, only which laws violate the Constitution. It is not up to Governors whether or not to follow Obamacare. Every elected official must have this same amount of respect for democracy in order to ensure democracy is living a century from now. People angry about judicial activism ought to be equally as angry about Executive activism. If a President wants to change a law, do as Lincoln did; push, pull, pry, preach, beg, and put together a public campaign to pass a law or amendment. But a President is an executive, not a legislator.

It is not a Sheriff, Governor, or President’s job to determine laws. In a Democracy we govern ourselves. We have a Congress that makes laws, and if we disapprove, we vote for new members. If a law is unjust or unconstitutional, we (or even the President, Governor, or Sheriff) can try that law in the courts. This is the system devised to ensure the rights of life, liberty, and property to all citizens of the United States. A law does not become invalid simply it does not fit with the current desires of a figure head. The last time one figure head determined the law for all Americans to follow declared independence and fought a revolution. We vote for representatives and executives, not monarchs. No matter how you feel about a law, seeing an elected official refuse to follow that law should make you cringe. If this becomes a pattern, our democracy will erode from under our feet.

–Matt Young

21 March 2013

Man in Japan Refused by 25 Hospitals and Dies; Could This Happen in US?

An evacuee is carried to an ambulance atIf you logged on to Facebook, or for that matter, any social media yesterday, you probably saw the headline. 75 Year old Japanese man died after being turned away fro m 25 emergency rooms a total of 36 times in 2 hours. The hospitals involved claim they had no bed for him, and a shortage of doctors to treat any more patients. Unbelievable, I agree, and I know what you are thinking: “good thing that would never happen in America.” Unfortunately, it was not long ago that would never have happened in Japan either. 10 years ago if you would have suggested to experts this would happen, most would have laughed. So, could this happen here? We may just be a few years away from it becoming possible.

The America of today is eerily similar to the Japan of a decade ago. Though the mostly-government healthcare system has worked for a generation in Japan, it is now taking on water faster than the ageing population can bail it out. Japan has a rapidly aging population, and a falling birth rate; just like we do. The Japanese national debt is limiting their ability to sustain the ageing population, and the medical system is the clearest symptom of the problem. As a population ages it typically pays less taxes; retired people made up the bulk of Mitt Romney’s infamous 47%. But unless there are people to replace those retiring, either by immigration or birth, the government has less money to support the extra healthcare costs that also come with an aging population. Trying to do more with less has never been a quality the government can hang its hat on.

I wrote months ago why I believed Obamacare would not work; well, here it is in practice. Obamacare  will push tens of millions of people onto Medicaid, those who cannot afford the rising cost of insurance and those unfortunate enough to be demoted to part time hours, many elderly, and of course, those whose employers choose to pay the fine that is roughly 1/3 of what the cost would be if they were forced to provide insurance. The result of this will be placing the cost of healthcare for drshortmillions squarely on the shoulders of the government.

As we see in Japan, people who do not directly pay for their own healthcare have little incentive to stay out of the healthcare system. If the government is going to foot the bill, why not go to the doctor every time you sneeze? This seems to be the rationale in Japan, where clinics and hospitals are very over crowded, and patients often wait hours just to see the doctor for 30 to 90 seconds. I experienced this same pattern while living in Australia. This means that Japan is facing a doctor shortage due to the influx of patients; ergo, their overcrowding. Doctors often have to see 100 or more patients per day. This leads to patients depending more and more on medication and less and less on actual healthcare from their physician.

The United States has been facing a doctor shortage for a few years now, and it is only expected to get worse. Our national debt is climbing at alarming rates. Our population is ageing. Our healthcare system is becoming more and more subsidized. Our hospitals are already overcrowded. These are many of the same challenges Japan faced at the turn of the century.  Not to mention their economic slowdown from a collapse of their manufacturing.drspec

Might the path the United States is following lead to a 75 year old man dying because no emergency room could take him? The answer is, probably not. Immigration, one of our largest means by which we replace our work force, has long been almost non-existent in Japan. Also, the cost of healthcare has never come close to the cost in the United States. Furthermore, the Japanese healthcare system is much more centralized than Obamacare is—at least for now. Even still, the similarities are alarming. Many, myself included, feel many of the inefficiencies in Obamacare were designed to lead to a universal healthcare system. The older our population becomes the more we will need healthcare. If our doctor shortage continues, and we become a more universal healthcare system it is plausible that an ambulance in America may drive around for 2 hours begging 25 different hospitals to admit their patient.

–Matt Young

6 March 2013

Does Raising the Minimum Wage Really Raise Unemployment?

Republicans seem to think that just because a business has extra money they will hire a new employee. At least that is the message they sent during the campaign last year with their insistence that tax cuts for the wealthy trickle down to job creation because the wealthy will have a surplus. Now that President Obama has proposed raising the minimum wage to $9.00 per hour they insist again that this will kill the power of businesses to hire employees because of the higher cost. Well, corporate profits are at an all-time high, so where are the jobs again? Not only do we see their theory being disproved in practice, but it is disproved in logic as well. Extra money never dictates hiring patterns, demand does. Regardless how much money a business has they will not hire anyone if they do not need the help. With companies’ profitability continually growing in recent years they can certainly afford a minimum wage hike.

Before you let a Republican tell you that studies show a higher minimum wage leads to higher unemployment you need to know that an equal (or greater from my research) amount of studies show exactly the opposite. The fact is there is no clear evidence to suggest raising the minimum wage will result in higher unemployment. Much of the evidence that I have seen from the right argues that states with a minimum wage that is higher than the federal minimum wage have a higher unemployment rate among younger workers. This, many assert is proof that a higher minimum wage will result in higher unemployment.corporate-profits

But if we break it down we see that this correlation does not compute. The federal minimum wage is currently $7.25, which means if a state chooses to set their minimum wage at $8.25 they are at a competitive disadvantage compared to states that follow the federal rate. Given the option, of course a company will choose to invest in states that will require lower fixed costs, such as hourly rate. This competitive edge takes away jobs from states with higher minimum wages. However, if both the minimum wage were increased, both of these two states would have a $9.00 per hour minimum wage, eliminating the competitive edge. Making this particular cost equal, all else being the same, there is now no reason for a company to avoid opportunities in these higher unemployment states. In fact, because more people are unemployed, one could argue there would be a more skilled candidate pool to choose from, and hiring in a state the used to have a higher minimum wage may increase productivity for a company. Either way, it is clear that it is a competitive advantage, not a higher minimum wage that makes for lower unemployment certain states.

Another popular argument is that an employer will not be able to afford to higher help if they are forced to pay $9.00 per hour (I am actually snickering to myself as I type that). This argument again hinges on the logical fallacy that you hire someone because you have extra money. This is nonsense, as I made clear earlier. Demand dictates how much help you need, and if your demand is high enough to need help, it is also high enough to pay an accordant $70 per week for that extra help, assuming you need that help for a full 40 hours. Moreover, as addressed earlier, corporate profits are at an historical high; companies are doing just fine right now, they can handle it. One last interesting fact on this is that currently only 3.4% of the workforce works for minimum wage.  Clearly, companies are not hiring many people at minimum wage, or, if they are, they can easily afford to give them a raise shortly thereafter. This is another clear indicator that employers can afford a minimum wage increase. This number also shows us that about one out of every 29 jobs pays minimum wage. So people looking for work will still have 96.4% of potential jobs to choose from, even if a minimum wage increase meant companies paying minimum wage would not be able to hire.

It is time to for Republicans to admit their economic philosophies have not panned out. The trickle-down effect does not work; it has never worked. Raising taxes on the rich does not, nor has it effected investment; in fact, there is some evidence to show that it increases it. Tax cuts do not pay for themselves. Leaving businesses (banks in particular) largely unregulated ends up hurting the economy. And a minimum wage increase from $7.25 to $9.00 will not cost millions of jobs. Talk to me when someone proposes a hike from $9.00 to $22.00; that might be something businesses cannot afford. But I do have to give them credit. The Republeconomists are probably on to something with this Obamacare thing.

Anyway, if the minimum wage increase will not hurt jobs, what will it do? Glad you asked. Income inequality (no my good conservative friends, that is not code for class warfare) was a major cause of the Great Depression and the 2008 collapse. Though it is modest, and will only affect maybe five percent of jobs, a hike in the minimum wage will help that. It will also put more money—buying power—into the pockets of the middle and lower income citizens. If the buying power increases, demand will likely increase leading to more companies needing more help. This is real economic growth.

JoblosschartNow, being completely unbiased I have to say that there is also no absolute evidence that raising the minimum wage will not increase unemployment; this entire issue is still one hotly debated by economists everywhere. One thing we do know for certain is that when the minimum wage increased in 2009 the rate of job loss slowed. I am not suggesting it was because of the minimum wage, simply illustrating that an increase does not add to unemployment the way right wingers insist it does. Because businesses can afford this particular increase, because it will help workers, and because recent history suggests it will not, the burden should be on conservatives to prove raising the minimum wage will cause harm. As of yet, nobody has been able to do this.


–Matt Young

19 February 2013

The Financial State of the Union

Guns. Yesterday’s analysis of President Obama’s State of the Union address was obsessed with them. Understandably so, it was about the only part of his speech that has not been playing like a broken record for the last 4 years. For fear of beating a dead horse I am not going to write any more about gun control; in fact, that was not even the most important part of the speech that I heard Tuesday night. To me, the most important line was his promise that new programs would not add a dime to the deficit. If we gave President Obama everything he is asking for on gun control it would make no difference regarding violence in America—some research suggest it will make it worse. However, if we give the President Obama everything he asked for in discretionary spending—I counted around 30 separate programs—getting control of our debt and avoiding severe measures like those being taken in Europe seems, at best, a fairy tale.

Crunching the numbers, you cannot actually call President Obama a liar, as many on the right no doubt will. If we were to use all the money from the close of the Iraq and Afghanistan wars, all the money from the recent tax increases, and all the money from the projected slower-than-great-depression-recovery growth the president is right. The programs will not add to our deficit, but our deficit will never come close to the 3% of our GDP level that any worthwhile economist says we need to meet.

In fact, when you factor in the President’s assertion that Medicare and Social Security not face any significant reforms, our deficit will only grow, and grow, and grow. At what point do our creditors refuse to lend us money? Were that to happen, Medicare would end completely.

However, none of this is to say that President Obama’s ideas are bad ideas. High speed rails would be great. I lived in Australia and found their extensive railroad system to be enviable. Though I never rode on high speed rail, even a standard rail at 80mph was an amenity I wish our nation had. I would love to invest more money in our education system. I think government funded research and development is great. I know there are failures like Solyndra, but R&D creates jobs. Without government subsidized research you would not even have the internet to read my ramblings. I live in Kentucky, so I understand as well as any American the need to fix bridges and highways. So many of these ideas would help America.2013 Bidget Breakdown

The biggest problem, and forgive the cliché, is the president wants to have his cake and eat it too. To explain what I mean by this I need to bore you with budget talk for a few sentences. There are generally two broad categories of government spending; discretionary and mandatory. Mandatory spending is the obligations the United States has to retirees and others through our Medicare, Medicaid, Social Security, pensions and so on. Discretionary spending is everything else not mandatory—defense, education, infrastructure, research and development, and so on. We are currently at one of the lowest levels of non-defense discretionary spending in history. In fact, Military and Entitlement spending make up 80% of our budget. You would have to do a whole lot of work to find a President that has cut more discretionary spending than President Obama. Our deficit is driven by the entitlement spending.

My point is, President Obama cannot have both. Leaving entitlements largely untouched and adding 30 new government programs simply is not possible without Greek level debt. If we reach that kind of debt crumbling bridges will be the least of our worries; we may not even have a stable nation for our children to drive around on, let alone worry about the roads they use. My argument is simple; it does not make sense to leave the entitlements untouched if the nation we hand to your children and my children is a shadow of what we have now.Life Expectance Graph

Life expectancy has increased about a decade since the baby boomers were born. This means someone who retires now will receive almost ten more years of entitlements than their parents did, on average. Entitlements are a good thing, but to truly deal with our nation’s problems, we need to raise the age of retirement. With smart tax reform and smart entitlement reform we can afford to invest in critical discretionary programs that will ensure our children have the same opportunity, the same capability, the same playing field, and the same possibilities open to them that our current retirees had; and if that means you and I will not receive quite as much in Social Security than we otherwise would have, so be it. America was built on sacrifice. Asking this small price is the ultimate investment for the future of this country. At this point we can have roads, or we can keep entitlements untouched, but we cannot have both.

Trying to have both is the European philosophy—the continent in a crisis philosophy. Uncertainty is now the thing that restrains our economy most. Debt is the high speed rail that carries uncertainty. Entitlement reform may be the very thing that unfetters our economy. If we try to have both, we may give nothing to our children. Happy Valentine’s Day kids; this nation sure loves you.

–Matt Young

14 February 2013

Government Solves Nothing with Fiscal Cliff Deal

To kick off the New Year I was hoping to send a fond farewell to Senator Joe Liebermann, a true statesman in an era of partisan radicals, but with the government choosing to fix nothing with their fiscal cliff deal, a goodbye send off for the retiring CT stalwart seems shallow. But ironically, there is probably no better way to write a tribute to Joe Lieberman than by highlighting the disturbing failures of our government on the fiscal cliff deal. It is really troubling to think that the biggest financial problem our nation has is not our debt or deficit, it is Congress.

President Obama and Congress were unable to make a deal to avert the fiscal cliff; Vice President Joe Biden and Senate Minority leader Mitch McConnell came to a deal that does nothing but kick the can down the road. It raises taxes on families with incomes over $450,000 per year–which we needed–but does nothing to cut spending–which we needed so much more. This failure perfectly illustrates what our nation has become. The era of moderate deal makers, like Sen. Liebermann, is now over; the fiscal cliff failure was the closing ceremony. Olympia Snow, Joe Liebermann, Richard Lugar, and Daniel Inouye were some of the last of a dying breed–the breed that governed.

In 2012 the biggest fear during elections was the primary race. State governments have so thoroughly gerrymandered districts that we have only? 35 “swing districts” left in the entire nation, down from 103 just 20 years ago. The solution to this is simple. Use the California style voting system. If every state voted to institute this system, in which redistricting is not done by a partisan legislature, and the top two vote earners go to the general election, no matter the party, we could get some political sense into Congress. For now, Congress is more worried about getting re-elected than fixing our problems.

Joe Lieberman was not. He left the Democratic Party after losing a primary because he was not extreme enough. For those of you who do not speak French, that means he was not crazy. He was a problem solver, not a party hack. The Democratic Vice Presidential candidate in 2000 and very nearly the Republican Vice Presidential candidate in 2008. I did not always agree with Sen. Liebermann, but in the age of zero compromise, he was always admirably pragmatic. The 112th Congress was not.

What better way for the most unpopular and unproductive Congress in history to give us the finger as they walk out the door than refusing to solve the fiscal cliff? This deal is an embarrassment to Congress, and an embarrassment to the United States. The rest of the world laughs at us. We are proving to our creditors that the only way we can pay our loans is with more debt. With close to 40% of the budget being borrowed and added to our children’s ransom one has to wonder how much longer this can go on. Europe scolds us because we first have to cast the beam out of our own eye.

Worst of all, China, our largest creditor, may not accept this much longer. The Chinese national television–which is essentially a statement from the Chinese Government–warned us this week that it is time to fix this. Congressmen have to stop worrying about re-election, and start fixing problems. Politically unpopular solutions, they say, have to stop being avoided. China said it best; we “simply cannot live on borrowed prosperity forever”. What will it take for Congress to get serious? When will China say enough is enough? If they cut off our line of credit we would dream for tax increases and spending cuts. Instantly we could lose 20% of our federal programs! Going off the fiscal cliff would have been better for us than the deal just reached. We need solutions, and we need them now; instead, Congress and the President insult us and continue to leverage our nation’s stability. We need more legislators like Joe Liebermann.

At least 4 times in the last four years we have had the opportunity to take a big step, first, the Republicans refused to give up revenue, and some great deals were scrapped. Now, after the election victories Democrats refuse to budge on entitlements, and deals continue to be scrapped. When President Obama could have–should have–been working on a compromise to solve the fiscal cliff he was meeting with business leaders, labor groups, bankers, and people who responded to his tweets rather than the Congressional leaders. I guess he missed the memo that his campaign is over, and he won the election.

Unfortunately this political atmosphere silences people brave enough to step outside the politically popular; people like Joe Liebermann. We need more can catchers, not can kickers. Any other person in America would have been fired for missing as many deadlines as Congress. The markets are watching, our lenders are watching, the world is watching, and hopefully we will all be watching too. But if Congress stands by watching much longer we may run out of road.


–Matt Young

1 January 2013

Would Going off the Fiscal Cliff Really be that Bad?

So, it is official. With the one of the largest political and financial crises of our lifetimes set to hit every American in just over a week, the people you and I elected to solve problems are MIA. At the first opportunity Congress bailed faster than a Kardashian in a marriage. We assume they will be back sometime toward the end of next week, just in time to have a good two or three days of work before the fiscal cliff actually sets in. This is the pessimists ultimate “I told you so” moment; the “throw ’em all out and get new blood” caucus is having holiday; Christmas will come twice for them. So the question is, would you rather make Congress actually do their job, or let them spend Christmas with their families? There probably is not a right answer here, but the fact that they are getting out of dodge just before the shootout once again shows why we as a nation do not trust them or approve of their performance.

So with the probability of driving off the fiscal cliff edging closer to a sure thing, maybe it is time to ask the bug question; would going off the fiscal cliff really be that bad? If a simple yes or no answer would do, I would have to look into writing sports articles or screen plays. Before you call me crazy, hear me out; the media and government are telling you it is the end of the world, but is it? By now everyone in the most remote parts of the world is aware that going off the fiscal cliff means an end to the Bush era tax cuts, the long term unemployment benefits, the payroll tax holiday, and the alternative minimum tax alongside the “sequester” spending cuts; across the board spending cuts of 9.4% for all Pentagon departments, and 8.2% for nondefense discretionary spending totaling $1.2 trillion. So what would your post-cliff world look like?

The question on everyone’s mind is, how will this affect me? What does this mean for the economy? Those on long-term unemployment will be hit the hardest. Typically unemployment benefits run for 26 weeks, or six months. However, during the brunt of the recession they were extended to 73 weeks, or just under a year and a half. This means people that might lose their jobs after the fiscal cliff will be in trouble if they cannot find a job. To gauge that we need to figure out how far the fiscal cliff freefall will be. The answer, according to most economists, is between 3-5% next year. To most normal people that number means nothing, so to interpret, that is about a little less than the 2008 recession; meaning this would not be an end of the world scenario like cable propaganda channels might tell you.

jobsc                Even if you look at layoff estimates, digging into the numbers makes the fiscal cliff seem more like a fiscal diving board–maybe not even the high dive at that. Estimates are that we may lose in the neighborhood of 1.5-2 million jobs if we go off the fiscal cliff. That seems like a huge number, but we have to remember that when President Obama took office, as he so readily reminded us during the campaign, we were losing 800,000 jobs per month. So the total job losses from the fiscal cliff might be about as bad as two or three months of losses at the beginning of 2008; maybe even less. I know that is a tough pill to swallow, but we know from 2008 it is not impossible to overcome. Moreover, business experts have been saying the reason businesses and banks are sitting on their hands is the uncertainty of the future. We now know Obamacare will stand, we now know who the President is, and after Jan. 1, whether a deal is struck or we go off the cliff, we will know exactly what the taxing and spending picture looks like as well–no matter what happens we will have certainty. With certainty businesses will know what to expect and what they can do. We may recover faster from a fiscal cliff dive than from the recession.

So the bad news might not end up being as bad as many expect it to be, but is there good news? Yes, the good news is that going off the fiscal cliff will make a significant dent in our federal spending, and with the increased revenue, our deficit as well. Going off the fiscal cliff will mean we have a solvent, respectable nation to hand over to our children. Going over the fiscal cliff means we will return to the tax rates that we had under Clinton, and similar to those under Reagan–the two highest growth periods in our lifetimes. The first rule of philosophy is that just because something happened after does not mean it happened because of. Yes there were other factors in those growth years, Republicans love to point out the internet boom under Clinton, but we cannot let them forget Reagan got us out of a recession at the same time he raised taxes.

Unfortunately that was a different era. An era of moderate Democrats in the south and progressive Republicans in New England; an era without cable and talk radio propaganda; an era where doing what the nation needed was applauded by your party, even if you had to go against your party to do it. Congress is far too polarized now for Speaker Boehner and President Obama to strike a Reagan—O’Neal type deal; the two party system has made it that way.

Yes, going off the fiscal cliff will hurt, but it might just be a sprained ankle or broken arm; it will not be suicide. We have had a 5% GDP drop at least 8 times since WWII, and we always came out stronger. Unless we get a real deal, a real grand bargain that raises significant revenue and makes major spending cuts we will stay on the path we are on. Congressman are more worried about their own re-election than they are their own children’s future. The path we are on is the same path as Greece; another decade one this path and we may have to face austerity as well–that would hurt much, much more then the fiscal cliff, and our children would be paying for that for generations.


Going off the fiscal cliff, or any other big deal for that matter, will be bad in the short run, but it is manageable. And in the long run we will be the better for it! It will put us on a fiscally responsible path, and be I first step to the major spending cuts we need to make sure we have programs for the future. Going on a diet always sucks, but after you have trimmed down your fat it is worth it.

We can and we will recover from the fiscal cliff, should we take the dive, and we need a painful solution to our problem. Nobody wants higher taxes, but we cannot have low taxes and big government programs without becoming Greece. This is the corner we have painted ourselves in; if you do not like it, vote for someone else in two and four years. A small deal will not help, and a big deal seems unlikely. Unfortunately the most likely scenario is more of the same–extending everything at its current state, kicking the can down the road, as they say. Unfortunately we are close to kicking the can down our children’s’ throats. The fiscal cliff is our CPR. If we do not get a major deal, it might even be our best option.

–Matt Young

26 December 2012

Is Obamacare Going to Work?

It is now a fact of life; the United States healthcare system will be reformed. With the Republican failures on Election Day, we now know Obamacare will take full effect in 2014. So, is it going to work?

We know it will raise taxes; in fact, the assertion from President Obama that he will not raise taxes on the middle class makes no sense; the tax increase on middle class families from Obamacare will be higher than going over the fiscal cliff. One wonders why President Obama is so worried about a recession from the fiscal cliff, but not from Obamacare? The tax increases under the fiscal cliff total around $600 billion; the tax increases under Obamacare total $700 billion, or more. This is all beside the point, because if Obamacare can save families money on insurance and medical costs, a tax increase may come out neutral on their bottom line. So the overwhelming question is the Affordable Care Act will be able to accomplish everything it is supposed to. The evidence says that this is a long shot.

Those who believe in the law point to the Canadian health system or the Swedish health system to prove that it will work. For starters, Obamacare is not a government healthcare system; it is a private system with Goliath amounts of regulation. Moreover, Patriotslog has noticed an interesting pattern with government healthcare systems: the larger the population of a nation, the less sustainable the system becomes; this is even becoming the case in Canada. For instance, to sustain the government healthcare system in Australia, France, or Britain taxes are over the 50% level (plus national sales taxes in many other nations). Have you ever wondered why the austerity measures in Greece and Spain are not fixing the debt issues? One would think that with all the pay cuts, pension cuts, and program freezes the debt issue would be well on its way out the door, but it is not, and healthcare is a major reason.

Healthcare will always take up a huge portion of a federal budget; this is why regular austerity cuts have not had the effect the people in Greece have expected. They continue to protests the deeper and deeper cuts to programs, pensions, and pay because cuts to these are not making as significant a difference as hoped for. We are not unique in the United States. Medicare and Medicaid alone take up over 21% of the federal budget–and this does not even include the expansion of Medicaid under Obamacare! Not to mention the fact that the United States does not even have a national healthcare system…at least not yet.

Most of the costs of Obamacare are expected to be paid for by the $716 billion in cuts to Medicare. If the government can find $716 billion in additional revenue we may not see taxes go up as steep as many suspect; but the question has to be asked: if the government can find $716 billion in cuts to Medicare, why have they waited until now to do it? There are only two possible answers: first, the President was not being honest when he said Medicare benefits would not be affected, or the government actually cannot make those cuts.

               Patriotslog suggests it is a bit of both. President Obama has already made cuts to Medicare Advantage; are these cuts to “Medicare”? Not in the most strict interpretation. Medicare Advantage plans essentially replace Medicare parts A and B (which are technically the legal definition of Medicare), so the president has already shown he will disrupt benefits to many Medicare beneficiaries, though as long as he leaves part A and B benefits as they are he is not technically lying. Moreover, those who will have their Medicare benefits cut might just have the same benefits restored on Medicaid. Seniors benefits might not be affected because they will be shifted under the massive expansion of Medicaid.

Even all these cuts will not amount to the $716 billion in cuts the budget calls for. The remainder will be from cutting waste and fraud, and the amount doctors and hospitals are paid by the Medicare program. The government already expends so much effort to combat fraud and waste; does the president actually expect a sudden change in fraud and waste, or better policing against it simply because his law says so? I know politicians have egos, but that impressive narcissism. So we are left with cuts in payments to make up the rest of the cost. History shows this will not work. The government has attempted to cut payment amounts under the Medicare program 34 different times, and all have failed. Most of these actually resulted in higher costs. Moreover, a bill was also passed in the Clinton administration to cut physicians fees; Congress has subsequently passed a waiver of that bill every year since it was passed. Why?

If you cut the amount Medicare pays physicians they will stop accepting Medicare; ergo, Medicare becomes irrelevant. If Medicare is irrelevant it does not matter what we do to the benefits, because they cannot be used. The solution to this would be to force doctors, by law, to accept Medicare. This in turn would raise the cost of providing care for the rest of the nation. This is clear to Congress, which is why they pass the waiver each year.

Another aspect of Obamacare is to penalize employers who do not provide healthcare to their employees. With the cost to insure an employee running about $6000 per year, forcing an employer to take on this expense is an economic deadweight. An employer could pay the $2000 fine for not ensuring an employee, give the employee a $3000 per year raise, and still come out on top as compared to providing

insurance. This will push scores of thousands more onto the expanding Medicaid program, adding an additional expense to the government. The other consequence is that businesses can (and have said they plan to) push employees

down to part-time employment. Every person in the nation might have to have two jobs just to keep a 40 hour work week. Another popular idea among businesses is to lay off employees. If a company has 50 employees they have to pay a $40,000 fine for not providing insurance. This seems extreme, but there are already nearly 2.5 times as many businesses with 49 employees than there are with 50. This uncertainty is one of the biggest reasons the economy has been so slow in recovery. Companies have been sitting on their money; now that they know exactly the uphill battle that faces them, they will invest, and the economy will grow, but Obamacare certainly makes that hill a steeper incline.

So where is the government going to find the money to pay for all of this expansion of Medicaid given the unlikelihood of the government actually being able to cut $716 billion with their current plan? Taxes; lots of taxes. Mitt Romney may have been right when he called Obamacare the single largest tax increase in history; time will tell. One wonders if it would not simply be more efficient–particularly with the amount of taxes we will have to pay–to initiate a government healthcare system. Maybe that was the plan all along.


–Matt Young

18 November, 2012

Mitt Romney’s 47%

                Mitt Romney is a terrible candidate. If elected, he may make a fantastic President, but as far as campaigns go, he fits in about a well as a figure skater on a football field. This week another political gaff has come to light: in May, Mitt Romney went on a rant about the 46.4% of Americans that do not pay federal income tax. This was videotaped in secret and released in the liberally biased blog Mother Jones. The Statistic that 46.4% of people do not pay income tax is the conservative response to President Obama’s proposition that the richest people in America “pay their fair share“. It has been the right wing rallying cry for the policy battle both sides have sides have escalated with ludicrous labels like “class warfare“. 46.4% of people not paying income tax is not an exaggeration, it is a fact; however, it is very misleading, and Patriotslog is sick of hearing it.

My issue is not as much with Mitt Romney as it is with the number in general. Though Mitt Romney classifying half the nation as welfare dependents that “rely on the government” is distasteful, the bigger problem is that people–apparently Mitt Romney included–do not understand the number. People see that nearly half the nation does not pay income tax and they get worked up into an ideological rage without actually understanding what it is that is spiking their blood pressure.

               It is true that 46.4% of people do not pay income taxes, but this does not tell the whole story. Many of the 46.4% (as much as 1/5) are retired. Retirees have paid taxes for decades and now have no earned income with which to pay taxes. Also, active duty military members are given special tax credits for their service to our nation; these credits often result in them being net non-income tax payers. These two groups contribute to a significant portion of those who pay no income tax. The other elephant in the room that is not discussed when people talk about 46.4% of the nation not paying income taxes is the fact that income taxes do not tell the whole story. Most of these people still pay taxes, just not income taxes. Consider this tax breakdown: a family with one or two children that has an income under $30,000 per year. Can you live off this income? Yes, it is possible, but money will be very tight. This is why they do not pay income taxes, but they do pay taxes. For a family that is living on $30,000 per year, odds are they will have to spend the bulk of that to live; maybe even upwards of 90%. Depending on where they live, sales taxes can be between 6%-10%. For those of you not following along with a calculator at home that means they are already paying as much as 8% or more of their income in taxes. Moreover, they also have to pay payroll taxes–FICA, unemployment, etc.–on each paycheck, and state income taxes. The point is, added all together these families which pay no income tax often pay between 9%-12% of their total income in taxes. For a man like Mitt Romney who has the bulk of his income generated by investments and capital gains, he will not pay the payroll taxes that most Americans pay. Where is the public outrage that the richest people in our nation pay no Social Security and Medicare taxes! The rest of the country is letting these privileged few become dependent on the government! This is class warfare! Everyone should pay taxes! How can we let them get away with this!

In all seriousness, the math is quite simple. Mitt Romney does not pay payroll taxes, and logic tells us that because of the size of his income he does not need to spend even close to 90% of it to survive. This means Mitt Romney’s total tax rate is not much higher than the 13% he says he pays. Factor in sales taxes and it is unlikely he pays more than 15-16% in taxes. In fact we can take him at his word when he says his effective tax rate was around 15%. To break that down for those of you still do not have a calculator (who knew politics could be a math lesson?) this means Mitt Romney, for all the fuss, hardly pays any more in taxes than the “dependents” that do not pay income taxes. So the best question to ask Mitt Romney is why this is a big deal? Is it right for these people to have their income taxed at 8%-10%, therefore making them pay more in taxes than Mitt Romney would?

There are two more aspects of the 46.4% number that I find comical, if not downright hypocritical. Republicans who fuss about some not paying income taxes seem to have forgotten; it was their party that demanded tax cuts. If the political right did not have an anti-tax religious conviction many of these people would be paying income taxes. They wanted to play in the mud, then cry when they have to clean up their mess. This is the anti-tax party, isn’t it? Why is the anti-tax party crying foul over people not paying taxes? This is the kind of thing that makes liberals believe the Republicans only care about the rich. Moreover, the income tax is only responsible for about 43% of the government’s revenue anyway. The second aspect is the Republican assertion that “we do not have a revenue problem, we have a spending problem“. Despite the fact that government spending is down, Patriotslog agrees that we have a spending problem; but Republicans need to see that we do have a revenue problem as well. We are well below the historical average for revenue, but that is beside the point. If Republicans insist that we do not have a revenue problem, why are they fussing about people not paying income tax? The standard answer is going to be “because that is fare”, but we need to remember. Those not retired or in active military service pay nearly as much in taxes as Mitt Romney, so fairness is not the issue. Moreover, the same fairness argument can be made the opposite way, and in fact it has. Warren Buffett revealed that his secretary pays more in taxes than he does. Is that fair? So if fairness is not the issue, revenue is. If Republicans believe we do not have a revenue problem, why does it matter that people are not paying taxes?

There is one more thing that I think most people who get angry about 46.4% of people not paying income tax do not understand. Many of them, Mitt Romney included, think that those not paying taxes “depend on the government” for much of their needs. This may be true, welfare spending has exploded; more on that later. However the assumption is that most of those who pay no income tax depend on the government and will vote for Obama.This may not be true. Dean Lacy, Professor of Government at Dartmouth, measured the amount of government money going into states and counties compared to the amount of money paid out in taxes. He found that states and counties that vote heavily Republican actually receive much more federal money as compared to the taxes they pay than do counties or states that vote heavily Democratic. So it would appear that the spending problem is not dependency of Democratic voters, rather, it is Republicans mooching off the Government.

Now there is no measurement for sheer welfare spending in that study, and there are many more aspects which go into that research, so Republicans may still be right, it just does not appear so. However, Mitt Romney is right when he talks about welfare spending. It has grown exponentially–up 724% since 1960. Taking into account inflation and population growth and that number is not quite so extreme, but the point remains: welfare spending continues to grow, and if it keeps the current pace this nation will have to be a nation that takes from the rich to give to the poor. The more welfare there is the more taxes there must be in order to keep a balanced budget. This means those with money have to provide for those without–that system is not fair and can lead to major problems. We currently have more people on food stamps than any other time in history. Now, welfare is not bad, but welfare abuse is. Government welfare should only be available as a last option. The tax payers can and should support those truly in need, but the government owes it to the tax payers to ensure there are not scammers and free-loaders abusing the generosity of the American people. Welfare is growing, and that can lead to dependency, but Mitt Romney should not assume that people are dependent because they are in need. For conservatives to be upset that 46.4% of people do not pay income tax is not only hypocritical, it is misleading, and the general attitude is derogatory.

–Matt Young

19 September, 2012

The Slow Economic Recover

It has been five years now. In case you have recently woken up from a coma, five years ago a deregulated Wall Street (yes, it is already obvious to tell where this is going. We deregulated Wall Street as if we thought they cared about the livelihood of the American people, and might actually act ethically) bundled together some ridiculous, high risk loans and sold then to investors around the world in order to make a profit on the booming American housing market. Investors thought it was a win-win to buy in on the flaming hot real estate enterprise, not knowing that the banks had bundled together the most dangerous assets to sell them. In many cases this was illegal, and in every case this was unethical, but now it is what it is. So during your coma the political sphere has been endlessly bickering like spoiled homecoming royalty about how to rebuild our economy. Buckle up, because for all the energy and attention given we are recovering at great depression speeds! Five years later we still have 44 out of 50 states with rising unemployment. Likewise, consumer confidence is barely above 60%; that is a good number for a president’s approval rating; in fact, if that was his approval rating, I would probably not need to write this article, but for consumer confidence, that number is disparaging. Read the rest of this entry

%d bloggers like this: