Archive for the ‘entitlements’ category

Take A Breath, And Think This Time

July 29, 2017

“Pause and reflect” might be good advice for Republican Congress members. But it is possible pause and reflect may still miss the foolishness of yesterday’s vote on Obamacare “skinny” repeal. The vote confirmed, with little room for argument, Congress is not fully under the control of the Republican Party. There is no Republican Party and Americans had better wake up to that fact.

Those who claim membership in the party in power are not of one mind other than wanting to get reelected. In other words, GOP membership is about winning elections and profiting personally from those elections as best one can. And with the amount of money floating around Capitol Hill, it would take a pretty dumb Congress Member to not increase their personal worth while in office.

For Congress members, unfortunately, there are strings tied to getting elected. Congress members must surrender their right to vote their conscience and instead march to the drum of the big money that financed their campaign. Besides the Congress members’ integrity, the main casualty is the absence of a functioning body invested in the 21st century problems facing America.

Healthcare is a perfect poster child.

Republicans have called out against the rising costs (premiums and deductables) of the individual market. Instead of offering solutions to this problem, Republicans, in essence, have said, if you think the price is too high for a whole loaf, we will offer you a half a loaf at a lower price. Shameful.

The skinny repeal bill took the Republican position even further into the absurd. Republican Senators were asked to vote for a bill which over turned the Obamacare requirements for individual mandate, employer mandated coverage, and certain taxes on makers of medical devices. The bill makes no sense as it would have destabilized the individual insurance market even more and posed the risk of significantly more Americans losing coverage.

Possibly even worse, the skinny bill was never intended to become law. Imagine, grown up elected officials seeking to pass a bill they believed would never become law. Why would that be necessary? Why not try to pass any bill, regardless of how flawed, that was Republicans true intent?

The Republican mysterious behavior has its roots in what basic principles underfoot healthcare. Is healthcare a right or is it a privilege?

Given the opinion polls and most of the nation’s Governors, Americans are trending towards healthcare is a right. (Now be careful and do not confuse, a right and being free.) Healthcare is expensive and the method of paying for it is not straight forward.
The inevitable end point will be a universal, single payer system, as most modern countries have already adopted.

Like most large social changes, US healthcare may still require more baby steps. But other than disgust with the GOP efforts, the defeat of the skinny bill has not brought us closer to any improvement. That work remains.

IMO, there were many Republican Senators who did see healthcare as a government benefit akin to meeting an individual’s right. Regretably, these Senators caved to special interests pressure. There are other Republicans who deny anyone’s right to healthcare unless they can afford it. They seek the best healthcare money can buy. Hence the fundamental schism.

The brightest face one can attach to the failed GOP effort is “some” Republicans working with Democrats could pass modifications to Obamacare which would stabilize the individual nsurance market and return premium costs to real world levels. A necessary fix, but a fix far short of what’s possible and what is ultimately the goal.

“Skinny” option. Hmmm. What will they think of next?

Free Market Health Care

June 11, 2017

When President Obama set in motion steps to expand healthcare coverage, in the wealthiest country in the world, for more Americans than ever before, he and his aides made a questionable decision to build the expansion around traditional healthcare insurance companies, like Aetna, Cigna, Anthem, etc. These cowardly chickens are now coming home to roost.

The Obama White House convinced the legacy healthcare insurers that their margins would be protected when they were presented with new enrollees who might not be able to pay for the entire premium. There would be government subsidies in other words.  That promise was enough to get the insurance companies loyalty.

With this promise (and recognition that there would be another 7 years with a President Obama), healthcare insurers signed on citing the importance of new customers and their dedication to improving Americans’ health.

When the Democrats lost control of Congress, the wheels soon began to come off the Affordable Care Act wagon. Republicans tried their best to outright repeal Obamacare and when not possible, the GOP tried to jeopardize the subsidy streams. Any uncertainties about rate coverage was enough to send healthcare insurer CEOs into orbit.

“Oh my, our shareholders simply won’t accept that”, these CEOs moaned.

In quieter moments, healthcare insurers raised rates and cited the “higher than expected” number of “sicker than average” enrollees. Imagine, these big name insurance companies were finding that previously uninsured Americans were devouring healthcare services at amounts greater than the average American?

After thought (and realization that not much more money was coming from the government), these insurance companies proposed a resolution. They would exit the market!

The Aetna’s of this world would no longer sell policies to exchanges and abandon the exchange market to someone else. So, unless the government renewed its pledge to provide adequate subsidies, these newly healthcare covered Americans would join the ranks of the uninsured again.

So much for these insurance companies’ concern about individual healthcare.

One might fantasize that a Government truly interested in its citizens’ healthcare might say to these companies that they might as well withdraw from the rest of the State’s health insurance business. Cheery picking is not in the publics best interest.

Should that hard ball tactic not convince the insurance company to stay, then employing the “public option” might win the day. Expanding Medicare (with its requirement for paying premiums) would be quick and easy to roll out. Insurance companies might then think carefully on whether they needed to become more efficient or face the creeping invasion of “single payer” insurance.

Republicans might jump up and say “how is the government going to fund the public option?  Of course the answer is through taxes combined with individual payments.  And if the Affordable Care Act is repealed or simple succumbs to the death spiral, how is the cost of the 25 million or so Americans without coverage to be covered?

How about taxes and higher doctor and hospital payments?  Which path seems more humane?  Oh, I forgot the Republicans want to cut taxes, not increase them.  Take a hike you 25 million soon to be without insurance Americans.

Hmmm.

“Americans” Expect Us To Act

March 22, 2017

How many times have you heard GOP leaders repeat ad nauseam the mantra “the American people elected us to X or Y”, or “the American people want this or that”? The correct terminology  would be “Some American people…” with emphasis on “some”.

This type of honesty and absence of hyperbole would diminish the pomposity and self importance GOP elected officials want to present. (I fear this is a Republican disease today simply because Republicans are in the majority and in truth, Democrat leaders might fall under the same spell if roles were reversed.)

No better example of the misleading nature of “Americans expect” is the current healthcare debate. Republican Congressional leaders are moaning about those Republican Congress members who are threatening to vote against the American Health Care Act (the replace plan for Obamacare). “Americans expect us to pass this bill” leaders cry while all sorts of non-partisan studies point out that the replacement bill will maintain some popular Obamacare benefits but at the end of the day provide less coverage and insure fewer people.  No more appropriate subject does “some Americans” apply than here.  “Most Americans” are not impacted as a benefit recipient by Obamacare

For some Republican Congress members, the AHCA does go far enough in rolling back entitlements and for others, it goes too far. Hmmm, I wonder what Americans really want?

Senator Rand Paul elaborated today on his proposal which could gradually eliminate Medicare expansion and streamline the individual market. Paul has proposed creating a pool of all uninsured and the allowing the “free market” to drive down price through competition amongst insurers.  As lower policy prices emerged,  government supports would decrease until they disappeared. Hmmm.

Paul deserves credit for proposing a clever way out of the box Republicans have created for themselves. His proposal, of course, has it own set of pitfalls, the most obvious of which is whether “for profit” insurance companies will want to offer policies at prices the pool will demand and people can afford. None the less, Paul proposal deserves a careful review.

The irony of the current healthcare repeal and replace drama is that greedy Republicans are far more interested in diving into “tax reform”. We will hear again that “Americans expect us to lower taxes” when in fact “some Americans”, like the top 1 or 2% wealthiest Americans will alone reap huge benefits. Most American will see little impact and no benefit. More insidious will be the knock on effects of such a large tax cut. Where will the Government get revenues to pay its expenses?  Think there will be more cut in government services?

The Republican tax reform odyssey will make “searching for a free lunch” dinner time conversation.

Negotiating 101

March 18, 2017

In 1973, Robert J Ringer, wrote a book titled “Winning Through Intimidation”, a self help book describing ways to be more successful in the art of selling. For someone who approached business as a “tell it as it is, win-win” person, Ringer’s examples were eye opening. The picture Ringer painted of unsavory, but successful characters one would have to deal with in the business world was shocking. Why would anyone waste their time dealing with intimidators and not prefer honest brokers? Hmmm.

President Trump (and his senior advisors) are giving Americans a refresher “Winning Through Intimidation” course. For the Trump Administration, there appear to be no limits on veracity and no retreat from prima facia falsehoods. Yet, four of Trump’s favorite words are “believe me, it’s true”.

Trump’s budget proposal is a clear example of a 21st century negotiation using 1970’s tactics. (I have carefully avoided using the word “strategy” because at this point there are no indications of what the Trump Administration’s objectives and strategies might be.) Trump’s “Winning Through Intimidation” tactic opens with proposed draconian cuts in order to boost Defense and Homeland security spending.

For example, the President has proposed increasing the defense budget about 10%, and offsetting those costs by decreasing a host of Federal programs (including support for science, the arts, and poverty programs). Budget cuts are also to include 30% decreases to the State Department and EPA’s budgets. What is the President thinking?

The President must privately realize that the “mess” he inherited is not former President Obama’s mess. Congress, and more specifically the fundamental division among Republicans, has produced a deadlock and Congress is incapable of making budgetary decisions. The more conservative Republican elements seem ready to throw the baby out with the bath water if that would reduce the size of government.

Medicare and Medicaid make up the largest drivers in both size of government and the deficit components. Although, healthcare reforms similar to healthcare systems in two dozen other “best in class” foreign countries, where effort is put into cost control (doctors, hospitals, and drug companies), and where the waste associated with “for profit” insurance administrators is eliminated, could dramatically reduce healthcare costs, lower the size of government, and in the process secure the benefits of Medicare and Medicaid for years to come. Why no mention of these expenditures yet?

So, let’s speculate.

The President and his advisors want tax reform (read tax cuts for the wealthy) and want a second term. They connect both of these with more jobs and a growing economy. Unfortunately, more jobs (if ever possible) and growth will take time. What can the Trump White House do in the interim to keep his faithful supporters quiet? Hmmm.

Let’s make the EPA and other regulatory agencies the “bad guys”. Let’s debunk science and focus short term on job promises. Let’s emphasize “America First” in a world where an isolationist retreat will stall the economy (but most voters don’t understand that), and buy time.

Inconveniently for President Trump, Republicans have made a “do or die” issue out of repeal and replace Obamacare. President Trump and his advisors realize that a replacement is politically near impossible. They realize there is no way “replace” can happen (60 votes in Senate) with drastic cuts in healthcare benefits or increasing the national debt (which is politically toxic amongst most Republicans). Hmmm.

President Trump is cleverly drawing Republican leadership further out on the “replace” limb knowing that an option acceptable to moderates will be unacceptable to conservatives and vice versa. At some opportune time in the near future, President Trump will inform Republican Congressional leaders that he is about to cut them loose and walk away from their plan because it’s wrong for the people. Of course, Congress could support an Obama-Lite alternative, keep his support, and move onto tax reform which could garner enough support to pass (at the end of the day, all Congress members like to tell their constituents they voted for lower taxes).

President Trump will show Congress members how lower taxes will stimulate the economy and generate new tax revenue, even at lower marginal rates, thereby not increasing the debt. While factually this is extremely unlikely, too many voters will believe it to justify a Congress member taking the chance of going against the President. Hmmm.

“Winning Through Intimidation” will become a must read during the Trump Administration. The Republican Party is a misnomer and will eventually break apart. Unfortunately, during the next four years a lot of unwise actions could take place.

Keep your eyes open and double check what ever you hears. There is a new sheriff in town.

The Tourniquet Syndrome

April 25, 2016

What policy positions do you associate with Republicans and with Democrats. The Republicans might be “tax cuts” and Democrats might be “entitlements”. For sure there are other policies each party pursues but taxes and entitlements separate the parties, one is for, and the other against.

The tax issue is socially complex. Most everyone, members of both parties, would prefer to pay no taxes at all if that were possible. Yet most people know that government services require a source of revenue to cover the expenditures. Hence, taxes are necessary. So when Republicans call for tax cuts, they are in fact seeking to shift the tax burden to be carried more and more by lower income individuals. Conversely, when Democrats seek tax increases, they are happiest when the “progressive” tax formula shifts the burden upstream to the very rich. Both parties agree the “other guy” should pay more, whether it is an increase or a cut.

Entitlements, however, represent a real conundrum.  The government is obligated to make entitlement payments even if it has to borrow money to over the costs.

Here is a list

  • 529 or Coverdell
  • Home Mortgage Interest Deduction
  • Hope or Lifetime Learning Tax Credit
  • Student Loans
  • Child and Dependent Care Tax Credit
  • Earned Income Tax Credit
  • Social Security–Retirement & Survivors
  • Pell Grants
  • Unemployment Insurance
  • Veterans Benefits
  • G.I. Bill
  • Medicare
  • Head Start
  • Social Security Disability
  • SSI–Supplemental Security Income
  • Medicaid
  • Welfare/Public Assistance
  • Government Subsidized Housing
  • Food Stamps

(Source – http://www.answers.com/Q/List_of_government_entitlement_programs)

Each of the entitlements was once justified as an emergency fix to a social problem, sort of like applying a tourniquet. Hmmm.

Looking at this list, one must first remove Social Security – Retirement and Survivors. The entitlement is designed to provide supplemental retirement income and is funded from wage taxes workers pay during their working lives. There is no reason that this form of Social Security should represent an on-going drain on the Federal Budget since revenues received can easily be adjusted to match future liabilities.

Medicare also should be removed. Medicare is healthcare insurance also supported by wage taxes and the rate of these taxes could be set to match payouts.

For the remainder, some social situation was deemed an emergency and a government payment (including tax credits, exemptions, or deferments) were thought necessary.

So, Republicans seek to cut entitlements are in effect seeking to remove the “tourniquet” and do nothing. In real life this almost always results in a serious deterioration in health and often death. Democrats seem just as content to leave the “tourniquet” in place and continue the status quo. Removing a “tourniquet” in real life must be accompanied with some other medical action of health deteriorates. Doing nothing, that is leaving the “tourniquet” in place does nothing to alleviate the underlying conditions which made the entitlement necessary in the first place, and maintains the long term “at risk” status of those receiving the benefit. Hmmm.

Candidates or political parties which advocate for tax cuts must be called out quickly and asked (1) who specifically would receive the cuts, and (2) how would the cuts be offset (especially now that there are already deficit budgets) The answer will reveal a naked attempt at lowering income taxes for the wealthy (even if it also lowers middle or low income tax rates), or the tax cut is advertised as a result of reducing entitlements (without any review of the underlying problems which lead to the entitlement in the first place).

Candidates who are content with the “entitlement status quo” or rise to fight the first hint of “entitlement reform” or “entitlement reduction” are guilty of a different but almost as cynical sin. Emergencies by definition cannot be allowed to go on forever, otherwise they wouldn’t be an emergency. Even more significant, the conditions which lead to an entitlement in the first place will almost certainly evolve over time. Sometimes the social situation can get even worse (like with Medicaid for those who cannot afford health insurance). Other times the need for an entitlement might be better served by an entirely different method of government assistance. One might suspect the “don’t touch entitlement” politician is someone more interested in a constituent’s vote than their wellbeing.

At first it probably seems discouraging that the all too familiar political rhetoric “I’m for cutting taxes” and “I’m against cutting entitlements” are words from someone only interested in attracting a voter’s preference. Political speeches are highly crafted, purposed to attract money and votes, that it often never occurs that there is more to taxes and entitlements than cutting or raising.

The candidacies of Donald Trump and Bernie Sanders have attracted a significant number of voters who for various reasons are rejecting the mainstream political message. These candidacies will have been successful if voters who once having rejected the “establishment” rhetoric, begin to ask questions of the “anti-establishment” about how and why their policies are wise and appropriate.

Will Americans find a way end the Tourniquet Syndrome?

Should Anyone Be Surprised?

March 13, 2016

GOP pundits, political operatives, and big money donors are all aghast about Donald Trumps potential to steal the Republican Presidential nomination. These authorities claim Americans are angry and say Trump is just feeding voters someone or someplace to target their fears. Mexico, Muslims, or anyone who is not us allow Trump supporters to accept Trump’s promise to fix it.

Hmmm.

Listening to the GOP “establishment” Trump must be some type of low life to conduct his campaign by appealing to voters’ fears. So, what does the establishment think voters want to hear? How about defunding Planned Parenthood, repealing Obamacare, and tax code reform featuring lower marginal rates. The GOP is also keen on increasing defense spending while reducing entitlements (Social Security, Medicare, and Medicaid). Rounding out the GOP’s list includes applying religious freedom interpretations to discriminate against gays and same sex couples. Are any of the GOP’s “must do” list designed to deal with Trump supporters’ fears?

Consider, in addition, what if many voters are victims of income inequality? What if many believe the American Dream either no longer exists or at least is not within their grasp? What if globalization just hasn’t worked well for many Americans and they haven’t figured out how overcome this global change? Does the mainstream Republican pitch deal in any way with this view of reality?

Here’s a bulletin. Neither the GOP establishment nor Donald Trump appears to have a clue. Income inequality is linked to globalization to be sure, but it is also connected to workers’ skill base and the ethical behavior of business leaders.

At this time, too many Americans lack the skills necessary for higher paying jobs, and too many corporations simply see their workers as throw away commodities. Corporate leaders are more concerned about stock price and personal bonuses.

As a consequence, corporate leaders have lost sight that their employees are also in some way their corporation’s customers. A customer with no money cannot buy the corporation’s products or services. Hmmm.

So which policies might lead to increased jobs, salaries, and wages?

Attempting to deal with globalization by imposing tariffs and duties, while often popular, only leads to equal and opposite trade restrictions from our trading partners. Some workers might get old jobs back while others employed in export related work lose theirs.

Retraining workers and developing more competitive skills with new workers are positive steps, but who will pay?

Simply paying workers more or sharing productivity gains with all workers would help but why would a capitalist pay more for labor than he must?

Here’s the conundrum. The GOP and Donald Trump have no policies which will deal with globalization or to unilaterally improve the wages of average people. GOP policies either do nothing or aggravate income inequality. Trump promises much, for example “to make America great again”, but how?

It should be clear that making globalization work better (more and better jobs) and reducing income inequality would be a worthwhile focus for both political parties.  But focusing upon Planned Parenthood or Obamacare has nothing to do with globalization/jobs or income inequality. If the mainstream GOP continues on its same path, the unproven case Trump is making sounds a better alternative.

Should anyone be surprised?

Speaker Paul Ryan

October 31, 2015

Change always offers an opportunity for selecting a different path. Sometimes that path involves different goals or sometimes it is just a different approach to reaching the same goals. The election of Representative Paul Ryan as Speaker of the House begs the questions, which option will mark his time as Speaker?

Wouldn’t any meaningful reform of the tax code entail either raising taxes (a Republican no-no) or beg reducing government spending (read cutting entitlements) if marginal rates were lowered? An elimination of exemptions, deductions, and loop holes, without lowering tax rates, would necessarily increase tax revenues. Any revenue neutral tax code reform would, in addition to favoring some groups, still come with a deficit and in a spirit of change, would put pressure on Congress to lower spending, hence a reduction in entitlements.

If this were to play out under Speaker Ryan’s watch, it would represent the same goals (help the wealthy and decrease efforts on poverty or the needy). The Republican rhetoric, however, will sound nothing like that. This approach will be hailed as an attempt to eliminate tax code favoritism and improve the campaign over poverty reduction.

The GOP claim that current Government regulations undercut individuals’ efforts to climb out of poverty. According to conservatives, Government rules makes it too easy for an individual to accept government money and not join the work force. Hmmm.

As the GOP see it, Government subsidies and direct payments should instead flow to State Governments who are much closer to the situations in their States. The Federal Government should, Republicans say, provide “block grants” to States replacing direct payments to individuals. States could then decide eligibility rules “appropriate” for their specific situation (and could use any excess portion of the block grant as the State saw fit. Hmmm.

Republicans make no mention that this could have significant unintended consequences if their assumption “that people are just lazy and do not look for work if there is a government handout available”. For instance, why won’t these “lazy people” just migrate from State to State in search of more generous benefits? Why wouldn’t some States preferentially make it more difficult for groups or classes of residents thereby encouraging them to “self-migrate” to another State. And what would all the States do when the economy enters a recession or near depression?

To the GOP’s credit, this could be a plan.   There are no Democrat plans other than to spend more. The historic track record of spending more is not brilliant. Unemployment, single parent families continue to rise, and the US workforce seems to be becoming less able to take on higher tech, better paying jobs.

What a mess. America has Scrooge on one side and a foolish (good hearted) spender on the other. Hmmm.

There must be a middle ground. During Bill Clinton’s time, he supported an entitlement reform aimed at harnessing the “welfare queens”. Cutting back did increase the effort of many to find employment. Would it work again?

Maybe but maybe not.

Like so many social problems, the causes are complicated and demand more complex solutions. America’s unemployed include the unlucky (laid off for example), street people, mentally challenged, single family moms (who can’t afford child care), physically disabled, unskilled, along with those who just are lazy and willing to accept less in life. Globalization has outsourced a lot of low skill jobs and low entry wages make little incentive for many to join the work force. Hmmm.

The success of Paul Ryan will be tied to whether he really tries for change and if he connects these goals to comprehensive plans with step by step results testing. For example, select four States and test the approach. Does it work? Than if so, expand.
Hmmm.

Should I hold my breath.